Entrepreneurial Ecosystems in Appalachia is a collection of entrepreneurship research, case studies, and data from EntreWorks Consulting, the Center for Regional Economic Competitiveness, and the Center for Rural Entrepreneurship on behalf of the Appalachian Regional Commission. The goal of the project is to document entrepreneurship metrics and strengthen Appalachian communities' understanding of the entrepreneurial environment not only locally, but across the larger region.

For any additional questions not addressed here, please contact us at eco_inventory@arc.gov

Methodology

This summary, along with our FAQ, provides additional details on the research methodologies used to create the materials and data for the Appalachian Regional Commission's Entrepreneurial Ecosystems in Appalachia web portal.

Appalachian Entrepreneurial Dynamism Dashboard

The Appalachian Entrepreneurial Dynamism Dashboard uses data from YourEconomy.org, a website developed and managed by the University of Wisconsin Extension (UW Extension), Division for Business and Entrepreneurship and the Business Dynamics Research Consortium (BDRC). Actual data comes from several databases developed by InfoGroup, and the information is further refined by UW Extension and BDRC. Further information on data development can be accessed here. Our data analysis uses the YourEconomy Time Series (YTS) data from the time period between 2010 to 2015. As such, these figures represent a one-time snapshot of economic activity. YTS focuses on establishments that are "in-business", defined as those intent on conducting business or commercial activities, or have a DBA (doing business as) physical location for that purpose. The YTS database uses private data sources from InfoGroup. Thus, it does not represent official public data on entrepreneurship trends. Data are presented up to 2015, the latest figures available at the time of this project.

This database tracks entrepreneurial dynamism in the 420 counties served by the Appalachian Regional Commission. It compares each county's performance to the statewide average, the average performance of all counties served by the ARC, and the national average.

The data dashboard tracks entrepreneurial dynamism, which refers generally to the strength and vibrancy of a community's base of establishments. Each Appalachian county's performance was ranked across three dimensions (Startups, Stage 2 Businesses, and High Growth Businesses). These three rankings were averaged to create a singular measure of dynamism for each county. More details on specific dimensions are presented below:

  1. Startups: Tracks new establishments, i.e. companies that reported employment in 2014 and/or 2015, but not earlier. This label intends to capture 'startup' companies with at least 1 year of activity.
  2. Stage 2 Businesses: This category uses a classification scheme first developed by the Edward Lowe Foundation. Stage 2 firms are those establishments that employ anywhere from 10 to 99 people.
  3. High Growth Businesses: Refers to establishments whose employment grew by 75% or more between 2011 and 2015.

The Appalachian Entrepreneurial Dynamism Dashboard is designed to offer a one-time snapshot of how Appalachia's counties and states are performing on key measures of business dynamism. These data present a single snapshot in time, so they should not be considered the final word on a region's business performance. Rather, the Dashboard is designed to help users better understand how a county fares in the three measures of dynamism, both as a standalone measurement and one that can be compared to other Appalachian counties.

Appalachian Entrepreneurial Resources Inventory

We examined seven elements that were identified through a literature search as factors that contribute to an entrepreneurial ecosystem. These seven elements are: Community Culture, Specialized Infrastructure, Talent, Market Access, Regulatory/Government Support, Business Assistance, and Capital. Our assessment is based on the assumption that communities and regions with effective programs and strong capacities in these seven elements will likely tend to be more "entrepreneur friendly" and thus better perform in key measures of entrepreneurial dynamism.

We used a three-step process to populate the inventory:

  1. The project research team identified specific types of programs that would fall into each of the ecosystem elements.
  2. Using those programs as a guide, we identified each state's major entrepreneurship programs such as Small Business Development Centers and others. These programs were included in the inventory with geo-coding to indicate what Appalachian counties they served. The inventory also includes statewide programs such as one-stop business information portals maintained by State agencies.
  3. Using our networks within the region, we then identified more unique programs developed by non-profit organizations, regional development organizations and others to address specific local or regional needs.

Like the Dashboard, the Inventory represents a snapshot in time. Entrepreneurship development is dynamic and evolving in the Appalachian Region. Communities introduce new efforts each year as they become exposed to new models and ideas and adapt those concepts to meet the needs of local entrepreneurs. Every effort was made to create a complete inventory (as of October 2017) based on the availability of information from public and nonprofit resources. As with any inventory effort, some program gaps may exist in our listing and classification of various efforts. If you have additions or revisions to this inventory, please contact us.

While the Inventory can be used to identify potential sources of business services, it is not intended to serve as a one-stop-shop for entrepreneurship in Appalachia. Rather, this inventory was designed as a resource for community members, economic developers, business service providers, and potential entrepreneurs to be used in tandem with the Dashboard and other materials from this project to better understand the key components of entrepreneurial ecosystems in their county, their state, and across Appalachia.

FAQ

Appalachian Entrepreneurial Dynamism Dashboard

What is entrepreneurial dynamism?

Entrepreneurial dynamism refers generally to the strength and vibrancy of a community's business base. Is the area home to a large number of business startups and companies with high levels of employment and sales growth? Our entrepreneurial dynamism measures seek to capture this reality by measuring both new businesses and growing businesses at the state and county levels. We measure each Appalachian county's performance across three dimensions — specifically, the number of Startups, Stage 2 Businesses, and High Growth Businesses:

  1. Startups: Tracks new establishments, i.e. companies that reported employment in 2014 and/or 2015, but not earlier. This label intends to capture 'startup' companies with at least 1 year of activity. There are various ways to interpret the 'startup' metric. High levels of business startup activity can be a sign of economic strength and of economic weakness. At times of great economic stress, startup rates may rise as residents have few other employment options, and start businesses out of necessity. In less trying times, high rates of business startups can be an important indicator of a region's vibrancy and dynamism. In these cases, residents start new businesses based on new ideas or as a means to capitalize on new opportunities.
  2. Stage 2 Businesses: This category uses a classification scheme first developed by the Edward Lowe Foundation. Stage 2 firms are those establishments that employ anywhere from 10 to 99 people. These firms are typically viewed as "high potential." They have shown an ability to survive and thrive, and are thus potentially poised for future growth. A high concentration of Stage 2 firms suggests that a region may have higher than average future growth potential. According to statistics from YourEconomy.org, from 2006 through 2016, Stage 2 businesses represented 15.8 percent of all U.S. business establishments but generated 37.5 percent of all jobs and 36.3 percent of all sales.
  3. High Growth Businesses: Refers to establishments whose employment grew by 75% or more between 2011 and 2015. These firms are the primary drivers of new job creation and prosperity in the American economy. They represent less than five percent of all U.S. businesses; but, according to the Kauffman Foundation, they account for roughly 50 percent of all new jobs. These firms also have massive spillover effects, stimulating other industries to create jobs and growth opportunities.

Each county's performance was ranked against all Appalachian counties, across all three dimensions (startups, stage 2 businesses, and high growth businesses). These three rankings were averaged for each county to create a measure of "dynamism".

What is the source of this data?

This dataset uses information from YourEconomy.org, a website developed and managed by the University of Wisconsin Extension, Division for Business and Entrepreneurship and the Business Dynamics Research Consortium (BDRC). Actual data comes from several databases developed by InfoGroup, and the information is further refined by UW Extension and BDRC. Further information on data development can be accessed here. Our analysis uses data from the YourEconomy Time Series (YTS) between 2010 and 2015. YTS focuses on establishments that are "in-business", defined as those intent on conducting business or commercial activities, or have a DBA (doing business as) physical location for that purpose. The YTS database uses private data sources from InfoGroup. Thus, it does not represent official public data on entrepreneurship trends. Data are presented up to 2015, the latest figures available at the time of this project.

What regions are tracked in this database?

This database tracks entrepreneurial dynamism in 420 counties that are served by the Appalachian Regional Commission (ARC). It compares each county's performance to the statewide average, the average performance of all counties served by the ARC and national averages.

How does Appalachia perform?

The performance of counties within the Appalachian region varies greatly, but the overall performance of these counties is quite similar to that of other regions in the U.S. According to YTS data, counties in the Appalachian region tend to have a slightly smaller share of startup companies, but their shares of stage 2 and high growth businesses are similar to national averages. The job growth in Appalachia is slightly lower than the U.S. between 2010 and 2015, but sales and establishment growths slightly outperform national averages. However, it is important to remember that these average numbers mask significant differences by county. The lowest performing Appalachian counties show business growth levels far below national averages. At the same time, the region's high performers greatly exceed regional and national performance levels.

How should I use this Dashboard?

The Appalachian Entrepreneurial Dynamism Dashboard is intended to be used in combination with the Appalachian Entrepreneurial Resources Inventory, which provides detailed information on entrepreneurial competitive assets and program gaps to enable community members, economic developers, business service providers, and potential entrepreneurs better understand how their county performs in these key factors related to entrepreneurial development. These data present a single snapshot in time, so they should not be considered the final word on a region's business performance. The YTS database uses private data sources from InfoGroup. Thus, it does not represent official public data on entrepreneurship trends.

Appalachian Entrepreneurial Resources Inventory

What is an entrepreneurial ecosystem?

There is extensive research literature on ecosystems, which was reviewed as part of this project. A summary of that work can be found at: [LINK]. Based on our review of the literature, entrepreneurial ecosystems in Appalachia are comprised of seven ecosystem elements:

  1. Community Culture: Efforts to support the startup community such as business plan competitions, entrepreneur recognition, and investments in quality of life to attract talent.
  2. Specialized Infrastructure: Elements of the built environment that support entrepreneurship. This may include a specific building, such as an incubator space, or something larger, like a downtown revitalization effort.
  3. Talent: Job training, entrepreneurial skill building, youth entrepreneurship, and the overall talent pool that impact the startup workforce.
  4. Market Access: Market intelligence to help entrepreneurs in the initial planning stages of their startup and as they seek to grow; sector strategies like support for local/regional food systems.
  5. Regulatory/Government Support: Efforts such as streamlined business licensing, working across economic development, workforce development, and education silos, etc.
  6. Business Assistance: Services such as business plan development, business counseling, and business acceleration programs to help entrepreneurs advance their startup.
  7. Capital: Financial tools such as microlending, angel and venture investing, and revolving loan funds to help get businesses off the ground and to their next level of growth.

How was the inventory compiled?

We examined seven elements that were identified through a literature search as factors that contribute to an entrepreneurial ecosystem. These seven elements are: Market Access, Capital, Business Assistance, Talent, Specialized Infrastructure, Culture/Community support, and Government/Regulatory Support. Our assessment is based on the assumption that communities and regions with effective programs and strong capacities in these seven elements will likely tend to be more "entrepreneur friendly" and thus better perform in key measures of entrepreneurial dynamism.

We used a three-step process to populate the inventory:

  1. Based on the research team's long history of work in the field of entrepreneurial development, we identified specific types of programs that would fall into each of the ecosystem elements. For example, economic gardening programs were included under Market Access while Small Business Development Center programs were included under Business Assistance.
  2. Using those programs as a guide, we identified for each state the major "known" entrepreneurship programs such as Small Business Development Centers, incubators, Economic Gardening programs, Community Development Financial Institutions, angel capital funds, etc. These programs were included in the inventory with geo-coding to indicate what Appalachian counties they served. The inventory also includes statewide programs such as one-stop business information portals maintained by a state department.
  3. Using our networks within the region, we then identified more unique programs developed by non-profit organizations, regional development organizations and others to address specific local or regional needs — e.g., tourism efforts such as the Crooked Road in southwest Virginia, food system work such as ACEnet in Athens, OH and Appalachian Sustainable Development in Virginia.

Every effort was made to create a complete inventory based on the availability of information from public and nonprofit resources (as of October 2017). As with any inventory effort, some program gaps may exist. This is especially true in counties where private firms play a key role in delivering entrepreneurial support. We also recognize that some organizations serve regions larger than the county level, or even whole states; therefore, the inventory may not capture those organizations' efforts specific to one county. Additionally, entrepreneurship development is dynamic and evolving in the Appalachian Region. New efforts are being introduced each year as communities are exposed to new models and ideas and adapt those concepts to meet the needs of entrepreneurs locally. Based on interviews and other research, we did our best to select the entrepreneurial support organizations playing the biggest role in each county. If you have additions or revisions to this inventory, please contact us.

How should I use this inventory?

There are many online platforms to help entrepreneurs connect with resources, including important portals maintained by state development agencies. This Inventory was designed as a resource for users, such as community members, economic developers, business service providers, potential entrepreneurs, elected officials, staff at local and regional development agencies, community college staff, and community entrepreneurship champions — as a way to better understand their own ecosystem. The inventory provides a good picture of the programs available across a local ecosystem and can point to places where the system is strong and where it needs to be strengthened. A user can use the Inventory to compare what resources exist in one county with those available in another county; one might look at the capital programs offered in other counties to get ideas for what might work locally. The Inventory can be used to help guide local/regional decisions on where to make investments that may help to fill gaps within the entrepreneurial ecosystem; The Inventory, however, should only be viewed as a starting point for understanding a local ecosystem. The presence of a program within a county — or the presence of a program that serves the county — does not speak to the quality of services provided. Communities are encouraged to engage local entrepreneurs to understand the value of the services offered by providers identified within the ecosystem, and to identify the service gaps that entrepreneurs feel need to be addressed.

Who We Are

About the Appalachian Regional Commission

The Appalachian Regional Commission (ARC) is an economic development agency of the federal government and 13 state governments focusing on 420 counties across the Appalachian Region. ARC's mission is to innovate, partner, and invest to build community capacity and strengthen economic growth in Appalachia to help the Region achieve socioeconomic parity with the nation. Learn more at www.arc.gov

About EntreWorks Consulting

EntreWorks Consulting is an economic development consulting and policy development firm focused on helping communities and organizations achieve their entrepreneurial potential. EntreWorks works with a diverse base of clients including state and local governments, Chambers of Commerce, business leaders, educational institutions, and non-profits. These customers all share a commitment to innovative economic development strategies that build wealth and build communities.

For more information about EntreWorks Consulting, please visit their web site at entreworks.net.

About the Center for Rural Entrepreneurship

The Center for Rural Entrepreneurship was founded in 2001 as a national non-profit organization to help communities leverage assets, primarily their business, social and civic entrepreneur, for a more prosperous future. The Center works in partnership with communities to provide research-based, asset-focused comprehensive and customized entrepreneurial development assistance.

For more information about the Center for Rural Entrepreneurship, please visit their web site at energizingentrepreneurs.org.

About the Center for Regional Economic Competitiveness

The Center for Regional Economic Competitiveness (CREC) was established as a not-for-profit 501(c)3 organization in 2000 to provide research, training, and technical assistance to regions seeking to use fact-based analysis to help design and implement innovative job creation strategies in a knowledge-driven economy. Through its technical assistance and research efforts, the Center helps leaders and organizations to understand the economic forces impacting their regions and their individual roles and responsibilities in promoting economic prosperity. CREC also assists these community stakeholders in formulating transformational strategies to build sustainable regional growth.

For more information, visit creconline.org.