Literature Review

This review provides a brief survey of scholarly literature and government publications of interest to the REAPontario project, including a full bibliography.

It is divided into the following sections: background; entrepreneurship; immigration to smaller population centres; immigrant entrepreneurs and economic development; and rural small businesses. 

 

Value-added Contributions of Immigrant Entrepreneurs to Rural Ontario’s Economic Development

 

Background, Impact and Scope

Entrepreneurial activities are recognized as a way to stimulate economic and rural development (Beugelsdijk 2007; Barreira 2004; Drabenstott, Novack, and Abraham 2003). Locally-owned businesses are vital in smaller and rural areas for the economic wealth they help generate and as centres of social connection and vibrancy.  Self-employment rates are higher in rural and small town Canada, and self-employed are closer to retirement age than salaried workers (Bollman and Alasia 2012).  Many are agricultural producers, though approaches to getting exact numbers are varied.  (Proposed research will generate better data.)

Given aging populations and out-migration by young people, immigration may help offset population decline and also revitalize local economies.  The proposed research examines the net attraction, retention and growth response for SME immigrant entrepreneurs (IE’s) in rural Ontario, including case studies of IE agri-food value chains to explore effectiveness of current policies and programs in meeting needs of rural SMEs.  It builds on the momentum generated by such disparate initiatives as Ontario’s first-ever Immigration Strategy, released  late 2012; Community Immigrant Retention in Rural Ontario (CIRRO); and Advantage Ontario, the Ontario  Jobs Prosperity Council report calling for a stronger culture of entrepreneurism.

The literature on IE’s in rural areas and smaller communities is limited, especially regarding agri-food value chains. The proposed research will be a valuable contribution to knowledge for Ontario policymakers and others.

 

Entrepreneurship

Individuals become entrepreneurs for a variety of reasons, including opportunity and necessity, or failure to secure waged employment (Baldacchino 2008).  Entrepreneurship is embedded within a larger context that influences the frequency, type and success of entrepreneurs.  Whereas many studies look at the ‘supply side’ of entrepreneurs only, a more comprehensive approach takes into account the ‘demand side’ and involves multiple levels of analysis (national, regional, local), including the influences of policies, markets, networks, and more (Kloosterman 2010; Kloosterman and Rath 2003; Kloosterman and Rath 2001; Low and McMillan 1988; Davidsson and Wilkund 2001; Aldrich and Martinez 2001). For immigrant entrepreneurs, transnational networks and opportunities may also be important (Wong 2004), in addition to other networks such as family, collegial, and ethnic (Salaff, Greve, and Wong 2006).

Immigration to smaller population centres

Smaller communities have identified immigrants as a potential source of population and labour force renewal (Bollman et al. 2007; Beshiri and He 2009). Immigrants often settle where they have family and friends, but they are also attracted by the economic vitality of a community, presence of educational institutions, and proximity to larger urban areas. This poses challenges for smaller communities which have proportionally fewer immigrants and may lack infrastructure to facilitate immigrant settlement, including language services (Reimer 2007).  Key factors influencing recruitment and retention include employment opportunities, social support, lifestyle preferences, language, amenities, community response, opportunities for professional advancement, and opportunities for spouses (Reimer 2007; Walton Roberts 2007; DiBiase and Bauder 2005; CIC 2001).

Population movements are highly influenced by regional economic growth rates.  A Statistics Canada study found recent immigrants responded much more strongly to the economic boom in Alberta than did non-migrants and longer-term immigrants. Economic incentives appear to play a significant role in the behaviour of immigrants, especially recent immigrants (Ostrovsky, Hou, and Picot 2011). In the longer term, settlement and integration are positively correlated with the presence of a developed and diversified economic base (Laaroussi and Walton-Roberts 2005). According to Smart (2003), immigrant entrepreneurs need to be mobile (change jobs) in order to gain the technical, management, economic and business skills to be successful entrepreneurs.

Even immigrants desiring to start farm operations face barriers to accessing transportation, land, capital, and information about opportunities (Janz, Dietrich-O’Connor, Stewin 2012).

Rural Canadians often lack familiarity with immigrants and IE’s.  A recent Ford Foundation report cites “distrust of newcomers” (including native-born) as a challenge to the successful development of rural economic clusters (Regional Technology Strategies 2009: 60).  Yet immigrants may enjoy various benefits of living in small communities, including faster language acquisition, better economic outcomes for less-educated immigrants, and faster integration of refugees (Bernard 2008).  Interviews with 60 IE’s in PEI found them attracted by “wonderful attributes” including affordable housing, stunning landscape, vibrant civil society, slower pace of life, easier access to provincial infrastructure, safety, and ideal family place  (Baldacchino 2008).

In brief, attraction and retention is built on several key factors, most notably economic opportunities and acceptance and inclusion into the receiving community.  Rural areas could better market the amenities they do have, and create more welcoming communities (CRRF and RDI 2005; OIN 2012; National Working Group on Small Centre Strategies 2007; Triple S. Community-building 2005; see also Welcoming Communities and Local Immigration Partnership initiatives).

IEs and rural economic development

The limited research on the effectiveness of encouraging entrepreneurship in rural areas indicates that differences do exist from urban areas (Dabson et al. 2003; Renski 2009). In the USA, small business creation and development are viewed as positive regional economic development strategies, particularly for rural areas (Johnson & Rasker 1995; Kauffman 2003; W. K. Kellogg Foundation, 2001). A study measuring entrepreneurial potential in rural areas suggests that foreign-born residents provide regions with more entrepreneurial depth (Low, Henderson, and Weiler 2007).  A recent study of Mexican entrepreneurs in American rural areas who previously owned businesses provided “an unrealized pool of talent and experience” and their transnational networks boosted their business capacity (Farmer and Moon 2011).

Initiatives by all levels of government can have an impact in immigrant attraction (CIC 2001; Reimer 2009).

Smallbone, Baldock and North (2003) argue that policies for rural areas need to be attuned to the distinctive characteristics (in terms of size) and needs (especially in terms of access to business service) of small rural businesses.  This would include:

  • systematic evaluation of whether business support programs address and are used in rural areas;
  • policies assisting rural enterprises with market development, exporting, and marketing, to grow external markets; and
  • improving training and use of information and communications technology (ICT), to better use technology in      production, marketing and workforce management.

The same authors further develop their thinking by conducting case studies of 10 “peripheral” local economies in five European countries to identify policies that might enhance rural entrepreneurial capacity.  They conclude that policies need to be developed with local input, be consistent across levels of governance, encourage diversification of enterprises, and help entrepreneurs overcome barriers to new technologies.  They call for investing in the areas of knowledge and education, as well as physical and social infrastructure (North and Smallbone 2006).

These findings reinforce the importance of using a policy lens and awareness that the experiences of immigrant entrepreneurs are embedded within the broader structures and social relations of the societies in which they settle (Kloosterman and Rath 2001). A complex policy response is required to address the diversity of pathways to immigrant entrepreneurship, of resources brought by immigrants, and of networks that they use (Collins 2008).

The proposed research focuses on immigrant entrepreneurs in agri-food value chains that are “designed to increase competitive advantage through collaboration in a venture that links producers, processors, marketers, food service companies, retailers and supporting groups such as shippers, research groups and suppliers” (OMAF definition).  There is a large literature on value chains, and even on agri-food value chains, but no literature was found on immigrant/ethnic-based chains.  Yet it appears that value chains for IEs may look very different from non-immigrant, such as by making use of ethnic networks and transnational connections. Some value chains contain both immigrants and native-born, and these have not been studied either.

 

Rural small businesses: challenges and strategies

Small business owners in rural areas face particular challenges, including market area, labour availability, access to urban centres, infrastructure gaps, and long hours. In a rare scholarly article addressing these challenges, the author encourages governments to pursue policies which improve transportation and network infrastructure, encourage people to remain living in rural areas, and provide more educational and training opportunities for all rural residents, but not to place more focus on loans and grants (Siemens 2010).

In their review of newcomers and services in Brandon, Manitoba, Zehtab-Martin and Beesley (2007) suggest implementing a “navigator system” that matches immigrants to a person or agency for orientation and follow up. The matching should take place at the pre-migration stage. They also suggest expanding the use of cooperatives to include immigrants.

Business networks are another way to overcome challenges.  Small businesses in small communities benefit from membership in formal networks (Miller, Besser, and Malshe 2007).  These networks help them overcome the limitations and challenges associated with scale and remoteness. Young (2010a) concluded that SMEs are more likely to succeed in rural areas if they are “well-networked and well-integrated into local customs” and institutions.  Business networks do not have to be local and place-based.  Non-local ties, including transnational ones which are of obvious relevance to immigrant entrepreneurs, can also be important.  This is supported by Virkkala’s (2007) research on the ICT sector in rural Finland.  One factor helping SMEs to innovate and succeed in geographically distant areas was the presence of clients located outside the SME’s region.

 

Sources

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Barreira, J.C.D. 2004. The Influence of Business Knowledge and Work Experience, as Antecedents to Entrepreneurial Success. University of Pretoria.

Bernard, André. 2008. Immigrants in the Hinterlands. Statistics Canada Perspectives on Labour and Income (January).

Beugelsdijk, S. 2007. Entrepreneurial Culture, Regional Innovativeness and Economic Growth. Journal of Evolutionary Economics 17 (2): 187-210.

Beshiri, R. and J. He. 2009. Immigrants in Rural Canada: 2006. Statistics Canada Rural and Small Town Canada Analysis Bulletin, 8, 2, Catalogue no. 21-006-X.

Bollman, R.D. and A. Alasia.  2012. A profile of self-employment in rural and small town Canada: Is there an impending retirement of self-employed business operators? Statistics Canada Rural and Small Town Canada Analysis Bulletin 9, 1, Catalogue no. 21-006-X.

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