CHAPTER 2: RURAL ENTREPRENEURSHIP AND LOCAL ECONOMIC DEVELOPMENT: THEORETICAL PERSPECTIVES
2.3 CONCEPTUALISING RURAL ENTREPRENEURSHIP
2.3.4 Rural Entrepreneurship: Characteristics and Definitional Issues
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entrepreneurship should be the understanding of adverse employment conditions as stimulators for the person to become self-employed. Thus, entrepreneurship motivated by necessity may be considered as being largely influenced by unfavourable external employment conditions of an individual (Haas, 2013). However, there can be no necessity entrepreneurship without someone who feels the need to engage in some type of entrepreneurial activity. The unemployment push effect can also be used to explain necessity entrepreneurship (Veel, 2010). Where there is a need to become an entrepreneur, but future objectives or current financial rewards are insufficient, economic factors clearly drive necessity entrepreneurship. With necessity-based entrepreneurship, an entrepreneur chooses to undertake entrepreneurial activities or start a new business venture because there are no other available options or options are limited. Due to the low opportunity cost of starting a business, necessity-based entrepreneurship is a situation where there are no better employment opportunities available for an individual seeking to establish a business enterprise.
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such as launching businesses or industries (Shreepad & Ahmed, 2016; Sharma, Chaudhary, Bala
& Chauhan, 2013; Saxena, 2012). This also demonstrates how rural entrepreneurship is portrayed as a sequential process that is heavily impacted by unique territorial or spatial qualities (Shathopolou, 2004).
Entrepreneurial activities contribute immensely to the economy and prosperity of particular rural settings. One of the most essential strategies to encourage rural development is through entrepreneurship (Pato, 2015). Thus, the growth and development of a particular rural area is greatly associated with the presence of entrepreneurs. Globally, there are over three billion people living in rural areas with adverse socio-economic situations (Ngorora & Mago, 2016).
These rural areas have distinct features that allow and help entrepreneurs to undertake and prosper in their entrepreneurial activities and ventures. Entrepreneurship research and literature has in recently recognised and helped society to understand how entrepreneurs are influenced by their settings and how their entrepreneurial actions may shape salient features of such settings (Munoz, 2019; Mair & Marti 2009; Anderson, 2000). Entrepreneurship in rural areas involves choosing to run a business that is located in a rural setting with low embeddedness (Eriksson, Fellenius & Norman, 2016). According to Eriksson et al. (2016), embeddedness refers to how different context levels such as community, environment and social relationships influence entrepreneurial action in different situations and thus the bond of the individual to different contexts.
According Shathopolou (2004), rurality defines a territorially specific entrepreneurial milieu with distinctive physical, social and economic characteristics such as location, natural resources, landscape, social capital, rural governance, business and social networks as well as information and communication technologies that have dynamic and complex influences on entrepreneurial activity in rural areas. Population density, rate of population declines or growth, size of settlement, regional economic structure and geography are all used to describe rurality (Pato &
Teixiera, 2013: 9). Rurality also indicates the level to which rural resources, such as the environment and labour, are included into their entrepreneurial process (Akgun et al., 2010).
Rurality is seen as a dynamic entrepreneurial resource in this scenario, influencing both
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opportunities and restrictions. Most studies on rural entrepreneurship, or entrepreneurship in general, have focused on the effect of the social, economic, and institutional environments, and have limited their understanding of entrepreneurship to profit-driven and short-sighted opportunistic behaviour (Korsgaard & Muller, 2015). In this case, context may be locational, for example context as space or place, local or national, or location in a socio-spatial or socio- economic milieu such as the rural or urban. Each context brings specific values that inform both entrepreneurial the process and outcomes. This suggests that in order to understand the concept of rural entrepreneurship and entrepreneurship in general, understanding the interplay between entrepreneurial activities and the contexts in which they take place is significant.
As a result, rural entrepreneurship is distinct from other types of entrepreneurship due to its unique spatial characteristics. Korsgaard and Muller (2015); Pato (2015), for example, distinguishes between two ideal sorts of entrepreneurship, ‘entrepreneurship in rural areas’ and
‘rural entrepreneurship’, which are similar in terms of the development of enterprises but have separate characteristics. ‘Entrepreneurship in rural areas’ entails treating the immediate spatial context as merely a location for one’s activities, thus employing a logic of space characterized by profit and mobility, whereas ‘rural entrepreneurship’ entails a more in-depth engagement with one’s place, particularly its rurality and environment. According to Korsgaard and Muller (2015), the difference between the two ideal forms of entrepreneurship in rural areas is an instrument for dealing conceptually and empirically with the diversity of entrepreneurial activities in the spatial context of rural areas. These distinctions imply that the needs and organizational activities of rural entrepreneurship are distinct from those of other types of entrepreneurship because they are embedded in local space through the use of local resources.
Moreover, entrepreneurship in rural areas is not the same as entrepreneurship in urban areas (Pato, 2015; Stathopoulou, Psaltopoulos & Skuras, 2004). Rural enterprises should be based in a rural location, serving a rural customer base, and selling a rural product when it comes to rural entrepreneurship (Eriksson et al., 2016).
Rural entrepreneurship involves a close relationship between the entrepreneurial activity and the location where it takes place, and it draws on the unique resources of a location, such as natural,
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cultural, historical, human, social, or financial resources, that a venture requires for its growth and survival (Korsgaard & Muller, 2015). This means that rural entrepreneurship is primarily reliant on the rural environment’s local resources as a primary source of income or on the usage of local labour (Pato, 2015; McElwee & Smith, 2014). Thus, rural entrepreneurship is defined as entrepreneurial activity that deals with its spatial context and is embedded in its spatial context through the use of resources (Korsgaard & Muller, 2015). Thus, rural entrepreneurship is deeply rooted in its geographic (spatial) location. Embedding refers to a conceptual and operational method to perceive the type, depth and extent of the entrepreneurial link with a (rural) location (Pato & Teixiera, 2013). The location and externality of entrepreneurs’ market and social relations, as well as the engagement of locals in rural areas in the entrepreneurial process, are used to measure embeddedness in rural entrepreneurship research. To put it another way, locality assesses whether businesses have local relationships in terms of producing for and with locals, whereas external relations focus on producing for or with people outside of rural regions (Akgun et al., 2010). This is significant since most research has overlooked the significance and influence of the relationship between the physical environment and entrepreneurial activity. As a result, understanding rural entrepreneurship requires an understanding of geography and location. According to Korsgaard et al. (2015), it is important to connect the notions of space and place with rural entrepreneurship in order to establish a more differentiated and contextualized understanding of entrepreneurship in rural areas. The spatial context (geographic location) is critical in rural entrepreneurship because it provides resources that generate value for both the entrepreneurs and the local community (Eriksson, Fellenius & Norman, 2016; Korsgaard et al., 2015). This is significant since most previous research has overlooked the significance and influence of the interaction between the physical environment and entrepreneurial activities.