Rural Networks in the United States: Lessons from Three Experiments

Abstract

A number of states and countries have begun to encourage formation of flexible manufacturing networks among small manufacturing and other firms to respond effectively to local economic crises or to enable smaller firms to compete more effectively in the global economy. A variety of strategic approaches have been employed, including funding organizations with a mandate to organize and support networks, and offering challenge grants to groups of firms to interest them in experimenting with a new organizational approach. This article examines several experiments with network stimulation among rural manufacturing firms in Minnesota, Oregon, and Washington, including results from surveys and other evaluation studies. No clearly superior strategic approach to network stimulation emerges from this review, but preliminary evaluation results suggest that the most productive approach may involve combining the capacity-building, soft network strategy with efforts to build collaborative manufacturing structures aimed at concrete, bottom-line business results.

Business Networks and Economic Development in Rural Communities in the United States

“…In other words, what aspects of the social structure of a rural community increase the likelihood entrepreneurs will be willing to cooperate? Several authors have emphasized the importance of social capital in a rural community for business networking and economic development Sommers, 1998;Woodhouse, 2006). However, it was Flora and Flora (1993) who first explained how different configurations of social capital might facilitate or impede collective action.…”

“…Beginning in the mid-1980s, interfirm collaboration as a means of rural development became a widely explored option in Europe (Rosenfeld, 2001;Sommers, 1998). The northern Italian region of Emilia Romagna provided the prototype for networks of small, independent firms formed to enhance competitiveness.…”

“…However, efforts to import European network models into the United States have yielded only mixed and modest success (Rosenfeld, 2001;Sommers, 1998). While this might be a consequence of differences between the American and European situations (e.g., national policies, culture, community dispersion), or of problems in funding, implementing, and assessing the relevant programs, some research results suggest that the issue may be related to the heterogeneity of rural regions, a heterogeneity that exists whether one focuses on intranational or international comparisons (Meccheri & Pelloni, 2006;North & Smallbone, 2006).…”

Barriers and Drivers to Accessing and Using Workforce and Technical Assistance Resources for Small and Medium Manufacturers (SMMs) in Rural Regions

“…Establishing networks among rural manufacturers has long been considered an important approach to strengthening the competitiveness of rural SMMs (Sommers, 1998). Sommers (1998) found that three regional network experiments had a "modest" impact on business performance. The study concludes that, when developing networks, policy makers need to account for size and capacity of firms, stage of development of respective firms (funding for start-up vs. capital for more established firms), and soft versus hard networks.…”

“…The study concludes that, when developing networks, policy makers need to account for size and capacity of firms, stage of development of respective firms (funding for start-up vs. capital for more established firms), and soft versus hard networks. Soft networks comprise capacity-building institutions, often economic development agencies, while hard networks include similar businesses attempting to develop new products or enter new markets (Sommers, 1998). The key to success in these types of networks is employer participation, as employers are less likely to participate in programs with government agencies (Green & Galetto, 2005).…”