Empowering Rural Communities Through Entrepreneurship. Experiences From the 1890 Land-Grant Institutions

Transcription

1 Empowering Rural Communities Through Entrepreneurship Experiences From the 1890 Land-Grant Institutions

2 Rural Community Economic Development: Experiences From the 1890 Land-Grant Institutions Proceedings December 2004 Tuskegee University, Tuskegee, Alabama Conference Sponsored by USDA Rural Development 1890 Entrepreneurial Outreach Initiative Peter J. Thomas, Administrator Proceedings Edited by Kenneth L. Robinson and Ralph D. Christy, Cornell University, and Ntam Baharanyi, Tuskegee University Booker T. Washington Monument photo courtesy of Tuskegee University, Office of Public and Media Affairs I

3 Table of Contents Introduction Edgar L. Lewis i Part One Overview: Entrepreneurship in the South Entrepreneurship and Small Business Development 3 As a Rural Development Strategy Kenneth L. Robinson, Wylin Dassie, and Ralph D. Christy Entrepreneurship and the Theory of Modes of 33 Incorporation: Black Americans as Data John Sibley Butler Part Two Entrepreneurship and the Land Grant University University-wide Entrepreneurship Education: 59 Alternative Models and Current Trends Deborah H. Streeter, John P. Jaquette, Jr., and Kathryn Hovis Entrepreneurship Education at 1890 Land Grant Institutions: A Profile of Programs and Consideration of Opportunities 91 Caroline E.W. Glackin Part Three Impacts and Outcomes: Creating Wealth in the South So What? : A Primer on Methods for Identifying, 121 Measuring, and Analyzing Program Impacts and Outcomes Ronald L. Williams Framework for Evaluating the Impact of Small 137 Enterprise Initiatives Eric Oldsman and Kris Hallberg Assessing Program Effects or Impact in 169 Enterprise Development Programs Tristi C. Nichols III

4 Appendix Appendix One: List of Acronyms 187 Appendix Two: 1890 Entrepreneurial Information 188 Exchange Workshop Program Appendix Three: Contact List of Program Participants 192 IV

5 Introduction i Introduction Edgar L. Lewis USDA Rural Development 1890 Program Manager Washington, D.C. In 1994, the United States Department of Agriculture (USDA) established the 1890 Rural Entrepreneurial Program Outreach Initiative to address rural entrepreneurship development in lowincome communities served by the 1890 land-grant institutions. The program is consistent with the President s Executive Order of February 12, 2002, Section 6, which states that Each executive department and agency identified by the Secretary shall develop an annual plan for, and shall document the agency s effort in, increasing the capacity of historically black colleges and universities to participate in Federal programs. Specifically, the purpose of the rural entrepreneurial program is to support the 1890 Land-Grant Institutions in their efforts to promote rural development programs, provide outreach and technical assistance to new and existing cooperatives, and to assist underserved rural residents to participate in rural development programs, especially USDA Rural Development s business and cooperative programs. This initiative also improved the capacity of historically black colleges and universities to participate in Federal economic development programs. In 2004, $1.8 million was awarded to Institutions. Since 1994, many university-community partnerships have been fostered and strengthened, resulting in a wide array of innovative programs that have a positive impact on rural residents. In December 2004, an Entrepreneurial Information Exchange Workshop was held at Tuskegee University, Tuskegee, Alabama. It brought 1890 Land-Grant Institutions and USDA Rural Development State Office representatives together to exchange success stories and generate new ideas for the future. The workshop is a collaborative training and capacity building effort involving USDA Rural Development, Cornell University, and Tuskegee

6 ii Introduction University and is funded by USDA via a cooperative agreement with the Cornell Emerging Markets Program. This document highlights several of the papers presented at that workshop and focuses on the experiences of participants in the Rural Entrepreneurial Program Outreach Initiative. Program Objectives The main objective of this program is to develop businesses, create jobs, and improve economic and community development. To this end, USDA Rural Development National and State Offices partner with the 1890 Land-Grant Institutions to: Promote Rural Development programs in targeted underserved areas, Build capacity in those targeted underserved rural communities, Encourage and assist the community leaders and residents to participate in the Rural Development business and cooperative programs, and Increase the number of underserved rural residents seeking to use programs at the Rural Development State Offices. The program s ambitious goals are achieved by employing a wide range of methods. Some programs focus on developing business plans, loan packages, marketing strategies, and accounting skills. Others assess and conduct feasibility studies of local communities and advise community leaders regarding economic and community development. Many program components include seminars, workshops, and conferences to disseminate information. Information technology outreach training for rural communities has been developed to link community leaders and residents to information about economic development programs. They are receiving training in using the Internet to establish and

7 Introduction iii maintain a network of business contacts (using BISNet and other services). Program participants may take classes in new venture planning and seek assistance with existing rural development loans and grants. Local programs vary in scope and approach in employing these methods, as demonstrated by these examples: The University of Arkansas at Pine Bluff helped River Valley Contract Manufacturing, Inc., to obtain a $250,000 loan to develop a wire harness manufacturing facility. The number of employees at the company grew from five to 15. It also provided consulting and technical assistance for a new day care provider, enabling the business to graduate from rental to ownership of a facility. The number of children served increased from 30 to 57, and staff increased from five to seven. Langston University in Oklahoma helped rural communities set up a conference on faith- based opportunities for religious organizations in the state. It also organized and facilitated a planning meeting for community leaders to discuss the possibilities of installing a water/sewer system in a rural town. Alcorn State University in Mississippi is conducting a series of workshops in the targeted five-county area of Southwest Mississippi, where it trains and provides technical assistance to individuals either already in business or planning to start one. It also provides technology assessments for new entrepreneurs. To provide a deeper understanding of effectiveness of the 1890 Rural Entrepreneurial Program Outreach Initiative, the proceedings that follow highlight four other success stories from the University of Maryland Eastern Shore, North Carolina A& T University, South Carolina State University, and Florida A&M University. These success stories were presented and discussed during the workshop, and are prominently featured as shaded textboxes in the body of these proceedings.

8 iv Introduction It is clear that the Rural Entrepreneurial Program Outreach Initiative has made a difference. These programs have created new jobs, saved faltering businesses, developed business incubators, and provided computers to underserved rural communities. Clients have been helped to secure business loans and grants. Moreover, they have developed a strong working relationship among 1890 Institutions, Rural Development National and State Offices, and underserved rural communities. Steppin Into the Future: Empowering Communities Through Entrepreneurship, Entrepreneurial Information Exchange Workshop These proceedings include major papers emanating from this workshop, as well as several invited papers related to the topic of entrepreneurship and rural development. This volume is divided into three parts, each representing a particular aspect of entrepreneurship: Part One - Entrepreneurship in the South, Part Two Entrepreneurship and the Land-Grant University, and Part Three Impacts and Outcomes. Together, the papers presented in these proceedings represent a collective effort by USDA and the 1890 Land Grant Institutions to provide a forum for the discussion of entrepreneurship and its role in the development of rural communities in the South. Acknowledgements Publication of these conference proceedings resulted from the active participation of a large number of individuals. First, the workshop planning, in large measure, owes a great deal of gratitude to the participants of the Cornell Emerging Markets Program s Summer Think Tank, who, over an extended weekend last summer at Cornell University, provided excellent intellectual input into the planning and execution of the workshop. In addition to myself, participants included Ntam Baharanyi (Tuskegee), Caroline Glackin (Delaware State), and from Cornell, Ralph Christy, Ken Robinson, and Krisztina Tihanyi. Second, special thanks to Ntam Baharanyi

9 Introduction v and Robert Zabawa, along with the PAWC staff, including, among others, Charlotte Ham, Youssouf Diabate, Nyanza Duplessis, and Tasha Hargrove, who did an unparalleled job of organizing the local arrangements and logistics. Third, many thanks to Neerja Vasishta for her work on these proceedings, especially for the editorial, design, and production assistance she so ably provided. Finally, both the workshop and the proceedings benefited immensely from the participation of the 1890 Entrepreneurial Outreach Initiative program managers and staff as well as Rural Development State Office representatives. To each of these individuals, a great deal of gratitude is owed as their participation and input greatly enhanced the workshop discussion and improved the content of the chapters presented herein. Edgar L. Lewis USDA Rural Development 1890 Program Manager

10 Part One Overview Entrepreneurship in the South

11 Robinson, et al. Entrepreneurship and Small Business 3 Entrepreneurship and Small Business Development As A Rural Development Strategy Kenneth L. Robinson, Wylin Dassie, and Ralph D. Christy Department of Applied Economics and Management Cornell University Abstract Many social scientists believe that supporting entrepreneurship development within low-income communities is a plausible development strategy to combat poverty. Some even suggest that if economic development is to be effective, new businesses in lowincome areas must be started through local initiatives, and that entrepreneurship is critical to the maintenance of a healthy economy. Underpinned by recent scholarship and grassroots movements that suggests that presence of smaller scale, locally controlled enterprises can help determine whether communities prosper or decline, this paper explores the links between entrepreneurship and rural development. Using a theory of change framework, the authors examine the USDA 1890 Entrepreneurial Outreach Initiative and its use as a local, community-based strategy to spur economic growth and development in rural communities across the South. Introduction Micro-enterprise and small business development programs have become a relatively new and important research subject globally. Many development scholars and professionals believe supporting small businesses within low-income communities is a plausible development strategy to combat poverty. Some suggest that entrepreneurship is critical to the maintenance of a healthy economy and if economic development is to be effective, new businesses in low-income areas must be started through local initiatives (Acs and Malecki 2003, Lichtenstein and Lyons 2001, Smilor 1997, Winters 1997). Despite general support for microenterprise and small business programs, relatively little attention

12 4 Part One Entrepreneurship in the South has been given to understanding entrepreneurship and small business development as the basis for a comprehensive, rural development strategy for low-income, rural communities. 1 As it pertains to many low-income communities, business development seems to be complicated by the very circumstances that it is aimed to eradicate. A poor state of socioeconomic welfare coincides, and most likely contributes to, a dismal state of enterprise development within many low-income communities. Increasingly, however, small enterprise development is purported to be more sustainable as compared to traditional business attraction approaches that tend to be more costly, considering how much of the local tax base communities are expected to give away over a period of time. Due to the multiplier effects that accompany enhanced small enterprise development, the most apparent contribution of entrepreneurship to increased community welfare is the creation of new jobs and the generation of additional income as new firms start and existing ones grow. A substantial body of evidence suggests that the small business sector has yielded the bulk of new jobs in the United States (Acs 1999, Bates 1995, Birch 1979). Given this record, entrepreneurship as a rural development strategy within lowincome communities in the United States has continued to gain credibility (Gittell and Thompson 1999, Porter 1995). Such credibility has prompted government and donor agencies to expand funding for entrepreneurship development programs and more articles now appear in both the scholarly and popular media about the success of this new approach on incomes, employment generation, and social empowerment. Interestingly, this development strategy is perhaps the first major economic development paradigm to be applied to low-income areas in both developed and developing economies simultaneously. 1 For the purpose of this paper, small enterprises are defined to include both micro-enterprises and small- and medium-scale enterprises. Definitions vary by country, and are usually based on the number of employees, annual turnover, or assets. Typically, micro-enterprises are defined as firms with up to 10 employees, small enterprises have from 10 to employees, and medium enterprises have from 50 to employees (Oldsman and Hallberg 2002). Also, the terms small business, micro-enterprise, and entrepreneurship as they relate to development are used interchangeably.

13 Robinson, et al. Entrepreneurship and Small Business 5 To examine entrepreneurship and small business development as a rural development strategy, this paper explores the links between entrepreneurship and rural development. The goal of the paper is to expand our understanding of entrepreneurship and its conceptual underpinnings as well as its potential as a rural development strategy for economically disadvantaged regions like the southern Black Belt. First, we provide a brief review of the entrepreneurship literature and how the concept has been used to underpin rural development policy and programs. Next, we give an overview of the southern Black Belt to exemplify a region where both challenges and opportunities for entrepreneurship development abound. This section is followed by an examination of contemporary African-American business development trends. Finally, using the Theory of Change framework, we then focus on the 1890 Entrepreneurial Outreach Initiative to highlight one approach being undertaken by the U.S. Department of Agriculture, in partnership with a group of historically black land grant institutions, to promote the creation of self-sustaining, long-term economic development strategies in underserved rural communities across the South that involve building entrepreneurial capacity and viable networks among businesses and entrepreneurs. Entrepreneurship and Rural Development From the mid-19th to the early 20th century, the United States developed a set of rural and agricultural institutions designed to improve productivity and welfare of farm people (Freshwater 2000). Although little or no attention was devoted to entrepreneurship and non-farm institutions per se, government invested in the basic infrastructure of agriculture by developing institutions and programs that provided rural roads, common market standards for farm products, and free mail delivery in rural areas. Later development included rural electrification; soil conversation; longterm, intermediate, and short-term farm credit, and commodity programs, all through national agricultural policy. The commodity programs, for example, have included supply control through acreage restrictions, allotments, long-term retirement and

14 6 Part One Entrepreneurship in the South marketing quotas, and price supports through direct purchases of commodities and use of nonrecourse price support loans. Such programs have generally benefited larger farmers who have the land and capital to take advantage of program provisions. Thus, public policy was used to create a rural elite, built around farming and agriculture-related industries at the exclusion of the growing rural, nonfarm sector. For many rural communities the consequence has been continued improvement in the productivity of the farming sector and a proliferation of public policies that focused on industrial development rather than on rural people and communities. For example, until the Great Depression much of the legislation enacted in support of rural communities was general social legislation creating public goods that were made available to all members of rural society, and often to members of the entire society. During the height of the Great Depression, general social legislation was pushed to the background as Congress created the Agricultural Adjustment Act (AAA) of 1933, once again providing selective goods and services to limited segments of the population (i.e., rural elite). Together, such policy initiatives helped to foster widespread erosion of human and institutional resources in many rural communities. Without the corresponding development of rural political institutions and economic structures independent of farming and agriculture, many rural communities were left behind, seemingly devoid of basic institutions necessary to counter the adverse effects of global competition that have resulted in unemployment, outmigration, and general rural decline. Entrepreneurship is the process of uncovering or developing an opportunity to create value through innovation and seizing that opportunity without regard to either resources (human and capital) or the location of the entrepreneur in a new or existing company (Slaughter 1996:7). Development theories of economic growth have largely ignored the existence of entrepreneurship, but pressures resulting from global competition and corporate restructuring have prompted development scholars and professionals alike to focus more attention on entrepreneurship as an area of policy and practice.

15 Robinson, et al. Entrepreneurship and Small Business 7 Theories of entrepreneurship are somewhat fragmented and not as well developed as economic growth theory. Most theories on entrepreneurship are centered around individual-specific factors, where the characteristics of the business owner is emphasized; environmental factors, where the access to markets, financing, labor force characteristics, and institutions are stressed as having prominent importance in the success of enterprise development; and group factors, where the importance of the ability to mobilize the population to facilitate institutional and attitudinal changes needed for enterprise development is stressed. Examples of changes requiring successful group mobilization that has led to group action, and subsequent institutional and attitudinal changes, include the Civil Rights Movement, affirmative action, and equal opportunity employment (Ahiarah 1993). In response to today s global economy, community activists and rural policy makers are beginning to call for development strategies that focus attention on small firms, regional trade associations, industrial districts, and local entrepreneurs. They maintain that such institutions are potentially important, though often neglected agents of development. Others argue that if policy makers and program planners expect to foster economic development in underserved, low-income communities, a policy of endogenous self-development for sustainable economic growth is needed. This notion is backed by a growing body of theory and research that reexamines the bigger is better model, and emphasizes the organizational embeddedness of small-scale, locally controlled economic enterprises (Robinson, Lyson, and Christy 2002). Moreover, it suggests that the establishment of more entrepreneurship-centered economic development could enable economically disadvantaged communities to reverse stagnant economic conditions by creating wealth and jobs through locally owned businesses. The literature suggests that the factors determining the prospects of entrepreneurship in rural communities are numerous. In Main Streets of Tomorrow, a Federal Reserve Bank conference report on rural entrepreneurship, Nolan (2003) points out that determinants of enterprise creation include, among others,

16 8 Part One Entrepreneurship in the South demographics, unemployment, wealth, the educational and occupational profile of the workforce, the prevalence of small firms, the extent of owner-occupied housing, infrastructure endowment, and regional history. In his work on creating wealth within disadvantaged communities, Porter (1995:62) asserts that sustainable economic growth strategies require improving the environment for business. To create such an environment, Porter contends that government must use public funds in ways that do not distort business incentives, but rather focus on providing infrastructure to support genuinely profitable businesses (Porter 67). Porter s model is not aimed to redistribute wealth but to identify and exploit the competitive advantages of inner cities that will translate into truly profitable business (Porter 56). In so doing, the focus is on the private sector, as opposed to government and social service organizations. Another important factor in Porter s model is the engagement of skilled and experienced minorities in building business versus engaging them solely in the social service sector. What is essential to the proper functioning of such a model is that: Government assume[s] a more effective role by supporting the private sector in new economic initiatives. It must shift its focus from direct involvement and intervention to creating a favorable environment for business. This is not to say that public funds will not be necessary. But subsidies must be spent in ways that do not distort business incentives, focusing instead on providing the infrastructure to support genuinely profitable business (Porter 67). Drawing from Porter, fundamental principles underlying an entrepreneurship-led rural development policy are: An economic versus a social focus, emphasizing the creation rather than the redistribution of wealth within economically disadvantaged rural communities.

17 Robinson, et al. Entrepreneurship and Small Business 9 An emphasis on the private sector as opposed to the government and social service sector; but highlights the supportive role of government and social services. An emphasis on having skilled and experienced individuals engaged in entrepreneurial activities. Although many rural communities may be considered deficient and assumed to be at a distinct disadvantage to undertake such policy initiatives, some of the conditions underlying the economic structure of persistently poor areas like the rural Black Belt may lend themselves to opportunities for rural economic development as well. In the asset-based community development tradition, we look at the rural Black Belt as an example of one region where both challenges and opportunities to entrepreneurship and business development abound. The Black Belt: A Rural Development Case Study The economic development challenges of the Black Belt are longstanding and represent one of the most economically deprived regions of the country. Geographically, the Black Belt comprises 11 states and 623 counties, running from Virginia to Texas. Sociologist W.E.B. DuBois (1961) is credited with coining the term black belt to refer to the region s racial and cultural distinctiveness. Black Belt counties are typically rural. In Louisiana and Mississippi, for example, Black Belt counties are concentrated along both banks of the Mississippi River. In Louisiana, Black Belt counties are synonymous with the Delta Parishes, which were major cotton producing areas during the era of plantation agriculture. Development in the Black Belt has been historically oriented towards agricultural and resource-oriented industries such as textiles, apparel, and meat processing. For residents of the Black Belt, poverty, low income, and unemployment are often a way of life. Per capita income in the Mississippi Delta is persistently 20 to 25 percent lower than in the rest of the U.S. The poverty rate for blacks living in the Delta in 1980 was almost 42 percent as

18 10 Part One Entrepreneurship in the South compared to 30 percent nationwide (Hyland and Timberlake 1993). Thus, Black Belt counties continue to be characterized by greater dependent populations, lower levels of education, greater incidence of female-headed households, and more lower-paying, less-skilled jobs (Falk et al. 1993). Educational attainment among rural blacks is less on average than other groups, including rural whites and urban blacks. The median years of school completed for rural blacks is 11.1 years as compared to 12.5 for rural whites and 12.4 for urban blacks (Allen and Christy 1992:830). Socioeconomic conditions in the Black Belt continue to be among the poorest in the region. In a recent description of the area, a southern newspaper editor writes, Long neglected, these areas typically suffer from a lack of infrastructure, poor education systems, a dearth of skilled workers and little or no economic development. The best and the brightest in those areas tend to leave and never return (The State, 8 October 2002). Such accounts coincide with Falk et al. s (1993) description of the Black Belt as a forgotten place, largely excluded from the economic growth and development taking place elsewhere in the region or in the country. Falk and Lyson (1988) suggest that the industrial and occupational structure of the region, supported by a low-skilled, poorly educated workforce, is largely to blame. Rural blacks are more heavily concentrated in unskilled occupations such as operators, fabricators, and laborers as compared to rural whites, who are about twice as likely to be in skilled occupations such as precision craft, repair, and production. For blacks, those structural conditions are manifested in low-wage jobs, limited economic and educational opportunities, poor health conditions, and general despair. Such conditions have prompted some (Falk and Lyson 1988; Hyland and Timberlake 1993) to compare Nonmetro Black counties to an underdeveloped country or colony, where the expansion of more economically advanced areas such as Metro counties is achieved through the influence of or control over less advanced areas. Falk and Lyson put it this way: The industrial fabric of the South is woven of cloth similar to that found in developing countries. Like the industrial

19 Robinson, et al. Entrepreneurship and Small Business 11 base in those countries, businesses in rural areas of the South are often characterized as being in the periphery sector of the economy, while core establishments are more likely to be found in the urban areas (Falk and Lyson 1988: 8). Notwithstanding the comparison to conditions of developing countries, persistent high unemployment rates in the South suggest reserves of labor that could be mobilized, given the appropriate strategic approach and policy framework, to contribute to entrepreneurship and small business development in areas like the Black Belt. Overview of African-American Business Development Trends and Characteristics Since 1972, the number of African-American firms has substantially and steadily increased. African Americans are starting business enterprises at a greater rate than the general population. As Tables 1 and 2 show, between 1992 and 1997, the number of African American firms increased by 32.5 percent as compared to 1.6 percent for total U.S. firms. Such increase in business start-ups among African-Americans prompts the question of where this business activity is geographically located and in what industries it is concentrated. Woodward (1997) observes that the geographic concentration of African-American-owned firms closely reflects population densities of African-Americans.

20 12 Part One Entrepreneurship in the South Table 1. U.S. and Black Business Ownership: Selected Statistics, Year U.S. Population # of U. S. Firms (000s) Gross Receipts of U. S. Firms $ (000s) Black Population (000s) # of Black Firms (000s) Gross Receipts of Black Firms $ (000s) ,896 12,978 2,495,000 23, , ,239 14,741 4,384,000 25, , ,188 14,546 6,842,000 27, , ,308 18,351 10,208,000 29, , ,419 20,498 12,214,000 31, , ,422 20,822 18,553,243 34, ,215 Source: U.S. Census Bureau, Economic Census. Table 2. U.S. and Black Business Ownership: Selected Statistics, Year # U.S. Firms/1000 Persons Gross Receipts of U. S. Firms/ Capita ($) Black Population (% of U.S. population) Black Firms (% of U. S. Firms) # U.S. Firms/ 1000 Blacks Black Firms Gross Receipts/ Capita ($) , , , , , , , , Source: U.S. Census Bureau, Economic Census. As shown in Table 3, the rate of black business ownership (i.e., the number of black businesses per 1,000 black persons) is relatively high for states with a greater concentration of African-Americans than the national average. For instance, in Florida and Virginia, the

21 Robinson, et al. Entrepreneurship and Small Business 13 African-American business ownership rate is higher than that of the U.S., and the African-American population in each of those states exceeds the national average of 12.3 percent. Table 3. Black Business Ownership Rate and Total Business Ownership Rate for U.S. and 11 Southern States, 1997 State # of Black Owned Firms Black Firm Owner ship Rate # of Total Firms State Firm Ownership Rate % of Black- Owned Firms % Black Population Alabama 19, , Arkansas 6, , Florida 59, ,301, Georgia 55, , Louisiana 25, , Mississippi 17, , N Carolina 39, , S Carolina 23, , Tennessee 20, , Texas 60, ,525, Virginia 33, , U. S. 823, ,821,93 5 Source: U.S. Census Bureau, Economic Census, Internet Black Business = (Total # of Black-Owned Firms in State) x 100 Ownership Rate Total # of Black Persons in State State Business = (Total # of Firms in State) x 1000 Ownership Rate Total State Population The service industry accounts for the highest volume of African- American-owned firms. Bates (1993) observes minority-owned businesses, traditionally concentrated in small-scale retail and personal service sectors of the economy. Today, the traditional minority business community comprised primarily of small firms serving predominately minority clientele is changing. Minority businesses have begun to take advantage of expanding market opportunities with even larger firms geared toward corporate and government clients (Bates 1993 and Woodward 1997).

22 14 Part One Entrepreneurship in the South Opportunities created by set-asides, preferential procurement policies, and the like have encouraged bettereducated, younger entrepreneurs to create and expand business in finance, insurance, real estate, contracting, wholesaling, manufacturing, and business services. Entrepreneurs in these emerging lines of business are younger, better educated on average, and have higher earnings that other self-employed minorities (Bates 1993). Although the landscape for African-American business is changing, Bates (1993) further reports that the traditional personal service and small scale retail fields account for a larger number of firms than the combined total of the emerging lines of business. On average, owners of businesses in the traditional areas are less educated and have lower earnings power, and their businesses are in a state of continuous decline, particularly in the personal services sector. Since the 1960s, the minority business community has started to diversify and expand in response to an influx of talent and capital, but continues to lag behind the non-minority small business universe (Bates 1993). The lag is often attributed to constraints such as access to financial capital, geographic location, and discrimination. Table 4 shows African-American-owned business industry concentration. Historically, African-American-owned firms have been concentrated in service and retail trade industries. Over time, the percent of African-American-owned firms in the service industry have increased while those in retail trade have decreased. This pattern is consistent with national trends. According to the U.S. Census, in 1992, the service sector comprised the highest concentration of African-American-owned firms in the United States, accounting for nearly 54 percent of all African-American-owned firms. In 1997, the service sector accounted for a slightly smaller percentage of African-American firms at 53.1 percent. During the period between 1992 and 1997, the concentration of African-American firms in the retail trade sector decreased from 14 percent to 10.6 percent. Most notable were a 3.4

23 Robinson, et al. Entrepreneurship and Small Business 15 percent increase in the retail trade and a 2.0 percent increase in the finance, insurance, and real estate industries. Overall, the number of African-American-owned businesses in the U.S. increased from nearly 340,000 in 1982 to over 820,000 in Table 4. Percent of African-American-Owned Firms in the U.S. by Industry Industry Service Agriculture, Forestry & Fishing Construction Manufacturing Transportation & Public Utilities Wholesale Trade Retail Trade Finance, Insurance, & Real Estate Source: U.S. Census Bureau, Economic Census, Internet Many scholars agree that focusing on smaller firms is a more realistic strategy for development of depressed economies with comparative disadvantages in the rural South. However, Bates (1993) cautions that entrepreneurial ability is highly correlated with both education and income levels: successful business operators tend to be above average in both categories. Even though the low education and income levels of individuals in the rural South make an entrepreneurship-centered development strategy challenging, eighteen 1890 institutions, in partnership with the U.S. Department of Agriculture, Rural Development, have undertaken an initiative to focus on local assets to stimulate entrepreneurship development in low-income, rural communities across the South. In the following section, the USDA-1890

24 16 Part One Entrepreneurship in the South Entrepreneurial Initiative is explored as a development strategy for rural Black Belt communities. The USDA-1890 Partnership U.S. Department of Agriculture. Since 1994, the United States Department of Agriculture (USDA), under the auspices of the 1890 Entrepreneurial Outreach Initiative, has provided funding to eighteen 1890 land-grant institutions to undertake outreach programs in underserved, targeted rural communities, with the objective to develop and assist businesses and future entrepreneurs. Administered by USDA Rural Development, and awarded through a cooperative agreement between USDA and the respective institution, the 1890 entrepreneurial outreach initiative is designed to promote rural development, provide outreach and technical assistance, and encourage and assist individuals living in underserved rural communities. Each 1890 institution is given freedom to assess the needs of their targeted communities and prioritize their area of work. According to USDA, the main program objectives are: 1. To promote Rural Development programs in the targeted underserved rural communities; 2. To build capacity in those targeted underserved rural communities through outreach and technical assistance; 3. To encourage and assist the targeted underserved rural community leaders and residents to participate in USDA Rural Development programs; and 4. To increase the number of the underserved rural residents (especially minorities) seeking programs at Rural Development state offices. A recent USDA (2002) review suggests that the initiative represents a good mix of information outreach, both formal and informal activities to develop the entrepreneurial skills, technical assistance and followup on individual project implementation, and has evolved into an effective process for bringing together efforts at building client capacity Institutions. The 1890 institutions, also known as Black landgrant institutions and Tuskegee University, were established in

25 Robinson, et al. Entrepreneurship and Small Business by the U.S. Congress to provide training to blacks in the fields of agriculture, home economics, and mechanical arts, among others. Over the years these institutions have essentially grown from under-funded secondary schools to accredited institutions of higher education with quality resident academic and extension programs that primarily serve rural communities in the southeastern United States. Today, through participation in programs like the Entrepreneurial Outreach Initiative, the 1890 institutions continue to carry out the land grant mission of being responsive to the problems of the people in their state and local communities. Figure 1 lists 1890 land-grant institutions participating in the Entrepreneurial Outreach Initiative. Even though the 1890 land-grant institutions have long provided research and extension support to limited-resource farmers and rural communities (Christy and Williamson 1992; Mayberry 1976), USDA funding for the Entrepreneurial Outreach Initiative is designed to help 1890 institutions target their business development efforts in a more focused and comprehensive manner. It enables 1890 institutions to provide business training and technical assistance to many rural entrepreneurs who otherwise would not receive it. To participate, each 1890 institution must provide matching funds equal to at least 25 percent of the amount provided by Rural Development in the cooperative agreement. These matching funds must be spent in proportion to the spending of funds received from the cooperative agreement. Any indirect costs provided by the 1890 institution may not exceed 10 percent of the funds provided by Rural Development. To receive funds, each 1890 institution is required to submit, for approval, a proposed plan of work and budget.

26 18 Part One Entrepreneurship in the South Figure Land-Grant Institutions Participating in the Entrepreneurial Outreach Initiative INSTITUTION CENTER LOCATION Alabama A&M Alcorn State Delaware State Florida A&M Fort Valley State Kentucky State University Langston University Center for Rural Life and Economic Development The Entrepreneurship Center The University Center Project Rural Business Outreach Institute School of Business Cooperative Extension Program Normal, AL Alcorn State, MS Dover, DE Tallahassee, FL Fort Valley, GA Frankfort, KY Langston, OK Lincoln University Cooperative Extension Jefferson City, MO North Carolina A&T University Prairie View A&M University Southern University South Carolina State University Tennessee State University Tuskegee University University of Arkansas at Pine Bluff University of Maryland Eastern Shore International Trade Center Rural Business Project Center for Rural and Small Business Development Center for Entrepreneurship and Rural Development Cooperative Extension Cooperative Extension Program Economic Research and Development Center Rural Development Center Greensboro, NC Prairie View, TX Baton Rouge, LA Orangeburg, SC Nashville, TN Tuskegee, AL Pine Bluff, AR Princess Anne, MD Virginia State University Cooperative Extension Petersburg, VA West Virginia State University Rural Business Services Program Institute, WV

27 Robinson, et al. Entrepreneurship and Small Business University-Community Partnerships: Technology Transfer and Diversification Strategies in Maryland and North Carolina Dan Kuennen University of Maryland-Eastern Shore Success Story: FARMS Maryland s Eastern Shore was once a truck-farming economy serving large canneries until 25 years ago. Refrigerated trucks and a year-round growing season in the south created competition that took away market shares from the region. As this decline continued, poultry farms and field crops replaced vegetables. Regional poultry competition and environmental concerns are continuous problems for retaining profitability. In 2003, the Rural Development Center and the Small Farm Institute at the University of Maryland Eastern Shore (UMES) initiated Farmers Access to Regional Markets (FARMS) Greenhouse Grower Network to address this economic decline. This project aims to diversify products and services in order to build a competitive greenhouse industry on Eastern Shore in environment-friendly, vertically integrated horticultural production. Project Description: With the need for agricultural diversification, the focus of the Greenhouse Grower s Network was the initiation of a regional infrastructure that could support the production and marketing of new crops on small family farm operations. With the support of UMES/MCE, local greenhouse growers have formed a cooperative ( which enables joint bulk purchases of fertilizers, chemicals, and disposable supplied and the cooperative utilization of accounting services for payroll and expense tracking. Outcomes: The hydroponic greenhouse and grower network now has 21 growers with 0.5 to 1 acre greenhouses and continues to expand with 5 to 8 new growers added each year. Bell Nursery, Inc. (the university s industry partner) has grown from $4 million in farm gate sales to $24.7 million through expansion of the grower network. Additional grower units are being added at a rate of 4 acres

28 20 Part One Entrepreneurship in the South per year. Based on the success of the network model project, Phase II has been initiated using a lower capital entry concept of European high tunnel greenhouses with roof vents for seasonal production of leafy vegetables and herbs. Lankford/Sysco Corporation, a national distributor based in UMES s home county of Somerset, Maryland, has expressed an interest in supporting the purchase of locally produced perishables through a cooperative if supply, consistency, price, and quality can be maintained. This project will localize the growing of the product, increase shelf life, add to the local economy, diversify agriculture, and reduce transportation and other costs. Shiitake Mushrooms: Diversification Strategy Omon Isikhuemhen North Carolina A&T University In North Carolina, many landowners have been hard hit by the declining tobacco market and are interested in trying new crops to offset their losses. An opportunity arose in 2002, when a scientist focusing on mushroom research, Dr. Omon Isikhuemhen arrived to North Carolina A&T s Agricultural Research Program (ARP). Not only is North Carolina s climate well suited for growing exotic mushrooms but in 2002 market research conducted by the North Carolina Department of Agriculture and Consumer Services showed that regional consumer demand for exotic mushrooms would grow over next five years. Furthermore, produce managers said they would consider buying mushrooms locally. Program Description: Mushroom strains are grown in the university s labs and are then given to Cooperative Extension, which distributes the mushroom strains to program participants interested in specialty crops. Logs are inoculated with the shiitake mushrooms, usually growing within a year s time. Outcomes: In 2004 the university conducted two workshops to introduce the program to a wider public. Twenty to twenty-five participants followed up and today ARP provides spawn and technical assistance to approximately 150 new shiitake growers. ARP is also helping to organize a growers association and is training members in business skills. Funding from the Golden

29 Robinson, et al. Entrepreneurship and Small Business 21 LEAF Foundation s tobacco settlement funds will be used to build a production facility at the A&T University Farm capable of producing 1,000 blocks of mushroom substrate a week in order to meet growing demand. ARP is also working towards the goal of technology transfer and is researching the chemical compounds in mushrooms. Source: Shiitake and Beyond Entrepreneurship and Small Business Development: A Rural Development Strategy for Southern Communities Theory of Change The guiding principle behind a successful entrepreneurship development program is the notion that initiatives aimed at boosting the performance of small to medium-sized rural enterprises will ultimately improve the socio-economic conditions of the rural people they serve (Oldsman and Hallberg 2002). In the case of the 1890 Entrepreneurial Outreach Initiative, the final beneficiaries are rural entrepreneurs in underserved, targeted rural communities. Using the Theory of Change framework, the initiative relies on 1890 land-grant institutions to provide business development services, access to business networks, and education to rural entrepreneurs. The Theory of Change model of intervention, particularly its focus on intermediary organizations, has become the hallmark of the new approach to promoting the development of small enterprises (Oldsman and Hallberg 2002:6). Figure 2. A Theory of Change

30 22 Part One Entrepreneurship in the South In this framework, donor support represents resources from the USDA Rural Development 1. For nearly ten years USDA has allocated approximately $1.9 million per fiscal year to participating 1890 land-grant institutions for the 1890 Entrepreneurial Outreach Initiative. The USDA-1890 Initiative represents a small enterprise initiative as it is designed as an outreach program to develop and assist businesses and future entrepreneurs in underserved, targeted rural communities. The impact of the initiative is measured in terms of improved enterprise performance resulting from training and technical assistance provided by 1890 institutions to rural entrepreneurs (i.e., the final beneficiaries), and ultimately by improved socioeconomic conditions within the communities where those rural entrepreneurs live and work. To effectively employ the Theory of Change framework, the partnership has identified a core strategy based upon two fronts: 1) Building entrepreneurial capacity (i.e., National Scholars Program, information exchange workshops, technical assistance from centers), and 2) Developing viable business networks (i.e., PAWC, funding through state offices, BISNet, networking at information exchange workshops). Together, these two fronts represent a collaborative effort by USDA and the 1890 institutions to promote entrepreneurship and small business development that will, in turn, help create self-sustaining, long-term economic development in underserved rural communities across the South. Building Entrepreneurial Capacity A stated goal of the entrepreneurship outreach initiative is to strengthen the capacity of underserved rural communities to undertake innovative, comprehensive, citizen-led, long-term strategies for community and economic development. Given its homegrown nature, entrepreneurship is widely becoming recognized as a means to stimulate economic growth and development in traditionally underserved communities. 1 Strictly speaking, USDA views their support as a partnership.

31 Robinson, et al. Entrepreneurship and Small Business 23 In addition to providing technical assistance and training directly to entrepreneurs and small business owners, 1890 entrepreneurial outreach initiative includes an annual 1890 Rural Entrepreneurial Program Information Exchange Workshop, cosponsored by Cornell University and Tuskegee University, for all 1890 project staff involved in the delivery of management, marketing, and business training services to rural entrepreneurs. The workshop, which is held annually at Tuskegee University, is designed to build staff capacity and to identify a set of strategies that will enhance the competitiveness of small and medium-sized businesses enterprises, while ultimately expanding employment, incomes, and economic opportunities in underserved rural communities. Using case study methods and participatory approaches, the workshop seeks to train and empower 1890 entrepreneurship program managers to provide quality business development services through access to the latest, state-of-the-art information on topics ranging from best management practices and e-commerce to financial analysis and networking for the small business sector. The objective of the workshop is to help 1890 program managers to sustain their respective outreach programs by attracting additional sources of financial support and lessening their dependence on USDA funding. Developing Viable Community and Business Networks In the tradition of Rosenfeld et al. (1989) who suggest that network-building and collaboration among small and mediumsized enterprises is a prerequisite for communities attempting to participate and compete in the global economy, the entrepreneurial outreach initiative has established the Business Information System Network (BISNet, BISNet is an electronic telecommunications initiative that allows rural areas access to the Internet. Jointly sponsored by USDA Rural Development and Southern University, BISNet is designed to allow communities to share successful business development concepts. It links users to a network of corporate, government, and private entities. By providing access to networks, BISNet is a resource to help targeted

32 24 Part One Entrepreneurship in the South communities overcome the barriers of physical isolation that often characterize rural areas. Moreover, BISNet is instrumental in facilitating coordination and communication among entrepreneurs and small business owners, thereby enabling them to take collective action when necessary. It is intended to reduce incentives for opportunism as entrepreneurs come to expect problems to be solved through participation and negotiation rather than opportunism. The expectation is that eventually the networks will be become embedded in the culture to the extent that past success at collaboration provides a cultural template for future collaboration. Networks are thought to broaden or shift the consciousness of entrepreneurs from one that implies individualism to one that implies cooperation, thereby enhancing the desire for collective benefits. Developing Effective Public Policy Finally, in addition to providing entrepreneurship training and access to networks, stakeholders in the Entrepreneurial Outreach Initiative actively engage in public discussions on rural development. For over 60 years, some of the 1890 institutions involved in the Entrepreneurial Outreach Initiative have been associated with a consortium called the Professional Agriculture Workers Conference (PAWC). The PAWC meets annually and serves as a forum where participants review and discuss relevant topics on improving the quality of rural life for people in the South and across the nation in general. The PAWC is primarily comprised of representatives from the 1890 and other land-grant universities, extension and outreach groups, and non-governmental organizations, among others. Although the PAWC is a discussion forum, it periodically issues policy statements and resolutions on topics that affect the well-being of its members. In recent years, the PAWC has joined forces with groups like the Rural Coalition, the Federation of Southern Cooperatives, and the Farm Foundation to support legislation that mandates state matching funds for 1890 land grant institutions, as well as support for black farmers, and for legislation to recognize the Mascogos Indians of northern Mexico as U.S. citizens.

33 Robinson, et al. Entrepreneurship and Small Business 25 Conclusion For many small, rural communities, the consequences of global capitalism have resulted in unemployment, outmigration, and general community decline. Under such conditions low-income residents, limited-resource farmers, and other economically disadvantaged groups are particularly vulnerable. For many development scholars and practitioners, entrepreneurship and small business development represent a plausible rural development strategy for these communities. The proliferation of policies and programs on entrepreneurship and small business development is widely viewed as a homegrown, local initiative that focuses attention on small firms and local entrepreneurs rather than on traditional branch plant attraction models. Increasingly, the literature on community and economic development suggests that the implementation of more entrepreneurship-led development policies could enable economically disadvantaged communities to reverse stagnant economic conditions by creating wealth and jobs through locally owned businesses. The notion that entrepreneurship-led development can spur economic growth is complemented by a growing chorus of development scholars that has begun to suggest that social relations and a strong local social structure may positively affect such development. The prospect that social relations may enhance entrepreneurship-led development bodes well for small rural communities, especially those characterized by limited factors of production and few economic opportunities. The rural Black Belt is representative of such communities. Often compared to emerging market economies of the Third World, the reserves of labor characteristic of the rural South, and the Black Belt in particular, suggest a potential opportunity for local business development. A recent initiative by USDA and a group of historically black land-grant institutions seeks to increase local business development in the rural Black Belt. This local development policy initiative is designed to promote the growth among new start-ups and enhance the competitiveness among existing small and medium sized

34 26 Part One Entrepreneurship in the South businesses. In its effort to improve local socioeconomic conditions, the initiative employs the Theory of Change framework. This framework is aimed at boosting the performance of small- to medium-sized rural enterprises as to ultimately improve the socioeconomic conditions of the rural people they serve. The initiative involves funding from USDA to support entrepreneurship development training that seeks to develop and assist businesses and future entrepreneurs in underserved, targeted rural communities. Since rural areas often lack the requisite economic factors to stimulate growth and development, the initiative includes a strategy that strengthens and builds upon the local structure. To this end, the initiative involves building entrepreneurial capacity, developing community and business networks, and developing effective public policy. In sum, the 1890 Entrepreneurial Outreach Initiative represents a holistic policy strategy that seeks to enhance economic opportunities for underserved rural communities through entrepreneurship and small business development. Each component is directed toward developing entrepreneurial capabilities and leadership to facilitate economic growth. The Initiative s call for the expansion of private and public support of programs that invest in human capital development, particularly in those communities where resources are limited, suggests that the agricultural policy is beginning to change, with rural economic development gaining more prominence on the national policy agenda. In any case, the 1890 Entrepreneurial Outreach Initiative must continue to expand beyond the traditional cooperative extension land-grant university constituency to encourage and enhance business capacity across an even wider segment of rural communities, including the transitional poor, disadvantaged youth, and women, among others. To this end, rural development policies must continually adapt as economic organization and public policy environments change, thereby creating a viable policy framework for setting rural economic goals, developing strategies to accomplish those goals, and transforming institutions to address critical issues facing rural communities.

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36 28 Part One Entrepreneurship in the South Williamson. New Brunswick, New Jersey: Transaction Publishers. Christy, R.D., M. D. Wenner, and W. Dassie A Microenterprise-Centered Economic Development Strategy for the Rural South: Sustaining Growth with Economic Opportunity, Journal of Agricultural and Applied Economics 32 (2): Du Bois, W.E.B The Souls of Black Folks. New York: Fawcett Publications. Edgcomb, E., J. Klein, and P. Clark The Practice of Microenterprise in the U.S.: Strategies, Costs, and Effectiveness. Washington, D.C.: The Aspen Institute. Falk, W.L., C. R. Talley, and B. H. Rankin Life in the Forgotten South: The Black Belt, Pp in Forgotten Places: Uneven Development in Rural America, edited by T. A. Lyson and W. W. Falk. Lawrence, Kansas: University Press of Kansas. Freshwater, D Paper Two: The Evolution of Rural Policy and Agricultural Policy in North America. Tennessee Valley Authority Rural Studies Program, Staff Paper Gale, F. n.d. Direct Farm Marketing as a Rural Development Tool. Rural Development Perspectives 9(2): Gittell, R. and J. P. Thompson "Inner-City Business Development and Entrepreneurship: New Frontiers for Policy and Research," Pp in Urban Problems and Community Development, edited by R. F. Ferguson and W. T. Dickens. Washington, D.C.: Brookings Institution Press Making Social Capital Work: Social Capital and Community Economic Development, Pp in Social Capital and Poor Communities, edited by S. Saegert, J. P.

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41 Entrepreneurship and The Theory of Modes of Incorporation: Black Americans as Data John Sibley Butler The Herb Kelleher Chair in Entrepreneurship and Small Business University of Texas at Austin In America, the principal source of economic security or wealth creation is entrepreneurship, or new venture creation. While most Americans will not become entrepreneurs, entrepreneurship is a building block for communities, value structures, and job creation within communities. In this sense, the study of entrepreneurship is more than the bottom line of financing, pricing, and profit topics that should be addressed by the disciplines of Finance, Accounting, and Economics. Contained within business statistics is the constant rebirth of communities and economic prosperity. The cities or countries that place entrepreneurship at the very center of their policies are those most prepared for the 21st century. America has done this in the past and today China is quickly changing because it has rediscovered the importance of entrepreneurship another name for freedom. Since the inception of the country black Americans of all racial descents have utilized entrepreneurship as a way to secure some degree of economic security and freedom. The emphasis on entrepreneurship was stronger during slavery among free blacks and during the decades following the Civil War among black southerners. My theoretical framework explains the decline in new venture development among black Americans and other Americans. This is because entrepreneurship is a newcomer s dream, with groups such as blacks coming out of slavery or immigrants coming to America creating the dream. In this paper I consider these issues within the context of modes of adjustment to America. The first part of the paper presents the theory of modes of adjustment and its implication for understanding not only black entrepreneurship but one of its outcomes, the education of children. The second part discusses the present status of black entrepreneurship with data from

42 34 Part One Entrepreneurship in the South the forthcoming edition of my Entrepreneurship and Self-Help Among Black Americans: A Reconsideration of Race and Economics. The concluding section looks to the future. The Theory of Modes of Adjustment and its Social Outcomes With time, more data on black Americans has become available that allows the setting up of an experiment with modes of adaptation as the treatment. The importance of modes of corporation into American society can be found in the works of scholars such as Booker T. Washington s Up From Slavery at the turn of the 20th Century, Portes and Bach s (1980) Latin Journey: Mexican and Cuban Adjustment, Mein Zhou s (1992) China Town, and my own work, Entrepreneurship and Self-Help Among Black Americans: A Reconsideration of Race and Economics (Butler 1991). This research is centered on theories that stress entrepreneurship, ethnic solidarity, reactions to a hostile society, and economic stability. In the context of non-black immigrant groups, it presents a challenge to assimilation theory, which has dominated literature on race and ethnic relations. In the context of black Americans, it helps to explain patterns of business and educational success from generation to generation. Simply put, the massive assimilation literature collects data to argue that economic stability accrues to new ethnic arrivals in America as they become more like the people of the host country. Research shows that discrimination can be the first experience of the new group. The longer a member of group has been in America, the more likely they will gain economic stability. The assimilation perspective, developed systematically by Milton Gordon in his classic Assimilation in America, is thus a "climbing-the-ladder" approach to the economic stability of racial and ethnic groups (Gordon, 1964). This plentiful and excellent literature concentrates on how the host society presents job opportunities in order to enhance the incorporation (especially economically) of new groups. Ethnicity and entrepreneurship research, which anchors the modes of adjustment literature, moves the analysis away from an emphasis on what economic stability the host society provides to

43 Butler Entrepreneurship and the Theory of Modes 35 immigrants to what immigrant groups do for themselves. In other words, the emphasis is placed on self-employment, which brings with it a degree of economic stability. When seen in light of traditional race relation theory this line of theoretical reasoning is distinctive in that the presence of hostility against a new group due to religion or race becomes a key variable in the explanation of the present and future success of members of organizations. Some groups, mainly because they were less likely to be discriminated against in the developing industrial sector of America, found jobs in factories, joined unions, and followed the ebb and flow of the labor economy. Meanwhile, other groups turned to small shops, developed a sense of economic security, and educated their children so that they could compete within the professional sector. No one has explained this better than Alejandro Portes and John Bach, in an example of two different immigrant groups arriving on the shores of America: Two immigrant groups arriving during the period differed markedly from other minorities both in the way their labor was utilized and in their mode of adaptation. Both groups were non-christian, but they were different in religion, language, and race. They disembarked at opposite ends of the continent and never met in sizable numbers at any point. Yet, Jew and Japanese developed patterns of economic and social adaptation that were remarkably similar. What both groups had in common was their collective resistance to serving as mere source of labor power. From the start, their economic conduct was oriented toward to goals: (1) the acquisition of property, and (2) the search for entrepreneurial opportunities that would give them an edge in the American market. (Portes and Bach 1980: 38). Research has shown that these entrepreneurial adjustment groups launched future generations into good jobs because of their insistence on the education of their children (Bonacich 1972: ). It is also apparent that in the tradition of America, Portes and

44 36 Part One Entrepreneurship in the South Bach could have been paraphrasing Booker T. Washington, a person who believed that black Americans should concentrate on business enterprise and the acquisition of property (Pryor 1995). The writings of Booker T. Washington were the first that demonstrated a keen understanding of the importance of modes of adjustment and entrepreneurial education, entrepreneurship, and organizations that would spread these ideas. As we move into the 21st century, we can imagine an experiment in order to look at how blacks adjusted to America at the turn of the century, and the impact of that adjustment on future generations. This experiment thus posits that regions and towns that concentrated on entrepreneurship at the turn of the century should be better off today in terms of business enterprise and the education of children. Present data points to the old southern confederate states, where racial hostility forced past generations to create their own institutions, whether they were business enterprises or educational institutions, creating a self-help tradition. This tradition of selfhelp was spearheaded by blacks in the southern states. Quantifying Black Entrepreneurship After more than thirty years of putting civil rights at the forefront of its agenda, data sets started to show black entrepreneurs returning to the tradition of business enterprises. When business enterprise was at the very center of communities during segregation and the economic detour, the collection of business data was also a focus of scholars and others in the black community. From W.E.B. Dubois' 1898 work, The Negro in Business, to Henry Minton's (1901) Early History of Negroes in Business in Philadelphia, to Joseph Pierce's (1947) Negro Business and Business Education, there was a strong belief that business enterprise (which produced money for the education of children) was the shoulder on which to build for future generations (Dubois 1899; Minton 1901; Pierce 1947). Indeed, in 1929 black Americans were the only people of color or ethnic group in America to ask the Census Bureau to conduct a separate survey of their enterprises. A rare document in the archives in Washington notes, In this chapter are presented data collected at

45 Butler Entrepreneurship and the Theory of Modes 37 the first Nation-wide census of retail stores conducted by Negro proprietors in the United States. At the request of a number of organizations of colored people, stores operated by Negro proprietors are classified separately, and in all States in which there are enough such stores to justify analysis, the stores are classified by kinds of business (U.S. Bureau of the Census 1932: 494). In recent years, as the concern for civil rights replaced enterprise at the center of the black community there was also a decrease in the interest of collecting business data on black America. Perhaps the most systematic statistical data analysis on black enterprises around the turn of the 20th Century was done by Margaret Levenstein. Her findings were major, especially given the treatment of Afro-American enterprise in the ethnic entrepreneurship literature, because she notes the rapid increase in the number of enterprises and compares them to other groups. Her research appears in an article entitled "African American Entrepreneurship: The View from the 1910 Census," and it is important to present her conclusions in full: One of the most striking findings of this study is that in 1910 African-Americans were more likely than white Americans to be employers, and almost as likely as whites to be self-employed. This contrasts with the current period in which African-Americans are only a third as likely as whites to work in their own businesses. This raises questions about claims that African-American culture is unsupportive of entrepreneurial activity, or that cultural differences may explain black white differentials in selfemployment. If cultural differences are to explain the 20th century differentials in self-employment, they must be a twentieth century development (Levenstein 1995: 107-8). Levenstein shows how blacks, who were mostly from the south at the time, took advantage of the kind of agricultural market in which they found themselves. Although white entrepreneurs were concentrated in agriculture, Afro-American men were more concentrated.

46 38 Part One Entrepreneurship in the South Levenstein's analysis was done partly to challenge the idea that self-employment was not part of the cultural experiences of black America. She notes, " in contrast to contemporary findings, entrepreneurship is significantly more common among both whites and African-Americans in 1910 than among Asians (those of Japanese, Chinese, or Hawaiian decent)" (Levenstein 1995: 108). One of the more interesting American stories is how individual entrepreneurs who became millionaires during this time of Booker T. Washington (Walker 1998). In The History of Black Business in America, Juliet Walker calls this time period the golden age of black business (Walker 1998). Entrepreneurs such as Jake Simmons Jr. created a company that made him the most successful black in the history of the oil business (Greenberg 1990). Turnbo-Amalone became America s first female millionaire by developing hair care products (Walker 1998). Madam C.J. Walker followed in her millionaire tracks in the hair care industry (Bundles 2001). The Survey of Minority-owned Business Enterprises (SMOBE) is a standard data set, albeit imperfect, for the documentation of black owned enterprises. Another data set is the Characteristics of Business Owners. This set is very expansive and adds much to our understanding of Afro-American enterprise. The magazine Black Enterprise provides snap shots of entrepreneurs and also ranks the top 100 businesses everyday. These data sets will be utilized to highlight the present status of black entrepreneurship. For the year 1994, the SMOBE show that there were 620,912 black firms in America. This represented 3.60 percent of all firms in the total country and for the entire country they accounted for one percent of all receipts. In a standard release by the Census Bureau, it was noted that The number of African-American-owned businesses in the United States increased 46 percent from 424,165 to 620,912 between 1987 and Receipts from these firms increased by 63 percent during the five-year span, from $19.8 billion to $32.2 billion. While the total number of black firms increased 46 percent, firms in America overall increased 26 percent from 13.7 million in 1987 to

47 Butler Entrepreneurship and the Theory of Modes million in For this category receipts grew from $2 trillion to $3 trillion. As noted above, the entrepreneurial boom in America has created an entrepreneurial economy. Getting back on Main Street is clearly the most distinctive trend of enterprises owned by black Americans over the past two decades (Butler 2005). My work tries to make theoretical sense of these patterns. Prior to the Civil War, black entrepreneurship, was strong in the northern part of America. After the Civil War, Blacks responded to segregation by building business communities. In Entrepreneurship and Self-Help Among Black Americans, I look at data from 1929, which was the height of the segregated business communities, and analyze where black enterprise was located. For comparative purposes, the data were divided by states. More specifically, categories consist of the states that formed the original Confederate States, those that seceded after the start of the war to join the Confederacy, slaves states that were pro-union, free states, and territories. The patterns for 1929 that emerge are expected, given data on the activity of the black population in the south. But population alone does not account for business development. One must understand the importance of business for the development of communities and the education of children. The data showed that in those states that withdrew from the Union to form the original Confederate states sixty years earlier (South Carolina, Georgia, Florida, Alabama, Mississippi, Louisiana and Texas), 42 percent of all blacks firms in America were accounted for; while the next highest percentage (22 percent) is found in states that withdrew from the union and joined the Confederacy after the conflict had begun (Virginia, North Carolina, Tennessee, Arkansas). When these two categories are combined, 62 percent of all black enterprises were found in areas that formed the old Confederate states. Slave states that were pro-union (Maryland, West Virginia, Kentucky, Delaware and Missouri) accounted for.08 percent of all black enterprises in Those states that were considered free states (Maine, New Hampshire, Massachusetts, Kansas, Rhode Island, Connecticut, New Jersey, Pennsylvania New York,

48 40 Part One Entrepreneurship in the South Vermont, Ohio, Indiana, Illinois, Michigan, Wisconsin, Iowa, Minnesota, Oregon, California) during the Civil War period accounted for 23 percent of black enterprise during this time period. At the time of the Civil War areas that had not as yet become states (territories) consisted of North Dakota, South Dakota, Nebraska, Colorado, New Mexico, Utah, Nevada, Washington, Montana, Wyoming, Arizona, Oklahoma and Idaho. These territories accounted for.02 percent of all black enterprises in By using the same categories for states during the Civil War period for 1992, interesting patterns emerge. Despite the passage of the decades, the states of the old Confederacy (combining original Confederate states with those that joined after the war started) house 45 percent of all black enterprises. This is compared to 62 percent in Total black enterprise in the free states increased from 23 percent in 1929 to 41 percent in 1992, reflecting the movement in the black population away from the Old South. The District of Columbia dropped from.02 percent in 1929 to.01 percent in The lessons of history during segregation and the continued ethos of self-help which was so much a part of the Old South is seeing an emergence of entrepreneurial behavior. Entrepreneurship and Education It is interesting to look at the effect of self-employment on the education of children. Since Dubois' landmark study, The College Bred Negro, research has shown that black college graduates are more likely to be southern in origin (Dubois 1911). Another excellent research example is Loren Schweninger's (1997) Black Owners in the South Schweninger was surprised to find that free blacks placed a strong value on the education of their children, a value that whites on the whole had not developed. He concluded that among 200 black families in one Louisiana parish, only one percent was illiterate. In the same parish, percent of the white families were illiterate. Table 1 reveals that the areas of the country where blacks make up the largest percentage of total enrollment in higher education, or

49 Butler Entrepreneurship and the Theory of Modes 41 college matriculation, are also the old Confederate States. In Mississippi, 27.9 percent of students enrolled in college are black, followed by Louisiana, Georgia, South Carolina, Alabama, Maryland, North Carolina, Virginia, Tennessee and Arkansas. The only states outside the Old South are Illinois, Delaware, and New York. Table 2 shows states where blacks make up the largest percentage of the total Bachelor's Degrees awarded in Again, Southern states dominate the list. It should be pointed out that although Historically Black Colleges and Universities serve many students, southern traditional historical white schools have a high percentage of black students as well. These data point to the value structure of the south that was put in place when racial hostility was highest. Interestingly, blacks are involved in higher education wherever racial hostility and legal segregation was the worst. Returning to entrepreneurship, while the Survey of Minority- Owned Business enterprises is the public workhorse for data on black entrepreneurship, it significantly underestimates the performance of these enterprises because it does not include subchapter C corporations (larger firms with shareholders) and concentrates only on smaller (S) corporations. Table 1. States With Highest Percentage of Black College Matriculation in 1992 State Percent Black Enrollment Mississippi 27.9% Louisiana 24.6% Georgia 22.3% South Carolina 22.3% Alabama 20.1% Maryland 19% Virginia 14.9% Tennessee 14.9% Arkansas 14.4% Illinois 12.5% Delaware 12.1% New York 12%

50 42 Part One Entrepreneurship in the South Research conducted by Thomas Boston (1999) shows that the survey understates total employment in black-owned businesses by at least 27 percent and financial capacity by 23 percent. Significant growth that takes place among C corporations is not recorded by the census and therefore the performances of enterprises are underestimated. The Rise of Scholarship on Black Entrepreneurship When all enterprises are taken into consideration, the picture of entrepreneurship among black Americans is very different from the era of the segregated racial enclaves. Independent research done by Thomas Boston (1999) and Timothy Bates (1999) points to a trend that successful, highly educated, and talented black business owners are found in what is called emerging enterprises. Indeed, the last five years has seen lively activity within academic literature as black and non-black enterprises increased in numbers and significance. Table 2. States with the Highest Percentage of Total Bachelor s Degrees Awarded to Blacks in 1991 State Percent Degrees Earned by Blacks Mississippi 20.5% Louisiana 19.3% North Carolina 14.4% Alabama 13.6% South Carolina 13.4% Maryland 12% Georgia 11.8% Virginia 10.5% Arkansas 9.5% Tennessee 8.7% One debate emerged from this discussion when Timothy Bates (1996) published an article entitled Why are Firms Owned by Asian Immigrants Lagging Behind Black-Owned Businesses? in the National Journal of Sociology. Using firms operated by their present

51 Butler Entrepreneurship and the Theory of Modes 43 owner for less than ten years, Bates added a consideration of receipts when assessing their performance. With this additional analysis using receipts, he placed the performance of black enterprises in a different light: Widely help perceptions about minority-owned enterprises are poorly grounded in facts. Paucity of empirical underpinnings coexists with numerous stylized facts about self-employment patterns, particularly regarding the experiences of Asian immigrants creating small businesses in the U.S. Asian immigrants, according to popular imagination, are successful; black Americans, in contrast, are unsuccessful in the self-employment realm. This study relies upon comprehensive small business data compiled by the U.S. Bureau of the Census: conventional financial measures of small business profitability are calculated for three owner groups blacks, whites, and Asian immigrants. Using financial returns to owners investments of time and money into the applicable businesses as the success criterion, the Asian immigrants rank last, nonminority firms produce the highest returns, and black Americans are in the middle. Profitability criteria suggest that Asian immigrant owners collectively lag behind the black business community (Bates 1996: 27). Bates analysis is concerned strictly with the business side of receipts, debt equity, and the death of firms. Although he considers race and ethnicity as a factor in business enterprise in his analysis, he concludes that those lacking the requisite skills and capital, whether immigrant or not, are likely to start small enterprises. Among those who choose self-employment without appropriate education, financial resources, and skills, business failure and the exit from self-employment are high. These patterns, notes Bates, can be related to black, Asian, and white Americans, men and women, immigrants and the native born (Bates 1998: 1). Bates data shows, as other research supports, that the present state of black enterprise is more in the tradition of getting back on

52 44 Part One Entrepreneurship in the South Main Street and that education levels for entrepreneurs is very high. Getting back on Main Street means doing business wherever one can get the highest rate of return not just in the traditional black enclave. In terms of the emergence of immigrant Asian enterprises in some inner-city communities, Bates argues that black entrepreneurs tend to avoid such enterprise. In his words, Collegeeducated African Americans tend to avoid such businesses because they can earn higher returns elsewhere. Running a small retail store in the ghetto, bluntly, is a waste of their time (Bates 1998: 13). Bates analysis is more about black Americans being Americans than immigrants. Certainly the old black enclaves that formed after the Civil War and ended in the middle of the 1960s posses attributes of present day ethnic immigrant enclaves. Some of these enclaves are also changing and dying as immigration patterns change and immigrants assimilate into American society. As noted by Mein Zhou, immigrants foster and maintain ethnic enterprises over generations. Her work shows that the prosperity of New York City s Chinatown during this time in history is due to the increasing number of immigrants who revived the economic structure of that community (Zhou 1992). Bates analysis brings a business side to the study of entrepreneurship, with special emphasis on successful selfemployment. In terms of the absolute number of enterprises started by Afro-Americans, he notes that they start fewer enterprises because they have less household wealth. Conversely, Asians start more enterprises than whites or blacks because they have more household wealth. Bates data leads to the conclusion that the variation in ethnic racial enterprises is influenced greatly by household wealth. His analysis is an interesting and intriguing look into racial and ethnic enterprise in America. Boston s Atlanta. Thomas Boston uses Atlanta as a case study to assess the present state of black enterprise. Like Bates, he found that business owners were highly educated. Because black enterprises are located in the greater Atlanta area, rather than being confined due to an economic detour caused by segregation, he compared the educational rates in different areas of the city. He found that The

53 Butler Entrepreneurship and the Theory of Modes 45 owners of business located in the city have a much higher educational attainment than do suburban owners percent of owners with businesses located in the city have a college degree or better, as compared to 61.5 percent of owners in non-city locations (Boston 1999). It is interesting to note that these educational levels are higher than white males who are business owners. As reported by The Characteristics of Business Owners, which is produced by the Bureau of the Census, only 35.1 percent of non-minority male business owners have a college education. Wherever they are located, education appears as a major variable in both Bates and Boston s analysis. Boston s analysis is historically rich because he takes Atlanta from its oldest business tradition of separate enclaves to the state of enterprises today. As noted earlier in this work, it is very important to understand that black entrepreneurship did not start in the 1970s. Boston shows that By 1911 Atlanta had some two thousand black-owned establishments representing over a hundred types of businesses, including one bank, three insurance companies, 12 drugstores, 60 tailor shops, 83 barber shops, 85 groceries, 80 hack line, and 125 drayage places (Boston 1999: 70). In the old Atlanta, before the passage of historical laws aimed at driving black contractors out of the local marketplace and the institution of what we called the economic detour, blacks were as competitive as whites in many areas of enterprise (Boston 1999: 63). While the old black enclaves enriched the black community, Boston notes that 126 years passed before Atlanta offered a business contract to a black-owned enterprise. New opportunities in contracting with the city of Atlanta, coupled with strong educational private black institutions and the cultural value of just going to college at any institution, helped to launch a new prosperity for black entrepreneurs. The new opportunities were related to the development of laws, under the Secretary of Commerce, to develop

54 46 Part One Entrepreneurship in the South and coordinate activities aimed at promoting minority business development (Boston 1999: 10-16). Once these opportunities were granted, enterprises that these entrepreneurs created were impressive. While trends were similar to other cities, there appears to be an Atlanta effect because of comparative figures the enterprises he examines were those that were certified by the city s minority business program. For example, in the entire country four percent of all black-owned business were corporations, standing alone as separate entities from one s own personal wealth or other property. In Atlanta, however, 57.9 percent of the black-owned enterprises were listed as corporations. Also, while the average revenue of all black-owned enterprises in the Atlanta area in 1992 was $44,668, the average revenue of firms registered with the city of Atlanta was $606, 208 (Boston 1999: 63). Boston s study points out how difficult it is to estimate the actual performance of black-owned enterprises in America because his data shows a performance standard, as measured by income, which outperforms national data sets. While this is an issue for all business data, the important point is that black-owned enterprises in Atlanta re-kindled the tradition that was started at the turn of the century. While scholarship points to the values of the old south as being significant in the rebirth of business enterprise, black Americans who ventured to northern cities in search of the promised land have a different experience. Although there is variation in that experience, with presence of self-help, there is no doubt that the emphasis has been on the decline of the industrial sector, the loss of jobs, and the decline of well-established working class communities. This discussion dominates the literature on black America within popular discourse. Wilson s Chicago. One of the most prominent scholars researching the northern poor is sociologist William Julius Wilson. Wilson s analysis focuses on the children and grandchildren whose parents and grandparents went to Chicago during the great migration of blacks from the south and found work during the heyday of industrialism within America. When Work Disappears: The World of the New Urban Poor extends William Julius Wilson s analysis of

55 Butler Entrepreneurship and the Theory of Modes 47 dysfunctional families and communities in urban northern cities (Wilson 1996). Southern cities did not possess the great jobs of the north during the early part of the century. The book has been praised for its insightful and rich analysis of the "underclass and its policy recommendations that followed. In a country hungry for answers to a problem that seemingly will not go away, Wilson's book has stood center stage in the print and televised media. The pathologies and sad stories that emerge from his rich qualitative data and relevant quantitative tables jump from the pages and become as clear as a television documentary for readers. The strength of Wilson's analysis does not lie in the generation of new knowledge about poverty itself, but rather in the documentation of the experiences and daily lives of people who live in impoverished situations. As such, the book is a compliment to the volumes upon volumes of statistics assembled on this topic. Another strength, which has been overlooked by most commentaries, is that it documents social outcomes that can follow if a certain mode of incorporation into American society is followed by a group that has experienced hostility from the larger society. In other words, perhaps the most valuable lesson of When Work Disappears is what black Americans should not do as we look to the start of a new century. Indeed, we now have rich data that allow us to look at the lives of blacks who chose another way of incorporation in American society. When modes of incorporation are wrapped around Wilson's analysis, understanding black success and black poverty are intertwined into one model that presents surprising lessons for the 21st century. Understanding the dynamics of modes of incorporation also provide us with a powerful comparative tool for other groups in America. Wilson commences his analysis by recreating the history of a poverty neighborhood through the eyes of the people who live there. Once a stable community with thriving enterprises, busy streets, and safe pedestrians, it declined almost geometrically and now is a thing of the past. It was a community that received its economic life from the many factory jobs and spin-off enterprises that are part of communities when factory presence is strong. Retail stores, restaurants, service sectors, and other enterprises were abundant.

56 48 Part One Entrepreneurship in the South This economic structure, strengthened by stable families, excellent role models, and avenues for upward mobility through good jobs, is now a thing of the past. Wilson's more mature respondents recall the days when one could look forward to an excellent workday, a safe community, shopping, and patronizing retail stores within walking distance of their homes. Wilson's analysis of this community comes alive through families and their strategy for obtaining a minimum of economic subsistence from the jaws of poverty and devastation resulting from the disappearance of jobs. Drug trafficking is a constant that emerges from Wilson's data. We are introduced to a 35-year-old male who sells cocaine because "I have to feed my family (Wilson 1996: 58). A 28-year-old welfare mother informs us that when money is short, one "turn tricks, sell drugs, anything-and everything. Mind you, everyone is not a stick-up man...but any and everything. Me myself I have sold marijuana, I'm not a drug pusher, but I'm just tryin' to make ends - I'm tryin' to keep bread on the table I have two babies" (Wilson 1996: 58). Using situational analysis, Wilson notes that the urban poor are victims of forces beyond their control that deteriorate American society, such as the movement of factories from the central cities to the suburbs, the movement of all middleclass people to the suburbs, and the inability of the poor to move with these jobs. Although this trend is nationwide, figures for Wilson's laboratory, Chicago, are powerful. At the beginning of this decade, only one in twelve people in poor urban areas of that city held jobs. Wilson's situational analysis allows him to argue that the communities he has been studying have been overwhelmingly black for the last four decades, yet they only lost most of their residents between 1970 and Thus catchwords such as "segregated" neighborhood will not suffice to explain the movement of communities from "Institutions to Jobless Ghettoes." Instead other forces, such as the loss of jobs and problems in getting new jobs is the proper focus for analysis. In other words, if jobs reappear, the historic character and structure of the neighborhood will also reappear. Wilson's analysis of "Ghetto Related Behavior and the Structure of Opportunity" is a reminder of how important the presentation of

57 Butler Entrepreneurship and the Theory of Modes 49 self is when seeking out job opportunities. His analysis is the opposite of the themes of books on dressing for success. Wilson provides an insight into a culture that has not been taught, or has been deprived of, cultural attributes important in the world of business. Ghetto related behavior is defined as behavior and attitudes that are found more frequently in ghetto neighborhoods than in neighborhoods that feature even modest levels of poverty and local employment. Although these behaviors are not necessarily ghetto specific, they occur more often in ghetto contexts. Wilson introduces his reader to people who do not know how to dress, speak, and present themselves to prospective employees. Isolated from people who are savvy to distinctive business cultures, ghetto residents were less likely to learn these kinds of skills through association. Wilson notes that unemployed black men and women were less likely to participate in local institutions and have mainstream friends (friends who are employed, with some college education, and married) than people in other classes and ethnic groups. Coupled with intense isolation, he describes family problems in one Chicago neighborhood. Wilson takes us through the traditional issues of birth rates among unmarried women (which has shown a greater increase among whites than blacks between ), attitudes towards marriage and the family, single-adult households, the strengths and weakness of marriages themselves, and the battle of blame between men and women over social conditions. Wilson shows how welfare is related to these issues, and introduces the reader to people who find themselves in this situation. A trademark of Wilson's analysis is the constant reminder that the problems of the inner city are related to what happens in larger society a constant reminder to the reader that the structure of the situation impacts the quality of life and general trends found in his data. For example, he notes that In the inner-city ghetto community, not only have the norms in support of husband-wife families and against outof-wedlock births become weaker as a result of the general trend in society, they have also gradually disintegrated

58 50 Part One Entrepreneurship in the South because of worsening economic conditions in the inner city, including the sharp rise in joblessness and decline real incomes (Wilson 1997: 97). Wilson's analysis prompts a very important question: How do black Americans differ today based on how past generations incorporated themselves into American Society? The question points to the fact that we must understand that following the dawn of freedom, black Americans followed different paths as they incorporated themselves into American society. An understanding of modes of incorporation is essential to understand the hidden contributions of Wilson's work. Business history research has documented the relationship between business enterprise, quality of life, and education of children for black Americans. It is important to point out that self-employment for black Americans, like all other American, has always been a tool to accomplish other things, and preparing the next generation of children. Conclusion It has been over one hundred years since the end of slavery and the dawn of freedom. Rich databases are available to evaluate both success and failure within black America. As is true for all databases, we must ask not only questions, but the right questions. Answers to these questions can form the baseline for success within black America, as well as larger American society, as we move into a new century. The greatest black generation in the history of America is the generation immediately following the Civil War. Building on the entrepreneurial tradition of Free Blacks, the Tuskegee Institute lead the way in creating an entrepreneurial culture and creating communities that placed entrepreneurship at the very center of success. This generation helped to create, with other great merchants of America, educational institutions that have continuous effects. For those of us who came of age during the most recent civil rights movement, we saw people educated in this tradition make great contributions. Entrepreneurs in major cities such as Birmingham,

59 Butler Entrepreneurship and the Theory of Modes 51 Alabama, and New Orleans provided economic assistance. This movement was very successful in killing the symbols of Jim Crow because these early generations were not dreamers, but doers. At the center of this action, which was wrapped around private and public institutions of higher education, was the importance of new venture development, which created a sense of self-help, achievement, and value structure that continues to embrace black America. As research moves into the 21 st Century, we create a tradition that focuses on inter-generational success. We need to know how the great grand children of people who finished from private institutions adjust to America. It is important to point out to future generations the importance of the mode of adjustment that is called entrepreneurship.

60 52 Part One Entrepreneurship in the South References Bates, T Race Self-Employment & Upward Mobility: An Elusive American Dream. Baltimore: The Johns Hopkins University Press Why Are Firms Owned by Asian Immigrants Lagging Behind Black-Owned Businesses? National Journal of Sociology, 10 (2) : Bonacich, E. A Theory of Middleman Minorities, American Sociological Review, 37: Boston, T. D Affirmative Action and Black Entrepreneurship. New York: Routledge. Bundles, A On Her Own Ground: The Life and Times of Madam C.J. Walker. New York: Scribner. Butler, J. S. Entrepreneurship and Self-Help Among Black Americans: A Reconsideration of Race and Economics. Second edition, forthcoming Entrepreneurship and Self-Help Among Black Americans. New York: SUNY Press. Dubois, W. E. B The College Bred Negro. Atlanta: Atlanta University Press The Negro In Business. Atlanta: Atlanta University Press. Gordon, M. M Assimilation in American Life. New York: Oxford University Press. Greene, P. G A Call for Conceptual Clarity, National Journal of Sociology 10(2) :

61 Butler Entrepreneurship and the Theory of Modes 53 Greenberg, J Staking a Claim: Jake Simmons, Jr. and the Making of an African-American Oil Dynasty. New York: Atheneum. Johnson, M. A Understanding Differences between Asian Immigrants and African-Americans: Issues of Conceptualization and Measurement, National Journal of Sociology 10(2) : Levenstein, M "African-American Entrepreneurship: The View from the 1910 Census," Business and Economic History. 24 (1). Light, I Reply: Why are Firms Owned by Asian Immigrants Behind Black-Owned Businesses? National Journal of Sociology 10(2) : 54-47; Minton, H Early History of Negroes in Business in Philadelphia. American History Society. Pierce, J Negro Business and Business Education. New York: Harper & Brothers. Portes, A A Dissenting View: Pitfalls on Focusing on Relative Returns to Ethnic Enterprise, National Journal of Sociology 10 (2) : Portes, A. and R. Bach Latin Journey: Mexican and Cuban Adjustment Los Angeles: University of California Press. Pryor, T. M Wealth Building: Lessons of Booker T. Washington for a New Black America. Edgewood, MD: Duncan & Duncan Publishers. Schweninger, L Black Owners in the South Illinois: University of Illinois Press.

62 54 Part One Entrepreneurship in the South U.S. Department of Commerce, Bureau of the Census, Negro Proprietorship in Retail Business. Walker, J. E. K The History of Black Business in America: Capitalism, Race, Entrepreneurship. New York: Simon & Schuster. Wilson, W. J When Work Disappears: The World of the Urban Poor. New York: Alfred A. Knopf. Zhou, M Chinatown: The Socioeconomic Potential of an Urban Enclave. Philadelphia: Temple University Press.

63 Part Two Entrepreneurship and the Modern University

64 University-wide Entrepreneurship Education: Alternative Models and Current Trends * Deborah H. Streeter, Bruce F. Failing, Sr. Professor of Personal Enterprise and Small Business Management in the Department of Applied Economics and Management, at Cornell University. John P. Jaquette, Jr.,Director of Cornell s University-wide Entrepreneurship and Personal Enterprise Program (EPE). Abstract The paper examines the trend towards university-wide programs in entrepreneurship education. We present a conceptual framework for dividing university-wide programs into two categories: magnet programs, which draw students into entrepreneurship courses offered in the business school, and radiant programs, which feature entrepreneurship courses outside the business school, focused on the specific context of the nonbusiness students. Examining 38 ranked entrepreneurship programs, we found that about 79% now have university-wide programs, most of which follow a magnet model. In interviews with stakeholders at sample institutions, we found that magnet and radiant programs differ in terms of program definition, motivation for the university-wide focus, and costs and benefits. Our major findings are 1) The trend toward university-wide entrepreneurship education is strong and gaining momentum 2) Our conceptual framework clarifies the different pathways for creating a universitywide approach, 3) While the radiant model is extremely appealing to students, parents, and alumni, the magnet model is easier to administer and represents the path of least resistance, and 4) While the magnet model is simpler to implement, it may lead to conflicts in the longer term because the benefits may not be shared equally across the university. * This research was funded through the Bruce F. Failing, Sr. Endowment in Personal Enterprise and Small Business Management and Cornell s Universitywide Entrepreneurship and Personal Enterprise Program. The authors appreciate the encouragement to undertake this project given by Gerald E. Hills, Illinois- Chicago and the Coleman Foundation.

65 58 Part Two Entrepreneurship and the Modern University University-wide Entrepreneurship Education: Alternative Models and Current Trends Entrepreneurship Education it s not just for Business Majors Anymore During the past few years, it has become common at entrepreneurship education forums across the country to hear speakers call for the integration of entrepreneurship programs with disciplines outside the traditional majors of business and engineering. The presentations raise such questions as: What exactly is an integrated entrepreneurship program? What are the benefits and costs involved in moving outside the traditional spheres of instruction (business and engineering)? Who has created successful university-wide programs? What are the choices for policy-makers considering a move toward university-wide entrepreneurship? This paper is intended to inform the discussion of such questions by reviewing the evolution towards integrated programs, discussing a conceptual framework for examining alternative models of university-wide education in entrepreneurship, and presenting a detailed discussion of some sample programs. 1 General Growth in Entrepreneurship Education The concept of entrepreneurship has undergone both periods of disfavor (classical economics) and exaltation (Schumpeter) and today has emerged as central to technological change, productivity, resource efficiencies and economic growth (Plaschka and Welsch 2002). In his review of the role of entrepreneur in economic theory, Formaini (2001:9) describes the contemporary economic concept of the entrepreneur as an ingenious, risk taking innovator who might also be an imaginative manager and whose actions both disrupt and 1 The discussion that follows uses the term program to indicate a unit of organization that embodies entrepreneurship within a university or institution. The entrepreneurship program or center may be inside or outside of the schools and colleges within an institution.

66 Streeter, et al. University-Wide Entrepreneurship Education 59 coordinate our market economy. As the image of the entrepreneur was gradually transformed from one of a greedy, bloodsucking profiteer to an innovative, creative, economic super-hero, entrepreneurship began to emerge as important subject matter in business programs. The striking growth in educational programs focused on entrepreneurship has been thoroughly documented and discussed (Cuff 2002; Gartner and Vesper 1994; Sexton and Bowman 1984; Solomon et al. 1994). As one of the lead organizations keeping track of entrepreneurship trends, the Kaufmann Center s Resource center ( lists over 700 institutions where entrepreneurship is taught (most, but not all in the U.S.). Many entrepreneurship programs got their start when entrepreneurial alumni funded initiatives focused specifically on helping students learn about starting and running businesses. Finkle (2001) documents the ample and growing supply of candidates and faculty positions in entrepreneurship. More recently, a survey administered by St. Louis University in 2003 reports that in the US alone, there are 406 endowed positions in entrepreneurship and related fields, and growth has been steady since 1991 (see Figure 1). Endowed professorships institutionalize entrepreneurship education at universities by protecting the subject area from being eliminated or subsumed during periods of reorganization or reorientation of the curriculum. Both push and pull factors are cited as reasons for the growth in entrepreneurship programs. On the demand side, students and parents have seen entrepreneurship as a relevant topic and an alternative to the corporate track. As Plaschka and Welsch (2002) put it: entrepreneurship is seen as a much-needed salvo to the theoretical learning that dominates b-schools. And although entrepreneurship as a field has struggled to find legitimacy (Low 2001), faculty champions have emerged, drawn both by personal interest and endowed chairs. On the supply side, donor-driven programs are common, funded by alumni who find the learning base of entrepreneurship education extremely appealing. Other enticements such as economic development grants and incentive programs have been created by various public and private

67 60 Part Two Entrepreneurship and the Modern University organizations (e.g., the U.S. Small Business Administration, the National Collegiate Inventors and Innovators Association, the Kaufmann Foundation, and the Coleman Foundation). Such programs have expanded the available supply of entrepreneurship opportunities open to educators, researchers, and students. Figure 1. Endowed Positions in Entrepreneurship Have Risen Dramatically Since 1991 Endowed positions in entrepreneurship and related fields Year U.S. Total Number of endowed chairs Impetus Towards University-wide Programs As a relatively young subject area, entrepreneurship education has no universally agreed upon pedagogical approach. Various authors have discussed issues associated with the teaching of

68 Streeter, et al. University-Wide Entrepreneurship Education 61 entrepreneurship. For example, the process model is promoted by Marchigiano-Monroy (1993) and Hynes (1996). Others focus on the experiential dimensions of entrepreneurship (Plascka and Welsch 2002; Porter 1994). Fiet (2001) calls for better teaching of theory in entrepreneurship classes, while Hood and Young (1993) present the opinions of 100 successful entrepreneurs on what entrepreneurs should learn. McMullan and Gillin (1998) discuss the role of graduate level degree programs. Despite ample literature on content and approach of entrepreneurship education, there is scant discussion of a more recent phenomenon: the fact that demand for and interest in entrepreneurship courses is starting to emerge outside the business school. The earliest non-business interest came from engineering schools, and has been followed by demand from other science and technology programs. The literature does discuss the importance of interdisciplinary programs, what might be called scientists learning business; businesspeople learning science. Laukkenen (2000) suggests that such an approach is essential if entrepreneurship education is to lead to increased economic growth, and Hill and Kuhns (1994) also document the value of the interdisciplinary experience for technology transfer. Demand for entrepreneurship from outside the business school is not limited to engineering, science, and technology. Because so many small business owners and entrepreneurs come from majors outside of business and technology, and because of the prominent role of entrepreneurs in the media, there is a growing belief at many institutions that entrepreneurship education should be of concern across the entire university. Larry Penley, Dean of the College of Business at Arizona State University, noted the move toward entrepreneurship across the curriculum in his address to the USASBE-SBIDA conference in Spring He referred to university-wide entrepreneurship education as a diversity issue, and addressed the need to look beyond the business school for how we help students learn about small business. He made the argument that university-wide programs will help to build a stronger small business sector because right now most small business owners have little or no formal business education.

69 62 Part Two Entrepreneurship and the Modern University Although it may seem that entrepreneurship and the arts make strange bedfellows, they are integrated in programs such as those at University of St. Thomas, where the entrepreneurship curriculum is grounded in the liberal arts and at Case Western Reserve, where entrepreneurship classes are part of the theatre program. At University of Arizona, students take entrepreneurship courses in the medical and agricultural programs as well as in the Mexican, Latin, and Native American Studies Program. The trend toward university-wide entrepreneurship is being accelerated through the actions of major foundations, such as the Ewing Marion Kauffman Foundation, which recently created a national initiative focused on creating entrepreneurship programs that span the curriculum. Taken together, the increasingly broad appeal of entrepreneurial values and education and the eagerness of alumni from all fields to introduce a real world dimension to their home schools intensify the pressure to view entrepreneurship education from a university-wide perspective. For students with non-business majors, university-wide entrepreneurship education can help to bridge the gap between the concepts and theories of the classroom and the realities they will face in their careers. Although various institutions may be motivated by common factors, the actual implementation of university-wide entrepreneurship education takes many different forms. For example, at some institutions moving toward a university-wide entrepreneurship program consists of attracting students from nonbusiness fields into the orbit of the business school. At other institutions a university-wide approach is manifested by the creation of courses or modules in non-business departments themselves, providing entrepreneurship lessons specifically relevant to the field itself.

70 Streeter, et al. University-Wide Entrepreneurship Education 63 Focus of This Paper Compared to many other academic programs, entrepreneurship education is relatively young and has experienced considerable growth in just over a decade of existence. With a firm foothold established in many business and engineering schools, champions of entrepreneurship education are now scanning the rest of the university for opportunities to reach and attract students with their programs. However, little is available in the literature to guide such efforts. While many of the inventories of entrepreneurship programs 2 contain descriptors such as university-wide program there is no widely agreed upon model for what makes an entrepreneurship program university-wide or how an academic policymaker might go about evaluating the challenges and benefits of such programs. Therefore, the primary objectives of this paper are to: 1. Present a conceptual framework for discussing various models of university-wide entrepreneurship education programs, 2. Use the framework to categorize 38 programs selected using various ranking systems and to analyze a smaller group of programs in-depth, and to 3. Share advice and insights from those currently administering, teaching and studying in university-wide programs. The next section of the paper is a presentation of a proposed conceptual framework for entrepreneurship programs, followed by a discussion of the methods of study and an explanation of how 2 For inventories and/or ranking of programs, see for example, Financial Times of London (rates entrepreneurial programs in MBA schools), the Kaufmann Center for Entrepreneurial Leadership (lists and describes programs), the National Consortium of Entrepreneurship Directors (annually publishes a compendium of programs), St. Louis University (lists entrepreneur programs in U.S.), Success Magazine (ranks top business schools for entrepreneurs annually), or U.S News and World Report (ranks undergraduate programs annually.

71 64 Part Two Entrepreneurship and the Modern University institutions were selected and categorized. The remainder of the paper is devoted to discussing the results of the study, with a final section summarizing the findings and implications. Models of Entrepreneurship Education Focused vs. University-wide Approaches In categorizing institutions that feature entrepreneurship education, we divide the programs into two broad categories, which we call focused and university-wide. A program is focused if its faculty, students and staff are located exclusively in the academic area of business, or in the combined areas of business and engineering. Examples of focused programs include Ball Sate, Harvard, and Loyola Marymount. Among focused programs, we can further subdivide programs according to which departments or schools feature the entrepreneurship courses. Although the MBA curriculum is always involved, there are various combinations of business and engineering and of graduate and undergraduate courses. In other words, having entrepreneurship classes in the graduate school of business seems to be a necessary pre-requisite of a focused program. In addition to educating MBA students in entrepreneurship, courses also may be targeted to undergraduates in business and/or engineering students. In contrast, university-wide programs target students beyond the business and engineering fields. Such programs may include entrepreneurship courses aimed at students majoring in arts and sciences or in physical and life sciences. Examples of universitywide programs include Babson, Cornell, MIT, and Stanford, where the opportunity for entrepreneurship education is extended to all students regardless of their majors. Although all university-wide programs take a sort of evangelizing approach to entrepreneurship, there are two different methods for accomplishing the goal of involving non-business/engineering students in entrepreneurship education.

72 Streeter, et al. University-Wide Entrepreneurship Education 65 University-wide Programs Magnet vs. Radiant Models A simple way to distinguish among approaches to integrated entrepreneurship education is to consider the basic differences in where the teaching of entrepreneurship occurs. In some programs, all courses are taught in one college or school, whereas in others, courses exist in various colleges/schools. As depicted in Figure 2, this can be seen in what we will call the magnet model (e.g., MIT) where classes in entrepreneurship are offered by a single entity (MIT Entrepreneurship Center, located in The Sloan School of Management) but attract students from all over the university. By comparison, in programs that fit what we term a radiant model (e.g., Cornell), the teaching of entrepreneurship education is diffused throughout the university (nine schools and colleges). Figure 2. Magnet Model vs. Radiant Model of Entrepreneurship E E Magnet Model Radiant Model However, the simple approach shown in Figure 2 fails to reveal some important nuances and variations in how programs work. The question of location, or where the program finds its center of

73 66 Part Two Entrepreneurship and the Modern University gravity, is actually determined not only by where courses are offered, but also by where the money, faculty and students are located. In fact, we can think about the location of the following elements as being crucial to understanding any given entrepreneurship program: funding, administrative infrastructure, faculty, teaching activities (including courses, internships, special lecture series, etc.), students, research activity, outreach activity, business development activity (including technology transfer), and alumni activity. Because it is not a given that all of these elements are located in any one place in the university, many configurations are possible, making it difficult to define a precise model of university-wide entrepreneurship. To complicate matters, it is also important to understand the interaction of these factors between and among academic units. In fact, it is useful to think about programs placed along a spectrum (see Figure 3) where at one extreme all factors are located in one academic unit (school, college) and at the other end factors are replicated throughout many different units. If we look specifically at the funding, the flow of students, and the interaction between and among faculty, there is a pattern at each end of the spectrum. In what we will call the pure magnet model, the administrative office, the faculty, and the financial resources of the entrepreneurship program or center are most often located completely within an academic unit, typically the business school. Students in the business program, as well as those from other academic units, take courses taught by business school faculty. What makes the program university-wide is the fact that non-business students, from other parts of the university, such as arts and sciences or medicine, also can take entrepreneurship courses. The pure radiant model, in contrast, is characterized by having the administrative activities of the entrepreneurship program or center located outside all academic units. The administrative unit serves as a mechanism for distributing money and performs a coordinating function for all participating academic units. Each academic unit (not just the business school) has some funding located internally and has faculty and students taking courses. In addition, entrepreneurship classes are available to students

74 Streeter, et al. University-Wide Entrepreneurship Education 67 throughout the university. Faculty members may collaborate across academic units on research, teaching and outreach, but are allied primarily with their own departments. In the pure Radiant Model, what makes the entrepreneurship program university-wide is its infusion into various academic units, resulting in an entrepreneurship curriculum that reaches across the institution and is taught by faculty in various disciplines. Figure 3. Spectrum of Entrepreneurship Programs Magnet Highly Centralized Center, which is locus for funding, students and all activities Radiant Highly decentralized. Every unit has independent source of funding, students, faculties and activities. As we shall see, in the real world there are many variations on these two models. Some universities have what could be called multiple magnets, created by centers located in different schools and colleges across the university. Another variation is a mixed model, in which part of the entrepreneurship program (typically at the graduate level) is university-wide, but the rest of the program stays focused on business and/or engineering students. Notwithstanding these variations, the basic framework is helpful in illustrating a key difference in approaches to creating a university-wide program. For those universities closest to the magnet model, university-wide means non-business students have access to certain entrepreneurially oriented business classes. For the radiant models, university-wide means that in addition to the entrepreneurship

75 68 Part Two Entrepreneurship and the Modern University courses offered in the business school, non-business faculty are creating entrepreneurship courses outside the business program, and that both business and non-business students are traveling to different academic units to take courses. What determines the shape of programs? Donor stipulations may be one element that impacts the structure. At Cornell, chairs were endowed in the Engineering School, the Graduate School of Management and the undergraduate department in Applied Economics and Management. These professorships created the three-legged stool that is the base of Cornell s university-wide program. Funding models and the culture of the university may dictate structure as well. 3 Some institutions, such as the University of Southern California, allocate money based on the number of students taught, thereby encouraging the lead unit to pursue a magnet model. In other places, such as the University of Washington, budgets are allocated based on estimates or the number of majors, providing little or no financial incentive to attract students from other schools because the business school is not rewarded (in monetary terms) for teaching non-business students. A Framework for University-wide Entrepreneurship Education We can summarize the discussion above by creating a method of classifying programs as shown in Figure 4. To determine the model that best fits the program in a university, the first question is whether or not the goals of the program include reaching beyond the business and engineering fields. If not, then it is what we call a focused program, and the next step in classifying it is to determine what parts of the university are involved with entrepreneurship education. If the program is intended to infuse the institution with entrepreneurship education, we call it a university-wide program. 3 The authors thank Bruce Gartner (Henry W. Simonsen Chair in Entrepreneurship, USC) for these insights, offered in his review of the working paper version of this publication.

76 Streeter, et al. University-Wide Entrepreneurship Education 69 Next, we examine the location of the faculty and teachers to determine if it is a magnet or a radiant program. If the program draws students into courses located in the business and/or engineering schools and taught by engineering and/or business faculty, then it is a single or multiple magnet program. Magnet schools tend to further subdivide into categories depending on whether they focus on attracting graduates or undergraduates (or both). If entrepreneurship courses and faculty are located throughout various academic units (not just business and engineering), the program is considered radiant. In cases where elements of a focused program exist at one level, but the other level is a magnet, we call them a mixed model. Thus, using the scheme depicted in Figure 4, we can classify every program. We now turn to applying this framework to existing programs. Figure 4. Potential Pathways for Entrepreneurship Programs MBA only Focused MBA & UGB Focused or University-wide? MBA & UGB & ENG Single University-wide Magnet Multiple Radiant Mixed U-wide only at Grad Level U-wide only at Undergrad Level

77 70 Part Two Entrepreneurship and the Modern University Categorizing Ranked Programs Methods of Study and Selection of Universities for Inclusion in the Study To study integrated entrepreneurship education for the purposes of this paper we reviewed existing compendiums of program information, analyzed existing program materials (including websites), and conducted interviews with stakeholders at selected universities. Choosing a set of universities for the study was challenging. We were not trying to create an exhaustive list, but we did want to see how the conceptual framework might be useful in categorizing a wide range of programs. Furthermore, we also wanted to investigate more closely programs at specific points on the spectrum. Thus our analysis is divided into two parts: 1) an overview of the visible, ranked programs (including both focused and university-wide models) and then 2) a more detailed look at selected university-wide institutions in particular (both magnet and radiant models), including some universities with programs that do not appear in the rankings but offer interesting variations of entrepreneurship education. We selected the universities in the first part of the study by consulting two ranking systems published in 2000: the top 25 institutions as ranked by Success Magazine, and the top 25 as listed by U.S. News and World Report. The resulting list of 38 universities appearing in either or both rankings are categorized in Table 1. 4 In particular, we asked about where courses are offered and to whom they are available. General Findings Not surprisingly, entrepreneurship education has its most secure anchor in graduate schools of management. All ranked universities reported graduate schools of management offering 4 For more details, see the working paper version of this study.

78 Streeter, et al. University-Wide Entrepreneurship Education 71 entrepreneurship courses. Over half also offer some sort of primary and/or secondary concentration in entrepreneurship at the graduate and/or undergraduate levels. These concentrations have a variety of names, such as: a Career Path (Babson), an emphasis (Baylor), a track (DePaul and others) a major (NYU and others), a minor (Indiana) or a Secondary Concentration (Pennsylvania). At four of the universities (Chicago, Harvard, Illinois-Chicago, and Wake Forest), MBAs are the exclusive focus of the entrepreneurship program, while at the remaining institutions undergraduates have varying levels of access to entrepreneurship classes. At the time of our review, only a handful of the universities offer a specialization to engineering students (e.g., Cornell, RPI, USC), but 23 had courses open to engineering students either at the graduate or undergraduate level. 5 In the case of undergraduate business majors, 16 offer some type of major out of the 29 universities where classes are available to the major. 6 About 79% of the programs recruit non-business/engineering students to take entrepreneurship courses, if you include both graduates and undergraduates. About a quarter of those schools have courses in entrepreneurship that are housed and taught outside the graduate school of management (e.g., Colorado, Cornell, DePaul, Duke, Indiana, Northwestern, NYU, RPI). Table 1 (next page): 38 Ranked Universities by Category of Entrepreneurship Programs. 5 Five of the 38 universities do not have an engineering program: Babson, Bentley, DePaul, Indiana, and Georgia. Babson is currently working on forging ties with the newly created Franklin W. Olin College of engineering, a stand-alone independent engineering college. 6 Duke and Stanford have no formal undergraduate business major.

79 72 Part Two Entrepreneurship and the Modern University Focused Programs University-Wide Programs Mixed Program MBA Only MBA & UGB MBA & UGB & ENG Magnet - Single Magnet - Multiple Radiant (Focus/ U-wide) Chicago Harvard Ball State Loyola Marymount San Diego State Illinois- Chicago Wake Forest Louisville Arizona Duke Cornell U-wide at Undergrad Babson Stanford RPI South Carolina Baylor Wisconsin - Madison Bentley Carnegie Mellon Case Western Columbia (G) * DePaul Georgia Indiana Maryland MIT North Carolina- Chapel Hill Pennsylania St. Thomas UCLA (G) USC Northwestern U-wide at Grad California- Berkeley Colorado Michigan New York Texas Virginia Total 4 (% 50% category) 3 38% 1 12% 17 81% 2 9.5% 2 9.5% Total 8 Total % (% total) 21% (% of total) 55% (% total) 24 % Based on 2000 Rankings by Success Magazine and U.S. News & World Report * (G) indicates Entrepreneurship is offered only at graduate level

80 Streeter, et al. University-Wide Entrepreneurship Education 73 Entrepreneurship centers, most carrying names with donors who have endowed the programs, are nearly all located inside business schools. Relationships between programs and academic units are difficult to interpret and can have many nuances. Maryland s Dingman Center for Entrepreneurship is focused heavily on outreach to emerging companies in the region, and operates in some ways quite independently of the business school. But the Dingman Center does support the undergraduate, MBA and Ph.D. academic programs in entrepreneurship at the University of Maryland, including joint academic programs with the School of Engineering. Cornell s Entrepreneurship and Personal Enterprise Program (EPE) was the only example among the ranked schools we found to be an independent, non-academic office that is allied with all its associated nine schools and colleges. Applying the Framework Although categorizing universities in the framework was challenging in some cases, Table 1 shows our interpretation of how each institution fits the framework presented in this paper. 7 While the classifications of some institutions are unambiguous (e.g. Cornell is radiant, MIT is magnet), other universities are in transition. UCLA is exploring new joint initiatives with the graduate program in the education department. Other programs, such as the one at University of Southern California, seemed to be in a gray area between a magnet and a radiant model. Thus, the classifications in Table 1 are simply a snapshot of an evolving entrepreneurship education field and by the time this study is published, Table 1 may no longer be completely accurate. One thing we can report unequivocally is that all the proposed changes mentioned by those interviewed indicated movement of their institutions towards university-wide models, and none are moving in the opposite direction. 7 Individual universities were contacted to confirm their positions on the table. For those who did not respond, we used publicly available information such as brochures and websites to reach a decision on which model was the best fit.

81 74 Part Two Entrepreneurship and the Modern University Summary The key findings from our study of the ranked universities are: 1. University-wide entrepreneurship programs are more prevalent than we expected. 2. The program structure and delivery system for taking entrepreneurship across the curriculum vary widely. 3. Currently, the most widely used method for creating a university-wide program is to follow a magnet model, created simply by opening courses to students outside the business/engineering majors. 4. Some universities are pursuing more aggressive approaches to creating magnet models, including: Creation of a set of courses specifically aimed at the non-business students (University of Maryland) Collaboration with non-business schools where entrepreneurship education is relevant to student careers (particularly where the graduates of the school may have a professional practice) 5. Although the trend toward university-wide programs is strong, there is still untapped potential for increasing the reach of entrepreneurship, especially at the undergraduate level. Additional In-Depth Analysis After examining the ranked institutions, many questions remained, including: How do different programs define the term university-wide? Why have programs chosen to become university-wide and what strategies are they using to achieve the goal of moving entrepreneurship education across the curriculum? Why are most universities opting for a magnet model? (i.e., what are the pros and cons of alternative strategies?) What challenges have such programs experienced in becoming integrated and how have they overcome the barriers? How is success measured in universitywide entrepreneurship education? To address these questions and to add to what we learned in studying the 38 ranked schools, we did more in-depth interviews with stakeholders at nine institutions.

82 Streeter, et al. University-Wide Entrepreneurship Education 75 Selection of Additional Institutions for In-Depth Study We sought to include in our investigation institutions of various sizes and in different positions on the spectrum shown in Figure 2. Accordingly, we talked to stakeholders in magnet and radiant programs as well as several who are in transition from a magnet to a radiant approach. Four were selected from the 38 ranked schools described earlier. To choose the other five, we examined program descriptions in the Compendium of Entrepreneurship Centers 2000 (compiled by the National Consortium of Entrepreneurship Centers) and selected institutions with programs that explicitly mention a university-wide approach. Lehigh University, MIT, and Northern Kentucky were chosen as magnet schools. MIT is a classic magnet models and we added Lehigh and Northern Kentucky to include a range of sizes and emphases. We chose two institutions with radiant programs: Cornell and Iowa State. Cornell s program is well known as a university-wide model and Iowa State emerged as an institution with a similar approach to offering entrepreneurship education across the curriculum. The universities chosen as in transition, California State-Fresno, RPI, George Mason, and Northeastern University, have announced new initiatives intended to move their university-wide entrepreneurship programs from a magnet model to a radiant model:. Of these four, only RPI is among the ranked institutions. The others are included in order to reflect institutions of different sizes and missions. We spoke with directors of the programs; faculty members doing teaching, research, and outreach related to entrepreneurship; and students taking entrepreneurship courses. In addition to asking questions outlined above, we also asked directors and faculty what advice they would give others considering integrating their entrepreneurship programs. Among the nine universities examined, there is considerable diversity in terms of the details of how programs are organized, but some common themes emerged.

83 76 Part Two Entrepreneurship and the Modern University Major Differences Between Magnet and Radiant Models Definition of University-Wide For magnet programs, becoming university-wide entails inviting students into the existing program, while for radiant programs it involves creating new, context-specific courses. Clearly the latter is more challenging from an administrative perspective, because creating new initiatives throughout the university involves finding champions at each independent site. By contrast, for magnet programs allowing enrollment in entrepreneurship courses to non-business and/or non-engineering students is a matter of convincing faculty and curriculum committees in a single location (or two at most). Motivation for Spreading Entrepreneurship Across the Curriculum For magnet programs, university-wide entrepreneurship helps expand existing initiatives and create a diverse group of students studying together. Such diversity can facilitate cross-disciplinary teams and a broadening of the perspective of participants in courses, which include students from other majors or programs. Radiant programs share the goal of expanding the program through a university-wide approach. However, instead of gathering diverse audiences to a single site, radiant programs create context specific courses tailored to each major. Curriculum Issues The curriculum issues of the two approaches differ accordingly. When designing a course in a magnet program, it cannot be assumed that non-business students have the same depth of business education as students in business and/or engineering. Conversely, business students may lack knowledge that is standard for the nonbusiness students in the class (for example, technology or scienceoriented knowledge). Thus, the curriculum must be structured to

84 Streeter, et al. University-Wide Entrepreneurship Education 77 bring everyone up to speed and to take advantage of the diversity of the audience. In radiant programs, there is stronger homogeneity in terms of the base knowledge of students in entrepreneurship classes. For example, design students entering the entrepreneurship class in their major at Cornell share the same basic knowledge. The entrepreneurship faculty member is a design specialist and can focus more deeply on the industry and issues relevant to the career path of the students. In addition, if the students have a common gap in their knowledge of business practices (for example, finance and accounting) the faculty member can deal with the gap in a more uniform manner. Table 2 (next page): Magnet and Radiant Programs differ on definitions, motivation, curriculum and strategy.

85 Definition of universitywide Motivation for universitywide focus Curriculum issues Potential Strategies for Creating or Building the Entrepreneurship Program Magnet Non-business students have access to certain entrepreneurially-oriented business classes Expand program beyond traditional business student audience Desire to create a diverse population within classroom Coordinated course sequence, with general emphasis Courses are structured to take advantage of heterogeneous backgrounds of diverse student body Some pre-requisites Open existing courses to nonbusiness students Create minors or specializations for non-business students Create joint-degree programs, with entrepreneurship taught within the business school Radiant In addition to the business courses offered in the business school, non-business faculty creating courses outside the business program both business and non-business students are traveling to various academic units to take entrepreneurship courses Expand program beyond traditional business student audience Desire to create a context-specific approach for non-business majors to study entrepreneurship within their own majors or fields De-centralized curriculum with courses designed for each specific major Courses structured for homogeneous population Few (if any) pre-requisites Recruit faculty champions in non-business fields by directing funds in ways that support the mission of the faculty mission (teaching, research, outreach) and draw non-business faculty members (e.g. traveling professorships) creating clear and simple qualifications for faculty membership Look for ways to align the self interest of deans, faculty and alumni Recruit alumni leaders from non-business majors in order to create multidisciplinary governing body At university level, create incentives/mandates for students to require entrepreneurial course or experience during their undergraduate program Secure funding to support program administration at the university level

86 Streeter, et al. University-Wide Entrepreneurship Education 81 Discussion Choosing the Right Model It is important to review the differences between magnet and radiant models without judging one model superior to the other. The comparisons that emerged from analyzing the examples in this study simply help reveal differences and implications of choosing one model or the other. Clearly the simplest strategy for creating a university-wide entrepreneurship program is to open up existing classes to nonbusiness majors. Thus, the magnet model is the fast track. In addition, magnet models often create minors or specializations for non-business students, which consist of courses that already exist in the business school and may have unused capacity. A third strategy for magnet programs is to take advantage of situations where jointdegree programs already exist between the MBA program and others, such as Law or Science programs. By contrast, radiant programs require more work to coordinate and launch. It is crucial to have faculty and alumni champions in the non-business fields. In addition, it is helpful to secure funding both for supporting faculty initiatives and support for program administration. Some programs have created incentives or mandates at the university level to encourage (or require) undergraduate students to take entrepreneurial courses (e.g., RPI). Others make extensive use of advisory councils to guide and help fund the program. Institutions with magnet models face a marketing challenge in terms of programs outside the traditional boundaries. In addition, if the program is a multiple magnet, there is the challenge of coordination across independent centers. However, the benefits of diversity and exchange offered by magnet models are motivation to overcome the challenges. Another important benefit of magnet models is that from the viewpoint of academic credibility (an ongoing struggle for entrepreneurship faculty) it may be easier to have a critical mass of entrepreneurship faculty, and therefore have a

87 82 Part Two Entrepreneurship and the Modern University stronger intellectual community of peers. Another positive aspect for the business school is that entrepreneurship programs often create a larger alumni constituency loyal to the school. Faculty in radiant models do not have the benefit of a critical mass of entrepreneurship interest within their own departments and therefore may face considerable skepticism of peers when teaching entrepreneurship classes or pursuing research related to entrepreneurship. A chemistry professor running a seminar on biotechnology and product development may have to justify the choice to his department and it is unlikely that publishing in entrepreneurship journals will be viewed favorably. This makes the entrepreneurship arena especially tricky for untenured faculty in radiant models. However, if programs can offer research support or teaching funds that help reduce the faculty s load (such as funding a research or teaching assistant) it can help deal with such issues. On the benefits side, the radiant model has the highest potential for growth and reach within a university because students can find an entrepreneurship class located conveniently in their own majors. The teaching load is spread across the university and hence potential enrollment numbers can easily be in the thousands. Students also benefit from having the entrepreneurship class tailored to the aspect of entrepreneurship most relevant to their specific field (e.g., practice management for Veterinary school students). Both faculty and students in radiant programs benefit from the opportunity to collaborate with others across fields. Fundraising is another arena in which radiant and magnet models differ. On the one hand, magnet models may find that many eligible donors are alumni from other fields, and therefore may not wish to pour resources into a school different from their own home department. The business school serving as a magnet may also be seen as competing for donors of other programs and thus inadvertently create pressure for building parallel programs in other fields. On the other hand, magnet models may be easier to explain to donors and other sources of funding (grants and contracts). Radiant models are by nature messy. While a larger pool of donors may be available, coordinating the development effort across

88 Streeter, et al. University-Wide Entrepreneurship Education 83 many schools within the university is clearly a challenge. On the other hand, radiant models are likely to provide a career-enhancing experience to students and hence breed high levels of alumni loyalty across the university. How Should We Measure Success? It is also important to realize that since radiant and magnet programs differ in terms of their raison d etre, that it may be appropriate to measure success in a distinct manner for each type of program. Magnet models with a very specific focus, for example business creation, may find it easy to point to measurable outcomes that occur in relatively short time frames. For radiant models, the goal may be to expose a wide variety of students to entrepreneurship and small business management, and thus it can be more difficult to gauge success. The impact of entrepreneurship on students may not be reflected in business startups, but rather in the longer-term skills and perspectives that enhance individual career choices (which include corporate, non-profit and other pathways). Best Practices In our discussion with stakeholders of various programs, we heard certain themes over and over again. For both radiant and magnet programs, a top success factor emerged: get buy-in from the top of the university and support for seeking donor funding, For magnet schools, it was considered critical to align the mission of the entrepreneurship program with that of the business (or engineering) school(s). For radiant programs the challenge is to convince deans of participating administrative units that membership in a university-wide program can lead to specific benefits for his or her particular school or college. For the same reason, it was considered important to involve all units in governance of the entrepreneurship program. This cross-university support is especially critical in order to have collaboration in fundraising. Another important best practice in radiant schools is to find ways to reward and support non-business faculty, with

89 84 Part Two Entrepreneurship and the Modern University particular sensitivity to incentives that are aligned with the specific promotion environment at the given institution. Alumni advisory councils seem to play a key role in both magnet and radiant programs. For radiant programs in particular, it is especially important to have the membership of such a council reflect the multi-disciplinary nature of the program. Finally, while comments from those allied with magnet programs seemed focused on suggestions of how to bring students into the business school, those closer to the radiant model were more apt to mention the need to recruit and coordinate faculty from across the university. Conclusions and Issues for Future Discussion Developing a conceptual framework and studying entrepreneurship education in various settings has led us to three major conclusions. First, the movement toward university-wide entrepreneurship education is more widespread than we imagined, and the trend in this direction has considerable momentum. The second conclusion is that our conceptual framework is most useful as a guide to discussion, not as a means to quantify the precise number of existing programs in each category. In applying the framework to over forty examples we found it difficult to place each case firmly within a precise and specific category. Sometimes this difficulty was due to the changing nature of a university s program. In fact, during the life of this project, the organization and staffing of several of the programs evolved in ways that moved them from one category to another. Undoubtedly, for some universities on our list, we missed certain subtleties in the ways entrepreneurship education is organized. As a result, we may well have placed an institution s program in a category that is not an exact fit. In the end, we think it is less important to apply labels than it is to realize that there are several general pathways for promoting a universitywide dimension to entrepreneurship education. To put it another way, we consider the framework a tool for discussion rather than accounting. Our third conclusion relates to the costs and benefits of choosing different pathways. Our observation is that while the

90 Streeter, et al. University-Wide Entrepreneurship Education 85 radiant model of entrepreneurship education is extremely appealing to students, parents, and alumni, the magnet model is easier to administer, at least initially. The choice between radiant and magnet models of entrepreneurship education is not an easy one. At first, the magnet model appears simpler, cleaner and more easily sustainable. However, its success eventually leads to competition with the non-business (or non-engineering) academic units, both for students and for donors. As a result, there can be political resistance to keeping the entrepreneurial win in just one element of the institution. In turn, this can produce constant pressure to create parallel entrepreneurship programs specific to other (nonbusiness) majors in an attempt to recapture students, alumni, and financial support. By contrast, a radiant model involves all stakeholders. Inevitably, a radiant program is a more complex organism in terms of academics, politics, and finances. Building a radiant program is a longer-term process because the program s leaders must align the self-interests of individual stakeholders in order to move forward. Each academic unit must perceive that it can lay claim to the larger university-wide program while only making a modest local investment. From an academic standpoint, the radiant model is difficult. Entrepreneurship classes in non-business majors have to be justified in terms of curriculum and faculty time. Justification depends on the importance given to linking education and preparation for the work world. Accepting that business education is intellectually valid and challenging is not a universally held concept across different majors. In universities where entrepreneurship is not viewed as rigorous outside business and/or engineering majors, it is likely that a magnet model will be easier and more practical to maintain. Our study provides no pat answers in terms of which model is the best. Each institution must chart a course that makes the most sense in terms of costs and benefits to its stakeholders. This paper is intended to inform and stimulate healthy debate and serve as the beginning of what we hope will be useful and productive conversations on the theme of moving entrepreneurship across the curriculum.

91 Streeter, et al. University-Wide Entrepreneurship Education 87 References ADD website showing St. Louis s most recent findings Remarks at msu Cuff, R. D Notes for a Panel on Entrepreneurship in Business History. Business History Review 76: Fiet, J. O The Pedagogical Side of Entrepreneurship Theory. Journal of Business Venturing 16: Finkle, T. A. & Deeds, D Trends in the Market for Entrepreneurship Faculty, Journal of Business Venturing 16: Formaini, R. L The Engine of Capitalist Process: Entrepreneurs in Economic Theory. Economic and Financial Review Fourth Quarter:2-11. Gartner, W. B. and K. H. Vesper Experiments in Entrepreneurship Education - Successes and Failures. Journal of Business Venturing 9: Hill, R. C. and B. A. Kuhns Experiential Learning Through Cross-Campus Cooperation - Simulating and Initiating Technology-Transfer. Simulation & Gaming 25: Hood, J. N. and J. E. Young Entrepreneurships Requisite Areas of Development - A Survey of Top Executives in Successful Entrepreneurial Firms. Journal of Business Venturing 8:

92 88 Part Two Entrepreneurship and the Modern University Hynes, B Entrepreneurship Education and Training - Introducing Entrepreneurship into Non-business Disciplines. Journal of European Industrial Training 20: Laukkanen, M Exploring Alternative Approaches in Highlevel Entrepreneurship Education: Creating Micromechanisms for Endogenous Regional Growth. Entrepreneurship and Regional Development 12: Low, M. B The Adolescence of Entrepreneurship Research: Specification of Purpose. Entrepreneurship Theory and Practice 25:17. Marchigiano-Monroy, T The Context of the Teaching Intervention as a Contingency Factor in the Selection of Course Content, Pedagogy, and Outcome Assessment in the Teaching of New Venture Creation: Toward a National Model of Entrepreneurship and Small Business Education. Report presented at the ICSB Conference. McMullan, W. E. and L. M. Gillin Industrial Viewpoint - Entrepreneurship Education - Developing Technological Startup Entrepreneurs: A Case Study of a Graduate Entrepreneurship Programme at Swinburne University. Technovation 18: Michael, H. M., S. Minet, W. John, and A. Jeffrey The Ethical Context of Entrepreneurship: Proposing and Testing a Developmental Framework. Journal of Business Ethics 40:331. Penley, L. E Challenges Ahead for Small Business Education. Journal of Small Business Strategy 12:1-7. Plaschka, G. R. and H. P. Welsch Emerging Structures in Entrepreneurship Education: Curricular Designs and Strategies. Entrepreneurship Theory and Practice

93 Streeter, et al. University-Wide Entrepreneurship Education 89 Porter, L. W The Relation of Entrepreneurship Education to Business Education. Simulation and Gaming 25: Sexton, D. L.and N. B. Bowman Entrepreneurship Education: suggestions for increasing effectiveness. Journal of Small Business Management Solomon, G. T., K. M. Weaver, and L.W. Fernald A Historical Examination of Small Business-Management and Entrepreneurship Pedagogy. Simulation and Gaming 25: Streeter, D. H., J.H. Jaquette, and K. Hovis. March University-wide Entrepreneurship Education: Alternative Models and Current Trends. Cornell University, Working Paper

94 Entrepreneurship Education at 1890 Land Grant Institutions: A Profile of Programs and Consideration of Opportunities * Caroline E.W. Glackin, Ph.D. Delaware Center for Enterprise Development Delaware State University Abstract Entrepreneurship education at U.S. Universities formally began at Harvard University in 1947 with a single course and most efforts have begun in the past 30 years (Katz 2003). This paper provides entrepreneurship education profiles of top ranked programs, emerging campus-wide programs, and 1890 Land Grant Institution programs. Entrepreneurship Centers (ECs), typically in Schools of Business, are components of entrepreneurship education at many institutions. ECs have programs and services from research to academic instruction to community outreach and programming. This paper introduces a typology of ECs predicated upon their academic programs and community outreach. Detailed program information on and recommendations for the 1890 Land Grant Programs is provided. * Research assistance provided by Lillie Crawford, Ilona Figat, Patrick Hamilton, and Jason Allen

95 92 Part Two Entrepreneurship and the Modern University The importance and spirit of entrepreneurship has been a core value of the United States since its founding. The first recorded entrepreneurship course was taught in 1947 at Harvard University (Katz 2003). In 1970, researchers reported 16 entrepreneurship courses while there were over 1,600 schools offering at least one entrepreneurship course in 1997 (Katz 2003, Solomon, Duffy, and Tarabishy 2002; Vesper and Gartner 1999). Universities and colleges in the United States began opening Entrepreneurship Centers (ECs) in the 1970s with the establishment of the Caruth Institute at Southern Methodist University and have continued to do so ever since. While there were only a few early centers, today the Kauffman Foundation lists 123 centers on its Internet site (Ewing Marion Kauffman Foundation 2004), Vesper and Gartner list 128, (Vesper and Gartner 2001) and the National Consortium of Entrepreneurship Centers lists 62 college and university members ( There is a combined total of 127 U.S. college- or university-based Entrepreneurship Centers. Individual memberships in the United States Association for Small Business and Entrepreneurship (USASBE) stand at 685 and organizational memberships at 30 ( While the number of ECs has grown significantly and research on entrepreneurship education flourishes, comprehensive research on the products and services offered by Centers in Historically Black Colleges and Universities (HBCUs) is thin. This paper attempts to provide a compilation of key attributes and services of ECs and entrepreneurship education at the 1890 Land Grant Institutions (1890s) subset of HBCUs, those 17 colleges and universities plus Tuskegee University that were established as land grants after abolition. The paper includes a typology of ECs based upon the intensity of their focus on academic programs and community outreach. It also provides recommendations for the 1890s. Entrepreneurship Centers, typically university centers for entrepreneurship education and/or research situated within business or management schools, vary in mission, size, role, products, services, and funding sources. Some are primarily responsible for entrepreneurial education and research within the university. Others provide training and consulting services for

96 Glackin Entrepreneurship Education at 1890 Institutions 93 local, regional, or national customers. Still others may combine these roles and add more services to the mix. Review of Research on Entrepreneurship Education Among the research categories on entrepreneurship education, one emphasizes the components of successful programs. Sandercock explores entrepreneurship education at universities in the following six categories: influential parties, internal and external; interdisciplinary programs and recognition; specialized entrepreneurial offerings; entrepreneurship skill development; real-life entrepreneurial opportunities; and technology implementation (Sandercock 2001). Within these categories are programmatic components, such as local community benefit, health-care related programs, accelerated offerings, social entrepreneurship, and local technology entrepreneurship within specialized entrepreneurial offerings. Sandercock identifies business plan evaluation, internships, and resources as components of entrepreneurial skills development. Starting live businesses and acting as investors are part of real-life entrepreneurial opportunities and distance learning and case study development are part of technology implementation. Within this framework, Entrepreneurship Centers fulfill roles as influential internal parties. Other researchers suggest specific skill building to include in entrepreneurship education. Some topics include: leadership and creative thinking, negotiation, new product development, and exposure to innovation (McMullan and Long 1987). Another category of research is the compilation of lists of entrepreneurship centers. The previously noted list of 123 centers (Ewing Marion Kauffman Foundation 2004) provides information on many of the programs and includes one 1890 Land Grant Institution. In addition, Jerome Katz has produced a list of 181 universities with majors in entrepreneurship or small business culled from a variety of written sources (Katz 2004). George Washington University researchers have conducted three nationwide surveys of entrepreneurship education in the United

97 94 Part Two Entrepreneurship and the Modern University Entrepreneurship Development and Education: Investing in Young People Adolphus Johnson S.C. State University Success Story In 2004, the Orangeburg campus of South Carolina State University initiated a Youth Entrepreneurship Conference, called Entrepreneurship Expo. Collaborating with SCSU faculty and students, the program was marketed to South Carolina high school business teachers and guidance counselors via telephone marketing, personal visits, and direct mail. Supportive organizations include: SC State University College of Business and Applied Professional Sciences, African American Men United, Students in Free Enterprise, Allendale-Fairfax High School, Jasper County High School, Sumter High School, Marion High School, and Beaufort High School. Project Description: Entrepreneurship Expo started in order to increase business development in South Carolina. One of the best ways to foster business development in rural areas is by working with youth and the expo provides high school seniors with the opportunity to learn about the rewards of business ownership. Its goal is to cultivate world-class business leaders who have strong character and the ability to make a difference in the world around them. Entrepreneurship Expo teaches young people about the principles of entrepreneurship through workshops, competitions, and rewards. Workshops: Throughout the expo, there are multiple workshop sessions. In these sessions, participants learn about developing business ideas, writing a business plan, and operating a business. The Entrepreneurship Expo features the following sessions: Is Business Ownership Right for Me? Business Planning Marketing and Advertising

98 Glackin Entrepreneurship Education at 1890 Institutions 95 Competitions: Participating high schools have entered teams into the Entrepreneurship Expo Business Plan Competition. Teams prepare business plans and presentations to compete with other teams from across the state. Competition participants have the opportunity to go on the South Carolina State Business Venture Trip which features visits to major businesses in South Carolina like the Charleston Port Authority and the BMW Plant in Greenville, SC. The winners have the opportunity to go on the New York City Business Venture Trip and visit Wall Street, which includes tours of the New York Stock Exchange, various banks, and business enterprises. Rewards and Incentives: Participants are eligible to apply for competitive scholarships and support to attend the South Carolina State University College of Business and Applied Professional Sciences to advance their entrepreneurship skills. In addition, all participants receive tickets to the South Carolina State University vs. Bethune-Cookman game and passes to the SCSU tailgate party. Outcomes: Entrepreneurship Expo realized the following results: 376 students participated in the Expo. 98% of participants agreed or strongly agreed that they would be able to utilize the expo information in their current or future business. 99% of participants agreed or strongly agreed that the expo was very helpful and informative. 99% of participants agreed or strongly agreed that they would recommend the expo to others. Challenges and Lessons Learned: Obtaining the support of high school faculty and staff was a challenge as well as maintaining a mix of fun and education. However, making contact with the right teacher or administrator when seeking participation was important. Every teacher or administrator isn t enthusiastic about providing external educational opportunities for their students. We also realized the importance of having an adequate amount of staff to assist with the endeavor in order to maintain service quality, direct participants, and perform tasks in a timely manner.

99 96 Part Two Entrepreneurship and the Modern University States and have another survey in progress that includes vital information about centers (Solomon, et al. 2002; Solomon and Fernald 1991; Solomon, Weaver, and Fernald 1994). Best Practices. Prior research on entrepreneurship centers identifies key learnings of Entrepreneurship Center directors and provides descriptive information from programs. The National Consortium of Entrepreneurship Centers project resulted in the Successful Experiences of Entrepreneurship Center Directors report (Upton 1997). This report provides a best practices guide from nine of the best U.S. programs. In addition to suggesting practices consistent for good practices for all enterprises, there are several that are specific to the ECs. Among those for directing are: a committed champion with practical experience in entrepreneurship as director; support of the president, dean and board of trustees; faculty support in and outside the school; and alumni used as a resource (Upton 1997:29-30). Funding best practices include: having endowments, grants and contracts and outreach sources; not having funds diverted; not starting on an inadequate budget (average of $250,000 per year); having a well-developed long range plan, and giving consideration to an endowed chair (Upton 1997:31). The EC Directors suggest that best practices for curriculum include: an excellent core curriculum of four to five classes; a strong first course; blending experiential exercises with theory and research; building on faculty strengths and engaging the community; not waiting for funds to teach a course, and integrating material across courses (Upton 1997:32). The best practices continue with those for managing and marketing. Of particular note are: use of advisory boards; governance varies with most ECs in a department and directors reporting to a business school dean for outreach and a department chair for curriculum and research, and numerous recommendations for quality outreach (Upton 1997:33-34). Showing students how to behave entrepreneurially and introducing them to people who might be able to facilitate success is another recommended practice (Ronstadt 1987). Others emphasize that experiential learning is widespread and diverse in application (Solomon et al.). They identify the following types of learning

100 Glackin Entrepreneurship Education at 1890 Institutions 97 tools: business plans; student business startups; consultation with practicing entrepreneurs; computer based training; behavioral and computer simulations, interviews with entrepreneurs, and environmental scans. How Entrepreneurship Looks in Universities. In addition, published proceedings from the 1999 Conference of University Entrepreneurship Centers includes a description of a range of program structures and processes of integrating entrepreneurship (Camp et al.1999). The panel including directors from the University of Colorado, Cornell University, Harvard University, and MIT provides specific descriptions of each program and panel leader Dennis Nock states, (O)ur comments centered around how different many of the programs in the room are and the different approaches that have been taken. Some are relatively new, some, such as Harvard s, have been doing entrepreneurship for fifty years. Some, like USC, use a totally clinical faculty, some use only tenured faculty. Some use both. Some, like Wharton have extensive outreach programs. (Camp et al. 1999:1). Noteworthy is the connection forged through entrepreneurship between generally distinct areas of the universities, such as business and engineering. The inclusion of tenure track faculty (making faculty/academic connections), advisory boards, and community guest speakers are advocated. Also, the University of Colorado named their EC in 1998 with an endowment of three million dollars and has an endowed chair. (Camp et al. 1999). This discussion of integrating ECs is synergistic with the overall concept of broadening entrepreneurship education across campuses. Researchers, practitioners, and funders alike have taken up this notion. According to one report, With a firm foothold established in many business and engineering schools, champions of entrepreneurship education are now scanning the rest of the university for opportunities to reach attract students with their

101 98 Part Two Entrepreneurship and the Modern University programs (Streeter, Jaquette, and Hovis 2002:7). Entrepreneurship Centers are not isolated to business schools, rather they are venturing into other domains (Sandercock 2001). Spreading the seeds of entrepreneurship education across the campus includes entrepreneurship minors, new courses and degree programs, and are complementary to technical disciplines such as engineering and applied sciences (Sandercock 2001). Streeter et al. (2002) developed a classification system for institutions with entrepreneurship education that defines them as either focused or university-wide depending upon the availability of courses to students outside of business and engineering programs. They further define magnet models and radiant models depending upon whether entrepreneurship is offered by a single entity or is diffused across the institution, as well as where resources are located. Within the radiant model, students outside of the business school can take entrepreneurship courses and non-business faculty may teach them. A mixed model includes university-wide programs only at the graduate or undergraduate level. Figure 1 illustrates the model and the classification of the studied programs. Entrepreneurship Centers may fall anywhere within the models defined by Streeter et al. However, most centers have traditionally been located within schools of business and have included students from outside of business to differing degrees. Because most business owners are not formally students of business, those institutions which reach across boundaries to include non-business students and faculty are most likely to serve more future business owners. A recent development is the discussion of issues and models specifically of Entrepreneurship Centers. A panel discussion at the 2004 National Consortium of Entrepreneurship Centers Conference noted seven types of center models and eight key variables in defining a model (Morris et al. 2004). The types of models identified are: the external center (outreach); the extra curricular center (campus); the niche center (technology, women, rural initiatives); the research center; the academic center; the comprehensive center, and hybrids. The key variables defined are: structural autonomy or tie-in with academic departments; location in or out of business school; budgetary independence; involvement of tenure track

102 Glackin Entrepreneurship Education at 1890 Institutions 99 faculty; responsibility for curriculum; involvement of students; responsibility for applied academic research; engagement on campus versus off campus, and participation in venture start-ups. Figure 1: Classifying Entrepreneurship Programs Using Framework MBA only Focused MBA & UGB Focused or University-wide? MBA & UGB & ENG Single University-wide Magnet Multiple Radiant Mixed U-wide only at Grad Level U-wide only at Undergrad Level Source: Streeter, D.H., J.P. Jaquette, Jr. and K. Hovis Universitywide Entrepreneurship Education: Alternative Models and Current Trends. Ithaca, NY: Cornell University. The present research addresses several issues of importance in entrepreneurship education and in the operation of entrepreneurship centers. It presents a comparison of programs, including the 1890s and addresses specific programmatic aspects of the 1890 Land Grant Institution entrepreneurship education efforts. It creates a typology of entrepreneurship education based upon academic emphasis and community outreach. It then provides recommendations to enhance the 1890 Land Grant options. Research Design & Methodology The goal of this research is to identify the salient features of entrepreneurship education via Entrepreneurship Centers in the

103 100 Part Two Entrepreneurship and the Modern University United States and to understand their distinctive and core competencies with particular emphasis on the 1890 Land Grant Institutions. This applied research project assists in understanding a range of features and benefits offered through entrepreneurship education. It consists of several components. It examines a sample of 36 Entrepreneurship Centers or Programs through primary and secondary research to determine what the roles of ECs are within U.S. universities. It further explores the question of how, if at all, 1890 Land Grant Institutions differ. This exploratory research provides an opportunity for benchmarking by centers so that they can more readily understand where in the continuum of designs they fall and where they may wish to be positioned in the future. The research uses mixed methods consisting of quantitative and qualitative components to identify and quantify products and services offered. It is concurrent nested research and consists of the following components: Review of literature on entrepreneurial education using content analysis. Identification of the universe of Entrepreneurship Centers via Internet and trade and professional association materials to specify data to be collected and to determine the purposive sample for further research. Program data from public domain sources to answer the research questions to the extent possible for the purposive sample of leading centers, Kauffman Foundation grantees, and 1890 Land Grant Institutions. Survey data from a comprehensive survey of 1890 Land Grant programs plus Tuskegee University, with emphasis on those funded by the United States Department of Agriculture through the Rural Business Cooperative Service Land Grant Institutions Rural Entrepreneurial Program Outreach Initiative. These data collection methods are several due to the exploratory and applied nature of the research questions. Because the full extent of program approaches is unknown, the research questions are

104 Glackin Entrepreneurship Education at 1890 Institutions 101 examined across programs and stakeholders and through various methods for greater understanding. Given that there are over one hundred Entrepreneurship Centers in the United States, inclusion of additional sites would be preferable in order to make the results more appropriate to generalization. However, the realities of resource constraints and the demands of the research time frame do not permit nor required this. For this purpose, this research and analysis is appropriate. All 1890 Land Grant Institutions were afforded ample opportunity to participate. The results and findings are not capable of generalization to the entire population of Entrepreneurial Centers in the United States. At the same time, the analytical framework and recommendations for 1890s is created from an analysis of the data and may stand on their own design. Findings The 36 Entrepreneurship Centers studied include large research institutions, medium-sized institutions, and small teaching institutions. The data obtained in the public domain and through surveys reveals that among the institutions studied, programs varied considerably in breadth and depth. Table 1 shows the programs studied and summarizes the key components of the entrepreneurship education programs. The literature program data suggests that there are several key aspects of ECs that assist in categorizing them. These include: placement within the university; academic emphasis in the form of degrees, majors, minors, concentrations, and/or tracks; full time, dedicated faculty or shared faculty; Endowed Chairs/Professors of Entrepreneurship or Entrepreneurial Studies; presence of a business incubator for commercialization; community courses (workshops, training courses, speaker series and the like for members of the broader community); counseling, and youth programs.

105 102 Part Two Entrepreneurship and the Modern University Table 1: Selected University-Based Entrepreneurship Centers Compiled from institutional websites, program surveys, and 1890 Land Grant USDA applications. Program and Placement in University Academic Emphasis FT Entrep. Faculty Endowed Chair/Prof. Incubator Community Courses Counseling Youth Programs Alabama A& M University*** School of Business No No No NA NA NA NA Alcorn State University*** Coop. Extension Babson College* Arthur M. Blank Center for Entrepreneurship Columbia University* Eugene M. Lang Ctr. for Entrep., Business School Delaware State University*** School of Management Florida A&M University*** Extension & Outreach Program, College of Engineering Sciences, Technology & Agriculture Florida International University** Global Entrep. Center (campus wide) Fort Valley State University*** Rural Business No No No Yes NA Yes Yes MBA, Major, Concent. Yes Yes Yes Yes Yes No: Teach -er progs only MBA No No Yes No No No No courses only with undergrad option No No In prog Yes Yes Yes No No No No Yes Yes No Cross curriculum No courses only via Yes No Yes Yes Yes No No No Yes Yes Yes Yes

106 Glackin Entrepreneurship Education at 1890 Institutions 103 Program and Placement in University Academic Emphasis FT Entrep. Faculty Endowed Chair/Prof. Incubator Community Courses Counseling Youth Programs Outreach Institute, Office of Advancement & Research, Public Service Ctr Business & Economics Harvard University* Arthur Rock Ctr. for Entrepreneurship, School of Business MBA elective curriculum Yes (31) Yes No No No No Howard University** Institute for Entrep., Leadership & Innovation, Office of the Provost Kentucky State University*** Cooperative Extension Langston University*** Center for Outreach, College of Agriculture Lincoln University in Missouri*** MIT* Entrepreneurship Center, Sloan School of Management North Carolina A&T State University*** School of Business & Economics plus Dept. of Natural Resources & Agribusiness Prairie View A&M University*** Cooperative Extension Program Creating undergrad minor & graduate concentrati on NA No In prog Yes Yes + No No No No No Yes Yes Yes No No No No Yes Yes Yes No No No NA NA NA NA MBA Track Yes Yes Yes No No No Certificate Program NA NA No Yes Yes No No No No Yes Yes Yes Yes

107 104 Part Two Entrepreneurship and the Modern University Program and Placement in University Academic Emphasis FT Entrep. Faculty Endowed Chair/Prof. Incubator Community Courses Counseling Youth Programs Economic Dev. Department South Carolina State University*** 1890 Research & Extension Adult Leadership & Community Development NA NA NA NA Yes via SB DC Yes Yes Southern Univ. & A&M College *** Center for Rural & Small Business Dev., Agricultural & Extension Center Stanford University* Center for Entrepreneurial Studies, Graduate School of Business Tennessee State University*** Cooperative Extension Program Tuskegee University*** Rural Business & Economic Dev. Program -College of Agriculture Coop. Extension U. Arkansas -Pine Bluff*** Economic Research & Dev. Ctr., School of Business & Management U. California Berkley* Lester Center for Entrepreneurship & Innovation, Haas School of Business & NA NA NA NA Yes Yes No No 15 graduate courses offered No No No No No & No Minor NA NA NA Yes NA Yes No No No In prog No courses only MBA Certificate in Entreprene urship Yes Yes Yes Yes Yes No Yes Yes Yes No No Yes No No Yes

108 Glackin Entrepreneurship Education at 1890 Institutions 105 Program and Placement in University Academic Emphasis FT Entrep. Faculty Endowed Chair/Prof. Incubator Community Courses Counseling Youth Programs Center for Entrepreneurship & Technology, College of Engineering U. California Los Angeles* Harold Price Center for Entrepreneurial Studies, School of Management No MBA elective courses Yes Yes No Yes No No U. Illinois -Urbana Champaign** Technology Entrepreneur Ctr., College of Engineering U. Maryland Eastern Shore (UMES) *** Rural Dev. Center, MD Extension U. N. Carolina - Chapel Hill** Center for Entrepreneurship at the Kenan-Flager Business School & the Carolina Entrepreneurial Initiative University of Pennsylvania* The Wharton School U. Rochester** Rochester Center for Entrepreneurship U. Southern California (USC)* School of Business U. Texas Austin* Herb Kelleher Ctr. for Yes Certificate program No No Yes NA NA NA No No No Yes No Yes No MBA concentr.; undergrad business concentr.;& Arts & Sciences minor Yes Yes NA NA NA NA MBA concentr., undergrad major and concentr. Yes Yes Yes Yes Yes Yes NA NA NA NA NA NA NA Degree, major, concentr. M.S. in Science & Technology NA NA NA Yes NA NA Yes Yes Yes NA NA NA

109 106 Part Two Entrepreneurship and the Modern University Program and Placement in University Academic Emphasis FT Entrep. Faculty Endowed Chair/Prof. Incubator Community Courses Counseling Youth Programs Entrepreneurship & Commerci IC 2 Institute alization U. Texas El Paso** No No No NA NA NA NA Virginia State University*** Virginia Rural Entrepreneurship & Business Dev. Program, Coop Extension NA NA NA NA Yes Yes Yes Wake Forest University** Angell Center for Entrepreneurship Babcock School Washington U. in St. Louis** The Skandalaris Entrepreneurship Program Olin School of Business West Virginia State University*** Rural Business Services Division of Agriculture, Consumer, Environmental, & Outreach Progs, Primary & Secondary concentr. Concentr. or major in each Olin degree program No course No No Yes Yes ^ Yes Yes No # Yes Yes Yes % No No No No No Yes Yes NA Coop. Extension * U.S. News & World Report ** Kauffman Foundation Multi-million Dollar Grantees *** 1890 Land Grant + Tuskeegee # works with RCGA Incubators % MBA Practicum & Internship Initiative ^ via Family Business Center & MBA field projects + Student consulting

110 Glackin Entrepreneurship Education at 1890 Institutions 107 As would be expected, the larger research institutions and those specializing in entrepreneurship show a greater level of academic entrepreneurship education. The recent grantees for creating entrepreneurial campus environments have a mixture of academic and community foci. The 1890 Land Grant Institutions, being primarily small teaching universities and having their programs in agriculture areas rather than business, emphasized outreach and community to a greater extent. Table 2 provides a summary of Entrepreneurial Education at the study institutions. The top-rated institutions often have an endowed chair or professor in entrepreneurship, full time entrepreneurship faculty, and an undergraduate or graduate major or concentration in entrepreneurship. Six of the top ten have endowed chairs or professors in comparison with two of the Kauffman grantees and one of eighteen of the 1890s. At the same time, six of the top programs have full time faculty with three and one respectively for the Kauffman grantees and 1890s. Only two of the top programs do not have an entrepreneurship track, concentration or major at either the undergraduate or graduate level. UCLA has MBA elective courses and Stanford has 15 graduate courses. The top programs all include entrepreneurship courses while the Kauffman grantees appear to be developing curricula. The 1890s include five institutions with courses. The entrepreneurship education programs at 1890 Land Grant Institutions are primarily directed toward their outreach mission and are generally a part of the Agriculture Extension programs rather than the business schools (South Carolina State and Delaware State are the only exceptions). Five of the 1890s (27.8%) report offering academic courses in entrepreneurship. The University of Arkansas at Pine Bluff (UAPB) is the only institution with an endowed professor of entrepreneurship, and offers a total of three entrepreneurship classes serving approximately 120 students per year. However, UAPB offers no entrepreneurship degree or concentration. Delaware State University offers an undergraduate entrepreneurship track within the School of Management with four classes consisting of over 200 students per year. Fort Valley State

111 108 Part Two Entrepreneurship and the Modern University University offers an undergraduate entrepreneurship course in the College of Arts and Sciences. North Carolina A&T State University has a certificate program in entrepreneurship. Tennessee State University offers a minor in Entrepreneurship and West Virginia State University offers one single course. Table 2: University-Based Entrepreneurship Centers Community Outreach & Academics Community Outreach Emphasis High Medium Academic Emphasis High Medium Low Florida Internatl.** Wake Forest** Babson* Wharton* MIT* UCLA* Washington University in St. Louis** Delaware State*** Fort Valley*** U. Arkansas Pine Bluff*** Howard** UC Berkeley** NC A&T*** Tennessee State*** Alcorn State*** Langston*** Prairie View*** South Carolina State*** Tuskegee*** Virginia State*** FAMU*** UMES*** West Virginia State*** Low Harvard* UNC - Chapel Hill** Columbia* Stanford* Univ. IL Urbana** Alabama A&M*** Lincoln U. in Missouri*** * Top 10 ** Kauffman grantee *** 1890 Land Grant Institution Business incubators, often involving internal and external constituents, are distributed among the range of institutions. The top ten entrepreneurship institutions include six with incubators.

112 Glackin Entrepreneurship Education at 1890 Institutions 109 The Kauffman Foundation grantees include three existing incubators and one in progress. The 1890s include four existing and two in progress incubators. The presence of community courses and workshops, business counseling, and youth entrepreneurship programs are community outreach and education efforts. Babson College, UCLA, USC, and the Wharton School are the four top schools offering community courses or workshops. Babson and Wharton are the only ones of the group to provide business counseling services. The University of California Berkeley and the Wharton School offer youth entrepreneurship education programs and Babson offers a teacher training program. Based upon data obtained, the Kauffman grantees are mixed with respect to community outreach. Four provide community courses and workshops and the same four provide counseling. None offer youth entrepreneurship programs. The 1890 Land Grant Institutions have considerably stronger community entrepreneurship roles. Thirteen of the 1890s have community entrepreneurship education programs in the form of non-credit and continuing education courses or workshops and training programs. Fourteen provide business counseling services and ten offer youth entrepreneurship programs. This represents a significant commitment of resources for relatively small institutions. Community entrepreneurship classes and workshops at the 1890s have common and divergent elements and service various constituencies. The 1890s (13) reported serving hundreds of participants through classes and workshops in fiscal year The programs often have a multi-week course for aspiring entrepreneurs. The total number of hours for a course or workshop ranges from 1.5 hours to 28 hours. Curricula vary from self-created to formal Kauffman Foundation courses. Other workshops offered include: Selling on e-bay ; QuickBooks, Market Research, Marketing on a Shoe String, Cooperatives 101, Alternative Enterprises for Farmers, Low Cost Technology for Mushroom Production, and Customer Service Essentials. There is little to no consistency in course offerings, materials, or content between the institutions. Program fees vary from $0 to $200 and class sizes

113 110 Part Two Entrepreneurship and the Modern University generally are relatively small (under 20 participants). Classes are most frequently held on campus, at community centers, Small Buisness Development Centers (SBDCs), and government facilities. Most programs promote via word-of-mouth, partner organizations and flyers. Public relations, newspaper advertisements and direct mail are used less frequently. The fourteen 1890 programs providing counseling services (77.8%) each have unique delivery and content components. For some, such as South Carolina State, technical assistance is structured into four weeks at one hour per week, then one hour per month for six months. Others provide counseling services weekly, monthly, or on an as needed basis. The average number of hours per client per year ranges from 4 to 30 with an unweighted mean of 13 hours. Technical assistance sessions are held at a variety of locations with the most prevalent being on campus (8), at businesses (7), and at community centers (7). Small Business Development Centers (5), government facilities (5), satellite campuses (3), and online/web counseling are other options. None of the institutions charges for these services. In total, the 10 institutions reporting hours of services provided approximately 8,500 counseling hours in fiscal year The ten 1890 Land Grant Institutions that provide youth entrepreneurship education offer conferences, day camps, and inschool and after school programs, primarily for secondary school students. In fiscal year 2004, eight schools reported serving 1,572 youth for an average of students each. The Kauffman Foundation s E-in-Me and Making a Job curricula are used by some programs as are the National Foundation for Teaching Entrepreneurship (NFTE) curriculum and self-designed curricula. Programs are held in middle and high schools, on university campuses, in community centers, government facilities, and churches. Youth entrepreneurship programs serve multiple purposes within the universities. They not only introduce entrepreneurial skills and concepts to students at a formative stage, but also introduce the universities and their programs to secondary school students through campus visits and competitions. For example,

114 Glackin Entrepreneurship Education at 1890 Institutions 111 South Carolina State and Delaware State offer scholarships to high performing entrepreneurship students. In addition to the main categories identified previously, universities may offer business plan competitions, entrepreneurial internships, speaker series, mentors, and student clubs. Three of the 1890s (Delaware State, Prairie View and South Carolina State) sponsor business plan competitions for youth and Delaware State also offers competitions for university students and community members. None of the 1890s offers a formal entrepreneurial internship although Tuskegee University has a work/study program in rural business development activities and Delaware State is planning an internship program. Five programs have a entrepreneurial speaker series and two have formal mentoring programs. Three of the 1890s have entrepreneurship clubs with Collegiate Entrepreneurs Organization (CEO) and Students in Free Enterprise (SIFE) being most common. In addition, Tuskegee University succeeded in working with a community development corporation to fund a business incubator while Fort Valley manages a loan pool. The data show that the top-ranked university-based entrepreneurship programs, the Kauffman grantees, and the 1890 Land Grant Institutions have many common elements as well as points of divergence. The ranked programs tend to have a strong to medium academic emphasis with medium to low community outreach emphasis. The Kauffman grantees cluster around the middle-ground along both attributes. The 1890 Land Grant Institutions fall primarily in the high category for community outreach and low to medium for academic emphasis. Given the factors of placement within the university, types of institutions, and funding sources, these differences are expected. However, there is opportunity to strategically reposition individual programs.

115 112 Part Two Entrepreneurship and the Modern University Implications of the Research and Recommendations to 1890 Land Grant Institutions This research suggests some interesting implications for the 1890 Land Grant Institutions. To a large extent the 1890 Land Grant Institutions are ahead of the curve by their placement outside of the Schools of Business or Management. At the same time, they are behind in terms of connections within the universities and with outside networks. Tendencies to focus only on the outreach function and far less at inreach and curriculum do not serve them well. This situation is appropriate and expected in light of the traditional role of cooperative extension in land grant institutions. However, it is an anathema in terms of modern, mature entrepreneurship education and resources. Even with relatively limited funding, greater interdisciplinary coordination and cooperation could be fostered. The ranked programs and those in the Kauffman Group have far greater breadth and depth and financial and institutional support. With the Agricultural Extension role at 1890 Land Grant Institutions, entrepreneurship education is necessarily an outreach effort. Cooperative Extension is not charged with academic curriculum development. While the 1890s have entrepreneurship education roles outside of the curriculum arena, there are considerable opportunities to enhance academic and community outreach activities, sometimes without substantial new investment. A key step is to gain institutional (internal) and funder (external) support to move toward university-wide involvement (Streeter et al. 2002). Internal champions can make strategic connections with areas outside of agriculture including business, social work, education, engineering, and the arts. Internal support of administrators can be increased via positive publicity and proven performance. While 1890 institutions may not wish to add full time entrepreneurship faculty, endowed chairs, center or entrepreneurship degrees, and majors or concentrations, they may want to offer cross-cutting courses or other student opportunities. External support can be facilitated by increasing visibility and emphasizing measurable, positive outcomes and success stories.

116 Glackin Entrepreneurship Education at 1890 Institutions 113 The field of university-based entrepreneurship education has expanded exponentially and the participating institutions in this growth have substantial accumulated knowledge. The literature contains abundant information about course designs, pedagogies, and effective strategies. Associations such as the United State Association of Small Business and Entrepreneurship (USASBE), the National Coalition of Entrepreneurship Centers (NCEC), and the Association for Enterprise Opportunity (AEO) have considerable information available to members and hold annual conferences for the exchange of information and peer networking. The 1890s can learn from these experiences so that barriers are minimized. Moreover, the outreach-focused institutions can learn from one another and achieve economies through the process. Before working the program design level, the 1890 Land Grant Institutions would be well served to work collaboratively to identify desired outcomes and impacts as a group while recognizing that each institution has differing strategic drivers and resources. Use of logic models (Hatry 1999) to create and define inputs, outputs, and outcomes combined with a review of the microenterprise field generally and Aspen Institute s Microtest measures (Doub 2004; Doyle 2001; Edgcomb, Klein, and Clark 1996; Nelson 2000; Schreiner 2002) could serve as a starting point for discussions. Annual 1890 Land Grant USDA grantee information exchange workshops are of significant value. However, more frequent and focused communications would foster more rapid and valuable learning. For example, 1890s may want to collaborate to create a core set of products and services with a menu of options for individual institutions so that each does not reinvent the wheel where knowledge exists within the institutions. Sharing tables can be instituted at 1890 workshops for all curricula, research, publications, and marketing materials with 1890 materials and materials from ranked institutions. Resources can be pooled to hold train-the-trainer sessions as a collaborative. In order to maximize the potential for entrepreneurship education along academic and community outreach lines, 1890 Land Grant Institutions may opportunistically use the resources available to them and may build upon their existing networks to enhance

117 114 Part Two Entrepreneurship and the Modern University performance. By looking inward and outward, they can establish realistic mutual outcomes objectives as well as institutional objectives. They can build stronger bonds with the broader entrepreneurship education networks that are established and reduce their learning curves. They can collaborate to reduce start up and operating costs for services. Integration of the work with that of other schools and colleges within each institution could benefit the students, the 1890 institutions and their communities.

118 Glackin Entrepreneurship Education at 1890 Institutions 115 References Camp, M., L. Cox, and R. Smilor Conference of University Entrepreneurship Centers. Presented at the 1999 Conference of University Entrepreneurship Centers, at University of Southern California. Doub, M Women's Initiative Measures Up: A Report on the Post-Training Outcomes for Microenterprise Training Participants from San Francisco: Women's Initiative for Self Employment. Doyle, K Performance measures for microenterprise in the United States. in The Role of Microenterprise Development in the United States. Geneva,: International Labor Organization. Edgcomb, E, J. Klein, and P. Clark The Practice of Microenterprise in the United States: Strategies, Costs, and Effectiveness. Washington, DC: The Aspen Institute. Ewing Marion Kauffman Foundation Supporting Entrepreneurship - Centers for Entrepreneurship (123) [Internet]. Kauffman Foundation 2004 [cited November ]. Available from e. Hatry, H Performance Measurement: Getting Results. Washington, DC: The Urban Institute Press. Katz, J The Chronology and Intellectual Trajectory of American Entrepreneurship Education Journal of Business Venturing 18: eweb's List of Colleges with Majors in Entrepreneurship or Small Business [Internet]. Saint Louis

119 116 Part Two Entrepreneurship and the Modern University University 2004 [cited September 21, 2004]. Available from McMullan, W.E., and W. Long Entrepreneurship Education in the Nineties. Journal of Business Venturing 2: Morris, M. H., D. Kuratko, T. Seelig, H. Sause, and R. White Models of Entrepreneurship Centers: Emerging Issues and Approaches. Presented at the National Consortium of Entrepreneurship Centers Conference. Nelson, C Microenterprise development works!: Outcomes for clients. Arlington, VA: Association for Enterprise Opportunity. Ronstadt, R The Educated Entrepreneurs: A New Era of Entrepreneurial Education is Beginning. American Journal of Small Business 11 (4): Sandercock, P Innovations in Entrepreneurship Education: A Study Commissioned by the Chair for Entrepreneurship, Department of Management, DePaul University. Schreiner, M Evaluation and Microenterprise Programs, U.S. Journal of Microfinance 4 (2): Solomon, G.T., S. Duffy, and A. Tarabishy The State of Entrepreneurship Education in the United States: A Nationwide Survey and Analysis. International Journal of Entrepreneurship Education 1 (1):1-22. Solomon, G.T., and L.W. Fernald Trends in small business and entrepreneurship education in the United States. Entrepreneurship Theory & Practice 15 (3):25-40.

120 Glackin Entrepreneurship Education at 1890 Institutions 117 Solomon, G.T., K.M. Weaver, and L.W. Fernald A historical examination of small business management and entrepreneurship pedagogy. Simulation and Gaming 25 (3): Streeter, Deborah H., John P. Jaquette, Jr., and Kathryn Hovis University-wide entrepreneurship education: Alternative models and current trends. Department of Applied Economics, Cornell University, Ithaca, NY. Forthcoming. Upton, N Successful Experiences of Entrepreneurship Center Directors. Waco, TX: Baylor University. Vesper, K., and W. Gartner University Entrepreneurship Programs Los Angeles, CA: Marshall School of Business at the University of Southern California Compendium of Entrepreneur Programs [Internet]. University of Southern California 2001 [cited February ]. Available from

121 Part Three Impacts and Outcomes Creating Wealth in the South

122 Assessing the Record and Charting the Future: A Primer on Methods for Identifying, Measuring, and Analyzing Program Outcomes and Impacts Ronald L. Williams Extension Head, Program Planning and Development The Alabama Cooperative Extension System Alabama A&M University & Auburn University Abstract This paper offers some observations on why there is a great need for increased program accountability and elaborates on the benefits derived from the use of better performance measures. Examples of impact and accountability reports are presented to highlight best practices. Weaker impact reports are analyzed so as to emphasize more effective ways to demonstrate outputs and impact to funders.

123 122 Part Three Impacts and Outcomes: Creating Wealth Demonstrating Our Impact and 1890 Accountability There is an increasing need for accountability for all publicly funded programs. Specific to Cooperative Extension, one need only examine the Cooperative State Research, Education, and Extension (CSREES) Narrative Annual Report of Accomplishments guidance and approval letters for evidence. Our federal partner has been adamant in recent years that states do a better job in reporting the measurable outcomes and impacts associated with expenditure of taxpayer dollars, and they caution states to only include program reports with actual impact data. Until recently, we were content with reports that cited outputs and numbers of program participants to the exclusion of reports that focused on measurable outcomes and impacts. Examples abound of reporting X number of farmers attending a demonstration or training, X number of homemakers receiving subject matter training, or X number of 4-H youth attending workshops. Rarely did we address the outcomes of such training. That scenario will no longer suffice. Increasing competition for dollars and program responsibility lends credence to the fact that our agencies must do a better job documenting the impacts of our programs and activities. We may no longer simply state what we did but instead must detail the outputs and outcomes of our programs by effectively documenting how our programs positively impact the lives of participants. Continuation of funding for public agency programs is directly related to how well we are able to document the impacts of our programs. Alabama, like many other states, is now imposing performance based budgeting for public agencies. Agencies that once took their state appropriations as a given are now faced with having to provide the funding source a concise set of indicators of program success and are then held accountable for their attainment. Outputs, while important in the overall program development process, are not measures of program success. The ability to merely cite numbers of publications produced, attendees, contacts, and meetings or demonstrations conducted will simply not suffice. Nor

124 Williams Assessing the Record and Charting the Future 123 will testimonials alone provide the needed evidence for continuation of funding. Our agencies must be able to prove that the continued expenditure of public funds is warranted, based on quantitative as well as qualitative assessments of the positive impacts derived. Success stories remain a valuable part of the accountability process, but only to the degree to which they complement and exemplify what is proven by objective, quantitative measures of success. Today, those who authorize and administer funding to public agencies demand data on the impacts of programs. They want to know how their investment has contributed to quantifiable changes in social, economic, and environmental conditions, improved community function and structure, and significantly enhanced individual and family well-being. Research and Extension at Auburn University, along with many other land-grant institutions, recently underwent an in-depth audit by the USDA Office of the Inspector General. The resulting report is sobering at best. The Office of the Inspector General s audit report is solid evidence that critical eyes are monitoring our programs for compliance with the law and how well agencies are able to document the measurable impacts of programs. Funders seek the answer to but one very simple question So what? In other words, they are not interested in the fact that 100 farmers were present at a meeting. They want to know how the economic conditions of 100 farmers were improved by their attendance at the meeting. It is necessary to provide creditable proof of our program outcomes and impacts in order to ensure the existence of future initiatives. Benefits of Increased Accountability There are important reasons for public agencies to seek accountability for our program efforts. When properly designed and implemented, accountability and evaluation allows public agencies to: Assess the performance of and improve public agency programs and activities.

125 124 Part Three Impacts and Outcomes: Creating Wealth Generate improved strategies to increase program efficiency. Generate objective, quantitative evidence of program impact and outcomes. More efficiently expend the human and fiscal resources of public agencies. Better assess which programs to keep in public agencies inventories and which programs to discontinue (a process that is very difficult for most agencies). Improve program visibility internally and externally. Help the public better comprehend our programs and their value to individuals and the community. Who Wants to Know? Audiences for Impact and Accountability Information Different parties seek greater accountability and evaluation data associated with expenditure of public funds. They want to know how we expend dollars, but are even more interested in the tangibles (positive outputs and outcomes) produced by such expenditures. This is especially true with regard to elected officials, who share our audience. Sources of requests for information on the impacts and outcomes of public agencies programs include: Federal partner (e.g., CSREES). Congress (e.g., OMB, OIG). State, county, and local governments. Public agency directors and administrators. Commodity groups, special interest groups, watchdogs, advisory groups. Public agency communication, program planning, and evaluation staff. Public agency personnel responsible for conducting performance appraisals. Peers within your agency, and in related public agencies across the nation. External funding sources, both public and private.

126 Williams Assessing the Record and Charting the Future 125 Common Attributes of Audiences for Accountability and Impact Information. To varying degrees, those demanding increased accountability and impact information from public agencies directly or indirectly exercise some control over programs. Their time is usually limited and they have multiple competitors for their attention. They only have time to read information that is vital to their decision-making process or information that is directly related to their target audiences and stakeholders. The Extension Narrative Annual Report of Accomplishments is somewhat of an exception in that it seeks documented impacts and outcomes but also continues to relish receipt of qualitative information, such as success stories, that highlight program impacts on selected individuals or communities. In the past our federal partner often wanted all program information but recently the focus has shifted. Today, our federal partner has an almost singular interest in reports that contain documented accountability and impact data. Those who seek hard evidence of program outcomes and impacts are looking for information that justifies their fiscal investment in a given agency program or activity. Reporting that a program is successful via anecdotal evidence or public testimonial is inadequate. In the highly competitive environment in which we operate today, feel good programs are coming under increasing scrutiny. The immensely popular law enforcement DARE program is a good example. While it remains politically incorrect to criticize such popular programs, fiscal realities negate the expectation that such programs can continue to persist in the absence of conclusive data to validate claims of success. How We Use Impact and Accountability Information I am often asked by county agents and specialists why we ask them for certain information. We often deluge our staff with information requests without providing them any explanation of why the information is important and what we do with it. There are

127 126 Part Three Impacts and Outcomes: Creating Wealth several concrete examples of how data is used. For example, some of the uses for requested accountability information include: Annual Reports of Accomplishments and unit/base program reports are often required for continued funding. Annual Reports that serve to inform internal and external audiences about your agency and the positive impacts its programs have on individuals and communities. Special reports, as requested from CSREES, state government, and the like are often needed to inform and convince executive and legislative entities to continue to include the agency as a line item in the budget. Unit reports (base program area reports). Reports to county and local governments are particularly useful given that such funding far exceeds federal allocations to the agency. Public relations materials that keep our publics and stakeholders up to date on agency activities. Performance appraisals greatly assists the individual in preparing for an evaluation. Information requests (on specific programs) from other states is important as there is no need to reinvent what has already been proven to work. The previously discussed program planning and evaluation functions. Impact Statement Checklists There are common formats for impact statements. Like the impact statement checklist outlined below, these formats are useful, but they can be significantly improved. Here, I examine the components of a sample impact statement checklist, while offering suggestions for improvement in light of the necessity to demonstrate impact and outputs. Impact Report Title. Be certain the title of the program or activity succinctly captures the essence of the program. It is all too common

128 Williams Assessing the Record and Charting the Future 127 to find project titles with extravagant and wordy titles that do little to inform the reader about the program. Time is critical and it is essential that the program title immediately convey to the reader what the activity is yet also persuades them to peruse the report. Issue Statement. The issue statement must immediately define the problem for the reader. It must convey why the program constitutes a significant endeavor. The issue statement must define the audience and answer the question: Why is this important? It is essential that we not overlook the great importance of the audience the Who cares? aspect of the report and the explanation of why the issue, and associated activities, are important to the audience. It is entirely possible that we (public agencies) have identified a problematic issue with the best intentions. But if the target audience does not share our definition it will be difficult at best to convince others (our administration, funding agencies, cooperators, for example) that our program has merit. We must also remain cognizant of the concept of a shared audience, that is, the target audience we define as associated with a given issue may also be the audience of other public agencies, as well as local, state, and federal elected officials. They may also want to monitor our program outcomes and impacts. In our issue statements we must also succinctly note the intended outcomes and impacts expected to derive from the program. Specific to Cooperative Extension, we must be able to express what it is that we predict extension program efforts to do to resolve the problem. Accomplishments. As CSREES reminds our institutions, we must detail what has been done to address the issue and who was most affected by the program. It is necessary that our accomplishment reports define the resources used in support of the activity and that we outline the outputs (e.g., publications, meetings, newsletters, handbooks, brochures, TV and radio ads, demonstrations) used to convey our educational message. But we cannot expect that a list of outputs will be enough to ensure program continuation. Not only must we define the resources and outputs, but we must also devote

129 128 Part Three Impacts and Outcomes: Creating Wealth the majority of our discussion to the achievement of program outcomes and impacts. Impacts. This answers the question So what? We must ensure that the reader has no difficulty understanding the positive impacts generated by our programs and activities. We need to define the outcomes, detail how we met our stated objectives, and have ample quantitative and qualitative data to support our claim of success. It is absolutely essential that our impact statements define the positive difference the program made in people's lives. The statements must define the economic value or improved efficiency, environmental quality enhancements, or other positive changes that occurred in the community resulting from the expenditure of public funds. As addressed earlier, if we cannot provide a clear and concise answer to the question So what? then our chances of program continuation are low. Partners. Today, it is almost a given that our programs and activities will include interagency collaborations and program partners. Most funding agencies expect this. Specific to Cooperative Extension (but also true of other agencies) we have an excellent history of engaging in successful collaborative agreements and partnerships. However, even though this history is strong, Extension has a very poor record ensuring that we are afforded public credit for our role in the program success. All too often we do the majority of the work and our partner takes the credit. Cooperative Extension and other public agencies must improve the public visibility for our own contributions to program success. Prioritize Affiliation. What national, regional, state, or local priorities is this program associated with? Linking program efforts to similar efforts on the state, regional, national, or international level may lend greater creditability to a proposed program or for continuation of an existing program. This is particularly true when we are able to demonstrate a need and also demonstrate that similar efforts have generated positive outcomes and impacts in similar contexts.

130 Williams Assessing the Record and Charting the Future 129 Program Contacts. For further information on the program, determine who should be contacted and how to reach them. Assuming we have done a good job with our impact statements and captured the interest of the reader, it must be easy for the reader to seek additional information about the program. A fault I often observe is that the designated contact is someone other than the person(s) who can provide firsthand program details. All too often the contact cites is the program director or administrator instead of the principals involved. The contact should be person(s) most actively involved in and most conversant about the program. Impact Reports: Best Practices With these general characteristics of the components of an impact report, it is useful to look at some examples of effective impact reports and some that are not. The following examples were pulled directly from Annual Reports of Accomplishments and Results as submitted to CSREES. Please go to the USDA-CSREES website for additional examples ( es.html The three examples that follow serve as best practices for writing impact reports. Their strengths are similar: there is a clear problem statement presented early on, a reachable goal to achieve, partners and their role in the project are described, a progression through outputs is described, and outcomes and impacts are clearly documented. Example One: Rural Housing Lot Improved. Rural areas such as Greene and Hale counties continue to bear a large percentage of inadequate housing. Tuskegee University partnered with the USDA Rural Development office to assist families and individuals to improve or acquire new homes. Potential homeowners were identified and assisted with the completion of all forms necessary to apply for a Rural

131 130 Part Three Impacts and Outcomes: Creating Wealth Development loan or grant program. Training in home management, household budgeting, dwelling maintenance, credit and debt management and other areas were provided to assist individuals in becoming successful homeowners or recipients of home repair funds and grants. Twenty-six applicants were assisted. Nine of the 22 participants have already received financial assistance. During the year, three elderly families obtained a 504 grant in the amount of $7,500 per family. Four families obtained 502 loans in the amount of 20,000 per family for home repairs. One family was able to become a first-time homeowner with a loan of $78,000. Example Two: North Carolina Extension Thirty-four counties reported that they conducted programs to increase individuals' and families' knowledge of and ability to implement financial planning techniques, and to adopt best management practices that would enable them to meet their changing needs and responsibilities over their life cycle. These 34 counties also reported that they focused programming efforts toward the limited resource individual and family audience. These efforts were intended to increase their awareness and knowledge of money management practices, to change their attitudes towards developing and using money management plans, and to have them adopt decision-making practices that would help them achieve their family financial goals. Twenty county extension units reported efforts to increase the awareness, knowledge, and skills of individuals and families to adopt best management practices to extend or increase their current incomes to meet their changing needs.

132 Williams Assessing the Record and Charting the Future 131 Impacts: While the number of persons who actually increased their knowledge of the value of financial planning numbered 3982, the number who actually demonstrated success in the planning process was An additional 1188 persons reported ongoing success in implementing goal setting, family budgeting, and record keeping. There was an additional 664 persons who actually developed and implemented a "life cycle plan." These thirty-four counties reported that as a result of conducting best management financial planning educational programs, 946 persons reported improving their financial status. These persons reported that they had collectively reduced debt by an estimated $108,889, and had increased their savings/investments by $400,385. There were 5231 persons in the limited resource audience who increased their awareness and knowledge about money management and the decision making process. Another 2028 reported that they actually developed written financial goals reported that they developed money management plans, and 1072 reported that they had actually attained their goals. In addition, 1199 people in this audience reported that they had saved an estimated $70,500 and had reallocated an additional $38,500 to meet family needs. 806 person indicated that they had reduced their debt by over $73,000. Twenty counties reported that their efforts to educate individuals and families about the benefits of best management financial practices, and the techniques of how to implement these practices to extend and increase their current income reached 4891 people and resulted in 1945 persons actually extending their

133 132 Part Three Impacts and Outcomes: Creating Wealth income by over $175,200. There was also 1093 individuals who demonstrated appropriate decisions making regarding their employment situation and increased their income by an estimated $365,411. Another 641 individuals indicated that they improved their self-employment situation after participating in these educational efforts by an estimated $64,558. Example Three: Alabama Combined Extension Beef cattle production is the major source of income for most limited-resource farm families in the Alabama Black Belt counties. Traditionally, limitedresource beef producers have marketed lightweight calves that have poor carcass quality. These calves took too long to reach the desirable market weight to earn reasonably good prices and profits. The Tuskegee University Cooperative Extension program with assistance from USDA s Natural Resources Conservation Service conducted intensive beef cattle workshops and clinics, concentrating on upgrading herds with performance tested bulls and improving nutritional programs. Health management, parasite control, and pasture and hayfield renovation were also emphasized and demonstrated. During the year, four producers in Dallas and Perry Counties reduced fertilizer applications by incorporating legume crops in grazing pastures and hayfields. Twenty-two producers in these counties and in Lowndes and Wilcox counties increased weaning weights, some on an average by 142 pounds and market weights by 208 pounds, thereby increasing their income by $ per calf. One producer started his own pasture feedlot operation to increase production of beef in a shorter time period.

134 Williams Assessing the Record and Charting the Future 133 These three best practices are effective not only in describing what the problem is, but also in clearly outlining the course of action taken and, most importantly, how the approach positively impacted program participants. Each makes clear that past program funding was well invested and makes a compelling case for additional assistance. Potential donors should feel confident that program planners and administrators are capable of affecting change and documenting their impact. Impact Reports: Examples Needing Improvement It is also useful to take a brief look at weaker impact report characteristics in order to provide real examples along with some suggestions of how they can be improved. The primary criticism of most is that they are focused on program or activity outputs to the exclusion of outcomes and impacts. As CSREES has well stated: Outputs without impact do nothing to help us justify funding of programs and projects. In other words, these reports fail to adequately answer the question, So what? In addition, some of the examples are from reports with projects that are not sufficiently mature to show positive outcomes and impacts. Still others beg the definition of report and are presented much like a plan instead of an assertion of accomplishments. 1 Weaker reports describe activity outputs; for instance, at a conference, over 200 horticulturists were updated on the latest information concerning landscape plant care and appropriate plant materials. Similarly, in a course, 70 new applicators were trained for their licenses. Another report asserts that 659 leaders were trained in leadership and development of community projects, and 145 community projects were developed and established. Though these activities show promise, impact and outcomes are largely ignored and potential donors are not presented with tangible outcomes. They cannot tell how program participants 1 Excerpts are from various Annual Reports of Accomplishments. To retain anonymity, no specifics are included to identify the university. For additional examples, please see

135 134 Part Three Impacts and Outcomes: Creating Wealth changed from their attendance. In order to make these reports more convincing, they should address what the participants do with the information presented. The following example is problematic for a different reason: Research results will allow scientists to devise methods to extend postproduction quality of flowering crops without the use of synthetic chemicals; will lead to more efficient use of greenhouse-applied fertilizers, minimization of nutrient runoff, and increase in crop water use efficiency; will minimize leaching of nitrate into groundwater supplies; and allow fast-growing trees to serve as a low-input, natural wastewater purification system for economically disenfranchised communities along the border. This is an example of a program that lacks maturity. It is better to delay reporting on immature programs until there are documented outcomes and impacts. Similarly, the following list of activities is not convincing either because it is presented as a plan rather than a report. Potential impacts are not actual outcomes or impacts. Approximately 28 master gardener classes will be presented approximately 7 per year as requested by county agents. Approximately 24 pesticide applicator training workshops will be presented. Approximately 96 newsletter and magazine articles will be written. Approximately 16 extension publications will be written. Approximately 8 TV spots, 40 radio spots, and 48 news releases will be disseminated. In my thirty-year tenure with Cooperative Extension, I have personally witnessed our evolution from the very loose, generally output only, reporting protocols to the current era of everincreasing scrutiny of the impacts and outcomes of programs. In

136 Williams Assessing the Record and Charting the Future 135 today s climate we are faced with rigorous competition, by both public and private entities for program dollars we once assumed to be an entitlement. Our competitors constantly position themselves to suggest that they could do a better job that is, produce greater and more significant program outcomes if afforded the opportunity. The question, So what? is increasingly significant and will continue to be so. If our agencies are to remain leaders in the provision of educational services to our publics, we must enhance our capacity to document significant positive program outcomes and impacts to individuals, families, communities, and our environment. Accountability and evaluation is an essential component to be included at the inception of the program planning process. We must have a clear, concise, and realistic vision of program outcome and impacts, and agency capacity to generate them prior to program design and initiation. Measures of program success must not be relegated to the status of afterthought and if we fail to recognize this, our efforts in community and economic development will be severely compromised.

137 Framework for Evaluating the Impact of Small Enterprise Initiatives * Eric Oldsman President of Nexus Associates, Inc. Economics and Management Consulting Kris Hallberg Lead Evaluation and Private Sector Development Coordinator Operations Evaluation Department World Bank Abstract This paper presents a framework for evaluating the impact of donor-funded initiatives designed to promote small enterprise development. We show how to use program logic models to structure the chain of causality between program inputs, outputs, and outcomes. Issues relevant to all evaluations -- attribution, the scope of the evaluation, the choice of indicators and evaluation methodologies, and tradeoffs in evaluation design are discussed in the context of small enterprise programs. The paper shows how to apply these principles in practice, illustrating different approaches with examples drawn from the literature and previous evaluations of donor-funded programs. * Support for the preparation of this paper was provided by the German Agency for Technical Cooperation (GTZ) and the Swiss Agency for Development Cooperation (SDC). The views expressed here are those of the authors and do not represent the policies of GTZ, SDC, or the World Bank Group.

138 138 Part Three Impacts and Outcomes: Creating Wealth Background Donor agencies have invested in a variety of initiatives to promote the development of small enterprises in developing countries. 1 Some of these programs are designed to expand financing available for small enterprises; others are intended to increase the scope and quality of needed business development services; still others focus on improving the policy environment in which small enterprises operate. The decisions to fund these small enterprise initiatives are based on the belief that well-designed programs will lead to improvements in the performance of small enterprises and associated economic and social benefits. Initially, many of these initiatives focused on establishing new government institutions and nongovernmental organizations to provide various services directly to small firms. However, many donors have become disappointed with these efforts, pointing to inadequate outreach, poor institutional sustainability, and potential distortionary impacts on markets. As a result, in recent years donors have shifted toward a greater focus on providing funding to facilitating organizations to undertake various initiatives to build the capacity of local institutions to deliver financial services and business development services (BDS) to small enterprises, while also stimulating demand for such services among companies in the target population. 2 In addition, donors have come to recognize that the formation and growth of small enterprises is dependent on conditions in the business environment in which they operate. As such, efforts have been devoted to encouraging policy, legal, and 1 Small enterprises are defined to include both microenterprises and small- and medium-scale enterprises. Definitions vary by country, and are usually based on the number of employees, annual turnover, or assets. Typically, microenterprises are defined as firms with up to 10 employees, small enterprises have from 10 to employees, and medium enterprises have from 50 to employees. 2 Analogous to accepted best practice in the field of microfinance, the BDS market development approach stresses the importance of the commercial orientation and financial sustainability of service providers. Interventions are expected to be short term, with a clear exit strategy defined from the outset. For a description of the BDS market development approach, see Committee of Donor Agencies for Small Enterprise Development (2001).

139 Oldsman & Hallberg Framework for Evaluating Impact 139 regulatory reforms that affect the ability of small enterprises to compete effectively. Despite the enthusiasm expressed by program advocates, there has been little effort devoted to rigorous, objective analysis of impacts in terms of desired outcomes. Donor agencies and governments want to know if small enterprises initiatives have actually been successful. In this regard, donors are under increasing pressure to show that their activities have led to economic growth, employment gains, and poverty alleviation the fundamental goals of their institutions. Successful initiatives can be expanded and replicated; ineffective programs can be redesigned or eliminated. To aid in this effort, the Committee of Donor Agencies for Small Enterprise Development (Donor Committee) is interested in establishing a framework for evaluating the impact of small enterprise initiatives. 3 This paper is intended to meet this need. It seeks to provide members of the Donor Committee and other program managers with a better understanding of the critical issues involved in assessing impacts and the various tools that can be used in carrying out such studies. By definition, the framework focuses on retrospective studies. 4 Specifically, it focuses on quantitative methods that can be used in summative evaluations of small enterprise initiatives. 5 In so doing, the paper draws on a rich body of knowledge. The field of evaluation is well established, with professional associations, scholarly journals, conferences, and thousands of published and unpublished studies that have been 3 The Committee of Donor Agencies for Small Enterprise Development was founded to share knowledge and best practices among donors that support small enterprise programs. Participants include 20 bilateral agencies from 16 countries, 16 multilateral agencies (including the African, Asian, and Inter-American Development Banks), and three international development organizations. We refer only to donors as the sponsors of small enterprise interventions, but note that most government-supported small enterprise programs have similar objectives and activities. Thus, the evaluation methods discussed in this paper apply equally to these programs. 4 In this regard, impact assessments differ from other research efforts designed to assess needs within a target population. Needs assessments typically occur as part of the design process before program implementation; impact assessments are carried out after program implementation. 5 Qualitative assessments are best suited for developing insights into critical process and should be used to supplement quantitative studies.

140 140 Part Three Impacts and Outcomes: Creating Wealth produced through decades of research. This paper taps this reservoir and applies widely accepted principals and techniques to small enterprise initiatives. The next section reviews the range of small enterprise initiatives that donors have supported, characterizing interventions in terms of the target of the intervention, goals, instruments, and key cause-effect relationships. This is followed by a discussion of different approaches that can be used to assess impacts of small enterprise initiatives, ranging from experimental designs to participant judgment, and offers suggestions on how to decide whether a particular approach is warranted. The paper concludes with recommendations to strengthen future assessment of the impact of small enterprise initiatives and points to areas requiring further work. The appendix contains a glossary of key terms used in the paper and is followed by a selected bibliography of impact assessments and other reference materials. Small Enterprise Initiatives Rationale and Forms of Intervention Small enterprises play a critical role in the overall economy, providing a broad range of goods and services both for domestic and foreign consumption. In so doing, small enterprises provide an important source of income and jobs in every country. In most developing countries, small enterprises account for the majority of firms and a significant share of total employment. Moreover, many people hold that increased growth among small enterprises will lead to greater demand for labor, rising incomes, and reductions in poverty. The performance of small enterprises is affected by myriad factors as illustrated in Figure 1. On the one hand, small enterprises need required inputs (e.g., capital, labor, materials, and purchased services) to produce goods and/or services. The availability and cost of these inputs has a direct bearing on the performance of firms. In general, lower factor costs translate into higher profits, all other things being equal. Small enterprises also need to be able to sell

141 Oldsman & Hallberg Framework for Evaluating Impact 141 their goods and/or services at a price sufficient to earn an adequate return on investment. As such, the performance of the firm is dependent on the nature of relevant markets and industries in which they compete. In general, higher profits arise in markets characterized by inelastic demand and limited competition. As noted in the diagram, small enterprises as well as factor inputs and output markets are affected by a broad range of policies, laws and regulations. Figure 1. Determinants of SE Performance Availability and cost of capital Availability and cost of non-financial services Small Enterprise Performance Availability and cost of labor and other factor inputs Structure, conduct, and performance of output markets Policy, Legal and Regulatory Environment Given this picture, donors have invested in numerous initiatives over the past decade to address various factors affecting the performance of small enterprises and spur the growth of these firms. As described in Table 1, these initiatives can be grouped under three broad headings those designed to provide or encourage the provision of financial services to small enterprises; those designed to provide or encourage the provision of nonfinancial (business development) services to small enterprises; and

142 142 Part Three Impacts and Outcomes: Creating Wealth those that attempt to improve the business environment in which small enterprises operate. Table 1. Typology of Small Enterprise Initiatives Focus of Intervention Financial services Debt and equity financing Banking services Equipment leasing Business Development Services Consulting and engineering Management and worker training Marketing assistance Information services Government-mediated Business Environment Business regulations Property rights and contract enforcement Transparency and corruption Labor policies Trade policies Tax policies Instruments Credit lines to financial institutions Consulting and training for financial institutions Direct investment in small enterprises Financial support to BDS facilitators/providers Consulting and training for BDS providers Product development for BDS providers Direct provision of BDS to small enterprises Matching grants/vouchers for small enterprises Technical assistance to government agencies Support for public-private dialogue Direct advocacy of specific policies

143 Oldsman & Hallberg Framework for Evaluating Impact 143 The particular focus and instruments used by donors depends on the overarching mission and policies of the respective organization. Most bilateral aid agencies and non-governmental organizations provide non-reimbursable grants or technical assistance. In so doing, they often work directly with private sector and civil society organizations as well as with government agencies. The multilateral development banks, on the other hand, primarily provide loans to government entities. However, at times, loans are made in concert with non-reimbursable technical assistance supported through trust funds. In addition, the World Bank Group, Inter-American Development Bank, and other organizations have units that provide debt and equity financing directly to private enterprises in developing countries. Targets of Intervention and Logic Models Regardless of the particular focus or instruments used, all initiatives aim at boosting the performance of small enterprises and, in turn, improving economic and social conditions as shown in Figure 2. However, it is important to note that while improved economic and social conditions within a defined region and population are the ultimate goals of donor agencies, small enterprise initiatives are designed to achieve these goals as a result of improved performance among small enterprises. Figure 2. Basic Program Logic Model Donor support Small Enterprise Initiative Improved enterprise performance Improved economic and social conditions As such, small enterprises constitute the principal target of small enterprise initiatives. These are generally firms (sole proprietorship or corporation) within a specific size range as defined by employment or assets. Certain initiatives are directed at microenterprises with a handful of workers and virtually no assets;

144 144 Part Three Impacts and Outcomes: Creating Wealth others aim at more substantial companies. 6 Sometimes, other characteristics or conditions are used to define targeted small enterprises. For instance, particular initiatives may target womenowned firms, rural enterprises, or specific industrial sectors. 7 However, as reflected in Figure 3, small enterprises may be either direct or indirect targets of initiatives depending on the particular focus and instruments used. For example, donors may establish credit lines for small enterprises or provide financing directly to particular companies. Similarly, donors may create programs to provide consulting services, training and/or grants directly to small enterprises. In these cases, small enterprises are the immediate subject (direct target) of the intervention. Figure 3. Direct and Indirect Targets of Small Enterprise Initiatives In other situations, donor support is intended to change the behavior and/or performance of intermediary institutions that, in turn, have consequences for small enterprises. In fact, a focus on 6 For example, the IFC-managed Mekong Project Development Facility works with firms that have assets and/or planned investments of at least US$100, All too frequently the principal targets of the intervention are ambiguous. For example, the target population of initiatives is often defined in terms of all small enterprises in a country. However, in practice, initiatives tend to focus on particular segments of the target population governed by accessibility, relevance, need, and willingness to pay.

145 Oldsman & Hallberg Framework for Evaluating Impact 145 intermediary organizations financial institutions, government entities and BDS providers has become the hallmark of the new approach to promoting the development of small enterprises. 8 As such, the effectiveness of the initiatives is dependent, in part, on their success in transforming these intermediary institutions. A discussion of the critical causal relationships between activities carried out through the small enterprise initiative and desired outcomes with respect to intermediary institutions, small enterprises, and economic and social conditions is presented below: Financial institutions. Small enterprises may need access to financing at various stages of their development, including seasonal or revolving lines of credit to meet short-term financing requirements, or intermediate or long-term debt for land, buildings, equipment, and permanent increases in inventory. In response to these needs, donors have invested in efforts to establish and strengthen financial institutions that provide financing to small enterprises. In these cases, the financial institutions are the direct target of donor-supported initiatives. The specific aim of these initiatives is help financial institutions expand available credit, establish new services, improve lending practices, and enhance their overall performance. These efforts are intended, in turn, to result in a greater availability of capital under suitable terms and conditions to small enterprises as shown in Figure 4. Government entities. Small enterprises operate within a policy, legal and regulatory environment established by government (i.e., executive, legislative and judicial branches). In many developing countries, this environment is not conducive to the formation and growth of small firms. As a result, donors have taken steps to work with government agencies to formulate new policies, reduce tax and 8 In addition, some donors have supported efforts to work with policymakers and government agencies to effect changes needed to create an environment more conducive to the growth of small enterprises. These initiatives focus on changing the institutional, legal and regulatory environment in which small enterprises operate. This assistance has generally revolved around the provision of technical assistance and training to government officials. It has also included efforts to promote greater dialogue between policy makers and business groups.

146 146 Part Three Impacts and Outcomes: Creating Wealth regulatory burdens, and streamline various procedures in order to provide greater resources and reduce the burdens on small Figure 4. Logic Model for Initiatives Focused on Financial Institutions enterprises. As suggested in Figure 5, small enterprises are expected to benefit from these reforms as a result of lower costs (i.e., factor input costs, regulatory compliance costs, and taxes) and an expansion in markets for their goods and services. Figure 5. Logic Model for Initiatives Focused on Government Entities BDS providers. Small enterprises may require various forms of outside assistance to address specific needs related to planning, production, operations and other business processes. However, the range of business development services that companies may call on is quite broad, including legal, accounting, auditing, bookkeeping, administrative, data processing, information system design and installation, management consulting, business brokering, market research, testing, marketing, advertising, engineering, and training. (In this regard, services provided to small enterprises are often presented under the general rubric of business development

147 Oldsman & Hallberg Framework for Evaluating Impact 147 services. ) As illustrated in Figure 6, donor agencies have taken steps to help existing service providers to develop new services, expand their operations, and strengthen their performance. 9 In these cases, the service providers are the direct target of the initiative. It is hoped that efforts to strengthen BDS providers will result, in turn, in more services being offered to small enterprises to good result. Figure 6. Logic Model for Initiatives Focused on BDS Providers A Note on BDS Market Development 10 Certain donors have called attention to the importance of going beyond strengthening particular BDS providers to promoting the development of sustainable markets for business development service. While these initiatives tend to still target BDS providers and small enterprises, intended outcomes are generally expressed in terms of overall market performance. In this case, donors are interested in inducing a permanent shift in the demand for business services among small enterprise and a commensurate shift in the supply of such services in relevant markets. This begs the question of the definition of the specific market of interest to donors. A market can be defined as trade among buyers and sellers of a particular service, in most cases, using money as the common numeraire (as opposed to barter). For example, the market for management training is not the same as the market for industrial 9 In practice, initiatives tend to emphasize certain services more than others. In this regard, some initiatives are designed explicitly to increase the supply of BDS services tailored to the needs of small enterprises and increase the demand for these services among targeted small enterprises. 10 The discussion of market development applies to financial markets as well.

148 148 Part Three Impacts and Outcomes: Creating Wealth engineering services. Moreover, even within the more narrowly defined market for management training, courses may vary significantly in terms of content, method of instruction, quality, duration, time, and location. In a market defined in terms of a particular service, the result of competition is a single price; more than one price suggests an absence of information or other market imperfections. Markets for particular business development services can be characterized in terms of their structure, conduct, and performance. (Mason 1939, Bain 1959). To a great extent, market structure influences firm conduct, which in turn affects industry performance as shown in Figure 7. For example, in a market with few competitors, sellers are likely to increase prices or collude with their rivals. While higher prices may lead to increased profitability, they may also be suggestive of allocative inefficiency as sellers exert market power. However, the casual chain also has important feedback loops. For example, companies may pursue predatory pricing practices in order to drive other firms out of the market, thereby altering its structure. Similarly, supranormal profits in an industry can induce new firms to enter the market again changing its structure. Figure 7. Logic Model for Initiatives Focused on Market Development In a sense, donor efforts to promote the market for business development services is about altering this dynamic to produced desired outcomes. As noted below, these outcomes may relate to the structure of the particular BDS market targeted by the intervention,

149 Oldsman & Hallberg Framework for Evaluating Impact 149 the conduct of participating companies, and the overall performance of the industry. 11 Methods for Assessing Impacts of Small Enterprise Initiatives Unit of Analysis Impact assessments are used to determine the effects of the program on specific targets. The targets of small enterprise initiatives can include intermediary organizations, small enterprises, markets, and/or regional economies. These targets constitute the relevant units of analysis for impact assessments, depending on the nature of the particular initiative. As noted above, in some cases the intervention may be directed to more than one type of target. For example, a program designed to boost output in small, women-owned businesses, may also be aimed at reducing unemployment in communities where these businesses are located. In this case, the impact assessment would need to treat both womenowned firms and the regional economy as separate units of analysis. At the outset, however, it is important to note that the central principles and issues involved in assessing the impact of interventions are the same, irrespective of the particular unit of analysis. Establishing Causality Impact assessments are undertaken to find out whether a particular initiative actually produced intended outcomes. In this regard, impact assessments are concerned with establishing causality. Did the provision of vouchers cause an increase in the demand for business services? Did the low-interest loan program 11 From a broader perspective, the intended goal of market development may be expressed in terms of an increase in total surplus (consumer s plus producer s surplus), representing the additional value from an expansion in trade in a particular BDS market.

150 150 Part Three Impacts and Outcomes: Creating Wealth cause companies to undertake additional investments? Did the management training course cause companies to adopt new business practices? Did regulatory reform cause improved performance among companies in the target population? These are the types of questions that decision-makers are asking. Donors fund small enterprise initiatives because they believe that they will result in desired outcomes. Impact assessments are intended to provide credible evidence to demonstrate whether their beliefs were justified and initiatives warrant continued support. In demonstrating that a particular intervention resulted in a specific outcome, certain conditions need to be met. 12 First, changes engendered through the intervention have to be shown to produce the effect put another way, the outcome must be responsive to the intervention. Second, plausible alternative explanations for the observed outcome have to be ruled out rival hypotheses must be disproved. Third, the mechanism by which the outcome was produced has to be explained in other words, a theory linking the intervention to the outcome must be articulated. Finally, it must be possible to replicate the results in similar settings. With proper research, apparent correlations can be translated into credible causal explanations. Need for Valid Comparisons The fundamental tenet of impact assessment is the need to compare the observed situation with the intervention to what would have been had there been no intervention at all. The difference in resulting outcomes between these two states constitutes the impact of the intervention as illustrated in Figure While the counterfactual cannot be observed or known with complete certainty, the concept of comparing observed outcomes to this hypothetical state underlies all valid approaches to assessing impacts. Valid comparisons imply that the net effect of 12 See Mosteller and Tukey (1977) for a discussion of conditions requited to demonstrate causality. 13 This is sometimes referred to as additionality.

151 Oldsman & Hallberg Framework for Evaluating Impact 151 interventions is isolated from all other extraneous or confounding factors that influence defined outcomes. For example, efforts to improve the performance of small firms by providing vouchers for consulting services may have been undertaken during a time of rapid economic expansion buoyed by substantial tax breaks, Figure 8. The Impact of an Intervention Outcome aggressive regulatory reform, and booming consumer demand. Given these conditions, it is likely that participating firms would have enjoyed significant growth even in the absence of the voucher program. As a result, the central question is not whether participating firms grew, but rather did these same firms grow more than would have been expected if they had elected not to participate in the voucher program. Thus, the major challenge in impact assessments is to estimate the effect of programs after netting out extraneous factors that affect outcomes. These factors may include specific events or long-term trends in particular industries, regions or countries as in the example cited above. They may also include ongoing developments within participating small enterprises. For example, a program to boost productivity within small enterprises through the provision of technical assistance should take into account the productivity

152 152 Part Three Impacts and Outcomes: Creating Wealth gains resulting from capital investments made by these companies unrelated to the small enterprise initiative. 14 Similarly, impact assessments need to account for the voluntary nature of programs. Small enterprises take part in programs of their own volition. Some members of the target population may be more inclined to participate due to greater interest, motivation or other conditions within the firm. This self-selection process can bias results if the factors that lead companies to participate are related to the specific outcomes under study. 15 For example, initiatives that focus on providing greater access to long-term financing for the purchase of fixed assets are likely to attract growing companies with progressive management that recognize potential market opportunities, are willing to assume certain risks in the hope of reaping financial returns, and have sufficient collateral to secure the loan. These same characteristics are likely to be associated with future sales growth. It would be inappropriate to compare this segment of the population of firms to other small enterprises that may be struggling to survive. To do so would run the risk of overestimating the impact of the financial assistance program. As discussed below, care needs to be taken to account for potential selection bias in estimating the impact of small enterprise initiatives. Data Collection Regardless of the approach, all impact assessments require accurate and reliable data. At a minimum, it is necessary to collect data on outcome measures for entities that were affected by the initiative. Again, the relevant unit of analysis could be intermediary organizations, small enterprises, or geographical regions 14 Threats to internal validity are generally grouped under several broad categories such as external events, secular drift, maturation, regression and attrition. Readers interested in exploring these concepts in more detail are referred to Cook and Campbell (1979). 15 A similar sort of selection bias can occur when organizations select participants based on certain characteristics this is referred to in the literature as administrative selection.

153 Oldsman & Hallberg Framework for Evaluating Impact 153 depending on the nature of the initiative and particular lines of inquiry. If comparative analyses are contemplated, data on outcome measures and other variables will be needed for members of the treatment and control groups. 16 In all cases, baseline data (preferably multiple measures) is needed along with data after the intervention. Draw on existing data maintained by government and other organizations. Given the cost of data collection, it is preferable to take advantage of existing data to the extent possible. Government statistical agencies in many countries conduct surveys of enterprises and households on a routine basis that might be used in impact assessments. These include national income and expenditure surveys, household income and expenditure surveys, labor market surveys, and various industrial surveys. For example, the Mexican statistics agency (INEGI) conducts a monthly survey of approximately 6,700 manufacturing establishments to obtain data on approximately 177 variables, including employment, payroll, production hours, value added, and total output. 17 Other organizations such as banks, credit unions and cooperatives maintain data on large numbers of companies as part of ongoing operations. These sources should be explored to see whether data required for the impact assessment are available. Commission special surveys. In many cases, however, the only recourse will be to conduct a survey undertaken specifically for the impact assessment. There are a number of critical issues that need to be addressed to design and administer a survey successfully. The type of survey selected, the wording of questions, sampling strategies, follow-up, and data entry procedures all have an important bearing on the accuracy and utility of survey results. A 16 Data requirements are specific to the outcome measures of interest and the nature of the analysis that will be conducted. In addition to outcome measures, data may be required for explanatory variables used in regression analyses, including instrumental variables used to control for potential selection bias. 17 While the sample is weighted toward large establishments to ensure it reflects the bulk of economic activity in the nation, smaller firms are also included.

154 154 Part Three Impacts and Outcomes: Creating Wealth special word on sampling is also in order. It is essential to use probability sampling to ensure valid results; stratification should be considered for greater efficiency and to ensure that the sample accurately represents the overall target population (Kish 1965). In addition, all four approaches require administrative records to identify and characterize service recipients as well as the nature of services received. Moreover, certain techniques require additional information. For example, in order to employ regression discontinuity, the program must maintain data on variables used to determine eligibility and/or qualification for participation. Selection of an Appropriate Method As indicated Table 2, the four approaches to assessing impacts can be applied to a variety of questions that might be posed by donors and other stakeholders with respect to small enterprise initiatives. The table also demonstrates that particular questions can be addressed in a variety of ways subject to data availability, time and budgetary constraints. For example, the question of whether a particular initiative resulted in a sustainable market for BDS can be approached in a number of ways. First, it may be possible to provide services (such as access to a list of qualified management consultants) to randomly selected companies that were interested in obtaining outside assistance. Other companies seeking such information could be placed on a waiting list, and used as a control group. Differences in actual expenditures on consultants could be compared to determine the impact of providing consultant information. In a related vein, a quasi-experimental approach could be used to determine the extent to which vouchers affected the long-term demand for management consulting services after subsidies were ended. This would involve comparing consultant expenditures of program participants to similar non-participating companies, controlling for other factors such as industry, firm size, and geographic location. A third approach would entail

155 Oldsman & Hallberg Framework for Evaluating Impact 155 Table 2. Alternative Approaches to Assessing Impacts of Small Enterprise Initiatives Question Approach Method Experiment with random assignment Did the initiative result in a sustainable market for BDS? Quasiexperiment with constructed controls Nonexperiments with reflexive controls Randomly assign small enterprise to a treatment and control group and compare expenditures on outside service providers over time Compare sales growth of service providers in a treatment and control group, statistically controlling for selection and other extraneous factors Compare baseline and postintervention sales of service providers in the treatment group Did the initiative result in higher sales among small enterprises that received services? Participant judgment and expert opinion Experiments with random assignment Quasiexperiments with constructed controls Nonexperiments with reflexive controls Participant judgment and expert opinion Ask small enterprises and/or service providers whether they believe that the program has resulted in a sustainable market Randomly assign small enterprises to a treatment and control group and compare sales growth over time Compare sales growth of small enterprises in a treatment and control group, statistically controlling for selection and other extraneous factors Compare baseline and postintervention sales of small enterprises in the treatment group Ask small enterprises in the treatment group whether the intervention affected their sales Question Approach Method

156 156 Part Three Impacts and Outcomes: Creating Wealth Did the initiative result in lower unemployment in the region? Experiments with random assignment Quasiexperiments with constructed controls Nonexperiments with reflexive controls Participant judgment and expert opinion Select comparable regions within the country in which to initiate the program at random and compare unemployment rates over time Compare unemployment rates in different regions of the country, statistically controlling for selection and other extraneous factors Compare baseline and postintervention unemployment rates in regions in which the program operated Ask experts whether they believe that unemployment rates declined as a result of the program comparing the volume of sales of management consulting firms to small enterprises in a particular region before and after the voucher program. Repeated measures pre- and post-intervention could be used to determine the impact of the program. A fourth approach would simply rely on asking managers of small enterprises to indicate whether a particular program made them more or less likely to purchase management consulting services. The choice of the approach to use in a particular impact assessment needs to take several factors into account. Each approach has strengths and weaknesses as illustrated in Figure 9. For example, experimental designs provide strong evidence of causality, but may be expensive and difficult to administer. Non-experimental designs are generally easier to implement, but may not offer strong enough causal inferences. The figure suggests that more sophisticated approaches such as experimental and quasi-experimental designs should be used wherever warranted given the strength of the causal inferences that can be drawn.

157 Oldsman & Hallberg Framework for Evaluating Impact 157 Figure 9. Trade-Offs in Evaluation Design High Strength of Causal Inference Low Low High Complexity and Cost However, the additional strength comes at a higher cost. Therefore, these approaches would be appropriate only when further significant investments are being considered. For example, numerous initiatives are established initially as pilot programs with the expressed intention of expanding and/or replicating the initiative if successful. Depending on the magnitude of the required investment, it may make sense for donors to commit resources for a rigorous evaluation to help inform decisions. However, the ability to use these approaches is contingent on whether requisite data can be obtained and whether there is sufficient time to design and implement the study. As such, it is possible to recast the figure above in terms of two questions as shown in Figure The general rule 18 Large samples are generally required for quasi-experimental designs. In computing the required sample size, it is important to consider three factors the likely variance in the outcome measure, the required confidence level, and the desired precision of the estimate. The latter can be thought of as the minimum effect desired by stakeholders anything less would not be considered successful

158 158 Part Three Impacts and Outcomes: Creating Wealth should be to use the best possible design from a methodological perspective, taking into account the significance of the investment, as well as practical considerations related to technical feasibility. Figure 10. Guidelines for Selecting Impact Assessment Method High How significant is the investment? Low Low High To what extent are data and time available? or of particular interest. A concrete example: assume that stakeholders are interested in determining whether the program has resulted in increased sales growth. Further, assume that the program should aim to increase growth by 5 percentage points more than would have occurred in the absence of the program. Put another way, if companies in the comparison group grew by an average of 10 percent per year, stakeholders would like to see participating companies grow by an average of 15 percent annually. Given a standard deviation of 30 percent, a 95 percent confidence interval and a test power of 90 percent, data would need to be obtained from roughly 620 participating and non-participating companies.

159 Oldsman & Hallberg Framework for Evaluating Impact 159 Recommendations and Next Steps Recommendations The basic principals and techniques for conducting impact assessments are well established. However, only recently have they been applied to small enterprise initiatives in developed and developing countries. This experience points to several important recommendations: Clarify targets, goals, and underlying program logic. Impact assessments require a careful articulation of the targets of the initiative, the specific changes that are expected to be brought about as a result of the initiative, and the causal relationships between particular activities and intended outcomes. This should be summarized in a formal program logic model or log frame. This exercise is best done as part of the process of designing new initiatives, rather than as the initial task of an ex-post evaluation. Plan evaluation at the inception of programs. Impact assessment should be planned as early as possible, preferably before the initiative has been launched. This is clearly the case for experimental approaches with random assignment; however, in general ex ante designs tend to be stronger since measures for collecting required data can be put in place prior to program implementation. To this end, all programs should be required to develop a formal evaluation plan as a condition for funding. The plan should discuss the purposes of the evaluation; specific questions that will be addressed; evaluation design; process and outcome measures; data collection strategy; possible analyses; reports and other methods of communicating results; timeline; roles and responsibilities of staff and outside contractors, if any; and an estimated budget. 19 Establish baseline data and program records. Programs should collect baseline data on characteristics and performance of program targets. 19 The evaluation plan should go beyond issues related to impact assessments and address other facets of performance, including outreach, operating efficiency, financial self-sufficiency and other issues.

160 160 Part Three Impacts and Outcomes: Creating Wealth Moreover, all programs need to maintain complete and accurate records as part of program implementation, including the nature and magnitude of resources committed to particular companies and/or institutions. Recognize that impact assessment is explicitly about demonstrating causality. While some people within the donor community are calling for greater accountability in terms of effectiveness, others bemoan the futility of trying to establish attribution. It is difficult to reconcile these views. Impact assessments are concerned specifically with demonstrating that particular initiatives produced the desired results put another way, they aim to establish causality. All evaluations of small enterprise initiatives should be designed to show effects, rule out alternative explanations, and explain causal mechanisms. The replication of results in similar settings can add further credibility. Build valid comparisons into the analysis. Assessing the impact of small enterprise initiatives involves comparing observed phenomenon to the counterfactual a hypothetical situation that would have occurred in the absence of the program. Random assignment, constructed controls, and/or reflexive controls are needed to isolate the impact of the program from other factors affecting outcomes. Use multiple methods. The approaches mentioned in the paper are not mutually exclusive. Wherever possible, multiple techniques should be used to assess the impact of particular initiatives. Similar results from different methods can add to the credibility of findings. Moreover, qualitative research should be used to complement quantitative techniques, providing insights into the specific causal mechanisms that come into play in generating outcomes. Recognize that good enough is good enough. Donors and other stakeholders should strive for as much rigor as possible. However, practical considerations need to be taken into account in designing and implementing an impact assessment. Data, time, and budgetary

161 Oldsman & Hallberg Framework for Evaluating Impact 161 constraints may make it infeasible to adopt certain approaches. Stakeholders need to accept these limitations. Commit needed resources. That said, the amount of money devoted to evaluations is at the discretion of donors. Donors must be willing to commit the level of resources needed to design strong evaluations, collect vital data, conduct required analyses, and report results. Next Steps Members of the Donor Committee are interested in measuring the impact of their respective small enterprise initiatives in terms of shared institutional goals: economic growth, employment gains, and poverty reduction. However, the task is daunting. Doing a careful job of tracing through the impact of small enterprise initiatives with respect to intended outcomes can be difficult, timeconsuming, and expensive. For this reason, members of the Donor Committee may want to consider the following actions: Establish evaluation standards. The Donor Committee should consider developing a set of standards to guide evaluation efforts in the field of small enterprise development. These standards should be modeled on well-established guidelines that have been adopted by institutions around the world. 20 Collect and disseminate information on good evaluation practices. The Committee should consider collecting and disseminating information on prior evaluations of small enterprise initiatives. Reviews should focus on the evaluation methodology, describing the specific design, data sources, survey instruments, sampling strategies, and analytical methods, as well as offering a critique of particular strengths and weaknesses. Good evaluation practices should be judged with reference to established evaluation standards. As an initial step, the Donor Committee should fund an inventory and review of existing evaluations to develop a better appreciation of the current state of the art. The inventory could also help identify the 20 For example, see United States General Accounting Office (1998).

162 162 Part Three Impacts and Outcomes: Creating Wealth largest gaps in knowledge concerning small enterprise initiatives and where it makes sense to focus initial collaborative efforts (see below). Collaborate on comprehensive evaluations of selected initiatives. Finally, the Donor Committee should consider developing a joint research agenda to answer critical evaluation questions concerning small enterprise initiatives. As part of the research agenda, the Committee might consider funding two or three comprehensive evaluations of selected initiatives to determine their impact with respect to intended final outcomes. A few well designed and implemented studies can be used to demonstrate the nature and magnitude of impacts of particular approaches. Subsequent evaluations of similar programs might then focus on output and intermediate outcomes, using these major studies as indicative of their likely effectiveness with respect to downstream goals. For example, many donors support programs that provide technical assistance to BDS providers in order to improve their performance and spur the development of the BDS market. Programs of this type with similar target populations, objectives and designs could benefit from a single, carefully done impact evaluation of a particular program. Methods for estimating the incidence and distortionary impacts of subsidies, willingness to pay, consumer s and producer s surplus, and "permanent" shifts in supply and demand for BDS could be developed in the process of carrying out the evaluation. Ideally, the evaluation would employ multiple approaches, including experimental or quasi-experimental methods. If the comprehensive impact evaluation suggests that assistance to BDS providers does indeed result in desired social and economic objectives, program evaluations of similar technical assistance programs could focus on outputs and intermediate outcomes such as outreach to target populations, numbers of small enterprise clients, number of service providers, cost per client served, degree of subsidy, etc. These more limited evaluations can be done more cheaply and quickly, giving Donors the means to report frequently on project performance to their funding agencies.

163 Oldsman & Hallberg Framework for Evaluating Impact 163 Other types of initiatives that could benefit from this approach include training vouchers for microenterprises; technical assistance to financial institutions to increase small enterprise lending; and policy advice designed to reduce the regulatory burden on small enterprises. Glossary Confounding factors. Variables that influence observed outcomes, resulting in an overestimation or underestimation of the true impact of an intervention. Counterfactual. The conditions that would have occurred in the absence of the program. Control group. Units (small enterprises, intermediary organizations, or regions) that are similar to those in the treatment group but did not participate in the program. Impact. The net effect of an intervention in terms of specific outcomes after controlling for extraneous confounding factors. Impact assessment. An evaluation of the extent to which a program resulted in desired outcomes within the target population. Also referred to as impact evaluation or outcome evaluation. Measurement validity. The extent to which a particular indicator reflects the concept to be measured. Measurement reliability. The extent to which a particular indicator is subject to measurement error. Outcome. The results of a program with respect to desired changes within the target population. Probability sample. A sample drawn from an identified universe where each unit has a known and independent probability of selection. Program logic model. A description of the causal mechanisms linking program activities to intended outcomes within the target population. Proxy measure. An indirect measure of an outcome.

164 164 Part Three Impacts and Outcomes: Creating Wealth Selection bias. A particular type of confounding factor in which preexisting conditions related to outcomes lead certain members of the target population to participate more than others. Small enterprises. Small enterprises are defined to include both microenterprises and small- and medium-scale enterprises. Definitions vary by country, and are usually based on the number of employees, annual turnover, or assets. Typically, microenterprises are defined as firms with up to 10 employees, small enterprises have from 10 to employees, and medium enterprises have from 50 to employees. Summative evaluation. A study undertaken to render a definitive judgment on performance of a particular program particularly with respect to its effectiveness in achieving desired outcomes. Target of intervention. The unit (e.g., intermediary organization, small enterprise, region) to which a program is directed. Target population. All units (targets of intervention) in the area served by a program. Treatment group. Units (e.g., small enterprise, meditating institution, region) that participate in the program. Unit of analysis. The subject of the impact assessment as defined by the targets of the intervention.

165 Oldsman & Hallberg Framework for Evaluating Impact 165 References Aboudha, C. and R. Bowles (2000), Business License Reform in Kenya and its Impact on Small Business, Small Enterprise Development, Vol. 11, No. 3, September 2000 Bain, J. S. (1959). Industrial Organization. New York: John Wiley & Sons. Baker, J. (2000). Evaluating the Impact of Development Projects on Poverty: A Handbook for Practitioners. Washington: The World Bank. Biggs, T. (1999). "A Microeconometric Evaluation of the Mauritius Technology Diffusion Scheme." World Bank, Regional Program on Enterprise Development Discussion Paper, November. Committee of Donor Agencies for Small Enterprise Development (2001). Business Development Services for Small Enterprises: Guiding Principles for Donor Intervention Cook, T. D. and D. Campbell (1979). Quasi-experimentation: Design and Analysis Issues for Field Settings. Chicago: Rand McNally. Galasso, E.; M. Ravallion; and A. Salvia (2001). Assisting the Transition from Workfare to Work: Argentina s Proempleo Experiment. World Bank, September 24. Heckman, J. (1974). 'The Common Structure of Statistical Models of Truncation, Sample Selection, and Limited Dependent Variables and Simple Estimator for such Models," The Annals of Economic and Social Measurement, 5:

166 166 Part Three Impacts and Outcomes: Creating Wealth Heckman, J. (1979). "Sample Selection Bias as Specification Errors." Econometrica, 47: 153 Heckman, J., and R. Robb. (1985). Alternative Methods of Evaluating the Impact of Interventions: An Overview. Journal of Econometrics 30: Kish, L. (1965). Survey Sampling. New York: John Wiley and Sons. Jalan, J. and M. Ravallion (forthcoming). "Estimating the Benefit Incidence of an Antipoverty Program by Propensity Score Matching", Journal of Business and Economic Statistics. Jarmin, R. J. (1997). " Evaluating Impact of Manufacturing Extension on Productivity Growth," Manuscript, Center for Economic Studies, US Bureau of Census, Washington DC Maddala, G.S. (1994). Limited Dependent and Qualitative variables in Econometrics," Econometric Society Monographs No. 3, Cambridge University Press. 1994; Mason, E. S. (1939). Price and Production Policies of Large-scale Enterprises, American Economic Review 29: McVay, M. (2001). "Report on the Outreach and Market Development Indicators Survey." Draft, June. McVay, M.; A. O. Miehlbradt; and T. Canedo (2001). "Performance Measurement Framework for Business Development Services: Technical Note on the Research Findings of the Performance Measurement Framework Research." Draft, September. Mekong Project Development Facility (2001). Doing Business Under the New Enterprise Law: A Survey of Newly Registered Companies,: Private Sector Discussions, No. 12. Mohr, L. B. (1995). Impact Analysis for Program Evaluation, 2nd ed. Thousand Oaks, Calif.: Sage Publications.

167 Oldsman & Hallberg Framework for Evaluating Impact 167 Mosteller, F.M. and J.W. Tukey. (1977). Data Analysis and Regression. Reading, MA: Addison-Wesley. Morduch, Jonathan (1998). "Does Microfinance Really Help the Poor? New Evidence from Flagship Programs in Bangladesh", in Baker (2000). Nexus Associates, Inc. (1999). The Pennsylvania Industrial Resource Centers: Assessing the Record and Charting the Future Rawlings, L. (2000). "Assessing Educational Management and Quality in Nicaragua" in Bamberger, Michael, Integrating Quantitative and Qualitative Methods in Development Research. Washington, D.C: World Bank. Rossi, P. H., H. E. Freeman, and M. W. Lipsey (1999). Evaluation: A Systematic Approach. 6th Edition. Thousand Oaks, CA: Sage Publications. Segal Quince Wicksteed, Ltd. (1991). Evaluation of Regional Enterprise Grants Second Stage. Tan, H. W. (2001a) "Evaluating SME Training Programs: Some Lessons from Mexico s CIMO Program." Washington, D.C.: The World Bank, April. Tan, Hong W. (2001b). "Malaysia's HRDF: An Evaluation of its Effects on Training and Productivity." Washington, D.C.: The World Bank, April. U.S. Agency for International Development (2001b). "What Did We Learn from the Pilot Impact Assessment in Kenya's Dairy Products Sub-Sector?" Draft, September 14.

168 168 Part Three Impacts and Outcomes: Creating Wealth United States General Accounting Office (1998). The Results Act: An Evaluator s Guide to Assessing Agency Annual Performance Plans, April van de Walle, Dominique (1999). "Assessing the Poverty Impact of Rural Road Projects." Washington: World Bank, processed (summary in Baker (2000).

169 Assessing Program Effects or Impact in Enterprise Development Programs Tristi C. Nichols, Ph.D. Manitou, Inc. Abstract Responding to questions increasingly posed by funders regarding what works best in assisting small businesses and what impacts are caused by program interventions, this paper aims to help program administrators answer these questions. Focusing on business development service provision, specific conceptual measures and quantitative variables are presented with examples in an effort to provide some guidance for collecting and analyzing data. The paper elucidates how program planners may emphasize the impact of their interventions, thereby explaining to funders what works best and how to prove it. It presents two major reflections about measures that yield robust results. The first conceptual measure explored relates to measuring changes in knowledge or empowerment levels among program participants. The second area examines how to demonstrate that program services may have led to a change or difference in businesses assisted by gauging business characteristics and sales or costs. Presented together, findings generated from both quantitative and qualitative methods are the most persuasive and compelling means of informing audiences about the effects of enterprise development programs.

170 170 Part Three Impacts and Outcomes: Creating Wealth Introduction Enterprise development programs have gained considerable popularity, domestically and internationally. The aims of such programs are identical in each context, focusing primarily on alleviating poverty and expanding the informal business sector, and secondarily on empowering minorities (particularly women and those from different ethnic groups). Another aim is expanding the market for business development services (BDS). BDS includes any non-financial service provided to businesses on either a formal or informal basis, such as providing technical assistance, one-on-one training, mentorships, technology, or infrastructure. Training and technical assistance varies from marketing and input supply negotiation to bookkeeping. Two main approaches employed when servicing credit and other enterprise development services to the poor are 1) minimalist and 2) integrative. The minimalist approach focuses almost exclusively on credit extension, whereas the integrative approach offers credit as well as other social services (e.g., nutrition education, HIV/AIDS awareness, and daycare centers). Recently, however, a third approach to enterprise development has emerged. Organizations now provide BDS as an indirect means of assisting small businesses reduce costs and expand production. Communitybased groups may sustain the costs for their services through at-cost fees, or in the event that costs are too high, such organizations simply act as facilitators, sharing information about marketing outlets, prices for goods, and connecting businesses together. As is the case of most social programs, funders and investors typically ask, What works best in assisting small businesses? and What is the impact of such interventions? This paper explores two forms of evaluation that organizations offering services to small businesses may use to demonstrate impact. Reflections on specific conceptual measures and quantitative variables that produce the most robust results over time will also be presented in this paper, although no specific or real cases will be cited due to obligations to retain confidentiality. Nonetheless, the cases are insightful and should be viewed as a resource. The information in this paper is

171 Nichols Assessing Program Effects in Enterprise Programs 171 intended to show business development service providers how they may harness the power of evaluation and presents a guide to avenues to take in collecting and analyzing data, illustrating that grasping solid and trustworthy impact information is in the practitioner s reach. Two Evaluation Approaches Used in the Land of Theory As is the case with most impact assessments, measuring the effects of enterprise development programs involves observing and analyzing the nature of, and relationships among, several outcome variables over time. Outcome variables may include loan repayment rates, changes in business sales and profits, differences in household income, and attendance rates at training sessions or meetings where beneficiaries learn business skills. At present, evaluators use at least two distinct lenses while evaluating enterprise development programs. On one hand, assessing the effects of participating in a program necessitates measuring the degree to which the institution or community-based organization has promoted a participant s empowerment process (Ackerley 1994; Goetz & Sen Gupta 1995). Specifically, evaluation findings may reveal: a) the nature of receiving training and repaying a loan at the same time (in most cases); and b) the effects of learning business management skills and applying them to the actual business venture. Essentially, the empowerment process is the central focus, but the issue of knowledge acquisition and business sales expansion is also included in the analysis. Problems arise in conceptualizing, defining and then measuring the empowerment construct or concept (Ackerley 1994; Goetz 1996; McNelly & Watetip 1993), but one may overcome some of these limitations. On the other hand, evaluators may explore the effects of having access to credit a program s end product. Through this lens, one determines quantitative and qualitative changes and differences in employment status, business income, household consumption, and

172 172 Part Three Impacts and Outcomes: Creating Wealth physical and liquid assets. Often, these types of evaluations draw on quantifiable, financial data (e.g., borrower household income and savings) as well as qualitative data (e.g., power shifts in the household, stabilization or expansion of employment status). The evaluation focus is directed at uncovering the effects of credit access and attributing the changes observed within the business and household to credit access specifically (Berger 1989; Buckley 1996; Hulme, Montgomery, & Bhattacgarya 1996). At times, evaluation findings may reflect the employment of both lenses in tandem. In such a case, the effects of credit as well as the service delivery system are examined holistically (Nichols 1997). How to Measure Knowledge and Empowerment? The conceptual measures and quantitative variables presented in this paper are largely drawn from informal field studies and professional experiences internationally, although the approach has significant application to domestic work. The conceptual measures used to test the extent to which an enterprise development program facilitated or led to a change in empowerment or knowledge levels among program participants involve the presentation of a list of areas that participants should know upon completing the program. Criteria often used include basic management practices (e.g., increased control over resources such as record keeping, financial management, inventory and stock control) and other factors that directly influence enterprise costs and production. To measure empowerment, many researchers (including the author) have used the concepts of self-esteem, confidence in undertaking a task, and work ethic. For instance, through the use of qualitative methods, program participants have been asked to comment on any changes experienced in these areas. Most often, the respondent shares information or experiences associated with improved status in the family and community, and additional details regarding these areas are elaborated later in this paper. In other words, one must focus on any differences in the program participant s knowledge or experiences of self-worth, and such an observation may then be attributed to program results.

173 Nichols Assessing Program Effects in Enterprise Programs 173 How to Demonstrate Impact? To examine the extent to which the program facilitated or led to a change in goods and services offered through the business involves measuring the expansion in business sales and costs. In addition, the evaluation should systematically present the key characteristics of the business, which may include changes in paid or unpaid labor, inventory, investment in marketing efforts, and purchases or upgrades in business assets. For instance, after enrolling and participating in the program, did the business owner: a) hire or engage more workers? If so, in what way---parttime, full-time, or seasonal? Was the person paid or compensated in other cost-cutting ways? b) improve the quality or desirability of products and services? If so, what (new) items or services constitute the bulk of the inventory? An example of this variable asset is a previously not offered high quality shampoo for client purchase at a hair salon. c) invest in other marketing activities? d) purchase enterprise assets? If so, was this asset a technological innovation (e.g., an additional sewing machine for a dry cleaner) or a fixed asset such as a restored storefront to improve the business s appearance? Ideally, the person interviewed reports the use of more labor, particularly during busy seasons, or she describes a new service or item offered to attract new clients. Concentrating on changes in the business is paramount, as the observed change may then be accredited to enterprise development intervention. Over time, one would expect the observed changes in the business to increase, which in turn could be ascribed to program exposure.

174 174 Part Three Impacts and Outcomes: Creating Wealth Taking Organizations and Businesses to the Next Level: Business Development Provision in Florida Dr. Lawrence Carter Sandra Harris Florida A&M University Success Story Responding to the need to combat deteriorating rural economies in North Florida, Florida A&M University's Cooperative Extension Outreach Program implemented the Entrepreneurial Rural Business Development Project (ERBDP). Funded by the United States Department of Agriculture's Rural Development, ERBDP'S mission is to provide sustainable business and economic development outreach services to selected rural counties in North Florida so that needs of limited resource communities can be better met - creation and retention of jobs. The Project's success is due to a demonstrated commitment to ensure that rural residents and organizations who seek services leave with something tangible that can take them to the next step in "jump starting" their business and/or economic development goals. Major services provided by ERBDP include: * Preparing business plans. * Preparing Florida non-profit applications. * Preparing Federal tax-exemption applications. * Identifying resources to enhance economic development. * Facilitating cooperative development. * Researching contacts for viable funding sources. * Business and non-profit development training. * Providing on-going support and assistance. Project Description: "Energizing and Connecting Communities." Community-based non-profits contribute to a community's

175 Nichols Assessing Program Effects in Enterprise Programs 175 economy by capturing grants and other funds from external sources, resulting in local job and income creation and improved social, economic, and cultural conditions. Working with two ministers who wanted to develop a faith-based non-profit and a Community Development Corporation in their respective communities, ERBDP prepared necessary documentation for this process. ERBDP prepared the organizations' articles and by-laws, co-facilitated community meetings, conducted a needs assessment, and walked the ministers through the process to gain Florida nonprofit status. Outcomes: Both ministers' efforts to identify and obtain funding increased significantly after receiving state certification. One organization gained tax-exempt status and the other organization's status is pending. The ministers then quickly moved to form a collaborative partnership in order to begin a housing initiative facilitated by ERBDP. This experience resulted in a best practice model that decreases the learning curve associated with acquisition of non-profit tax-exempt status and funding to create housing rehabilitation and new housing for low and moderate income rural residents. The collaborative and ERBDP will employ this model with emerging non-profits so that they can quickly and successfully maneuver through the same process with community support. At this printing, both organizations mentioned above are now taxexempt. One has acquired over 2 million dollars in loan approvals for a residential housing and community center development called FRIENDS Village. The other now operates a community based literacy development and learning center. In a related effort, ERBDP prepared fourteen Florida Non-Profit Applications between February 2004 and present. Project Description: Connecting People To Their Dreams". Loan officers require entrepreneurial applicant borrowers to submit a business plan with their loan application. The thought of writing a business plan or securing the funding to have one prepared is a monumental hurdle for burgeoning entrepreneurs, ERBDP assists with business development in rural Florida by preparing business

176 176 Part Three Impacts and Outcomes: Creating Wealth plans with the continuous involvement of the business owners. Outcomes: From February 2004 to present ERBDP completed eleven business plans for Business owners in rural counties. Each business plan includes marketing and financial plans and sales forecasting. At this printing ERBDP has prepared 19 business plans. Methodology How does one collect the information necessary to prove change in program participant skills and impact? On the one hand, qualitative information offers depth and specificity in which the funder may have strong interest. On the other hand, quantitative information appears more objective and representative, as numbers and statistics present a strong case for change or continuing program funding. It is possible, however, to use a mix of both quantitative and qualitative methods and there are several frameworks available, stipulating different designs, instruments, and forms of presentation (Caracelli and Greene 1997). When collecting data concerning changes in empowerment or knowledge levels among program participants, one leans toward the use of qualitative methods because knowledge acquisition is a personal process. In the field of enterprise development, understanding how and when an entrepreneur gained and applied her knowledge in basic management practices or inventory control is challenging to quantify, since businesses vary tremendously by sector, location, and customer base. For instance, if a program offered training services to businesses engaged in selling one commodity exclusively (e.g., pizza parlor restaurants), then it is straightforward to measure changes in program participant skills in business management as they relate to managing a pizzeria. However, most programs offer or refer training services to a variety of businesses and measuring and collecting data on the knowledge acquisition process requires more time. Additional attention must be paid to a) the nature of the business (including location and

177 Nichols Assessing Program Effects in Enterprise Programs 177 seasonal influxes), and b) the business owner s skill sets and state of mind before and after the intervention. Similarly, the questions used to uncover 1) what the participant has learned, and 2) how his sense of empowerment has evolved (if at all) since program enrollment are open-ended, easy, and uncomplicated. For instance, Describe any changes you have experienced? or Since you have learned new skills in inventory management (or what skills the program offers), what changes have you noticed in your business? The responses to such questions are, in turn, simple and usually refer to one or two ideas. For example, the quotes below reflect some changes women in Nicaragua mentioned to the aforementioned questions: Now, that I earn money, I am much more respected by other members of the household. Now I no longer have to buy millet from my mother-in law on credit. Now I feel well-respected by X [member of the community], and I feel confident about my contribution. In each case, the respondent mentions that her current state contrasts with a condition before program enrollment. As seen above, qualitative data is easily presented, puts forward a personalized sample of who the program is assisting, and provides the reader with flexibility to interpret how the participant s business has changed as a result of knowledge gained or a new sense of empowerment. Employing Quantitative Methods When monitored over time, data concerning business sales and costs produces great insight and provides planners and managers with information that can inform program direction and strategy. Quantitative measures normally relate to business fluctuations and expansion, and one may tailor data collection tools around such questions. The list falls into three categories, including 1) characteristics about the business labor structure, 2) the business

178 178 Part Three Impacts and Outcomes: Creating Wealth customer base, and 3) value and volume of inventory, sales, and estimated profit. Each category is further defined below. The labor upon which a business relies varies depending upon the nature of the business venture. For instance, in the event that a business operates in the agricultural sector or in retail, it is possible that the owner contracts full-time labor seasonally (during harvests or holiday periods), while the remaining part of the year she may employ one part-time worker. From this measure, a program manager may expand data collection inquiring about the full- or part-time work status, gender, and wage paid to the worker(s). Table 1 presents fictitious data from a sample of twenty program participants interviewed from a BDS program in India. The program was designed to aid dairy farmers and though some variations in quality existed, the commodity sold was essentially the same. Business sizes were different depending on the number of employees and corresponding labor status. Table 1: Fictitious data reflecting quantitative data related to labor. Labor Status Categories Minimum Maximum Average Hourly Wage Paid Years of Owner Experience 3 35 Total number of employees 1 9 $5.00 Number of full time - male employees Number of full time - female employees Number of seasonal - male employees Number of seasonal - female employees Sample Size = $ $ $ $7.00 Information about the customer base paints a one-dimensional picture, illustrating to whom one sells merchandise or services. Once the business owner becomes acquainted with regular customers, he can closely estimate the proportion or percent of

179 Nichols Assessing Program Effects in Enterprise Programs 179 certain customer characteristics such as a) age, b) residence (e.g., urban, rural, suburban), and c) volume during a particular period (e.g., customers come more frequently during the beginning, middle, or end of the month or week). All such factors create a surprisingly rich picture about the business size and its rate of expansion. Once the profile of the customer is established, the quantitative data also informs business inventory needs and marks fluctuations in capital flows. For instance, in the case of a video rental business, rentals are most prevalent during the close of the week for older movie-watchers, as they may have more time on the weekends to enjoy a video. However, younger clientele may have an alternative rental pattern. Given the two different groups of clientele, the basic inventory needs, which include labor (additional workers on Thursdays and Fridays), extended hours, and a supply of videos to accommodate the influx of renters, varies and the business owner requires capital to cover such operating costs. Finally, the value and volume of business sales and costs is the most telling indicator measuring expansion and success. Unless the program extends credit and financial services directly, attributing business expansion or successes directly to program services or training is challenging. However, if monitored over time (in excess of two or three years), a positive trend from financial data would suggest a link or correlation between program exposure and business expansion. The value of business sales and operating costs normally recorded for tax purposes enables an entrepreneur to understand exactly how much he extends to customers and spends on inventory. In some places, particularly outside of the United States, a business owner may not keep track of such financial information, in which case the program representative could assist or facilitate the business owner to recall and then estimate a number for business sales and costs. Under such circumstances, it is best to begin with the amount of the item or services the business owner purchases monthly to supply his customers. The same process should be used when calculating how much the owner sells in merchandise. Multiplying these figures by twelve months in the year is logical, but one must account for seasonal fluctuations the business

180 180 Part Three Impacts and Outcomes: Creating Wealth experiences. For instance, summer months may be heavier compared to spring. Once these figures have been computed, they are fairly accurate predictors of business expansion and change, but data collection must always take place at the same time of the year. It is possible that a business owner will receive other income (e.g., pension from a previous job, social security, other wages) and it is important to note any outside contributions invested in the business. Table 2 presents fictitious data how one may display business sales data over three years. Please recall that such information, particularly a positive trend observed, may only suggest that a link between program exposure and business expansion exists. Nonetheless, the positive trend presents a strong case to funders. Table 2: Program participant business sales in Consecutive years Year Sales 2001 Sales 2002 Sales 2003 Sales 2004 Sample Size Program Clientele US $3,111 US $4,950 US $7,341 $8,154 With such data, it is also possible to conduct other statistical analyses such as Chi-Square and Analysis of Variance (ANOVA), which could indicate that the percent change from one year to the next is statistically significant. Conclusions The paper elucidated how program planners may emphasize the impact of their interventions and explains to funders what works best and how to prove it. While explaining the steps one may take to demonstrate impact, the intention is to present concepts and methodologies in simple language using specific examples. Drawn from international experiences, there are two major reflections about specific conceptual measures and quantitative variables and why such measures yield robust results, particularly when used over

181 Nichols Assessing Program Effects in Enterprise Programs 181 time. The first conceptual measure explored related to how to measure a change in knowledge or empowerment levels among program participants. The most logical method of collecting data in this area is through the use of qualitative means. Asking simple open-ended questions produces straightforward answers, and as seen in this article, the results appear interesting and convincing. The second area to examine how program services may have led to a change or difference in businesses assisted is by gauging business characteristics and sales or costs. It is noted that quantitative methods are the most practical in this case, and several key characteristics of the business (e.g., labor structure and customer profiles) were elaborated upon, citing several examples. The value and volume of business sales and costs is another indicator reflecting business expansion but attributing the success to program enrollment is difficult. However, the case may be more credible if the business owner has extended program exposure and an example of such was also provided. Finally, it is important to note that the findings generated from both quantitative and qualitative methods presented side-by-side is the most persuasive and compelling means of informing audiences, both domestic and international, about the perceived effects of enterprise development programs. The tools presented in this paper should be viewed as a starting point, but the framework and varying forms in which to present and combine data sets are boundless.

182 182 Part Three Impacts and Outcomes: Creating Wealth References Ackerly, B Testing the Tools of Development: Credit Programmes, Loan Involvement, and Women s Empowerment. IDS Bulletin, 26 (3), Berger, M Key Issues on Women s Access to and Use of Credit in the Micro- and Small scale Enterprise Sector. Pp in Women in Micro and Small Enterprise Development, edited by D. Louise & J. Havet. Boulder:Westview. Buckley, G Financing the Jua Kali Sector in Kenya: the Krep Juhudi Scheme and Kenya Industrial Estates Informal Sector Programme. Pp , vol. 2 in Finance Against Poverty, edited by D. Hulme & P. Mosley.. London: Routledge. Goetz, A. and R. S. Gupta Who Takes the Credit: Gender, Power, and Control Over Loan Use in Rural Credit Programs in Bangladesh. World Development, 24: Greene, J. C. and V. Caracelli Defining and Describing the Paradigm Issue in Mixed-method Evaluation. New Directions in Evaluation, 74:,1-17. Hulme, D., R. Montgomery,and D. Bhattacgarya Mutual Finance and the Poor: a Study of the Federation of Thrift and Credit Cooperatives (SANASA) in Sri Lanka. Pp , vol. 2 in Finance Against Poverty, edited by D. Hulme and P. Mosley. London: Routledge. Lincoln, Y. S. and E. Guba Naturalistic Inquiry. Newbury Park: Sage Publications. MkNelly, B.and C. Watetip Impact Evaluation of Freedom From Hunger s Credit with Education Program in Thailand: Selected Survey Results. Davis, CA: Freedom From Hunger.

183 Nichols Assessing Program Effects in Enterprise Programs 183 Nichols, T Assessing the effects of a micro/small enterprise development program: a case study of Kenya women finance trust (KWFT) in Karatina, Kenya. PhD dissertation. Department of Human Service Studies, Cornell University

184 Appendix List of Acronyms Conference Program List of Contacts

185 Appendix 187 Appendix One List of Acronyms AAA: Agricultural Adjustment Act AEO: Association for Enterprise Opportunity ARA: North Carolina A&T Agricultural Research Program ANOVA: Analysis of Variance BDS: Business Development Services BISNet: Business Information System Network CEO: Collegiate Entrepreneurs Organization CSREES: Cooperative State Research, Education, and Extension DARE: Drug Abuse Resistance Education EC: Entrepreneurship Center ERDP: Entrepreneurial Rural Business Development Project FARMS: Farmers Access to Regional Markets HBCUs: Historically Black Colleges and Universities INEGI: Instituto Nacional de Estadística, Geographía, e Informática (Mexican Institute for Statistics, Geography, and Information) MCE: Maryland Cooperative Extension NCEC: National Coalition of Entrepreneurship Centers OIG: Office of the Inspector General OMB: Office of Management and Budget PAWC: Professional Agriculture Workers Conference SBDC: Small Business Development Center SBIDA: Small Business Institute Directors Association SIFE: Students in Free Enterprise SMOBE: Survey of Minority-owned Business Enterprises USASBE: United States Association for Small Business and Entrepreneurship USDA: United States Department of Agriculture

186 188 Appendices Appendix Two Steppin Into the Future: Empowering Communities Through Entrepreneurship 1890 Land Grant - Entrepreneurial Information Exchange Workshop Program Tuskegee University, Kellogg Conference Center December 2-4, 2004 Thursday, December 2 7:00 PM Registration and Welcome Reception Friday, December 3 7:30 AM 5:00 PM Registration 8:00 AM 8:45 AM Continental Breakfast 9:00 AM Introductions Kenneth L. Robinson, Moderator Emerging Markets Program, Cornell University Opening Remarks Edgar L. Lewis, USDA Rural Development, Washington, DC Walter A. Hill, Dean, College of Agriculture, Environment, and Natural Sciences, Tuskegee University 10:00 AM Assessing the Record and Charting the Future Ron Williams, Alabama Cooperative Extension System, Program Planning and Development A primer on methods for identifying, measuring, and analyzing program outcomes and impacts.

187 Appendix :15 AM Catalysts for Collaboration -- Fostering Effective Partnerships between 1890 Programs and Rural Development State Offices Ralph D. Christy, Cornell University, Moderator Panel of State Directors and 1890 Program Managers GA Toni Grimes, USDA Rural Development, and Dollie Horton, Fort Valley State MS Charlie Joiner, USDA Rural Development, and Brenda Buck, Alcorn State 12:30 PM Lunch Reverend Clifford Jones, Greater Peace Missionary Baptist Church, Opelika, AL, and 2003 Excellence in Entrepreneurship Awardee, Booker T. Washington Economic Development Summit, Tuskegee University 2:00 PM Update on USDA Financial and Reporting Procedures Edgar L. Lewis, 1890 Program Manager, and Barbara Williams, USDA-Rural Development, Washington, DC Update 1890 project staff on USDA compliance, reporting requirements and financial regulations related to cooperative agreements and grants. Topics to be discussed include, among others, (A) Matching Funds/In-Kind Contributions; (B) Preparing and Reporting SF-260 and SF-270; (C) BISNet; and (D) Computer Technology Outreach 3:15 PM Benchmarking Entrepreneurship Development Programs

188 190 Appendices 4:15 PM Break Caroline Glackin, Director, Delaware Center for Enterprise Development, Delaware State University 4:30 PM Case Studies and Innovative Approaches of Entrepreneurship Development: Success Stories Lloyd Hebert, Moderator, Prairie-View A &M Presentations on respective 1890 Entrepreneurial Outreach Programs Panel: Florida A&M, South Carolina State, Maryland-Eastern Shore 6:00 PM Dinner Saturday, December 4 8:00 AM Continental Breakfast 9:00 AM Entrepreneurship Across the Curriculum Jewel Hairston, Moderator, Virginia State A discussion by 1890 program managers on entrepreneurial outreach initiatives that span the curriculum, ranging from secondary school to undergraduate education to cooperative extension and outreach to executive training. Panel: Arkansas-Pine Bluff, Tennessee State, West Virginia State 11:30 AM Break 11:45 AM Attracting New Funds USDA and Beyond Winford Willie, Moderator, Langston University

189 Appendix 191 Fred Williams, Special Projects Officer, Department of Commerce, Atlanta Regional Office Discussion of the U.S. Department of Commerce s Minority Business Development Agency, followed by firsthand experiences from a panel of 1890 program managers regarding the challenges and rewards involved with seeking out new sources of entrepreneurship development funding at USDA and beyond (e.g., foundations, government agencies, private sector, etc.). Panel: Tuskegee Housing and Urban Development, Southern Small Business Administration, Delaware State Corporate and Foundation Sector, and NC A&T 1:00 PM Closing Remarks 1:30 PM Lunch and Departure

190 192 Appendices Appendix Three Contact List of Workshop Participants Ntam Baharanyi Tuskegee University 105 TM Campbell Hall Tuskegee Institute, AL (phone) (fax) Brian Bell Southern University J.S. Clark Adm. Bldg. Baton Rouge, LA (phone) (fax) Deborah Brown SCSU Extension Office P. O. Box 1033 Bennettsville, SC Brenda T. Buck Alcorn State University 1000 ASU Drive #210 Alcorn State, MS (phone) (fax) Lawrence Carter Florida A&M University 215 Perry Paige (phone) (fax) Ralph D. Christy Cornell University AEM Department 204 Warren Ham Ithaca, NY Youssouf Diabate Tuskegee University 105 TM Campbell Hall Tuskegee Institute, AL (phone) (fax) William Dodson 3322 West End Ave. Suite 300 Nashville, TN

191 Appendix 193 Nyanza Duplessis Tuskegee University 105 TM Campbell Hall Tuskegee Institute, AL (phone) (fax) Arthur D. Etherly University of AK Pine Bluff 1200 N University Mail slot 4943 Pine Bluff, AR [email protected] (phone) (fax) Ilona Figat Delaware State University Delaware Center for Enterprise Development 1200 N. DuPont Hwy. Dover, DE [email protected] (phone) Caroline Glackin Delaware State University Delaware Center for Enterprise Development 1200 N. DuPont Hwy. Dover, DE [email protected] (phone) (fax) Tanya Gonzales [email protected] (phone) Toni Grimes STOP E Hancock Ave. Athens, GA [email protected] Jewel Hairston Virginia State University Box 9081 Virginia State University Petersburg, VA [email protected] (phone) (fax) Charlotte Ham Tuskegee University 105 TM Campbell Hall Tuskegee Institute, AL [email protected] (phone) (fax) Chris Harmon 4121 Carmichael Rd. Montgomery, AL [email protected]

192 194 Appendices Sandra Harris 210 Perry Paige Bdg. So. Tallahassee, FL Lloyd J. Hebert Prairie View A&M 1295 Pearl St. Beaumont, TX (phone) (fax) Jimmy Henry P. O. Box 3059 Prairie View, TX Dolllie Horton Fort Valley State University 1005 State University Dr. Fort Valley, GA (phone) (fax) Omon Isikhueuihen North Carolina A & T Greensboro, NC [email protected] Charlie Joiner USDA Rural Development 100 W Capitol St. 831 Federal Bldg. Jackson, MS [email protected] (phone) (fax) Adolphus Johnson South Carolina State University P.O.Box 7066 Orangeburg, SC [email protected] (phone) (fax) Willie Johnson Fort Valley State University 1005 State University Dr. Fort Valley, GA [email protected] Kemeka Kearse South Carolina State University PO Box 7066 SCSU Orangeburg, SC [email protected] (phone) (fax)

193 Appendix 195 Theresa Keller Southern University P.O. Box 9338 Center For Rural & Small Business Development Baton Rouge, LA (phone) (fax) Dan Kuennen UMES Princess Anne, MD Ramona Latham Alcorn State University 1000 ASU Drive #210 Alcorn State, MS (phone) (cell) (fax) Gail Latimer Langston University P. O. Box 1258 Langston, OK (phone) (fax) Edgar L. Lewis Cooperative Marketing Division USDA Rural Development 1400 Independence Avenue, SW, Room 4204, Mail Stop 3252 Washington, DC phone fax Terrence Lewis Fort Valley State University 1005 State University Dr. Fort Valley, GA (phone) (fax) Diony Monestime University of Arkansas Pine Bluff x7119 Charlotte Pierce 112 Brock Street Albertville, AL Wonda Pierce 874 Horton-Nixon Chapel Road Horton, AL

194 196 Appendices Kenneth L. Robinson Cornell University 207 Warren Hall AEM Dept. Ithaca, NY (phone) (fax) Angela Sanders-Mayers Tenn. State University Cooperative Extension Program 3500 John A. Merrit Blvd. Nashville, TN (phone) (fax) Desmond Stewart Alcorn State University 1000 ASU Dr. #210 Alcorn, MS (phone) (fax) Gabrielle Stokes 805 Dr. MLK Drive Slidell, LA Stacy Turner 97 Park Ave. Hinson, WV Alvin Wade 3500 John Merritt Blvd. Nashville, TN Louis D. Whitesides South Carolina State University P. O. Box 7066 Orangeburg, SC (phone) (fax) Barbara Williams 1400 Independence Ave, SW Washington, DC (phone) (fax) Ronald Williams Al. HWY. 20 Hillsboro, AL Winford Willie Langston University 4205 N. Lincoln Blvd. Oklahoma City, OK (phone)