Jason Henderson

Bio: Jason Henderson is an academic researcher from Iowa State University. The author has contributed to research in topics: Rural area & Rural economics. The author has an hindex of 11, co-authored 71 publications receiving 737 citations.

Building the Rural Economy with High-Growth Entrepreneurs

Abstract: Entrepreneurs create economic growth in their communities by forming new firms. Each year during the past decade, more than half a million businesses were started that added new jobs in the United States. In the 1990s, during the longest economic expansion in the United States economy, the majority of new jobs were created by small and medium-sized entrepreneurs operating highgrowth businesses. Because entrepreneurs are such a wellspring of growth in the economy, many rural policymakers have shifted their long-time focus of recruiting existing firms, such as branch plants, to developing new entrepreneurs. Most policymakers recognize that entrepreneurs usually start out with limited financing as small or medium-sized firms operating in a variety of industries and places. As a result, policies generally support a wide range of entrepreneurs. However, policies often fail to recognize that the benefits of entrepreneurs can vary dramatically, depending on the entrepreneur's desire to build a high-growth business. And rural areas often lack these high-growth entrepreneurs. This article presents a fresh review of entrepreneurial activity in rural America and discusses some of the new ways policymakers are beginning to encourage high-growth entrepreneurs in their communities. The first section discusses the benefits entrepreneurs offer communities. The second section examines the pattern of entrepreneurship in rural areas and the difficulties many rural communities face in supporting high-- growth entrepreneurs. The third section discusses some of the policies supporting the startup and growth of this valuable resource. I. THE VALUE OF ENTREPRENEURS TO A COMMUNITY Entrepreneurs add great value to local economies. This conclusion is widely evident in the number of communities that have initiated entrepreneurial development strategies over the past two decades. To be sure, less than half of all new firms survive the first few years of operation, and far fewer become high-growth businesses (Malecki 1988; "Entrepreneurs" 2002). Still, entrepreneurs are now recognized as vital sources of economic growth to local communities, and that has spawned the new entrepreneurship programs. Until 1990, such programs were concentrated in the industrial Northeast and Midwest. But since then programs have spread across the United States (Leicht and Jenkins). The value of entrepreneurs is evident at both the national and local levels. At the national level, nations with more entrepreneurial activity have stronger GDP growth. Entrepreneurship accounts for one-third of the difference in the economic growth rates between countries (Reynolds, Hay, and Camp).1 The relationship between entrepreneurship and growth is stronger in countries dependent on international trade (Reynolds and others). Throughout the world, small and medium-sized firms operating high-growth businesses provide the majority of new jobs (OECD). At the community level, entrepreneurs create new jobs, increase local incomes and wealth, and connect the community to the larger, global economy. But these benefits vary substantially across different types of entrepreneurs. Some entrepreneurs start firms to help them capture a certain quality of life. Many times, these smaller businesses radiate a quaint charm that attracts people to America's Main Streets. Other entrepreneurs start firms that will become high-growth businesses. While many new firms fail, those that succeed often add jobs, lift incomes, and generate new wealth in a community. How entrepreneurs benefit communities Over the past 200 years, the definition of entrepreneurship has evolved into a complex set of ideas.2 Put simply, entrepreneurship is the creation of a new firm. Ultimately, entrepreneurship is "the process of uncovering or developing an opportunity to create value through innovation..." (Kauffman Center). A common thread runs through most definitions of entrepreneurship: innovation. …

Gauging a Region's Entrepreneurial Potential

Abstract: Regions are facing rapidly evolving pressures from today's global economy. The old rules of the game, where traditional assets such as cheap land and labor determined a region's success or failure, no longer apply. Instead, new categories of assets are shaping economic prospects-assets like workforce skills, lifestyle amenities, access to capital and information, and innovative activity. Finding new pathways to tap these assets makes economic success much easier.The first step along each new pathway is to measure a region's assets. The Center for the Study of Rural America is working to quantify today's critical regional assets by developing a series of asset indicators. These measures should help regions gauge their own competitive capacities, as well as provide a better understanding of the new drivers of regional economic growth.Entrepreneurship is emerging as a particularly promising new engine for regional growth. The relation between long-term regional employment growth and entrepreneurship is strong. Not only do entrepreneurs create new local jobs, but they also generate new wealth and new growth. In addition, entrepreneurs are innovative users of other regional assets and resources. In fact, entrepreneurs appear to be a critical mechanism for bringing new ideas and innovations to the marketplace.Despite the growing recognition that entrepreneurship is a vital driver of strong regional growth, acceptable ways of measuring entrepreneurship still are not widely available. Without standard measures of entrepreneurship, private and public decision makers cannot properly evaluate a region's entrepreneurial activity-nor assess ways to spur faster economic activity.Ideally, two distinct measures of entrepreneurial activity would set critical benchmarks. The first would assess the quantity, or breadth, of entrepreneurial activity across a region. Entrepreneurial breadth reflects the size and variety of small businesses in a region that create the foundations for economic growth. Until recently, breadth measures have been absent from economic radar screens. The second measure would assess the quality, or depth, of entrepreneurial activity in a region. Depth represents the value these small businesses generate for themselves and their local economy.Research suggests that rural areas are fostering entrepreneurs but find it more difficult to produce high-value entrepreneurs. Regions that succeed in producing high-value entrepreneurs typically offer a core urban area, a base of human and financial capital, amenities, and infrastructure that support entrepreneurial development. Together, these findings suggest a new set of policies to support entrepreneurs in rural regions.This article develops measures of entrepreneurial breadth and depth and uses them to gauge entrepreneurial activity across the United States. The analysis focuses on nonmetropolitan, or rural, counties-where small-scale businesses play an especially important role in regional development. But the analysis can apply to any county. The first section defines entrepreneurs and the measures of breadth and depth. The second section shows where entrepreneurial activity is occurring in the United States. The third section discusses key factors that foster regional levels of entrepreneurial breadth and depth. Finally, the fourth section explores some policy implications for regional development.I. MEASURING ENTREPRENEURSHIPAnalysts currently lack effective measures of both the breadth and depth of entrepreneurship in a region. Breadth reveals the size of a region's entrepreneurial foundation, giving a sense of how many small businesses employ local resources, generate local income, and enhance local quality of life. Depth reveals the value these foundations add to the local economy and offers insight into whether a region's entrepreneurs are reaching the frontiers of the marketplace. This section first describes entrepreneurs and then discusses why they are important to regional economies. …

The Capitalization of Wildlife Recreation Income into Farmland Values

Abstract: Wildlife recreation—hunting, fishing, and wildlife watching—appears to be an increasingly important pastime for many Americans. From 1991 to 2001, U.S. wildlife recreation expenditures surged from 108 billion in 2001 dollars. Land lease and ownership expenditures by wildlife recreation participants are also rising and appear to be capitalized into farmland values. This paper analyzes the impact of hunting lease rates on farmland values in Texas. The results indicate that counties with higher wildlife recreation income streams have higher land values.

Agriculture's Boom-Bust Cycles: Is This Time Different?

Abstract: U.S. agriculture is notorious for its boom and bust cycles. During the past 100 years, shifts in U.S. agricultural export activity triggered fluctuations in agricultural profits. Soaring wartime food demand during the 1910s and 1940s boosted U.S. agricultural exports and farm prosperity. A spike in U.S. agricultural exports during the 1970s sparked another surge in U.S. farm incomes. At the same time, low interest rates quickly translated rising incomes into booming farmland values, especially during the 1910s and 1970s when farmers used debt to finance their investments. These golden eras of a booming farm economy, however, quickly faded as economic and financial market conditions changed.Today, U.S. agriculture is in the midst of another farm boom. Farm incomes are swelling due to record high exports and strong biofuels demand. Simultaneously, with historically low interest rates, farmland values have soared to record highs. While current conditions echo the rhythms of the past, farmers have hesitated to accumulate debt in financing new investments, raising the possibility that this time could be different.This article explores the foundations of U.S. agriculture's boombust cycles. Similar to past farm cycles, robust export activity is fueling record high agricultural commodity prices, rising profits, and booming farmland prices. Despite this similarity, one subtle difference remains. To date, farmers appear to have limited the debt and leverage in their farm enterprises. Only time will tell if this is enough for agriculture to break free from the patterns of past boom-bust cycles. Section I compares and contrasts past fluctuations in farm exports, prices, and profits. Section II investigates the relationship between debt, leverage, and farmland values. Section III explores the factors that may shape agriculture's future prosperity.I. AGRICULTURE EXPORT, PRICE, AND PROFIT CYCLESIn the 20th century, agricultural fortunes followed a series of 30 year cycles. During the 1910s and 1940s, U.S. farm prosperity rose as two world wars cut global food production while boosting U.S. food exports. During the 1970s, surging exports triggered record high agricultural commodity prices and farm profits. Today, biofuels production and robust export activity to emerging nations, particularly China, have fueled another rise in agricultural prices and profits.Agriculture's first cycle: 1910s to 1930sWorld War I ushered in U.S. agriculture's first golden era of the 20th century (Paarlberg and Paarlberg). By the late 1910s, robust export demand during the war sent agricultural commodity prices and farm incomes climbing. During the second half of the 1910s, real U.S. exports rose sharply to satisfy wartime demand for food.1 By the end of the war in 1919, U.S. agricultural exports had almost doubled pre-war levels, rising 10 percent per year from 1916 to 1919 (Chart 1). In fact, U.S. exports accounted for almost 20 percent of U.S. food production during the war.2 The sharpest export gains emerged in the livestock sector, which rose fourfold.Rising exports during World War I sparked a sharp increase in agricultural prices and farm profits. With wartime food demand and the war's associated global supply shock straining global food production, agricultural commodity prices jumped to record highs (Chart 1). From 1915 to 1918, prices received by farmers for both crops and livestock doubled. Surging agricultural prices lifted farm revenues as gross farm cash farm income rose more than 70 percent (Chart 2). Despite higher input costs, net farm profits spiked to record highs as the returns to farm operators jumped 60 percent in 1917 and remained elevated through 1919.Farm prosperity, however, was short-lived as global food production rebounded, export demand collapsed, and farm incomes fell. With the conclusion of the war, export demand faded. By 1922, U.S. agricultural exports returned to pre-war levels, slashing agricultural commodity prices by 40 percent from 1919 to 1921. …

Innovation types and performance in growing UK SMEs

Abstract: Purpose – The objective of this study is to explore the types of innovation that are predominant in UK SMEs, whether they are predominantly radical or incremental, and to investigate the impact of these innovations on performance.Design/methodology/approach – A web‐based survey instrument was used to administer survey questionnaires to a sample of UK SMEs in manufacturing, engineering, electronics, information technology and telecommunications industries. The response rate was 13.8 percent. Relevant statistical analytical techniques including regression for analysis was then used.Findings – It is found that the SMEs tend to focus more on incremental than radical innovations and that this focus is related to growth in sales turnover.Practical implications – It is not such a bad idea for SMEs, particularly those operating in high technological industries, to focus on incremental innovations as these are actually related positively to sales turnover growth.Originality/value – An investigation of the types of...

Public Policy, Entrepreneurship, and Economic Freedom

Abstract: The "entrepreneurial spirit" is something that has long been associated with the driving force behind economic progress and growth. Joseph Schumpeter (1942) stated that the key to the success of markets lies in the spirits of entrepreneurs who persist in developing new products and technologies, through a process he termed as "creative destruction." Kaiser (1990) modeled the entrepreneur on the basis of many historical characterizations, including the Schumpeterian innovator, and concluded that the major characteristics of the entrepreneur--innovator, risk taker, and resource allocator--are complementary and inseparable facets of entrepreneurship. Kirzner (1997) argues that the entrepreneurial discovery process is vital to the effectiveness of markets, where discovery entails entrepreneurs discovering profit opportunities by trial and error. In this same respect, Jenner (1998) models the Schumpeterian entrepreneurial process as a dynamic process in which entrepreneurs search for new combinations of products and production techniques that will lead to increased productivity and economic growth. Knight (1921) views the entrepreneur as the bearer of the uninsurable uncertainty present in the marketplace, with the profit earned being the compensation for bearing this uncertainty. Recently, the conceptual link between entrepreneurship and economic growth has received renewed interest by economists. As argued by Minniti (1999), entrepreneurs are the catalysts for economic growth because they create a networking externally that promotes the creation of new ideas and new market formations. The finding that increased entrepreneurial activity leads to greater economic growth has been well-established at both the national and local levels. For example, Reynolds, Hay, and Camp (1999) show that one-third of the differences in national economic growth rates can be attributed to the level of entrepreneurship in each country. Supporting these findings, Zaeharakis, Bygrave, and Sheperd (2000) study 16 developed economies and find that entrepreneurial activity explains approximately one-half of the differences in GDP growth between countries. More recently, Henderson (2002) shows that entrepreneurs significantly impact economic activity at a more local level through fostering localized job creation, increasing wealth and local incomes, and connecting local economies to the larger global economy. Based on the increasing awareness of the role of entrepreneurs in driving economic growth, state and local economic development efforts have been more heavily directed toward promoting entrepreneurship. These development efforts have mainly focused on reducing the financial constraints that entrepreneurs face--either through preferential loans to new businesses, as those supported by the Small Business Administration, or preferential tax treatment for new or small businesses. One such policy that has recently gained popularity aims to devote public resources toward attracting and building a larger amount of venture capital to encourage entrepreneurial activity. This development strategy is largely based on casual observation that areas with larger amounts of entrepreneurial activity generally tend to also have a larger amount of venture capital. A recent controversial policy alternative has been popularized by Richard Florida (2002) in his book The Rise of the Creative Class. The author proposes that instead of focusing on developing capital inputs, development efforts should be focused toward making areas more attractive to bring in and nourish creative, entrepreneurial individuals. In addition, recent work by Gwartney and Lawson (2002), Farr, Lord, and Wolfenbarger (1998), Gwartney, Lawson, and Holeombe (1999), Cole (2003), and Powell (2003) highlight the role of economic freedom in promoting economic prosperity and growth. The results of this research suggest that policies consistent with expanding the economic freedom of individuals are the cornerstone of successful economic development policy. …

In the national interest: defining rural and urban correctly in research and public policy

Abstract: Researchers and policy makers depend on two federal systems when defining urban and rural. One, designed by the U.S. Census Bureau, separates the territory of the nation into urban and rural. Its intent is to differentiate urban and rural. The other, designed under the leadership of the Office of Management and Budget (OMB), focuses on the integration of urban and rural within metropolitan and micropolitan areas. Forgetting the distinction between separation and integration is dangerous, for example, when (mis)using the OMB system as if it differentiated between urban and rural. At stake is the misunderstanding of rural conditions, the misdirection of federal programs and funds, and a breakdown of communication that confuses people. This article presents two alternatives that can strengthen the foundations of research and policy and uses one of them to analyze rural distress and prosperity. Much can be gained by using these better rural definitions to replicate important research to see whether key findings hold true and to review eligibility requirements and funding procedures to determine whether government programs are reaching the rural people and places they are intended to serve.