Rural Wealth Creation as a Sustainable Economic Development Strategy

Shanna Ratner, Deborah Markley

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781317312666
• Edition: 1
• Topic: Betriebswirtschaft
• Subtopic: Business allgemein

Many rural areas in the United States find themselves struggling to build local assets and create wealth, and, when this wealth is created, they often struggle to hold on it. Previous approaches to community and economic development have been inadequate in attempting to reverse these trends. Shifting to a new way of enabling economic development requires supporting innovative community leaders as they explore new ways of approaching the task at hand. It also requires thinking anew about the role of rural areas, based on valuing multiple forms of wealth – natural, social, and human. There is a real need for an approach that can help stem the potential loss of existing wealth, and attract new investment that will allow rural areas to become valued partners in regional economies.

This book provides an important insight into rural wealth creation as a sustainable economic development strategy. At the same time, a number of compelling issues are raised that merit future research effort and discussion. This book was originally published as a special issue of Community Development.

Facilitating community wealth building: understanding the roles played and capacities needed by coordinating institutions

Thomas S. Lyons^a and Barbara Wyckoff^b

^aManagement, Baruch College, New York, USA; ^bDynamica Consulting, Silver Spring, USA

Wealth-creating value chains are an emerging and potentially very important market-based strategy for addressing poverty in local communities. Crucial to the efficacy of these value chains is a capable value chain coordinator (VCC). The literature to date focuses on the value chain itself, and less so on its coordinator. In this paper, we utilize the insights of a focus group of rural wealth-creating value chain participants to identify both the roles played by VCCs and the skills required to perform those roles effectively. Our findings expand upon existing knowledge about the VCCs’ roles, and venture into new territory by cataloging requisite skills. We argue that the work of wealth-creating VCCs is best characterized as social entrepreneurship. This work has implications for enhancing the efficacy and sustainability of wealth-creating value chains.

The roles played by intermediaries in community development have been well documented in the literature, whether as backbone institutions essential to collective impact, as re-granting entities within a larger program, or in some other capacity (Nye & Glickman, 2000; Shea, 2011; Turner, Merchant, Kania, & Martin, 2012; Wright, 1992). The contributions of intermediaries, or network coordinators, to manufacturing networks have also been explored (Sherer, 2003). Additionally, the supply chain literature has contributed to our understanding of the functions of intermediaries or channel coordinators (Kampstra, Ashayeri, & Gattorna, 2006; Kumar, 2001; Patterson, Martin, & Mollenkopf, 2005). However, most of this literature has focused more on the supply or value chains themselves — their management, the transmission of information, and market intermediation — and less on the coordinators and what capabilities and capacity they require in order to be successful. Heretofore, it has been assumed that these coordinators will naturally occur and rise to the challenge. Little effort has been made to intentionally qualify, support, and, as needed, build the capacity of organizations to play this role, especially as it applies to value chains focused on wealth creation.

We argue that the role of the value chain coordinator (VCC) is crucial to the success and sustainability of the value chain (Akhtar, Fischer, & Marr, 2010); and, in light of this, a more intentional and strategic approach to identifying and preparing organizations to play the VCC role may be beneficial. Using the insights and experiences of value chain participants in several wealth-creating value chains, many of which were developed under a Ford Foundation-sponsored initiative, we identify the various roles that successful VCCs must play and the skills required to execute those roles effectively. We conclude by urging the creation of a VCC skills diagnostic tool that permits the self-assessment of the readiness of prospective coordinators to take on this role, any skills gaps that may exist, and the actions required to address them. We suggest that this tool might also facilitate the development of existing VCCs.

Wealth-creating value chains and their coordination

The creation and operation of supply chains have long been of interest to business strategists and operations management and logistics experts. In the manufacturing sector, strategic interaction and coordination between suppliers and assembly facilities has become the norm. Geographic proximity of suppliers and assemblers is the crux of cluster theory, with implications for both supply chain management, and regional and local economic development (Feser, 1998; Gibbs & Bernat, 1997; Porter, 1990).

While there is still little empirical research on the role of the supply chain channel coordinator, increasingly the importance of that role is acknowledged. Researchers have recently begun to explore the part played by coordinators in the creation and management of supply chains and the factors that influence them. Patterson et al. (2005) found that coordinators identify market niches for the supply chain and create strategies for pursuing them, using both the resources of the coordinator and of the other supply chain participants. These activities result in a supply chain structure built to capture the identified market. This finding suggests that coordinators are influenced by both the context in which the chain operates and resource considerations.

Kampstra et al. (2006, p. 1) assert, “… collaboration is believed to be the single most pressing need in supply chain management.” They emphasize, however, that true collaboration is rare and is fraught with challenges, including issues of trust, short-term thinking and acting, friction among participants, and inadequate organization design, among others. They draw an interesting distinction between what they call the “collaboration leader” and the “collaboration coordinator.” The leader, as its name implies, focuses on leadership activities, while the coordinator assumes management duties. Kampstra et al. (2006) conclude that collaboration in supply chains is an ongoing process.

Kumar (2001) observes that in order to optimize a supply chain, a centralized approach is needed, involving the role of a supply chain coordinator, or what he calls the “lord of the chain,” that organizes participants and enforces strategy. However, he notes that optimization is not always the goal, as in cases where supply chains rapidly emerge and disband over the life cycle of a market opportunity. These latter situations call for more informal and horizontal collaboration.

While the research on supply chain coordination helps us to better understand its significance and the roles assumed by coordinators, it does not directly address the capabilities required of them if they are to be successful, nor is it proactive in the sense that it attempts to explore how these coordinators came to be in that role.

In their recent work on international food chains, Akhtar et al. (2010) take us another step forward in our understanding of supply chain coordinators. They emphasize the role of the coordinator as a manager of a complex and interconnected system. As such, the coordinator must not only contribute to the system’s overall competitiveness and successful implementation, it must also motivate supply chain participants and build trust among them. Being able to carry out these duties requires that the coordinator be an effective manager, have access to resources, and be able to use them efficiently and effectively, and possess certain abilities (either innate or developed). In work published in 2011 and focused on humanitarian relief chains, two of these researchers and another colleague are more specific about the “intangible assets” coordinators must possess in order to successfully execute their role, citing experience, education, leadership, research skills, relationship management skills, performance measurement skills, and the willingness to go beyond minimal efforts (Akhtar, Marr, & Garnevska, 2012).

This latter study also moves us into the realm of supply chains that create social value and not merely economic value. This type of supply chain falls under the aegis of social entrepreneurship (Dees, 1998) and adds an additional layer of complexity to supply chain motivation, management, and performance measurement. Social entrepreneurship can be defined as “the application of the mindset, processes, tools, and techniques of business entrepreneurship to the pursuit of a social and/or environmental mission” (Kickul & Lyons, 2012, p. 1). Thus, arguably, the coordinators of supply chains that have a double (economic and social) or triple (economic, social, and environmental) bottom line must have the capabilities of social entrepreneurs, a concept that will be explored later in this paper.

Supply chains, however, are focused on suppliers and assemblers. In order to be more inclusive and to accurately capture the entire chain of activity from the production of inputs to consumption by the end-user, it is useful to think in terms of “value chains.” According to Morgan (2009, p. 35), “… value chains reflect the distribution of added or relative value at each stage of a product’s manufacturing and the chain of activities that bring that product or service to market.” Thus, a value chain is highly end-user focused, with participants working together to make improvements in product pricing, quality, durability, and sustainability (Dymond & Hart, 2008; Grunert et al., 2005; Morgan, 2009).

There is an emerging interest in using value chains as a means to build wealth, particularly among low-income individuals and households in a given community or region. In some cases, this involves integrating developing countries into the global value chains of multinational corporations (Goonatilake, 2010; Metzger, Ickis, & Leguizamos, 2010). In other cases, it may involve integrating low-income individuals into regional value chains through employment in job-producing SMEs that are participants in those value chains, or by facilitating business start-up by low-income individuals as part of a value chain (Aremu & Adeyemi, 2011; Mogistro et al., 2007; Senge, Dow, & Neath, 2006). The ultimate goal in these cases is to build wealth, reduce poverty, and foster sustainable development (Goonatilake, 2010; Senge et al. 2006).

Relative to wealth-creating value chains, even less is known about their coordina...

Table of contents

• Cover
• Half Title
• Community Development – Current Issues Series
• Title
• Copyright
• Contents
• Citation Information
• Notes on Contributors
• Introduction: Rural wealth creation as a sustainable economic development strategy
• 1. Facilitating community wealth building: understanding the roles played and capacities needed by coordinating institutions
• 2. Socioeconomic development in an ultra-peripheral European region: the role of a food regulatory council as a social anchor
• 3. Community forests as a wealth creation strategy for rural communities
• 4. Community development and other extra-religious functions of Islamic schools: a contemporary perspective from the voices of stakeholders in two madrassas in Pakistan
• 5. International amenity migration: implications for integrated community development opportunities
• 6. A story about storytelling: enhancement of community participation through catalytic storytelling
• Index