Innovation and Entrepreneurship in Rural America

by Brian Dabson, Rural Policy Research Institute

What do the following have in common? A syringe for delivering food to the feeding-tube dependent. A programmable handlebar for motorbikes. A computer-regulated medicine dispenser. A vacuum cleaner for horse grooming. A high efficiency canoe paddle. The answer may be unexpected. They are all innovations from entrepreneurs living and working in rural Kentucky.

Innovation in a rural context may have as much to do with overcoming obstacles created by geography and distance in accesssing markets and resources as with the products themselves.

Putting the words innovation and entrepreneurship in the same sentence as rural America may be to some an unlikely combination. Surely innovation is something associated with glossy high technology campuses in metropolitan suburbs, rather than sleepy small towns and remote counties? And anyway, don’t successful entrepreneurs need a critical mass of skills, knowledge, markets and capital, attributes not usually found in the hills and hollows of rural America?

Of course there are significant challenges to entrepreneurship in rural America, but these do not seem to be preventing entrepreneurs coming forward with ideas and innovations in increasing numbers. Jim Clifton, executive director of Kentucky’s Innovation Group, from whose investment portfolio the above examples come, acknowledges that often the quality of business ideas being generated by rural entrepreneurs lacks the sophistication of those coming from the universities and metropolitan areas of the state. However, he suggests that this is largely a function of their lack of experience of and exposure to commercial markets rather than any lack of creativity or inventiveness.

Innovation in a rural context may be as much to do with overcoming the obstacles created by geography and distance in accessing markets and resources as with the products themselves. The Appalachian Center for Economic Networks (ACEnet), based in Athens in southeast Ohio, works closely with partners to create an environment in which local entrepreneurs – particularly those in food-related businesses – can prosper. ACEnet joins with the Independent Restaurant Association to organize purchasing from these local businesses; with farmers markets to provide a market venue and to operate a café where residents can learn the benefits of buying local; and with local tourism bureaus to support specialty food festivals, such as a hot pepper festival. These and other examples are showcased in a publication by the Association for Enterprise Opportunity on innovations in rural microenterprise development. ¹

There has been a strong surge of interest in entrepreneurship development as a rural economic strategy in recent years. Two years ago, the Federal Reserve Bank of Kansas City convened a conference on growing and financing rural entrepreneurs at which Mark Drabenstott, the director of the Bank’s Center for the Study of Rural America, described entrepreneurship as “the new focal point for rural development,” and David Sampson, head of the U.S. Economic Development Administration, stated that “entrepreneurship is a cornerstone of the administration’s economic policy.”²

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¹Natallie Keiser & Jennifer Hird (2003). Innovations in Microenterprise Development from the Rural Experience: Guiding Practices for Entrepreneurial Development in the Food, Tourism, and Artisan Sectors. Arlington VA: Association for Enterprise Opportunity.

²The proceedings of the conference can be found in: Center for the Study of Rural America (2003). Main Streets of Tomorrow: Growing and Financing Rural Entrepreneurs. Kansas City, MO: Federal Reserve Bank of Kansas City.