THE ROLE OF INNOVATION IN RURAL FIRM EMERGENCE AND VITALITY

Innovation lies at the heart of most entrepreneurial activity, and yet its role in supporting the growth and survival of new and existing rural firms remains poorly understood, largely because suitable data have been lacking. A newly available dataset shows that innovative activity, broadly defined, is far more prevalent in rural areas than commonly believed; this dataset for the first time also allows in-depth research to examine the roles of different types of innovation in rural firm success. By combining this nationally representative, novel establishment-level data set with detailed Census micro data we can test hypotheses about the emergence and viability of rural entrepreneurship that could not be examined previously. In addition, by linking the establishment survey with founders' information in the Census Survey of Business Owners and the Annual Survey of Entrepreneurs the research will provide unique insights on female and minority entrepreneurship.We will use appropriate econometric methods including selection and survival models, quantile regression and two-sample two-stage least squares to address these questions. In addition to devising a new taxonomy of county-level entrepreneurship and presenting more refined measures of innovation, we are able to determine the precise role played by different types of innovation in firm success measured, among other factors, by earnings, survivability and the ability to compete internationally. Our expected results include identifying detailed and specific policy recommendations and investment strategies for different types of entrepreneurs and under varying county conditions, that ultimately may lead to more sustained rural economic growth.