Entrepreneurship and local economic resilience: the impact of institutional hysteresis in peripheral places

Abstract

This article examines how the legacies of the past in peripheral post-industrial places serve to shape current and future entrepreneurial activity, and with it local economic resilience. Drawing on in-depth qualitative interviews with key regional stakeholders, the article reveals how peripheral post-industrial places are constrained by their histories. This is found to be manifest in different ways, such as low aspirations, generational unemployment and a loss of identity which are in turn compounded by negative perceptions of place and opportunity. These issues culminate in institutional hysteresis at the local level and constrain entrepreneurial ambition. The article argues that the rigidity and reproduction of informal institutions continues to stymie economic resilience and growth. We conclude by reflecting on the implications for entrepreneurship in peripheral post-industrial places as well as with recommendations for policy.

Identity, Enactment, and Entrepreneurship Engagement in a Declining Place

“…Such constructions of places offer us a theoretical lever because different identities may clash and be resistant to change. Gherhes, Vorley, and Williams () described how depleted communities, peripheral postindustrial places can be caught up in vicious circles of suboptimal development trajectories. Their histories shape informal institutions, forming place identities that deter change, especially entrepreneurial change.…”

The “additional costs” of being peripheral: developing a contextual understanding of micro-business growth constraints

“…More specifically, micro-businesses operating in PPIPs face 'additional costs' including limited access to higher-skilled labour and a 'closed' business environment, factors that are compounded by the negative perceptions stemming from a stigmatisation of PPIPs that can further stymie growth. Building on Gherhes et al (2018) the paper explores how these 'additional costs' facing established micro-businesses manifest as a product of institutional hysteresis that is constraining entrepreneurial ambition in PPIPs. Second, the findings emphasise that micro-businesses growth is contingent on the ambition and capabilities of the OME, and therefore developing leadership and management capacity is essential for the growth of micro-businesses.…”

“…Moreover, while much of the research on peripherality has been carried out at the regional level, the local, intra-regional level remains less explored (Trettin and Welter, 2011;Huggins et al, 2017). For example, Gherhes et al (2018) have shown how, in PPIPs, institutional hysteresis at the local level constrains entrepreneurship by limiting entrepreneurial ambition and aspirations. However, how such a local socio-institutional context influences established businesses is yet to be explored.…”

“…For micro-businesses operating in PPIPs, this is compounded by limited availability of higher skilled labour, one of the main barriers to growth: 'The main barrier is being able to recruit the right staff to enable that growth … There must 'For me to attract the staff that I need, with all due respect to Doncaster, I'm not going to find that in Doncaster. ' (OME28) Moreover, the reasons that underpin the shortage of higher-skilled people in the locality are connected to the impact of institutional hysteresis shown by Gherhes et al (2018) to constrain entrepreneurial activity in PPIPs. On the one hand, the locality is characterised by lower educational attainment levels manifesting as a legacy of the past (Stuetzer et al, 2016).…”

“…Consequently, and critically, many micro-businesses prefer to remain small and orientate their ambition away from employment growth, finding different ways to cope with the difficulty to recruit people: 'It's easier for me to pay more money to a subcontractor, because I know that they're very good at what they do and that's what I'm paying for, whereas with the [local] students or someone similar there's a barrier to break through, and that barrier is: is the work that they're going to produce good enough?' (OME9) Therefore, institutional hysteresis in PPIPs like Doncaster not only hinders the creation of a more entrepreneurial and resilient economy (Gherhes et al, 2018), but also stymies the growth of established local businesses as aspirations and educational attainment levels remain low, and negative perceptions of place drive the higher-skilled towards economic cores. As a result, Doncaster as a city-regional periphery is being 'emptied' of the talent that could otherwise support growth in the locality.…”