Innovation and Knowledge Transfer in Rural Entrepreneurship and Regional Development

Abstract

Family businesses provide a critical structure for economic activity and wealth-creation worldwide, existing and flourishing across geo-political frontiers, markets, areas and legal forms of business [Poutzioris et al, 2004]. Worldwide, family businesses are the most common type of business and despite much academic debate about the precise definition of a family business, estimates of the proportion of family businesses within the economies of developed countries remain remarkably constant at around two thirds of business operations [Poutzioris et al, 2004] and around half of GDP economic activity and private employment [Shanker and Astrachan, 2006].

One constant theme throughout the literature is the relatively private nature of family businesses, which in turn tends to mean that accurate information about them is not readily available [Astrachan and Shanker, 2006]. A second constant theme is the importance of the contribution that family businesses make to economic, social, cultural and community development, whether the be in the UK [Reid and Harris, 2004], the USA [Astrachan and Shanker 2006], in the Chinese economy [Chung and Yuen, 2003; Poutzioris et al, 2004] or amongst distinct and relatively discrete minority communities [Dhaliwal and Kangis, 2008]. The combination of a sector of clear and, to some extent, measurable, importance where robust data are nonetheless difficult to establish, illustrates both the dilemma of family business research and its importance

Working with the Scottish Family Business Association and the Economic Development Unit at East Lothian Council, Queen Margaret University are currently researching the impact of family business in East Lothian on local communities, businesses and regional development. Family businesses frequently play a key role in Regional Economic Development, as they tend to be based within a community and prove relatively resistant to major geographic re-location. The methodology is currently being piloted, therefore, which is based around the use of semi-structured interviews with one or more members of a family business.

The impact of family business culture on knowledge transfer and the implications of the relatively informal working practices often identified within family-based SMEs will be considered, alongside effective strategies for engagement and examples from current projects. Links between current KT policy and the specific needs of family businesses will be explored as part of both local and National strategies for engagement.