Going Viral or Growing Like an Oak Tree? Towards Sustainable Local Development Through Entrepreneurship

Abstract

Nurturing venture capital–backed, high-growth entrepreneurship has been strongly promoted as an effective means to achieve local development in impoverished places. Yet, growing evidence has suggested that, despite its notable successes in resource-rich regions, this approach creates limited impact in economically challenged locales. We address this conundrum by calling into question the crux of high-growth entrepreneurship—the pursuit of quick scaling through venture capital financing. Our field research in two entrepreneurship-nurturing organizations in Detroit reveals important heterogeneity in resourcing modes and venture growth in time and space. Specifically, we find that ventures developed through different modes of resourcing (financing vs. local bricolage) grow at different spatiotemporal scales ( scaling up toward fast geographical expansion vs. scaling deep toward locally anchored endurance), and consequently generate distinctive yet complementary contributions to their depleted place of origin. Unlike scaling-up ventures whose local impact was explosive yet short-lived, scaling-deep ventures created jobs, products or services, and spillover effects that stayed local and addressed specific local problems. Building on these findings, we challenge the exclusive pursuit of high-growth entrepreneurship for poverty alleviation and suggest that entrepreneurship-driven local development requires cohabitation of ventures growing at varying scales.