A new report by the Wilder School’s Elsie Harper-Anderson highlights the role of local governments in successful entrepreneurial ecosystems
By Pamela Cox
Entrepreneurship in the United States has dramatically increased since the COVID-19 Pandemic. Applications for new businesses have reached historical numbers and remain higher than those filed pre-pandemic. This is great for the American economy as entrepreneurial ecosystems are essential for fostering innovation, economic growth, and job creation within a city. An exploratory report released by the RAND Corporation reveals that while the contributions of entrepreneurs are widely recognized, the local government's role in fostering entrepreneurial ecosystems needs to be more understood.
Elsie Harper-Anderson, an associate professor of urban and regional studies and planning at the Wilder School, was one of three researchers for the report, which examined the efforts of six local governments to support entrepreneurship. The six cities reviewed for this study were Charlotte (NC), Chicago (IL), Detroit (MI), Long Beach (CA), Pittsburgh (PA), and Seattle (WA). They were selected based on population size, demographics, economic conditions, and geographic region.
"Local governments play essential roles in nurturing entrepreneurial ecosystems," said Harper-Anderson. "Understanding and appreciating the multifaceted contributions of local governments is crucial in fostering stronger and more supportive entrepreneurial ecosystems."
The report found that city governments provide significant support and resources to help small business owners "navigate local rules, regulations, and requirements" that could cause barriers to the business' success. Researchers identified four main roles local governments play: convener and agenda setter, policymaker, regulation navigator, and conduit. The report outlined each type and role.
"Local governments play essential roles in nurturing entrepreneurial ecosystem. Understanding and appreciating the multifaceted contributions of local governments is crucial in fostering stronger and more supportive entrepreneurial ecosystems."
-Elsie Harper-Anderson, Ph.D.
Convener and Agenda Setter: A key role played by local governments, which brings together stakeholders from across the city, including entrepreneurs, investors, academics, and community organizations, is to establish priorities for entrepreneurship. This convening ensures that the entrepreneurial ecosystem aligns with the city's broader vision and addresses its unique challenges and opportunities.
Policymaker: Informed by insights gained from convening, city governments formulate and implement policies that support entrepreneurs in starting or scaling their businesses. These policies can include funding, tax incentives, and infrastructure development, which contribute to the growth and sustainability of the entrepreneurial ecosystem.
Regulation Navigator: Local governments dedicate resources to aid entrepreneurs in navigating regulations by streamlining processes, simplifying license and permit requirements, and reducing bureaucratic barriers. This support enables entrepreneurs to focus on their business and fuel economic growth.
Conduit: City governments actively seek and secure funding opportunities to give entrepreneurs access to capital, resources, and opportunities they might otherwise not have. They also act as conduits to distribute funds from other sources, such as the state or federal government, including the COVID-19 stimulus funds, which provided much-needed support to entrepreneurs during the pandemic crisis.
Mayors, city council members, city administrative departments, and city task forces are among the key players who fulfill each identified role. Researchers highlighted the commonalities and differences in how the six cities prioritize them based on their agenda and goals for economic growth and development.
"This exploratory report is a starting point for a more comprehensive study to include more cities and their role in supporting entrepreneurial ecosystems," says Harper-Anderson. "By understanding and leveraging the unique strengths of local governments, cities can create a favorable environment for entrepreneurship and sustainable development."
The entire report can be viewed at Roles for City Governments in Entrepreneurial Ecosystems