ENGAGING RURAL COMMUNITIES TO ENHANCE VIABILITY: A CANADIAN EXPERIENCE Victoria Calvert, Mount Royal University, [email protected]

Abstract Small and medium enterprises play an important role in the Canadian rural business landscape. With the rapid development of e-commerce, coupled with increased competition, rural SMEs must find new ways to maintain their competitive advantage. This paper proposes an evolution of the standard Business Expansion and Retention (BR&E) model based upon the author’s reflection of an BR&E pilot project conducted in rural Alberta. While the traditional BR&E model is widely recognized and has been employed in economic development projects, the authors suggest a modification that enhances the impact, and greater opportunity for SME growth by deepening the engagement of community agencies and creating the opportunity for local and area linkages. The process of information sharing is highlighted as key to creating the web of support necessary for venture growth and sustainibility. The results of BR&E projects that employ the new model will be discussed; with the author’s focusing on heightened impact resulting from a broader web of linkages which entails the involvement of community agencies and inter-community engagement. Keywords: Business Retention and Expansion, SME, Community Engagement, Economic Development

Introduction SMEs account for more than 90 percent of all firms in US and Canada and play a pivotal role in job creation, welfare of economies, and bonding multiple communities together (Riding et al, 2007; Morrison et al, 2003; Morris & Brennan, 2000). In the absence of larger counterparts, SMEs are considered to be the economic engine of rural communities. A recent report suggests that there are more than 500,000 rural SMEs serving and creating wealth for thousands of Canadian communities (Small Business Economy, 2005, p.54). The growth of SMEs is multi dimensional and depends upon various internal factors such as owner-manager ambitions and competencies, and external factors such as region-specific infrastructure and the broader economy (Shaw & Conway, 2000; Morrison et al, 2003). Most of the recent literature on Canadian SMEs is focused on new venture creation with limited attention paid to the retention and expansion of SMEs in rural areas. This paper attempts to fill this gap by providing fresh evidence and a new perspective from Alberta.

While the rural communities in Alberta, which is 661,848 square kilometres with a population of 3.6 million, does not face unique economic and social challenges their isolated nature may contribute to both operation and communication barriers. In 2011 80 rural communities in

Alberta were in the process of being delisted as towns due to a combination of declining rural populations and economic challenges for agricultural based businesses. As such, business retention is perceived to be an urgent requirement for retaining viable rural communities, with municipal and provincial level government agencies seeking strategies that will contribute to a successful process.

Business Retention & Expansion (BR&E) is a widely used survey employed to identify issues and strengths for small and medium enterprises (SME), (Cothran, 2006, Jagoda 2010). It is a community-based economic development model that promotes job growth by identifing the barriers to survival and growth facing local businesses, and facilitating practical strategies for local business owners and municipal representatives to develop an economic plan to improve the business climate and foster local action (Saland & Dillman 1994). The model is based on the philosophy that existing firms are the key to community economic prosperity, and that communities dominated by small, locally owned businesses experience greater economic stability and a higher level of prosperity as defined by socioeconomic well-being (Flora, Green, Gale, Schmidt, & Flora, 1992, Lyson & Tolber, 1996). The purpose of a BR&E pilot project conducted in Alberta in 2010 was to investigate the applicability of existing BR&E models in the Western Canadian context. It was designed to achieve two outcomes: first, to investigate the opportunities and challenges confronting rural SMEs in maintaining or expanding their operations. Second, it was to provide guidelines for improving the exisiting BR&E models by analyzing their effectiveness with the intent to address those challenges thereby better facilitating the growth of rural SMEs. Building upon the research of North and Smallbone (2006) who recommend a strategic and coordinated approach towards building the entrepreneurial capacity of rural areas, the authors revisited the traditional BR&E model, and employed the revised model in a province wide study. The authors will discuss the prelimary findings of a province wide study employing the modified BR&E model which will reach twelve communities and 600 SMEs over a three year period. The impact of the project, whereby multi-modes of engagement and communication are pursued during the project development and delivery within a wide network of community agencies, and the resultant opportunity for local and area linkages, will be outlined. The dyadic process of information sharing within the context of the revised model is perceived to be a critical factor in creating the web of ongoing support necessary for venture growth and sustainibility both through agency and government involvement. As such the multi-stage, and diverse engagement of community leaders, organizations, business owners, and government agencies will be outlined. The remainder of this paper is organized as follows. Related literature on BRE models is provided followed by a brief summary of the methodology and results from the pilot BR&E study. Perceptions regarding the inefficiencies of the traditional model are identified, and the modified BR&E model is then introduced. Insights regarding the implementation of the emergent model will then be provided. within the context of the project being by conducted in rural Alberta communities. Conclusions and suggestions for future research, including the implications of employing the modified model within the context of rural communities in other

countries, are then outlined, with an emphasis on implementation for geographically isolated rural societies.