SUSTAINABLE MÄORI DEVELOPMENT IN TAITOKERAU

Sustainable Economic Development: An Indigenous Perspective

Val Lindsay Taitokerau Sustainable Development Research Group for The James Henare Mäori Research Centre The University of Auckland September 2004

Sustainable Mäori Development in Taitokerau Sustainable Economic Development: An Indigenous Perspective Val Lindsay Published for: The James Henare Mäori Research Centre The University of Auckland Private Bag 92-019 AUCKLAND By The Taitokerau Sustainable Development Research Group c/o Alta Vista Pacifica Ltd P.O. Box 33, Ngaruawahia Waikato 2171 This document may be copied and distributed on a non-commercial basis for educational purposes. © James Henare Mäori Research Centre 2003

The research to which this paper contributes is part of a programme funded from the Public Good Science Fund by the Foundation for Research, Science and Technology, Wellington, New Zealand.

SUSTAINABLE ECONOMIC DEVELOPMENT AND ENTREPRENEURSHIP: AN INDIGENOUS PERSPECTIVE

Val Lindsay

Associate Professor in International Business School of Marketing and International Business

Victoria University of Wellington P O Box 600 Wellington

New Zealand

Ph: 64-4-4636915 e-mail: val.lindsay@vuw.ac.nz

Prepared for The James Henare Mäori Research Centre

The University of Auckland September 2004

SUSTAINABLE ECONOMIC DEVELOPMENT: AN INDIGENOUS PERSPECTIVE

Abstract Sustainable development has been the subject of considerable research over recent

decades. In indigenous communities, the notion of sustainability is often rooted in

tradition and heritage. Because of growing global concerns over environmental

sustainability, the topic of sustainable development has been largely investigated in the

context of environment and impacts of development on environment sustainability.

Economic development, such as economic growth of communities, including social and

political aspects, is also covered in the literature, and a wide range of studies across

multiple locations exists. Indigenous economic development studies are generally

grounded in anthropological and social studies. Probably because of the diversity of the

literature, few studies have brought these various elements together, particularly in the

context of indigenous communities and development through sustainable business

development and growth. The paper draws together the various strands and provides an

overview of the main conditions and issues concerned with indigenous sustainable

economic development.

ii

Contents

ABSTRACT ....................................................................................................................... II

INTRODUCTION .............................................................................................................. 1

SUSTAINABLE ECONOMIC DEVELOPMENT.......................................................... 3 INDIGENOUS SUSTAINABLE DEVELOPMENT....................................................................... 5 CONTEMPORARY MAORI VIEWS OF BUSINESS AND ECONOMIC DEVELOPMENT .................. 6

SUSTAINABLE ECONOMIC DEVELOPMENT IN RURAL AND INDIGENOUS COMMUNITIES: A REVIEW OF THE LITERATURE............................................ 10

CONDITIONS FOR SUCCESS .............................................................................................. 10 CHARACTERISTICS OF SUCCESS ....................................................................................... 12

Organisation............................................................................................................... 12 Business Financing..................................................................................................... 12 Business Recruitment.................................................................................................. 13 Promotional Campaigns............................................................................................. 13

CRITICAL NEEDS ............................................................................................................. 14 Economic Diversification ........................................................................................... 14 Strategic Planning ...................................................................................................... 14 Adequate Local Infrastructure and Services .............................................................. 14 Business Transfer Mechanism.................................................................................... 14 Business Skills ............................................................................................................ 15 Attraction and Retention of Quality Personnel .......................................................... 15 Funding....................................................................................................................... 15

CHARACTERISTICS OF SUCCESSFUL ECONOMIC DEVELOPMENT IN RURAL COMMUNITIES. 16 Leadership and Cooperation...................................................................................... 16 Commitment of Key Staff within Local and Regional Agencies ................................. 16

SUCCESS FACTORS IN IMPLEMENTING A DEVELOPMENT PROGRAMME ............................. 17 Financial Assistance................................................................................................... 17 Technical and Managerial Assistance........................................................................ 17 Job and/or Technical Training................................................................................... 17 Location Assistance .................................................................................................... 17 Innovative Programmes.............................................................................................. 17 Infrastructure.............................................................................................................. 17

ENVIRONMENTAL CONCERNS AND ECOTOURISM ............................................................ 18 COMMUNITY LEARNING .................................................................................................. 19 ECONOMIC DEVELOPMENT IDEAS.................................................................................... 20

Business Attraction..................................................................................................... 21 Import Substitution ..................................................................................................... 21 Value-adding .............................................................................................................. 21 Developing Business Services .................................................................................... 21

EXTERNAL AGENCIES...................................................................................................... 22 Networks and Collaboration ...................................................................................... 23

CULTURE AND ENTREPRENEURSHIP................................................................................. 25

CONCLUSIONS............................................................................................................... 31

REFERENCES ................................................................................................................. 34

iii

iv

Introduction One of the critical questions in dealing with the challenges of sustainable economic

development in indigenous communities1 is how to engage in the contemporary global

economic system, while at the same time preserving critical traditions, values and culture

(Hailey, 1987; Henare and Lindsay, 1999). A significant body of work has been done on

issues of modernity in developing economies, much of it from the perspectives of

anthropology and sociology, as well as development economics (Pezzoli, 1997; Robins,

2004). Although there is a growing interest in development in indigenous communities,

less research exists. Business development, as one aspect of economic development,

offers opportunities for growth and improved economic wellbeing for indigenous

communities. However, the question of relevant and appropriate frameworks for business

development that deals with the modernity / tradition dilemma of these communities,

remain largely unanswered.

This paper aims to cast light on this question by providing an integration of literature

relevant to the area. It specifically focuses on integrating the findings, to provide an

understanding of extant research in the area, rather than providing a discourse on the

underlying theoretical stands involved – an aspect open to analysis, but beyond the intent

of this paper. The paper also draws on the findings from a large study conducted over a

decade on sustainable indigenous development in New Zealand, focusing on indigenous

(Maori2) communities. Detailed accounts of the findings of this study are reported

elsewhere.

The study is aimed at researchers and practitioners, including community leaders, business

owners and policy makers. It provides an integrated overview of research and knowledge

in the area of sustainable indigenous economic development, which should help to provide

insights into ongoing development initiatives.

1 The notion of community is often regarded as elusive (Brent, 2004). In this paper, the specific context for community is a co-located, geographically bounded group of people that represents a ‘stable entity’ (Brent, 2004 (p 215). For Maori, community generally relates to family and heritage ties (Henare and Lindsay, 2000) that, while generally reflect co-located groups, includes members outside the focal location. 2 Maori are the indigenous population of New Zealand (Aotearoa).

1

The paper is structured as follows. First, an overview of the meanings and contexts of

sustainable development is provided. This is followed by a brief review of research on

indigenous sustainable development, drawing on findings from Maori communities to

illustrate. The next section is a review of the key literature on economic development in

rural and indigenous settings, noting that many indigenous communities also face issues

associated with their rural location. Findings on conditions for success in a range of

studies are presented, and then a number of key issues emerging from the literature on

sustainable economic development are discussed. These include considerations associated

with the natural environment and ecotourism, community clearing, generating and

harnessing economic development ideas, the role of external agencies, and culture and

entrepreneurship. The paper concludes with a discussion of gather implications of the

findings for policy-makers, community leaders and for further research.

2

Sustainable Economic Development

Sustainable development has many definitions and meanings, contingent, for example, on

the perspective of individuals in the context of their social frameworks, contemporary or

traditional views, and culture and ethnicity. The concept of sustainable development

emerged in the 1980s in an attempt to explore the relationship between development and

the environment (Banerjee, 2003). Over 100 definitions of sustainable development exist

(Holmberg and Sandbrook, 1992), but the most widely used is that of Brundtland (WCED,

1987) arising from the Report of the Brundtland Commission. The common definition

from this source is: “the ability to meet the needs of the present without compromising the

ability of future generations … to meet their own needs” (p43). There is also a well-

known Kenyan proverb, which articulates the concept of sustainability: “We do not inherit

the earth from our parents, we borrow it from our children.” (cited in Pezzoli, 1997, p

549).

Gladwin et al (1995) undertook a content analysis of sustainable development definitions,

and identified several themes:

• Human development;

• Inclusiveness (of economic, political, technological and social systems);

• Connectivity (of socio-political, economic and environmental goals);

• Equity (fair distribution of resources and property rights);

• Prudent (avoiding irreversibilities and recognising carrying capacities); and

• Security (achieving a safe, healthy, and high quality of life).

Pezzoli (1997) emphasises the point that, given its various roots and definitions,

sustainable development concerns ideological, political, ecological and environmental

factors. A comprehensive review of the derivation of the concept of sustainable

development is provided in Pezzoli (1997). On a global level, concerns about the

consequences of economic growth and development are increasing (see review by Engel

and Engel, 1990). For example, “the impact of science, technology and economic growth

upon people and the environment has become a matter of increasing ethical and

theological concern.” (Pezzoli, 1997, p 16). While economic growth and environmental

sustainability are clearly key components of sustainable development, social, cultural and

3

political elements are also important (Duchin, 1996). Banerjee (2003) notes that the

separation of ‘economic’ from ‘social’ is characteristic of Western economic thought, but

it became evident in the late 1960s and 1970s that economic growth can also lead to

adverse social consequences.

Li (2003) undertook a study of heritage tourism development, considering particularly the

sustainability of heritage and culture in Hong Kong and Singapore communities. This

study showed that culture-based tourism may assist in preserving a destination’s cultural

heritage, but it also accelerates change in the local society. This depends on a number of

factors, particularly government policy and guidance (Henderson, 2002; Swain, 1989,

1990). For many communities, preservation of heritage and culture must be weighed

against profitable business / commercial development (Wright 1994), although Li (2003)

argues that these are not mutually exclusive outcomes of development.

Consideration of heritage or tradition highlights an inherent contradiction between

conservation and change in the development process. For example, the NZIER (2003)

study suggests that, while not universal among Maori, many regard economic

development as a trade-off with other elements, particularly ‘Maoriness’ (p.45). Li (2003)

notes that “Heritage is viewed as part of the cultural tradition of a society, whereas tourism

is a form of modern consumption, dynamic in nature” (p.248); and “Tradition implies

stability or continuity, whereas tourism involves change (Fowler, 1989; Hall and

McArthur, 1993)” (Li 2003, p 249). According to the NZIER (2003) study, Maori

perceive potential risks to tradition and culture from culture-based tourism. However, Li

(2003) also suggests that this contradiction “between conservation and change constitutes

resources more than threats for heritage tourism” (p 259).

Successful exploitation of sustainable development based on cultural tradition and

traditional practices, such as heritage tourism, requires communities to desire or accept

both continuity and up to-date representation of their cultural heritage in the 21st century

(Li 2003). For Maori, this means recognizing heritage and tikanga from the perspective of

the modern world - accepting the concept of modernity while preserving the meaning of

their heritage and tradition (Haworth et al 1997).

4

Indigenous Sustainable Development

Indigenous views of sustainable development appear to have broad similarities across

different groups. Many of these groups have practised sustainable development for

centuries, and the concept of sustainability is deeply rooted in their tradition. For Maori,

traditional values help to shape contemporary views of sustainable development (Henare

and Lindsay, 1999). A long-term perspective is fundamental to these views, with adult

Maori concerned that sustainable development provides a future for their grandchildren

(mokopuna), in the same way that their own lives have been shaped by their predecessors

and ancestors (tupuna). Empirical research with rural Maori communities, typically poor

in economic terms, has identified the following components of sustainable development

that are consistent with contemporary perspectives of their tradition, values and culture:

preservation of natural and cultural resources, while not excluding their utilisation in

economic advancement; tangible social benefits for all members of the community,

particularly in areas of employment, education, housing and health; and community

control of economic growth, with limits defined by the extent of trade-offs needed to

achieve sustainability (in other words, not 'wealth for the sake of wealth') (Lindsay, 1996).

Similar key components of definitions of sustainable development are noted by Gladwin et

al (1995).

From his study of small-scale entrepreneurs in Tanzania, Kristiansen (2002) suggests that

the business environment may look different to entrepreneurs of various social standings

and ethnic and class backgrounds. “New, small-scale entrepreneurs might not have the

appropriate types of motivation, may not perceive available business opportunities, or

could be hindered by formal procedures and bureaucracy. They are easily marginalized in

the liberalized economy.” (p 284). In attempting to provide a context in which to

understand these issues, Kristiansen draws on two theoretical bases: x-efficiency

(Lieberstein, 1966), and adaptive efficiency (North, 1993). These are discussed in a later

section of this review, in the context of entrepreneurship.

5

Contemporary Maori views of business and economic development

While the key elements of sustainable development (social, economic, ecological, and

political) present challenges for indigenous communities, they are also recognised as

linked and interdependent. Sustainable economic development encompasses a range of

contextual elements, even though sustainability issues are usually addressed in terms of

economic outcomes. Indigenous communities have recognised the holistic nature of

sustainable economic development for generations, but only in very recent years has this

realisation become evident in contemporary Western cultures (e.g. Handy, 1996; Giddens,

1999; Moore, 1996). This realisation has come about with a growing disenchantment of

the economic-centred policies of many countries, and the consequent social and ecological

problems that have arisen (Banerjee, 2003).

It is not surprising, therefore, that indigenous people may perceive business in ways that

are different to those represented by the dominant paradigm of Western cultures. The

distinctions are not, however, universally held. In the same way that the capitalist

paradigm is challenged by many Western communities (Lindsay, 1996; NZIER, 2003),

Maori have views of business that occupy different positions along the continuum between

economics-driven, capitalist models and holistic perspectives. Research in New Zealand

has shown that Maori who are more inclined to the holistic perspective are those who

respond strongly to the influence of their traditional values (Haworth et al, 1997; Henare

and Lindsay, 1999; NZIER, 2003). Sometimes this results in the explicit rejection of the

capitalist model. Others, however, separate the role of economics from that of traditional

values and culture, and recognise a need for Maori business to integrate with the global

economic system. Durie’s (1998 – cited in NZIER, 2003, p. 45) summary of the potential

sources of conflict and misunderstanding arising from Maori collective attitudes and

colonial attitudes to land highlights the contrasts between the role of traditional values and

modern-day views of economic development (NZIER, 2003). Social and cultural

implications of these differences in viewpoints for business development are significant.

Results from empirical studies of Maori institutions and business suggest that there are

similarities and differences in relation to contemporary Western businesses (Lindsay 1996;

6

Haworth et al, 1997; NZIER, 2003). In this context, business development may be viewed

from three main perspectives; motivations for business development, business principles

and practice, and desired business outcomes. Maori business owner/managers perceive

that motivations for business and desired business outcomes are generally different to

those represented in contemporary Western business models, while the principles and

practice of business are very similar. More specifically, Maori business managers tend to

be motivated more by the social needs of their communities than purely economic

objectives. Business development is seen to provide opportunities for employment and

training of community members, especially the unemployed and unskilled younger

generations. On the other hand, Maori business managers recognise that business

principles and practices must largely conform to those of contemporary business, if they

are to succeed. Business success is necessary to support the initial motivations and to

achieve the desired outcomes, which are also generally different to Western business

expectations. For example, Western business models tend to focus on short-term profit

and other financial outcomes, with maximisation for shareholders being a key element.

Desired outcomes of Maori business, however, link closely with their initial business

motivations. While profit is an important ingredient for business maintenance and growth,

the community is also recognised as an important long-term stakeholder. Tradition and

culture, therefore, play a role in shaping present-day Maori business perspectives and

practice, at the same time enabling a blending with some of those of contemporary

Western business. Implications of these apparent similarities and differences need to be

considered further in relation to their role in sustainable development in indigenous

communities.

A number of models have been developed for sustainable economic development at a

community level (e.g. Robinson, 1994). The international development literature

increasingly recognizes the importance of community participation for effective

community development (Uphoff et al, 1998). The community has a stakeholder role

either through its collective membership or through individuals. For example, the

community may determine social, cultural and political frameworks in which local

businesses must operate. It may also provide labour and other resources, and a significant

local market. For these reasons, it is helpful to develop models of sustainable economic

development that incorporate these community aspects. This assists the understanding of

7

the interactions between the community and business development, and the role that

community members play in this interface.

The NZ Institute of Economic Research proposed four high-level building blocks of

economic performance, relevant to Maori economic development (NZIER, 2003, p. 37).

These are:

• Aspirations: these include the consideration of culture and values.

• Opportunities: short-term opportunities are strongly influenced by history, but

policies and individual choices influence the creation (and destruction) of

opportunities.

• Factors of influence: include “educational and legal institutions, and attitudes to

markets and risks. Institutions, including Maori institutions and central

government have key influences.

• Strategy and action: considers “what can be, or needs to be, done to maintain and

improve current performance.”

The recent corporate emphasis on the benefits of human capital in business

competitiveness is consistent with the value attributed to people by most indigenous

communities, and notable in Maori communities (Haworth et al 1997). Rural Maori

communities generally have a rich, untapped human resource coincident with a physical

primary resource base that is, however, often undeveloped or declining in economic value.

The extent to which the value of these resources can be leveraged appears to be limited by

both market conditions and insufficiently developed knowledge and specialist skills.

Whether or not sustainable economic development derives from resource bases such as

these, or the introduction of new knowledge-based resources, or a combination of both, the

implications for human resource and capability development in Maori communities are

considerable. The unique challenge for indigenous communities in these endeavours is to

respect, retain, preserve and, if possible, rejuvenate, their traditions, culture and values in

ways that are compatible with economic development goals.

The following section provides a brief review of the contemporary literature on

sustainable economic development in rural and indigenous communities. While the

literature on Maori sustainable economic development is limited, the broader literature

8

provides a base, from which parallels with Maori communities may be drawn, at the same

time recognising their unique cultural context.

9

Sustainable Economic Development in Rural and Indigenous Communities: A Review of the Literature

This section provides an overview of the broad literature on sustainable economic

development in rural and indigenous communities. It is organised around the following

key themes that emerge from the literature: conditions for success; environmental

concerns and ecotourism; economic development ideas; external agencies, collaboration

and networks; state, regional or local development; cultural considerations and

entrepreneurship.

The eclectic nature of research on sustainable development is evidenced by the range of

fields that the topic covers. Pezzoli (1997) identified what he refers to as ten fields of

discourse on sustainability. These are: managerialism, policy, planning, economics,

environmental sciences, ecology, chemistry, biology, geology and climatology.

Underlying these are four principal challenges concerning: “1. holism and co-evolution, 2.

social justice and equity, 3. empowerment and community building, and 4. sustainable

production and reproduction.” (p549).

The link between ecology and culture is most explicit in the co-evolutionary approach,

particularly as articulated by Norgaard (1994). This perspective views development as a

co-evolutionary process between cultural and ecological systems. Further, people are a

“co-evolutionary” part of the web of life.” (Pezzoli, 1997). Norgaard (1994) also reflects

critically on the assumptions of progress as being rooted in modernism, and talks about

this as “development betrayed”. (p1).

Conditions for Success

The focus of many studies on sustainable economic development in communities has been

on the conditions and characteristics of success. These can be broadly divided into those

important at the community level and those important at the individual business level.

This section describes some of these studies in more detail, in order to understand the

underlying implications of the conditions for success.

10

Coates et al (1992) comment that rural areas (in the US) are more likely to demonstrate

economic failure than success, with little in between. The successes include retirement

and recreation communities, area trade centres, government centres, academic

communities and entrepreneurial centres. Failures include rural communities, which have

based their economies on extracting a natural resource, such as mining and agriculture;

these communities are expected to decline and offer fewer employment opportunities for

rural residents. These findings are supported by the US Report on Rural Economic

Development for the 90’s, (Edgell and Staiger, 1992). On the other hand, Parks (1992)

has shown that it is possible to attract agricultural investment (for dairying) into a rural

community in the US, by the establishment of a specific programme, utilising shared

resources and public/private coalitions. Such co-operative ventures, involving private and

public sector partners, or partnerships between other stakeholders, appear to be playing an

increasingly important role in rural and small community development (for example,

Elferdink, 1992).

Strategies for the revival of rural economies have indicated the importance of the

following factors: educational reform, new technologies, government policies and building

and maintenance of infrastructure. According to Coates et al (1992), the extent to which

these complementary factors are implemented will determine the future economic

development scenario. These and other factors have been widely identified by research on

the economic development of small rural communities (for example, Leistritz et al, 1992a

and 1992b - see discussion below)

Leistritz et al (1992b), in studying the retail sector in a number of small rural communities

in the US, found the following factors to be important for revitalisation and success: a

strong economic base (to support the retail trade), business management training,

mechanisms to transfer business operations, innovative funding mechanisms for new and

potential businesses, and planning for the future. Among the broad characteristics of

success, Leistritz et al also noted a number of specific critical needs common to the three

different communities surveyed. The broad characteristics and critical needs are discussed

below.

11

Characteristics of success The characteristics of the communities demonstrating success in their retailing sector

(Leistritz et al, 1992b) were fourfold: organisation, financing, recruitment, and promotion.

Organisation The following organisational success characteristics were identified:

- strong community organisations e.g. a local business group, usually without any

paid employees, but with officers and/or a board of directors

- a local Chamber of Commerce, often with the employment of an economic

development coordinator

- cooperation between county (region) and city councils, combining resources to

hire a development coordinator; cooperation sometimes extended to several

regions and cities

- a strong spirit of, and commitment to, cooperation between organisations within

the communities.

Business Financing This is often seen as the key to rural economic development (Daniels and Crockett, 1988),

but lack of financing was not seen as a problem for established businesses in Leistritz et

al’s (1992b) study. Banks were the main source of funding for these businesses.

However, without substantial owner equity, banks regarded new and aspiring businesses

as risky and imprudent. Credit unions appeared to be more willing than banks to make

loans to businesses in smaller towns and communities. A variety of innovative funding

mechanisms were used by businesses and communities in the study, including "silent

partnerships" and revolving loan funds.

The concept of micro-financing has become increasingly popular as a successful

mechanism for funding new businesses (Dyck, 2002). Largely led by the early financing

endeavours of Professor Muhammad Yunus of Bangladesh in 1976 for micro-

entrepreneurs, to assist in overcoming poverty, the concept has now “taken the

international development community by storm.” (Dyck, 2002, p361). As of 2000, the

bank that he founded in 1983 (the Grameen Bank) had helped over 2.3 million clients in

12

over 40,000 villages, and had disbursed over US $3.25 billion. The concept of

microfinancing has been recognized by the United Nations, “encouraging all those

interested in “poverty eradication programmes to consider incorporating microcredit

schemes in their strategies.” (United Nations, 1997).

Business Recruitment Leistritz et al (1992b) found that successful attraction of new businesses and industry was

important to ongoing business success. This includes both new basic sector employers

and diversification of the local retail sector. However, in some cases, it was shown that,

although the communities were able to develop strong industrial sectors, the retail sector

remained weak. This breakdown of the multiplier effect generally resulted from

community members spending their money elsewhere e.g. the nearest large town or city,

for the reasons discussed earlier. There is some evidence to show that, in order to prevent

people from buying goods and services elsewhere, and to preserve the multiplier effect

within a community, the community's economy must be reasonably diverse and self-

sufficient. Where the multiplier effect is preserved, the original economic activity can

often be doubled, or even more (Gordon and Mulkey, 1978; Leistritz et al, 1982).

Promotional Campaigns Strong promotional campaigns to attract outside people to the community were a

characteristic of success in Leistritz et al’s (1992b) study. Attractions included shopping,

annual events, local attractions (e.g. natural, cultural, and historical) and local specialised

services. Promotional media which proved most successful were pamphlets (bi-weekly or

monthly), local newspaper, local radio stations, and word-of-mouth; other useful devices

included billboards, displays and video-tapes.

13

Critical Needs

The critical needs of business communities as identified by Leistritz et al (1992b), are

discussed below.

Economic Diversification The communities' experiences of heavy dependence on agriculture, or just one or two

major manufacturing firms, demonstrated the need to broaden the economic base and

reduce susceptibility to economic fluctuations in any one sector. Successful economic

diversification was shown to require efforts in a number of key areas, outlined above. In

particular, diversification may result from the recruitment of new businesses into, as well

as entrepreneurship within, the communities concerned.

Strategic Planning A key factor was the need for communities to take a strategic approach to their economic

development efforts. This involved (i) determining the community goals, (ii) identifying

available resources and constraints, with the aim of (iii) identifying the town's comparative

advantage relative to other towns and localities (these advantages could, for example, be

based on a natural resource base, the availability of serviced land, location, and skills of

the labour force). The importance of strategic planning in rural economic development,

particularly the adoption of a broad range of local development plans, has been suggested

by a number of authors, (for example, Reed and Blair, 1993).

Adequate Local Infrastructure and Services A local bank is important for local business, and for attracting new businesses. It was also

noted that appropriate banking hours were necessary. Other local infrastructure includes

roading, sanitary sewer systems, medical facilities, schools and recreational facilities, all

of which impact on the attraction of businesses and customers to the community.

Provision of adequate infrastructure and services also help to retain local people in the

community, and, therefore, capture the associated economic benefit.

Business Transfer Mechanism The study found that many businesses in the communities failed when there were no

provisions for succession or transfer when the owners retired, died or wanted to sell the

business. The main difficulty associated with business transfer was the lack of suitable or

willing buyers for the business.

14

Business Skills Particular skill requirements noted in the study were financial management, business

planning, merchandising, inventory management, personnel management and customer

relations. Although these needs were all articulated, few of the people surveyed in the

study had taken advantage of relevant courses offered by various training providers.

Attraction and Retention of Quality Personnel Good employees tended to gravitate towards larger towns and cities to seek alternative,

usually more attractive, employment. Prospective employers in the communities tended to

seek more information on personnel management and employee incentives.

Funding The study noted access to long-term debt or equity for financing new ventures or major

expansions as a critical need for business. Improved skills in business plan development

and financial management were perceived to help in gaining approval for loans,

particularly from banks.

In another study, Leistritz et al (1992a) noted a steady decline in retailing enterprises

associated with smaller rural communities in the US. The principal causes include better

transportation, improving access to nearby larger towns; changing tastes and preferences

of consumers, leading them to seek wider varieties of goods; the need to travel to larger

centres for specialised services; and small populations, insufficient to support retail

businesses. These authors estimated that a population of 500 to 999 is required to support

a grocery store.

15

Characteristics of successful economic development in rural communities

Leaman et al (1992) undertook a study of rural communities in the US and isolated three

main characteristics of successful economic development: leadership, cooperation and

commitment of key staff within local and regional agencies. These are discussed below:

Leadership and Cooperation This was most effective if undertaken as a team effort involving cooperation between the

elected leader/s within and between communities. The role of leaders was to decide which

action was needed to improve the local economy and to set an agenda for action. The

agenda typically covered a period of years, rather than weeks or months. Undertaking

group discussions and consensus was the most effective style of leadership. Cooperation

was also extended to outside agencies and the goal of the cooperative efforts was to

benefit the community/ies rather than individuals (particularly in terms of money or

prestige). Taking a sociocultural perspective on leadership, Kirk and Shutte (2004) have

developed a model for leadership capacity building that focuses on both the individual and

the organisation.

Commitment of Key Staff within Local and Regional Agencies This was shown to be a catalyst for an aggressive economic development programme,

often linked to a key individual in a local or regional agency. Leistritz et al (1992b) also

showed this to be a success factor. Examples of some of the assistance initiatives taken by

such individuals included the analysis of the strengths and weaknesses of a community to

assist in the development of an economic development strategy; playing a pivotal role in

securing local and central government funds for infrastructure development; and working

closely with a local banker to offer financing to new businesses.

16

Success factors in implementing a development programme

Leaman et al (1992) also highlighted the following factors, which are important in

implementing a successful development programme:

Financial Assistance Financial assistance was critical to the success of small business, as noted by other

authors. Assistance was in the form of local and central government programmes, private

financing (including banks), and funds generated internally by the community. From the

point of view of access and risk, communities and/or businesses utilised a combination of

all of these.

Technical and Managerial Assistance While financial assistance was seen as necessary for successful business development, it

was not sufficient for business success; technical/managerial assistance was also

necessary. Training, offered by a variety of state and private-sector organisations, was the

main mechanism for generating technical/managerial support.

Job and/or Technical Training Some local authorities provided job training programmes, which attracted businesses to

the area. The programmes reimbursed companies for training new employees, and

required that the company invest in the area.

Location Assistance Location advice and information provided by local agency officials was helpful in

attracting new businesses to the area.

Innovative Programmes These included such things as marketing and promotion programmes to promote the

community or regions and attract both customers for existing businesses and potential new

businesses to the area.

Infrastructure Possession of, or good access to, basic infrastructure, was considered to be extremely

important for economic development success. Infrastructure included schools, highways,

hospitals, water and sewerage systems, roads, and recreation facilities.

17

Similarly to Leistritz et al (1992b), Leaman et al’s study recommended that successful

rural economic development strategy should involve a combination of new ventures in the

community, retainment of existing businesses, and recruitment of new businesses to the

area. In addition, the study suggests that small, as well as large, businesses should be

developed or attracted, and that the small businesses, if home-grown, will be more likely

to stay in the community once they become large, than recruited large businesses.

Matuszewski (1993) indicated the importance of communicating an economic

development plan to the community in question, particularly if the community has limited

experience in, and knowledge of, the mechanisms of economic growth. The concepts of

economic development and wealth and employment creation must be explained to the

community and its major stakeholders. In addition, Matuszewski suggested that success

stories should be presented, to engender confidence in the community.

Environmental Concerns and Ecotourism

McBeth (1992) found that environmental preservation in rural communities was as

important a concern as economic development. Strategic plans for economic development

that lacked environmental considerations were likely to lack the necessary support needed

for implementation.

Ecotourism is a fast growing and profitable industry, which many believe supports

environmental preservation. Hasek (1994) cites a definition of ecotourism: "Ecotourism

involves responsible travel to natural areas that conserves the environment and sustains the

well-being of the local people" (p. 25). In a South African study, Sheridan (1994)

describes officials noting that ecotourism has a vital role to play in balancing the needs of

employers, local populations and environmental preservation. However, Jesitus (1992)

documents that unchecked ecotourism can devastate animal habitats and primitive cultures

and perhaps upset entire nations. One example is the overbuilding of resorts such as

Hawaii and the US Virgin Islands. Appropriate land-use planning is important in

controlling the impact of ecotourism.

In recognising the threat of tourism to the world's cultural and natural heritage, UNESCO

officials indicated that new ideas and concepts need to be developed which reconcile

tourism and conservation with the need for sustainable development. The dilemma is that

18

too many tourists can cause damage to the environment, while too few tourists can hurt the

local economy. Only by balancing commerce with culture and ecology can ecotourism

flourish (Jesitus, 1992). Sawhill (1993) suggests that the concept of sustainable

development offers a vision for integrating economic growth and environmental protection

into everyday life. A successful and sustainable rural development programme will build

on local strengths, invest in local communities and local businesses, and create local jobs.

Community Learning

The transfer of learning between communities and other agents involved in economic

development is crucial for sustainability of growth and development strategies. Dyck

(2002) has reported the successful application of a Nonaka’s (1994) model of knowledge

transfer in the learning and knowledge exchange processes associated with microfinancing

programmes in rural development. Nonaka’s model of organisational learning has been

well received in the management and organisation theory literature (Crossan and Olivera,

2001), and has been applied in a number of empirical settings, for example, in

international development (Dyck et al, 2000). Key to the application of the model is the

understanding that replication of development programmes in different settings is an

ongoing process of learning, rather than a one-time transfer of knowledge, and involves

learning by all participants. The model also helps to identify which knowledge

components are explicit (can be easily codified and transferred) and which are tacit

(difficult to codify and transfer in situations not involving face-to-face communication).

Key to the application of Nonaka’s model to development is the multi-level analysis of

learning, recognising that “learning that occurs at an individual level spills over to group-

learning, which in turn spills over to organisational learning, inter-organisational learning,

societal learning, and vice versa.” (Dyck, 2002, p 363).

Nonaka’s model has four phases, all applicable to sustainable community development.

The first phase, called Socialisation, involves tacit-to-tacit knowledge transfer, revolving

particularly around trust built up among a group of people with shared experiences. This

can take a considerable period of time, especially if the participants are not well known to

each other at the outset. The second phase, Externalisation, involves tacit-to-explicit

knowledge transfer, where some of the tacit knowledge transferred earlier becomes

articulated – often an explicit acknowledgement of the knowledge gained. The third

19

phase, Combination, involves explicit-to-explicit knowledge transfer, where the new

knowledge gained in the second phase is connected to existing, relevant knowledge. The

final phase, Internalization, is characterised by explicit-to-tacit transfer, where “the

development initiative becomes institutionalised and accepted as an everyday part of life

… it has become self-sustaining.” (Dyck, 2002, p 364).

Economic Development Ideas

MacKensie (1992) writes about a changing world economy, with wealth generation having

shifted from agriculture to industry and now moving to technology, the basis of which is

information and knowledge. She states that individuals and small- and medium-sized

enterprises (SMEs) will continue to replace cumbersome corporations, and business

success will increasingly depend on creativity and innovation. The focus on the

knowledge economy and dual role of knowledge and innovation are now widely

recognised (Stewart, 2001). In particular, small, rural communities will stand to benefit

from this changing economic focus, and their success will depend on how effectively they

utilise their intangible assets (e.g. knowledge, creativity, and innovative capability) and

overcome their disadvantages (Malmberg and Maskell, 1999).

Matuszewski (1993) suggests that non-core activities, such as services and cottage

industries, may provide a basis for rural economic development through diversification.

MacKensie (1992) also believes that industrial policy and infrastructural issues are best

handled at a local / regional level, rather than at a national level. Networking and

collaboration between organisations in a social and industrial context is expected to

become increasingly important (e.g. Elferdink, 1992; Borich, 1994; Robinson, 1994;

Blatchford, 1994). Much of the research literature supports the notion that successful rural

(small community) economic development will centre on the outgrowth of craft-based

industries, the utilisation of technology in these craft-based industries to provide a

competitive advantage, and service provision, largely through the utilisation of

information-related technology. Craft production, enables flexible specialisation and the

integration of technological expertise into new products and services. Similarly,

opportunities for arts-based community development, including those built around tourism

ventures, have been identified (Phillips, 2004)

20

A broad, diversified base of industries is important (Reed and Blair, 1993). Matuszweski

(1993) suggests strategies for such diversification, concluding that both local cottage

industries and the development of business services offer potential for local economic

development. Her study documents a number of diversification strategies available to

remote communities:

Business Attraction Attraction of outside businesses to the area is often the first strategy adopted, and is

recommended by some researchers as an adjunct to internal business development.

However, in practice, this is often very difficult to implement, as there is usually an excess

of communities seeking outside investment over the number of firms seeking investment

opportunities. To be successful, the community has to offer something of unique value to

the outside business community.

Import Substitution While businesses based on import substitution can develop within a community, they have

shown to be limited in scope, seldom going beyond one or two small investments. The

main reasons for this are the lack of appropriate skills in the community, the relatively

high start-up costs often involved, and the difficulty of securing necessary supplies to an

isolated area. Utilising locally available materials and resources tends to outweigh this

opportunity.

Value-adding While intuitively attractive, the reality of this strategy is fraught with constraints and

difficulties. These include the distance to markets (processing is often carried out most

economically near to the major consumer or industrial markets), the inability to respond to

just-in-time requirements of downstream players, and the lack of local skills.

Developing Business Services Evidence shows that service industries tend to begin with small entrepreneurial start-ups

rather than large-scale entrants. A key advantage for the small firm is that services

generally require less investment than manufacturing operations. There are feasible

opportunities for some non-core service functions of large firms based in the community

to be successfully contracted out to local entrepreneurs. With the benefit of more efficient

logistics and telecommunications these services can relatively easily be sold to other

organisations outside the community, generating income externally and providing a net

21

gain to the community. The business skills gained from these activities can, in turn,

benefit further business developments.

Encouraging Local Cottage Industries

This strategy may not initially contribute greatly to a community's economic recovery,

although it is likely to assist individual households' net income. There is the possibility

that these micro-businesses may develop into fully-fledged, job-creating companies.

Matuszewski (1993) suggests that typical product categories from cottage industries

include: clothing, food specialities, local crafts and other consumer goods (e.g. toys,

fashion jewellery, sporting and camping equipment). Other, small-scale, low-investment

manufacturing industries, such as metal fabrication and software development, may also

develop as cottage industries. Similarly, targeted tourism may also provide some

opportunities for small-scale businesses development in rural communities, particularly

where unique, localised activities can be developed.

External Agencies

The importance of external local and regional agencies in rural economic development has

long been recognised. Recent trends have shown that, not only is the availability of these

agencies important, but also the manner and extent of their participation in the

development of communities and regions (Leaman et al, 1992; Reed & Blair, 1993 and

others). Markley and Shaffer (1993) undertook a study of rural banks and their

communities and concluded that, in order for rural community banks to become more

active participants in their communities' economic development, they could adopt several

strategies that would provide the following: access to new sources of capital for rural

business; assistance for new business formation; and leadership in the community.

Development and maintenance of infrastructure is critical to economic development

(Coates et al, 1992; Leistritz et al, 1992a, 1992b) and external agencies play a significant

role in this. In subsistence level communities, with low levels of employment and

business development, tax contributions are generally low, and thus unlikely to provide

much support for infrastructure development. Particularly important infrastructure needs

are roads, transportation, telecommunications, and medical services. A number of authors

22

recommend that rural economic development is better addressed on a regional, rather than

state (MacKensie, 1992; Scharre, 1994) or purely local (Scharre, 1994) level.

Networks and Collaboration

Networking is an increasingly recognised and researched strategy for empowerment and

community building around sustainable development objectives (Pezzoli, 1997).

Researchers and their institutions have an important role to play in networking processes,

acting as mediator-advocates of the “critically needed social learning and social change

necessary for sustainable development” (Fairtlough, 1994; Gaventa, 1995; Gunderson et

al, 1995). Social learning is critical because it begins and ends with action, or purposeful

activity (Friedmann, 1987). According to Freidmann (1987), social learning involves

“political strategy and tactics (which tell us how to overcome resistance), theories of

reality (which tell us what the world is like), and values that inspire and direct the action.

Taken together, these four elements constitute a form of social practice.” (p181). For

social practice to enhance sustainable development, action is necessary in both research

and practical areas. Research needs to become more multi-disciplinary and link better

with practice. Practical actions need to involve coalitions and networks to “link the

innovative agendas of research agendas, governments, industry and grassroots

organisations that are aimed at clarifying and implementing approaches to sustainable

development (Robert, 1992)” (Pezzoli, 1997, p. 568)

Borich (1994) and others (for example, Blatchford, 1994) suggest that the joint problems

of a declining economic base and increased urban competition has created a debilitating

environment for small-community development. The resulting decrease in human and

financial resources has made it apparent that competition for scarce and declining

resources between small communities is not productive. This realisation has resulted in

increased collaboration between different communities, and also between various public

and private players, such as state government working with local councils, private

business, regional development organisations, local communities and others (Blatchford,

1994). Borich (1994) has studied multi-community collaboration and concluded that, for

those rural communities with insufficient resources to mount their own development

activities, the critical mass achieved through multi-community collaboration allows for

more organised development efforts, while maintaining a high degree of local control. A

key to the success of multi-community collaboration was that community participation

23

came about through voluntary association rather than external mandate (e.g. from local or

state officials).

A study by Maldonado (1993) of small urban producers in Benin, showed that the

obstacles to economic development, above subsistence level, could be overcome by

organising group-based networks to manage economic and financial services. The

effectiveness of these stemmed from their focus on user needs and integration into the

local culture. In addition, Maldonado (1993) found that the sustainability of the network

structures depended on their recognition by existing institutions and on the adoption of

macroeconomic measures to support small producers, raising the issue of adapting

legislation to accommodate these structures and their expected outcomes.

National centres for handcrafts, adopted by eighteen counties in North Carolina and

Asheville, in the US are described by Gregory (1994). Called 'Handmade in America', a

plan was instigated, based on a four-part strategy: tourism, cultural development,

education, and economic development, all of which are expected to develop from the

area's arts experience.

A programme for helping rural communities prepare for economic development, called the

RURAL PARTNERS / Kellogg Program, was launched in the US in the early 1990s

(Robinson, 1994). The focus of the programme was collaboration among all members of

RURAL PARTNERS, which comprises private and public players. The programme has a

number of sponsors and funding partners, state- and nation-wide. Many studies have

investigated ways of assisting economic development, but this programme emphasises the

critical part played by prior preparation for economic development. The programme cast

a wide net over the economic development paradigm, and suggested that social and

community development are necessary, and generally desired by community members

involved. The programme's formula for economic development was as follows:

HRD + OD + CD + ED = CA

where: HRD is Human Resource Development; OD is Organisational Development; CD

is Community Development; ED is Economic Development; and CA is Community

Actualisation. The concept is compelling, and although it was developed for

communities that mostly had an existing industrial base, it offers potential for application

24

to smaller communities, particularly those that support a collaborative approach to

economic development.

Culture and Entrepreneurship

There is a substantial literature on the impact of culture and ethnicity on entrepreneurship

and economic development. Most of the findings suggest that decisions made

independently of the specific cultural context are less likely to succeed and endure than

those that do consider culture.

Cultural dimensions of a community may influence the mechanisms and style of business

development, and the motivations and attitudes of individuals in the community. For

business development to be successful, it is necessary that individuals have the appropriate

motivation and attitude, as well as realistic expectations (Hailey, 1987; Perry, 1993). In

his Pacific Islands study, Hailey (1987) concluded: "..the success of any attempt to

encourage Pacific islanders in business depends on the motivation and perception of the

people themselves. Island peoples cannot be forced into business, no matter what the

politicians and development planners may like to think. They can be encouraged and

supported, but the final decision lies with the individuals themselves. Business success

depends on individual motivation and the ability to bring resources together in profitable

combinations.” (p. 79). As Kristiansen (2002) notes, “individual motivation is especially

important in the first phase of business start-up and risk-taking.” (p288). “Such skills and

desires can be encouraged, can evolve, but can never be imposed. The benefits of any

money invested in supporting indigenous business can be assessed only over the long

term. No short-term panacea is available". (p. 79)

Like Leistritz et al (1992b), Shanklin & Ryans (1999) suggest that economic development

is a three-pronged approach, involving industrial attraction, retaining and expanding

existing industry, and fostering business start-ups, through entrepreneurial action. The

focus of development over recent years has been on encouraging entrepreneurship, in

favour of the other two approaches. This perspective is captured in the view that “states

and cities came to realize that planting acorns locally might be better in the long run than

trying to import a grown tree.” (cited in Shanklin and Ryans (1999), p 77). As Shanklin

and Ryans (1999) note, communities have realised that depending on one or a few

25

industries for their economic base is not sustainable. For example, the closure of large

companies or the exit of a major industry from a community, such as dairy, forestry or

meat processing, can have major implications on the economic base of communities, with

substantial reduction of employment, and the disintegration of a supporting economic

infrastructure.

Shanklin & Ryans (1999) propose four models, or entrepreneurial prototypes to explain

how some communities are successful and others are not. They suggest that the models

“represented the strategic component of economic development.” (p. 78). Accordingly, it

is necessary for communities to understand the underlying forces that lead to prosperity.

Communities are more likely to succeed in economic development if they pursue the right

entrepreneurial model for their particular capabilities, a notion resonating with Giddens

(1979) theory of structuration. The four models are:

• The symbiotic entrepreneurship model, where new small businesses set up to support

major employers in the region;

• The spin-off entrepreneurship model, where community core competences embedded

in large organisations, are spun off by individual employees, most often in the areas of

science and technology;

• The compelled entrepreneurship model, where the driving force is hardship resulting

from redundancy, or relocation, from a large organisation;

• The pre-emptive entrepreneurship model, which is the most dynamic, based on the

pre-emptive diversification of the local economy.

Shanklin & Ryans (1999) suggest that a community should identify the model of

entrepreneurship most suited to its capabilities and circumstances, and this should guide

strategic planning. The local characteristics most likely to affect the choice of model are:

demographic, technological knowledge, climate, transportation situation, financial

resources, and other progenitors of business start-ups and growth.

Kristiansen (2002) conducted a major study of small-scale Tanzanian entrepreneurs,

drawing on general entrepreneurship theory. Of particular interest in this study is the

motivation of, and information use by, entrepreneurs. This study included the

development of a simple model, conceptualising a range of entrepreneurial contexts and

26

reflecting multiple levels involved in entrepreneurship, from individual to national level.

These are:

a. value and needs context: influence on individual motivation and business

objectives;

b. opportunity context: available natural resources, information, skills, capital,

labour, infra-structure and markets;

c. bureaucracy context: limits the scope of entrepreneurial striving and success

(e.g. lack of trustworthiness and administrative maze).

Kristiansen presents two main theoretical bases for understanding business contexts, based

on Leibenstein (1966) and North (1993). Leibenstein (1966) introduced the term x-

efficiency, which is “the ability to find new business opportunities in a society, or the

capability to innovate in Schumpeterian terms (Schumpeter, 1934)” (cited in Kristiansen,

2002, p. 285). Leibenstein suggests that x-inefficiency is a serious cause of lost profits in

firms and lost welfare in society, and attributes much of this x-inefficiency to ''differential

and inadequate motivation and information use.” (Kristiansen, 2002, p 285).

Motivation is strongly linked to x-efficiency, since this will decrease unless there is

pressure to innovate and work harder. This depends on entrepreneurs finding gaps-

business opportunities that are based on innovations in technology, organization, or

market arrangements (Leibenstein, 1968); cited in Kristiansen, 2002). This reflects the

supply of, and demand for, entrepreneurial services. Supply is influenced by 'motivational

factors', or what Leibenstein calls the ‘interfirm motivational state’, while demand is

determined by the size and structure of the gap-filling opportunity (Kristiansen, 2002,

p286).

North (1993) emphasises the role of institutions in institutional change, evidenced in the

‘new institutional economics approach’ (Kristiansen, 2002). North’s ‘adaptive efficiency’

refers to the development of organisations by entrepreneurs within the context of formal

rules and informal guidelines of institutions. This is a path-dependent process, where

formal institutional rules and constraints vary with different contextual settings.

Business contexts will be perceived differently at different stages of the entrepreneurial

process (Kristiansen, 2002). Similar contextual perspectives at various stages within

27

communities’ economic developments processes have been identified in a study of

sustainable Maori development (Lindsay, 1997). In this model, the role of community

culture and tradition in the process of sustainable economic development was paramount,

as noted in other studies of Maori economic development (Haworth et al, 1997; NZIER,

2003).

Herbig and McCarty (1993) found that only when both structural elements (political,

economic and legal boundaries of the society) and culture are favourably inclined can

innovation thrive, and, by extension, economic development occurs. Similarly, Billig

(1994) concluded, in a study of the Philippines, that entrepreneurial values are not fixed

features of culture, but tend to wax and wane with political, economic and social

conditions in complex ways. He suggests that it is inappropriate to judge entrepreneurial

behaviour as fixed features of culture, and that the structural conditions, outlined above,

also influence entrepreneurship. An African study by Takyi-Asiedu (1993) showed that

government programmes designed to foster entrepreneurship tended to negate the impact

of culture on entrepreneurial behaviour. The author identified three social and cultural

issues, which retarded entrepreneurial activities: power distance; collectivism; and

Confucian dynamism.

In Hailey’s (1987) study of entrepreneurs and indigenous business in the Pacific islands,

business opportunities were identified which capitalised on the specific cultural

characteristics of the Pacific societies. This included the supply of products and services

appropriate to the needs of their own indigenous population; expanding tourism and

service sectors, which enabled them to gain a business advantage, "because they have

valuable contacts, understand local customs, and are in a special position to promote and

market goods and services that are unique to the Pacific, and attract people from all over

the world". (p. 62). They can also "use their local knowledge and contacts to support and

facilitate overseas investment or go into joint venture partnerships". (p. 62)

On the issue of culture, Hailey (1987) concluded: "Successful entrepreneurs have also

learned how to balance business commitments with traditional demands. ... a prerequisite

for success is their continued respect for the obligations and communal commitments

inherent in the local culture. At times conflict may occur between traditional values and

business efficacy, but the test of any entrepreneur is his ability to resolve these conflicts.

28

Successful entrepreneurs have learned to accommodate traditional values with

contemporary business practice". (p. 63-64). Thus, it is not a question of the culture

adapting to an environment of contemporary business practice, but of the two co-existing.

Hailey (1987) also articulated the seemingly conflicting situation of reconciling business

with cultural values, stating that: "For many Pacific islanders, 'business' remains an alien

concept. The business ethics of the cash market economy, measurable economic returns,

individual acquisitiveness, and the 'profit motive' work against the traditional communal

cultures of the Pacific. Any attempt to encourage business threatens traditional values and

thus a way of life". (p. 79). Underpinning this difficulty is a number of key constraints

imposed by cultural factors. These include:

a) the traditionally hierarchical character of many Pacific societies that demands

conformity, resulting, in many researchers' views, to a stifling of initiative and

entrepreneurial behaviour;

b) pressure from family and neighbours on productive individuals to distribute their

surplus produce or profits, resulting in reduced incentive to invest or work long hours;

c) remittance payments from families living and working in other countries, providing a

ready income source and stifling local enterprise. Evidence shows that remittances are

seldom spent on investment for business, but rather on unproductive ceremonial purposes

or luxury items (Croulet and Sio, 1986);

d) historical domination of the business sector by overseas entrepreneurs may have caused

an acceptance that entrepreneurship belongs to foreigners, again, stifling the motivation

and incentive of indigenous people to develop local businesses;

e) because of ownership conditions of land, it is often difficult for entrepreneurs to obtain

land for business development. Most land is leased and leases either have restrictive

conditions or are granted only for a limited term. Coupled with limited availability of

land, this situation inhibits long-term investment in business development;

f) a perceived idyllic subsistence lifestyle, which, traditionally, has inhibited the

motivation for entrepreneurship;

29

g) specific constraints imposed on isolated rural communities, such as infrequent

transportation, lack of infrastructure and essential services.

Hailey concludes by stating: "...the long-term survival of indigenous businesses ...

depends on the ability of [Pacific] entrepreneurs to resolve the inherent contradiction that

exists between contemporary business practice and the communal commitments that are

integral to [Pacific] cultures and the island way of life". (p. 86)

The potential for Maori economic development from innovation has been documented

(Lindsay, 1996; Haworth et al, 1997; NZIER, 2003). These studies have explored some of

the important antecedents of innovation and the NZ Institute of Economic Research has

developed an instrument for determining the level of innovation and innovation potential

among Maori (NZIER, 2003).

Finally, the development of an entrepreneurial attitude must be encouraged. This,

Matuszewski (1994) concedes, is the hardest part, especially if the community does not

have an entrepreneurial spirit, or orientation. She maintains, however, that

entrepreneurship can be accomplished through such methods as: public recognition of

local entrepreneurs, promoting success stories, and having major industries encourage

start-ups through initial contracts, prompt payments and managerial assistance. Support

from major industry/ies, which may provide initial contracts, is very important in the early

stages of community economic development, and a ‘buy locally’ policy is recommended

for these industries. MacKensie (1992) notes that, while the individual characteristics and

attitudes of an entrepreneur are important, successful entrepreneurship is most often not an

isolated occurrence, but happens within the social context of a community, and a

supportive environment.

30

CONCLUSIONS

The process of sustainable economic development has been studied for a number of

decades in a range of settings, from poverty-based communities in third world countries,

to wealthy rural communities in economically successful nations. Some common themes

pervade the process and these increasingly focus on the importance of entrepreneurship,

motivation, and community support for entrepreneurial development. Networks within

and outside communities are important in the establishment and activities of

entrepreneurs, facilitating access to information and knowledge transfer.

The literature suggests, however, that the sustainable economic development processes for

indigenous people incorporate cultural and traditional elements that are often not present,

or not explicit, in many ‘Western’ models of sustainable economic development. It is

argued that social, political, environmental, and human resource development policies and

programmes must recognise and incorporate the unique cultural and traditional aspects of

communities, and the importance of these in sustainable economic development.

Many communities now grapple with the tensions that exist between development, which,

by its nature, involves change, and the preservation of tradition, heritage or culture.

However, it is also increasingly recognised that the apparent contradictions can unleash

resources that can contribute positively to both development and heritage preservation (Li,

2003). For example, the utilisation of culture and traditional practices for tourism can

rejuvenate a community’s interest in its own heritage, and engage its young people in

learning and dialogue. Similarly, in some communities, there are incongruities between

individuals’ commercial independence and conformity with their community’s values and

expectations. In some cultures, crossing between these spheres is socially acceptable, for

example, in Zanzibar (Kristiansen, 2002). He suggests that “successful entrepreneurs who

operate between traditional and modern economic rationality, according to Geertz (1984)

“…draw much of their strength from this ability to operate on both sides of the line

between traditional and modern in economic matters and so form a bridge between the

two.” (p153)”. (p289).

31

Sustainable development for indigenous communities encompasses a range of factors, and

reflects a largely holistic approach. Interrelationships involve predominantly

environmental, social, political and economic factors. Many indigenous communities

place a high emphasis on social factors in the sustainable economic development process.

Cultural considerations and traditional values, important to indigenous communities also

play an important, sometimes critical, role in sustainable economic development.

Human resource development has the capacity to harness tradition and culture in ways that

strengthen the economic and social resources in their communities. Traditions and

cultures of indigenous people can bridge the old (traditional) and the new (modern,

Western) perspectives of sustainable development. For instance, as Giddens (1999)

suggests, tradition inevitably is interpreted in the light of current contexts and perceptions

of the future. In other words, modern-day individuals necessarily interpret tradition and

culture in the context of their own life experiences and expectations. The challenge for

Maori and other indigenous peoples aspiring to sustainable economic development is for

their traditions and cultures to retain meaning and place, while also reflecting

contemporary world-views. Evidence suggests that these apparently opposing forces for

stability and change can co-exist and reinforce communities’ opportunities for sustainable

economic development.

Supportive institutional and policy structures that address the holistic needs of

communities, particularly across social, cultural, economic, and environmental

dimensions, are necessary, both at national and local levels (NZIER, 2003). It is also

important for indigenous economic development to be measured in an absolute, rather than

relative (to the overall national economy) way, in order for the influence of policies and

strategies to be properly assessed and for success to be observed over time. The following

example illustrates this perspective in relation to Maori economic development. While

specifically measuring economic growth and not taking into account other indicators of

sustainable Maori development, a report of the NZ Institute of Economic Research

(NZIER, 2003) concluded: “Maori are frequently presented as a drag on the New Zealand

economy. Our review of the state of the Maori economy paints a very different picture.

While still small, the emerging Maori economy is robust. It has enjoyed strong growth in

the 1990s, and is poised for continued expansion.” (p. 33). Despite these positive trends,

NZIER (2003) also note the need for involvement of government in promoting Maori

32

economic development, particularly through “investing in institutional frameworks that

would help Maori improve governance arrangements” (p.106).

A review of the literature highlights a number of research gaps in the area of indigenous

sustainable economic development, particularly at the level of community and business

development. For example, there is little empirical research that identifies models of

business development in indigenous communities, or that provides measurement of

business performance in these contexts. At a more conceptual level, aspects such as

attitudes to business development, motivation and leadership are all important facets of the

business development process that warrant further research.

33

References Banerjee, S B ( 2003), Who sustains whose development? Sustainable development and the reinvention of nature. Organization Studies, 24 (1) 143-180.

Billig, M S (1994) The Death and Rebirth of Entrepreneurism on Negros Island, Philippines: A Critique of Cultural Theories of Enterprise, Journal of Economic Issues, 28 (3): 659-678.

Blatchford, E (1994) Working Together for Community Economic Development in Rural Alaska, Economic Development Review, 12 (1): 41-45.

Borich, T O (1994) Collaboration: A Different Strategy for Rural Economic Development, Economic Development Review, 12 (1): 18-21.

Brent, J (2004) The desire for community: Illusion, confusion and paradox, Community Development Journal, 39 (3): 213-223.

Coates, J F, Jarratt, J and Ragunas, L (1992) Reviving Rural Life, Futurist, 26 (2): 21-28.

Crossan, M. M. and Olivera, F. (2001) Organizational learning and knowledge management: New directions (eds), 4th International Conference Proceedings. Richard Ivey School of Business, London, ON.

Croulet, C R and Sio, L (1986) Indigenous Entrepreneurship in Western Samoa, East-West Center, Hawaii.

Daniels, B. H. and Crockett, C. A. (1988) Rural North Carolina Development Finance Action Plan, Boston, MA: Council for Community Development Inc. Duchin, F. (1996) Population Change, Lifestyle, and Technology: How Much Difference Can They Make? Population and Dynamic Review, 22 (2): 321-330. Dyck, B., Buckland, J., Harder, H. and Wiens, D. (2000) Community development as organizational learning: The importance of agent-participant reciprocity, Canadian Journal of Development Studies, 21: 605-620. Dyck, B. (2002) Organizational learning, microfinance, and replication: The case of MEDA in Bolivia, Journal of Development Entrepreneurship,7 (4): 361-382. Edgell, D. L., Sr, and Steiger, L. (1992) A Small Community Adopts Tourism as a Development Tool, Business America, 113 (8): 16-20. Elferdink, J. F. (1992) A Collaborative Model for Community Workforce Excellence, Economic Development Review, Fall: 9-13.Giddons, A. (1999) Globalisation, Reith Lectures, BBC, UK. Engel, R. and Engel, J. G. (1990) Ethics of Environment and Development: Global Challenge, International Response, (Eds), Tuscon, Univeristy of Arizona Press.

34

Fairtlough, G. (1994) Creative Compartments, London: Adamantine. Friedmann, J. (1987) Planning in the Public Domain: From Knowledge to Action, Princeton, NJ. Fowler, P. (1989) Heritage: A postmodernist perspective. In D. Uzzell (ed) Heritage Interpretation: The Natural and Built Environment, Belhaven, London. Gaventa, J. (1995) Citizen knowledge, citizen competence and democracy building, The Good Society: A PEGS Journal, 5 (3): 28-35. Geertz, C. (1984) Culture and Social Change, Chicago: University of Chicago Press. Giddens, A. (1979) Central Problems in Social Theory. Action, Structure and Contradiction in Social Analysis, Berkeley, CA: University of California Press. Giddens, A. (1999) Globalization, Reith Lectures, BBC, UK. Gladwin T. N., Kennelly, J. J. and Krause, T-S (1995) Shifting paradigms for sustainable development: Implications for management theory and research, Academy of Management Review, 20 (4): 874-907.

Gordon, J. and Mulkey, D. (1978) Income Multipliers for Community Impact Analysis - What Size is Reasonable? Journal of the Community Development Society, 9 (2): 85-93. Gregory, M. (1994) Handmade in America, Planning, 60 (3): 15. Gunderson, L. H., Holling, C. S. and Light, S. S. (1995) Barriers and Bridges to the Renewal of Ecosystems and Institutions, (Eds), New York: Columbia University Press. Hailey, J. M. (1987) Entrepreneurs and Indigenous Business in the Pacific, Pacific Islands Development Program, East-West Center, Hawaii.Handy, C. (1996) Beyond Certainty, Random House, UK. Hall, M. and McArthur, S. (1993) Heritage Management in New Zealand and Australia, Oxford University Press, Oxford. Handy, C. (1996) Beyond Certainty, Random House, UK.

Hasek, G. (1994) Tourism's Green Machine, Hotel and Motel Management, 209 (17): 25-26. Haworth, N., Lindsay, V.J., Higham, R. and Henare, M. (1997) Sustainable Development in Tai Tokerau: Ngati Kahu: Commercial Development Options, James Henare Mdori Research centre report for FRST, July. Henare, M and Lindsay, V. J. (1999) Traditional values and sustainable economic development in the context of APEC, APEC Study Centre Consortium Conference, Auckland, New Zealand, 31 May – 2 June, 21pgs.

35

Henderson, J. (2002) Attracting tourists to Singapore’s Chinatown: A case study in conservation and promotion, Tourism Management, 21: 525-534.

Herbig, P. A. and McCarty, C. (1993) The Innovation Matrix, Journal of Global Marketing, 6 (4): 69-89. Holmberg, J. and Sandbrook, R. (1992) Sustainable development: What is to be done? In Policies for a Small Planet. J Holmberg (ed) London: Earthscan.

Jesitus, J. (1992) Unchecked Tourism Can Be Devastating, Hotel and Motel Management, 201 (7): 43 - 45.

Kirk, P and Shutte, A. M. (2004) Community leadership development, Community Development Journal, 39 (3): 234-250.

Kristiansen, S. (2002) Individual perception of business contexts: The case of small-scale entrepreneurs in Tanzania, Journal of Developmental Entrepreneurship, 7 (3): 283-304.

Leaman, S. H., Cook, T. J. and Stewart, L. S. (1992) Rural Economic Development: Learning From Success, Economic Development Review, 10 (4): 27-33.

Leibenstein, H. (1966) Allocative efficiency v. “x-efficiency”, American Economic Review, (56 (3): 392-415.

Leibenstein, H. (1968) Enterpreneurship and development, American Economic Review, 58: 72-83.

Leistritz, L. F., Murdock, S. H. and Leholm, A. G. (1982) Local Economic Changes Associated With Rapid Growth, in Coping With Rapid Growth in Rural Communities, B. Weber and R Howell, eds, Boulder, CO: Westview Press, pp 25-66.

Leistritz, L. F. and Schuler, A. V. Threshold Populations Levels for Rural Retail Businesses in North Dakota, Economic Development Review, 10 (4): 45-48.

Leistritz, L. F., Ayres, J. S. and Stone, K. E. Revitalising the Retail Trade Sector in Rural Communities: Lessons From Three Midwestern States, Economic Development Review, 10 (4): 49-54.

Li, Y. (2003) Heritage tourism: The contradictions between conservation and change, Tourism and Hospitality Research, 4 (3): 247-261. Lindsay V.J. (1996) Sustainable Development in Tai Tokerau: Muriwhenua: Commercial Development Options, James Henare Maori Research Centre Report for FRST, July. Lindsay, V. J. (1997) A conceptual model for sustainable economic development in small, isolated, rural, indigenous communities of New Zealand, Regional Sciences Association Conference (Australasia), Wellington, New Zealand, December.

MacKenzie, L. R. (1992) Fostering Entrepreneurship as a Rural Economic Development Strategy, Economic Development Review, 10 (4): 38-44.

36

McBeth, M. K. (1992) Rural Development and Environmental Preservation: A Search for Community Consensus, Economic Development Review, 10 (3): 41-45.

Maldonado, C. (1993) Building Networks: An Experiment in Support to Small Urban Producers in Benin, International Labour Review, 32 (2): 245-264. Malmberg, A. & Maskell, P. 1999. Localized learning and regional economic development, European Urban and Regional Studies, 6, 1, 5-8.

Markley, D. M. and Shaffer, R. (1993) Rural Banks and Their Communities: A Matter of Survival, Economic Review, 78 (3): 73-79.

Matuszewski, J. (1993) Economic Diversification Opportunities in Remote Industrial Areas, Economic Development Review, 11 (1): 61-63. Moore, J.M. 1996. The Death of Competition, HarperBusiness, NY. Nonaka, I. (1994) A dynamic theory of organizational knowledge creation, Organization Science, 5 (1): 14-37. Norgaard, R. B. (1994) Development Betrayed: The End of Progress and a Co-evolutionary Revisioning of the Future. New York: Routledge. North, D. C. (1993) The ultimate sources of economic growth, in Szirmai, A. Van Ark, B. and Pilat, E. (Eds), Explaining Economic Growth, Essays in Honour of Angus, Maddison, Amsterdam, North Holland.

Parks, W. (1992) Dairy Attraction Program: An Example of Economic Development Recruitment, Economic Development Review, Fall: 34-54.

Pezzoli, K. (1997) Sustainable development: A transdisciplinary overview of the literature, Journal of Environmental Planning and Management, 40 (5): 549-574.

Phillips, R. (2004) Artful business: Using the arts for community economic development, Community Development Journal, 39 (2): 112-122.

Reed, B J. and Blair, R. (1993) Economic Development in Rural Communities: Can Strategic Planning Make a Difference? Public Administration Review, 53 (1): 88-92.

Robert, K-H. (1992) Educating a nation: the natural step, Context, 28: 1-15.

Robins, S. (2004) Whose modernity? Indigenous modernities and land claims after Apartheid, Development and Change, 34 (2): 265-285

Robinson, J. W. Jnr. (1994) Helping Rural Communities Prepare for Economic Development: The RURAL PARTNERS / Kellogg Program, Economic Development Review, 12 (1): 22-27.

Sawhill, J. C. (1993) Balancing Economic Growth and Environmental Protection, Management Quarterly, 34 (1): 24-31.

37

38

Scharre, P. C. (1992) Creating a Regional Economic Development Effort for a Nonmetropolitan Area, Economic Development Review, 10 (4): 83-85.

Schumpeter, J. A. (1934) The Theory of Economic Development. Cambridge, Mass: Harvard University Press.

Shanklin, W. L. and Ryans, J. K. Jnr. (1999) Cultivating home-grown entrepreneurial economies, Economic Development Review, 16 (3): 77-82

Sheridan, E. (1994) Leaders Link South Africa's Prosperity to Tourism, Hotel and Motel Management, 209 (13): 6- 28. Stewart, T. A. (2001) The Wealth of Knowledge. Intellectual Capital and the Twenty-first Century Organization. New York: Doubleday. Swain, M. (1989) Developing ethnic tourism in Yunnan, China, Tourism Recreation Research, 14: 33-39. Swain, M. (1990) Commoditizing ethnicity in Southwest China, Cultural Survival Quarterly, 14: 26-29.

Takyi-Asiedu, S (1993) Some Socio-Cultural Factors Retarding Entrepreneurial Activity in Sub-Saharan Africa, Journal of Business Venturing, 8 (2): 91-98.

United Nations (1997) General Assembly Resolution 57/194, www.grameen-info.org/mcredit/ungar.html.

Uphoff , N., Esman, M. and Krishna, A. (1998) Reasons for Success: Learning From Instructive Experiences in Rural Development, West Hartford, CT, Kumarian Press. WCED (1987) World Commission on Environment and Development, The Brundtland Report, Our Common Future. New York: Oxford University Press. Wright, P. (1994) Environmentally responsible marketing of tourism. In E. Carter and G. Lowman (eds), Ecotourism: A Sustainable Option?, John Wiley & Sons Ltd., West Sussex, England.