Source: PENNSYLVANIA STATE UNIVERSITY submitted to NRP
COLLABORATION AS FUEL FOR ECONOMIC GROWTH:RURAL ECONOMIC DEVELOPMENT THROUGH STRATEGIC ORGANIZATIONAL CHANGE
Sponsoring Institution
National Institute of Food and Agriculture
Project Status
COMPLETE
Funding Source
NRI COMPETITIVE GRANT
Reporting Frequency
Annual
Accession No.
0207912
Grant No.
2006-35401-17502
Cumulative Award Amt.
(N/A)
Proposal No.
2006-02994
Multistate No.
(N/A)
Project Start Date
Sep 1, 2006
Project End Date
Aug 31, 2011
Grant Year
2006
Program Code
[62.0]- Rural Development
Recipient Organization
PENNSYLVANIA STATE UNIVERSITY
208 MUELLER LABORATORY
UNIVERSITY PARK,PA 16802
Performing Department
AGRI ECONOMICS & RURAL SOCIOL
Non Technical Summary
Economic growth of small and medium-sized enterprises (SMEs) has not been widespread in rural settings. While urban SMEs have been spawned by recent trends toward collaboration across enterprises and unbundling of enterprise functions, this has not generally occurred in rural economies. Differential access to agglomeration services between rural and urban settings could be reduced by information technology. The main economic structural barriers to SME growth in rural settings are not understood. Evaluate potential of collaboration across SMEs in rural settings as a growth strategy both for the SMEs and the local economies. Identify main barriers to organizational change of enterprises in rural settings and establish the extent to which removal of these barriers could catalyze rural economic growth.
Animal Health Component
25%
Research Effort Categories
Basic
75%
Applied
25%
Developmental
(N/A)
Classification

Knowledge Area (KA)Subject of Investigation (SOI)Field of Science (FOS)Percent
6026110301030%
6086050301040%
6096199301030%
Knowledge Area
602 - Business Management, Finance, and Taxation; 608 - Community Resource Planning and Development; 609 - Economic Theory and Methods;

Subject Of Investigation
6110 - Economy of the United States and sectors thereof; 6199 - Economy, general/other; 6050 - Communities, areas, and regions;

Field Of Science
3010 - Economics;
Goals / Objectives
Given the success of strategic organizational change in generating economic growth across a wide spectrum of industries, to what extent does it offer a basis for a rural development strategy in the U.S.? Given the dominance of SMEs in U.S. rural economies, and the disproportionate impact of rural decline on these firms, to what extent does strategic organizational change offer an approach for kindling the economic viability and growth of SMEs realized during the past decade by SMEs in the general economy? Finally, what conditions enable or pose barriers to the success of strategic organizational change strategies for rural development? These questions motivate a clear long-term goal for this project of evaluating the potential of strategic organizational change as a basis for new rural development strategies. Within this context, specific project objectives are defined. 1) Identify the necessary and sufficient conditions for rural private enterprise to establish new viability, sustainability, and economic growth through strategic re-orientation, organizational change, and inter-organizational coloration, 2) Evaluate the relative potential of three key types of strategic collaborative organizational form: a) horizontal collaborations across peer enterprises, b) spatially distributed collaborations, and c) vertical collaboration in consumer-oriented value chains, 3) Determine the bases and characteristics for rural development policies that would support and catalyze inter-organizational collaboration and strategic organizational change in rural enterprises
Project Methods
A field-based approach to learning will be adopted in this project. Specifically, at least three regional economies will be the subject of study. In each case, these economies will be selected for their rurality, their continued economic decline over the past decade despite extensive rural development effort in the form of state and federal expenditures, and the presence of spatial location that renders them as feasible sites for economic growth. Preliminary discussions with colleagues and professionals identified WIBs in Pennsylvania, Indiana, New Mexico, Washington State, and Wisconsin as logical starting points for this field-based research. We will address objectives 1 and 2 of this proposed research through a staged series of key informant interviews that ripple downward from regional organization to specific rural enterprises. We will interview the executive directors, staff, and boards of directors of workforce investment boards (WIBs). We will follow a structured interview approach using the same core of questions for each WIB. Stage 2 will focus on regional assessment of the current extent and potential of strategic re-orientation and re-organization as a rural development strategy. Activities will include key informant interviews, review of key informant provided documentation, and secondary informant interviews. In Stage 3 of the project, the results of Stage 2 will be exploited to develop a specific economic theory of rural development centered on enterprise-level strategic re-orientation and re-organization. This theory will be derived from key informant observations concerning mechanisms through which these firm-level strategies operated. This theory will further formally motivate the testable hypotheses derived in Stage 2. In a second step, a formal telephone survey instrument will be developed to elicit data sufficient to provide a strong empirical test of each of the testable hypotheses. Based on this survey instrument, we will proceed, after appropriate testing and revision, to implement the survey across a sample of 75-100 individual, private rural enterprise managers (CEOs or equivalent) in each of the three research regions. This sample of individuals will be drawn from individuals identified by key and secondary informant interviews in Stage 2 as well as from Stage 1 interviews with WIB personnel. This sample would not include any individual interviewed in Stage 1 or 2. To conduct this telephone survey, we will use a commercial, professional telephone survey company that conducts telephone surveys. Survey results will provide an empirical basis for state-of-the-art econometric modeling of the empirical implications of the economic theory developed in step 1 of Stage 3. Of particular interest will be empirical examination of the key perceived facilitators and barriers of attainment of economic growth through strategic re-orientation and organizational change. Industry and enterprise characteristics, manager and owner characteristics, and quantitative measures of interdependencies and joint interests across enterprises will be specifically gauged.

Progress 09/01/06 to 08/31/11

Outputs
OUTPUTS: The project disseminated basic knowledge of and capacity for design and assessment of collaborative strategies for rural economic development. Presentations were made by R.D. Weaver to planning and economic development groups and individuals in three key project study sites in Wisconsin, Pennsylvania, and Connecticut. Relationships were established with key development organizations. R.D. Weaver prepared and presented seminars at these locations that presented assessment of potential of collaborative strategies to spur regional economic growth. R.D. Weaver developed and implemented a key informant interview instrument and conducted two week-long trainings of interviewers who implemented extensive open-ended discussion based interviews with enterprise managers in the project study regions. R.D. Weaver met with officials and enterprise managers in the study regions and presented the project concept, results, and discussed current strategies for economic growth given continued decline in rural manufacturing and related industries. Weaver developed a standardized database to collect regional and local economic data to characterize rural economies. Data was collected for the study sites as well as for potential further study sites such as north central Virginia. Graduate students and post-doctoral scientists were trained to conduct key informant interviews and engaged in conceptual and theoretic model development and analysis. Results of the key informant interviews served to characterize key development opportunities facing local and regional economies as well as the nature of opportunities for formation of collaborative relationships. Prof Weaver developed an economic theory of formation of networks of SMEs and presented it at 6 international conferences and four universities. Prof Weaver presented findings at professional meetings and developed a dynamic, spatial investment model to analyze allocation of private and public funding to support critical infrastructure and business services investments across diverse spatial locations. This modeling provides an important platform for analysis of public policy alternatives to save low performing rural economies through various types of collaborative investment strategies. The potential for these strategies to establish sustainable economic growth while managing environmental effects was examined through extensions of these models. These results were disseminated through a series of presentations at professional conferences and are available for dissemination on request as summarized below in publications. PARTICIPANTS: Five doctoral students were trained in interview-based subjective learning methods. Three doctoral students were trained in frontier economic theory of and simulation modeling of dynamic, spatial control problems with multiple, gaming agents competing for use of limited resources. One B.S. level honors student was trained in interview skills, sampling methods, and qualitative, contextual analysis. TARGET AUDIENCES: Nothing significant to report during this reporting period. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.

Impacts
The project contributed several areas of new knowledge. Key informant interviews provided key information to R.D. Weaver in development of a model of the formation of interorganizational relationships across enterprises. Interviews provided foundational understanding of key motivations, constraints, and benefit perceptions across managers of enterprises that are interdependence. Nonparametric methods for the quantitative evaluation of the performance of networks of collaborating enterprises. New capacity to simulate established new appreciation of conditions under which formation of relationships for collaboration across rural SMEs would enhance the performance of the participating SMEs. This basic knowledge change will serve as a foundation for applied research to develop modeling capacity to analyze rural SMEs to identify potential for collaboration that contributes to enhanced economic performance. New economic theory and application tools were developed to analyze the net benefits of collaboration across rural SMEs and between SMEs and OEMs. Results provide an important new capacity to analyze private and public investment strategies to stimulate rural economic growth through support of essential infrastructure, labor market strategies, and business services for rural SMEs. This basic knowledge change will serve as a foundation for development of applied hands-on tools to support analysis of SME procurement, production, and marketing processes to identify opportunities for collaboration and evaluate net benefits of specific partner relationships. A second level of tools will be supported that provide decision aid to private and public investment decisions with respect to infrastructure, labor market, and business service development. 2010/09-2010/08 Research continued to focus on infrastructure investment as infrastructure is interpretable as a joint resource that generates service flows to rural SMEs, a PhD dissertation was completed. This work focused on formation of policy to coordinate performance of decentralized enterprises such as SMEs. 2010/09-2011/08 Simulation capability was expanded to consider how collaborating networks of enterprises behave when their production processes generate both market and nonmarket goods and services. The potential for spatial shifting of production activities to locations with capacity to absorb nonmarket flows was examined and the potential for use of incentive policies to control the performance of collaborations was examined through simulations. This work contributed to new capacity to consider both private performance aspects of collaboration such as profitability or economic growth and environmental effects such as ecosystem services and environmental emissions that might feedback over time to affect the sustainability of local economic growth.

Publications

  • Kraus, D. K. 2007. Dissertations and theses Interorganizational Collaboration and Small Business Performance. B.S. Thesis. The Pennsylvania State University, University Park, PA. pp. 92
  • Moon, Y. 2008. Essays on Investment Decisions Under Uncertainty. Ph.D. Dissertation. The Pennsylvania State University, University Park, PA. pp. 120
  • Kwon, C. 2008. Dynamic Pricing, Competition, and Uncertainty. Ph.D. Dissertation. The Pennsylvania State University, University Park, PA. pp 139.
  • Gellynck, X., B. Kuhne, and R. D. Weaver. 2011. Relationship Quality and Innovation Capacity of Chains: The Case of the Traditional Food Sector 2(1):1-22.
  • Gellynck, X., B. Kuhne, and R. D. Weaver. 2011. Innovation capacity of food chains: A novel approach. International Journal of Innovation and Regional Development 3(2):99-125.
  • Gellynck, X., B. Kuhne, and R. D. Weaver. 2011. Relationship Quality and Innovation Capacity of Chains: The Case of the Traditional Food Sector. International Journal of Food System Dynamics 2(1):1-22.
  • Chung, S. H. 2011. Exploring Computational Sustainability vis Differential Variational Inequalities. The Pennsylvania State University, University Park, PA. pp. 203.


Progress 09/01/09 to 08/31/10

Outputs
OUTPUTS: To expand understanding of urban proximity as a factor in SME performance and collaboration, Weaver and a research associate developed a sample and administered a scripted, key informant interview to SME managers in the Connecticut river valley and New Haven Connecticut. Over 20 interviews were completed, taped, transcribed and summarized to establish current practices in collaboration across these enterprises and the potential contribution of relational organization of rural SMEs to regional economic growth. Prof Weaver presented findings at professional meetings and developed a spatial investment model to analyze allocation of private and public funding to support critical infrastructure and business services investments across diverse spatial locations. This modeling provides an important platform for analysis of public policy alternatives to save low performing rural economies. These results were disseminated to through a series presentations at professional conferences and are available for dissemination on request as summarized below: Economic Performance and Growth in the New Economy, May 1, 2009. Alberta Economics Association, Red Deer, Alberta, CA. Cattle producers from Northern Plains. The New Economy and Pull Innovation: Implications for Managing Environmental Performance. Mansholt Graduate School Seminar. University of Wageningen, NL. Professionals in economic development. Multi-Regional Sustainable Infrastructure Capital Investment Allocation Conference on Applied Infrastructure Modeling and Policy Analysis. Network Modeling and Infrastructure Policy for a Sustainable Future Trans-Atlantic Infraday Conference 13 Nov. Resources for the Future in Washington, DC. Professionals and academics. Outsourcing and Offshoring: Sector Implications for Dynamics, Growth, and Sustainability. Presented at International Forum on System Dynamics and Innovation. Innsbruck. Regional Infrastructure Investment Allocation for Sustainability at 3rd Annual Trans-Atlantic Infraday Conference, Resources for the Future. Washington D.C, USA, Sept 2009. with Friesz, T. L., S. H. Chung Returns to scale and dynamics of multiple enterprises 114th Seminar of the EAAE. Berlin, May 2010. Structural Change: Modeling Policy Impacts and Strategies. Humboldt-Universitat zu Berlin. April 15 - 16, 2010 Saving Places with Infrastructure (When Coupled, Complex Dynamics are in Play M.E. JOHN SEMINAR SERIES. Penn State University. January 15, 2010. also presented at IIASA. Laxenbourg, Austria. Feb 2010. Relationship quality and innovation capacity of chains: The case of the traditional food sector in the EU with Xavier Gellynck, Bianka Kuhne Presented at 4th International European Forum (Igls-Forum on System Dynamics and Innovation February 08 -12, 2010 -Innsbruck-Igls, Austria Why differences make a difference: an empirical study of chain performance imbalances in the traditional food sector in the EU with Adrienn Molnar and Xavier Gellynck Presented at 4th International European Forum (Igls-Forum on System Dynamics and Innovation February 08 -12, 2010 -Innsbruck-Igls, Austria PARTICIPANTS: Nothing significant to report during this reporting period. TARGET AUDIENCES: Nothing significant to report during this reporting period. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.

Impacts
Research conducted during the past project year led to new economic theory and application tools to analyze the net benefits of collaboration across rural SMEs and between SMEs and OEMs. Results further provide an important new capacity to analyze private and public investment strategies to stimulate rural economic growth through support of essential infrastructure, labor market strategies, and business services for rural SMEs. This basic knowledge change will serve as a foundation for development of applied hands-on tools to support analysis of SME procurement, production, and marketing processes to identify opportunities for collaboration and evaluate net benefits of specific partner relationships. A second level of tools will be supported that provide decision aid to private and public investment decisions with respect to infrastructure, labor market, and business service development.

Publications

  • Weaver, R. D. 2009. Supply Chain and Network Performance: Metrics for Profitability, Productivity, and Efficiency. International Journal on Food System Dynamics 1(1):56-68.
  • Gellynck, X., B. Kuhne, and R. D. Weaver. 2010. Innovation capacity of food chains: A novel approach International Journal of Innovation and Regional Development, 2010 Special Issue pp. 242-267.
  • Gellynck, X., B. Kuhne, and R. D. Weaver. 2010. Relationship Quality and Innovation Capacity of Chains: The Case of the Traditional Food Sector in the EU. Proceedings in Food System Dynamics. pp. 352-373.
  • Friesz, T. L, S. H. Chung, and R. D. Weaver. 2010. Regional Infrastructure Investment Allocation for Sustainability. In Kasthurirangan Gopalakrishnan and Srinivas Peeta (eds.), Sustainable and Resilient Critical Infrastructure Systems: Simulation, Modeling, and Intelligent Engineering. Springer-Verlag, ISBN: 978-3-642-11404-5. Pp. 117-138.
  • Molnar, A., X. Gellynck, and R. D. Weaver. 2010. Why Differences Make a Difference: Traditional Food Chain Performance in Selected European Countries. Proceedings in Food System Dynamics. pp. 506-518.


Progress 09/01/08 to 08/31/09

Outputs
OUTPUTS: Prof Weaver and a research assistant developed samples of rural SMEs in three key study sites through collection and analysis of secondary data and telephone interviews with key industry leaders in the study site regions. This sample was drawn together in a data base that includes characterization of the SMEs and contacts. Weaver and the assistant developed and administered a scripted, key informant interview to SME managers in the Fox Valley region of Wisconsin. Over 30 interviews were completed, taped, transcribed and summarized to establish current practices in collaboration across enterprises and the potential contribution of relational organization of rural SMEs to regional economic growth. Prof Weaver and a research assistant presented the project findings to cooperating project participants at the Fox Valley Workforce Development Board as well as to the Fox Valley Chamber of Commerce. Weaver developed background for implementation of the survey in South Central Pennsylvania and Southeastern Connecticut. Prof Weaver developed an economic theory of formation of networks of SMEs and presented it at an international conference to specialists in this topic, as well as at Univ of Wageningen, NL; Univ of Bonn, DE; and BOKU, AT. PARTICIPANTS: Nothing significant to report during this reporting period. TARGET AUDIENCES: Nothing significant to report during this reporting period. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.

Impacts
Research conducted during the past project year led to development of new capacity to simulation conditions under which formation of relationships for collaboration across rural SMEs would enhance the performance of the participating SMEs. This basic knowledge change will serve as a foundation for applied research to develop modeling capacity to analyze rural SMEs to identify potential for collaboration that contributes to enhanced economic performance.

Publications

  • Weaver, R.D. 2008. Collaborative Pull Innovation: Origins and Adoption in the New Economy, Agribusiness 24(3):388-402.
  • Weaver, R.D. 2009. Microeconomics of Network Configuration and the Structure of Collaboration. British Food Journal 111(8):746-761.
  • Weaver, R.D. 2009. Outsourcing and Offshoring: Sector Implications for Dynamics, Growth, and Sustainability. Proceedings 3rd International European Forum on System Dynamics and Innovation in Food Networks. February 16 - 18. Igls. http://bscw.ilb.uni-bonn.de/fsdcommunity/bscw.cgi/d90229/Weaver-2.pdf .
  • Weaver, R.D. 2009. Supply Chain and Network Performance: Metrics for Profitability, Productivity, and Efficiency. Proceedings 3rd International European Forum on System Dynamics and Innovation in Food Networks. February 16 - 18. Igls. http://bscw.ilb.uni-bonn.de/fsdcommunity/bscw.cgi/d86572/Weaver.pdf.


Progress 09/01/07 to 08/31/08

Outputs
OUTPUTS: Relationship was established with Fox River Workforce Development Board. R.D. Weaver presented a seminar "Collaboration as an Engine of Regional Economic Growth" to Fox River Manufacturers Alliance. R.D. Weaver developed and implemented a key informant interview instrument and conducted two week-long trainings of interviewers who implemented the interviews with enterprise managers in the Fox River Valley area of Wisconsin. R.D. Weaver met with officials of Fox River Chamber of Commerce and Oshkosh Chamber to present the project and discuss current strategies for economic growth given continued decline in rural manufacturing and related industries. Weaver developed a standardized database to collect regional and local economic data to characterize rural economies that might serve as study sites. Data was collected for north central Virginia, eastern Connecticut, southcentral Pennsylvania, and the Fox River region of Wisconsin. PARTICIPANTS: Rebecca Cleary was trained to conduct key informant interviews. She completed her M.S. in Ag Econ at Univ of CT and is pursuing a PhD at the Univ of Wisconsin Jan Schliefer was trained to conduct key informant interviews and develop data characterizing local and regional economies relevant to formation of collaborative relationships. He is pursuing a PhD at the University of Bonn, Germany. TARGET AUDIENCES: Nothing significant to report during this reporting period. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.

Impacts
Key informant interviews provided key information to R.D. Weaver in development of a model of the formation of interorganizational relationships across enterprises. The interviews provided foundational understanding of key motivations, constraints, and benefit perceptions across managers of enterprises that are interdependence.

Publications

  • Weaver, R. D. 2008 "Collaborative Pull Innovation: Origins and Adoption in the New Economy", Agribusiness 24(3):388-402.
  • Weaver, R. D. 2008 "Micro-Economics of Network Configuration and the Structure of Collaboration" Proceedings. 110th EAAE Workshop 'System Dynamics and Innovation in Food Networks' Feb 18-22. Igls, Austria. (In Press)


Progress 09/01/06 to 08/31/07

Outputs
OUTPUTS: Activities Site visit: Neenah, Wisconsin May, 2007. Site visit: Lewisburg, PA March 2007. Products "Defining Rural" Project literature review. Prepared by Jeffrey Bridger, Research Associate. May 2007. "SMEs and Local Economic Growth: A Review of Evidence". Project literature review. Prepared by Jeffrey Bridger, Research Associate. June 2007. "Innovation through Collaboration: Micro-economic Perspectives for the Food System" Robert D. Weaver Project Working Paper February 2007. Presented as plenary paper at International European Forum Innovation and System Dynamics in Food Networks, Austria, February 15-17, 2007. under review. "Gauging Performance of Collaborations: Supply Chains, Networks, and Alliances." Robert D. Weaver Project Working Paper May 2007. under review. PARTICIPANTS: Robert D. Weaver, Professor of Agricultural Economics, Project Director Theodore R. Alter, Professor of Agricultural Economics, Co-PI Jeffrey Bridger, Research Associate. TARGET AUDIENCES: Individuals, groups, market segments, or communities that were served by the project include the following: rural development specialists, rural bankers, food processors, small and medium sized enterprises, small rural communities.

Impacts
Change in knowledge: Nonparametric methods were developed for the quantitative evaluation of the performance of networks of collaborating enterprises. By enabling quantitative evaluation of performance, these methods will provide a means of developing data that can reveal the economic benefits of collaborations. It is envisioned that these data along with data describing the attributes of enterprises as well as their rural location will allow identification of the drivers and barriers to collaboration by rural enterprises.

Publications

  • No publications reported this period