Description
Small businesses are normally privately owned corporations, partnerships, or sole proprietorships
Strategic Community Economic Development and Small Business: Cooperation for Sustainability
Karl A. Fulson Amy Seabrooke
School of Engineering Blekinge Institute of Technology Karlskrona, Sweden 2005 Thesis submitted for completion of Masters of Strategic Leadership Towards Sustainability, Blekinge Institute of Technology, Karlskrona, Sweden. Abstract This thesis aims to increase the knowledge and capacity of Canadian communities and their small businesses in order to enable their transition towards sustainability. This was accomplished through interviews with Canadian Community Economic Development (CED) experts, and surveys from Small Business (SB) operators in Canmore, Alberta, Canada. We suggest the potential roles for CED proponents and SB operators include: (1) Shared development of community vision; (2) Local business networks for sustainability; (3) Community capacity building through dialogue. Keywords Sustainability, Community Economic Development, Small Business, Capacity Building, Vision
Acknowledgements
Our work was carried out at the Department of Mechanical Engineering, Blekinge Institute of Technology, Karlskrona, Sweden, under the supervision of Sophie Byggeth and David Waldron. Initiated in February 2005, our thesis research would not have been possible without the cooperation and assistance from Blekinge Institute of Technology, The Natural Step Canada and Canmore Community Economic Development Authority. We wish to express our sincere appreciation to Lisa Princic and Michael Barkusky for their professional guidance through our work on small business. For providing access to resources and information in Canmore, we thank Chad Park, Teresa Mullen and Bart Robinson. We thank all the participants of our interviews and surveys for their time and thoughtful input into our research. We extend our warmest appreciation to our families in Canada and finally, to our colleagues in the Masters in Strategic Leadership Towards Sustainability program. Thank you for offering your friendship and for creating a truly vibrant community for us here in Sweden. Karlskrona, June 2005 Karl A. Fulson Amy Seabrooke
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Executive Summary
This research paper uses a systems perspective of sustainability within the biosphere in order to explore community economic development and small business and propose opportunities for cooperation that will lead communities strategically towards sustainability. We begin by introducing the topic from a sustainable starting point or desired future. Next, we identify some of the core components of community economic development (CED) and small business in Canada, proposing a rationale and purpose for our research and establishing the primary research questions for investigation. The research questions are (1) When CED is strategic towards sustainability what might it look like; and (2) What is the role of small business within this strategic approach to CED? Chapter 2 on methodology outlines our research design. To better understand the substantive literature on CED, we framed our thinking using a five-level model for planning in complex systems. We used this model again when structuring questions for our CED telephone interviews. For small business, a web-based survey and literature review were used to gather primary and secondary data to inform our investigation. The first literature review situates CED within a broader context or system and then gives a more detailed picture, specifically focusing on the Canadian context for CED. The second literature review explores the relation between small business and sustainability, looking at such varied topics as: the Canadian economy and tax treatment of small business; sustainability issues, such as reporting, the ‘business case’ for sustainability, and the value of networks; and finally, the role of small business in linking local and global economies. Chapter 4 presents the results of our primary research. Here a summary of the findings from the CED telephone interviews is presented using the five-level model to help structure and clarify our findings. Following that, the outcomes from the small business survey are offered using pie charts as visual aid to assist in interpretation of results. Our discussion once again uses the five-level model for planning in complex systems to develop a strategic approach to CED. This is
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substantiated using the findings from our research. Following that, we propose a role for small business to play within this strategic approach to CED. Finally, we use evidence from the research to identify opportunities where CED and small business can cooperate to move communities strategically towards sustainability. We conclude the research paper by identifying the value of creating a strategic, sustainable approach to community economic development. Building on the strengths of current CED processes, we advocate for: an understanding of the whole system; a principled definition of success within that system; backcasting from a vision of success when developing strategy; creating actions in line with the vision; and using tools to engage people and monitor and evaluate progress made towards sustainability. Then, we reinforce the importance of engaging small business in sustainability, due, in part, to their capacity to enable human needs to be met within the community. Finally, we reflect on opportunities for CED and small business to cooperate in an effort to lead communities strategically towards sustainability within the biosphere.
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Table of Contents
List of figures ............................................................................................7 1 Introduction..........................................................................................8 1.1 Overview ....................................................................................8 1.2 Rationale...................................................................................11 1.3 Purpose .....................................................................................11 1.4 Research Questions ..................................................................11 2 Methodology .......................................................................................12 2.1 Research Design .......................................................................12 2.1.1 General .....................................................................12 2.1.2 Community Economic Development .......................13 2.1.3 Small Business .........................................................15 3 Literature Review ..............................................................................16 3.1 Community Economic Development .......................................16 3.1.1 CED System .............................................................19 3.1.2 CED Success ............................................................21 3.1.3 CED Strategy............................................................23 3.1.4 CED Actions.............................................................26 3.1.5 CED Tools................................................................29 3.2 Small Business and Sustainability............................................30 3.2.1 Small Business in the Canadian Economy ...............30 3.2.2 Sustainable Development Issues ..............................34 3.2.3 Local and Global Economies ...................................39 4 Results .................................................................................................41 4.1 Community Economic Development Interviews .....................41 4.1.1 System ......................................................................41 4.1.2 Success .....................................................................42 4.1.3 Strategy.....................................................................44 4.1.4 Actions......................................................................44 4.1.5 Tools.........................................................................45 4.2 Small Business Survey .............................................................45 5 Discussion ...........................................................................................54 5.1 Strategic Community Economic Development ........................54 5.1.1 System ......................................................................54 5.1.2 Success .....................................................................55 5.1.3 Strategy.....................................................................56 5.1.4 Actions......................................................................57 5.1.5 Tools.........................................................................58 5.2 The Role of Small Business .....................................................60
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Cooperation for Sustainability................................................. 63 5.3.1 Shared Development of a Community Vision......... 63 5.3.2 Local Business Networks for Sustainability............ 64 5.3.3 Community Capacity-Building through Dialogue... 65 6 Conclusion.......................................................................................... 67 References............................................................................................... 69 Appendix A............................................................................................. 75 CED Interview Questions ................................................................... 75 Appendix B ............................................................................................. 76 Small Business Survey Questions....................................................... 76
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List of figures
Figure 1.1. Interaction between CED and small business .........................9 Figure 2.1. Schematic of action plan to answer research questions.......13 Figure 2.2. Five-level model for planning in complex systems applied at the community level [10,11].............................................................14 Figure 3.1. The Natural Step ABCD Framework.....................................24 Figure 3.2. Strategic Business Planning [23]..........................................35 Figure 4.1. Number of full-time staff employed by business. ..................46 Figure 4.2. Number of years the business has been in operation. ...........46 Figure 4.3. Small business membership in networks/associations...........47 Figure 4.4. Define sustainability for your business. ................................48 Figure 4.5. Are you a sustainable business?............................................49 Figure 4.7. Community support for small business sustainability ...........50 Figure 4.9. Resources to assist engagement in sustainability initiative...52 Figure 4.10. Business benefits derived through sustainable operations..53
List of tables
Table 1.1. Potential ways for small business to satisfy human needs ..... 61
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1 Introduction
1.1 Overview
In order to reach success in a complex system, it is useful to begin with a high-level overview. Understanding the components of that system and being sure not to get caught up in the details is essential to sustaining the whole. This research paper begins with a broad vision of a sustainable society, which then permits the mind to search out creative solutions for achieving that vision by eliminating reductionism in our thinking. Local communities are inevitably set within global society and the biosphere. It is therefore essential to consider global scale socioecological sustainability as a pre-condition for sustainable communities. Holmberg and Robèrt (2000) have developed the following four system conditions for a sustainable society in the biosphere [1]: In a sustainable society, nature is not subject to systematically increasing: 1. … concentrations of substances extracted from the Earth’s crust; 2. … concentrations of substances produced by society; 3. … degradation by physical means; and in that society, 4. … people are not subject to conditions that systematically undermine their capacity to meet their needs [1]. Within a sustainable society in the biosphere1, there will be distinct communities, each defined, in part, by the nature of their associations with the habitat (and natural resources) they use. We suggest that, in these communities, a business sector (among other sectors) will exist and help to support a stable local economy – one where small businesses cooperate to offer complimentary services and products that reflect the culture of the local community. Respect for local culture provides a foundation for social sustainability – where self-organization, diversity and
Biosphere: part of the earth system in which life can exist, between the outer portion of the ecosphere and the inner portion of the atmosphere.
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interdependence amongst community members are fostered in an effort to meet the needs of the individuals that constitute the community. According to Daly and Cobb a society should not be called a community unless (1) there is extensive participation by its members in the decisions by which its life is governed, (2) the society as a whole takes responsibility for the members, and (3) this responsibility includes respect for the diverse individuality of these members [2]. “Community is an effective unit of change in the yawning chasm between rich and poor in all nations, the widespread erosion of culture at the hands of economic clout and global marketing schemes, and life threatening environmental problems [3].” Keeping these system conditions and our broad vision of community sustainability in mind, our focus on Community Economic Development (CED) and its interaction with Small Business (SB) will begin to take shape and explore what it means to have cooperation, between the two, for sustainability.
Biosphere
Sustainable Society CED Small Business
Local Community
Figure 1.1. Interaction between CED and small business In North America, Community Economic Development (CED) has evolved as a process away from the industrial development of the 1930’s and the economic development of the 1970’s, to incorporate both concepts with a more holistic, social and environmental view of development [4]. CED has existed in governments and development organizations since the 1980’s and the birth of the sustainability
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movement [4,5]. Since then, CED has continued to employ a more holistic perspective, but has evolved and changed its meaning to meet the mandate of its host agency or organization. A working definition of CED from the Canadian CED Network is: “Community economic development is a way of creating economic development that is responsive to locally defined priorities. It strives to increase the self-reliance of local communities. It focuses on local control and local ownership of resources, and aims to locate assets in the hands of low-income residents. It seeks to ensure that the benefits of economic development flow equitably to those who are frequently left out. It is an approach to development, which integrates the social, cultural, economic and ecological goals of the local community [6].” As the definition implies, the principle of CED is to stimulate the local economy by encouraging business growth that is essentially driven by the community members and their resource capacity. More detailed concepts of CED are discussed later in this paper, however understanding the high level functioning of CED reveals notions of local economy, business growth, and natural resource management. In Canada, small business (SB) (firms with less than 100 employees), accounts for nearly 98% of all enterprise, represents an integral part of our communities and contributes to the well being of the national economy [7,8]. SB impacts the local community through commerce and the provision of essential goods and services, but it also has the potential to strengthen political will to stimulate change at the local level. Meeting needs of SB in the community is one of the first steps to creating a vibrant, enduring business climate and economy. As each community has different values, cultural norms, and types of business (i.e. resource extraction vs. information technology), the way in which their needs will be met differs. In his work on Human Scale Development, Max-Neef identified nine basic human needs, which include; affection, creativity, freedom, identity, subsistence, participation, protection, idleness, and understanding [9]. Creating a community atmosphere in which these needs may be satisfied is the shared responsibility of CED and SB to ensure sustainability initiatives are respectful of local culture.
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1.2 Rationale
We want to gain a better understanding of some of the more prevalent theories surrounding CED in Canada and organize this data based on a five-level model for planning in complex systems [10]. We believe this unique approach will inform strategic CED and reveal an important role for SB to play within this strategic approach.
1.3 Purpose
The purpose of this research is to explore the interaction between CED and SB, as it relates to sustainability. What does a strategic approach to CED look like and how does it further sustainable business development in the local community? What is the potential for SB to contribute to strategic CED towards sustainability? Optimizing this interaction may help to foster economic, social and ecologically sound development at the local community level.
1.4 Research Questions
The primary focus of our research is to explore the interaction between CED and SB at the local level. In an attempt to better understand this interaction and recommend opportunities moving forward, we will address two main research questions: (1) When CED is strategic towards sustainability what might it look like? (2) What is the role of small business within this strategic approach to CED?
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2 Methodology
The problem area and the research questions introduced in the previous chapter set the stage for the methodological approach outlined below. There are several plausible approaches for answering the research questions posed in this thesis project. As the purpose was to explore and understand contemporary events (i.e. current realities for community economic development and small business as they relate to sustainability), we chose to use a combination of interviews and surveys, basing these on a solid general and historical understanding of the two topics, achieved through literature review and the use of a five-level model for planning in complex systems. Below, we give a rationale for these methods and illustrate their use in greater detail.
2.1 Research Design
2.1.1 General The design of our methodology can also be described as our action plan for obtaining answers to or for drawing conclusions on our research questions. Our basic approach was to: • Develop a foundation for our understanding of community economic development and small business; • Formulate interview and survey questions based on that understanding and on the knowledge that could be gained through asking questions of practitioners and experts in these respective fields; • Compare interview and survey results with what we had learned through literature review and use the five-level model to frame our understanding and ensure a systems approach; • Illustrate how community economic development can move strategically towards sustainability and; • Identify a role for small business within this process. This process is illustrated in Figure 2.1.
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Introduce the concept of Community Economic Development (CED)
Suggest a potential role for Small Business (SB)
Literature Review
Five-level model
CED Interviews
SB Surveys
Reasoning from principles (deduction) and reasoning to principles (induction) Understand how CED and SB may cooperate to achieve community sustainability.
Figure 2.1. Schematic of action plan to answer research questions. 2.1.2 Community Economic Development The methodological approach to this portion of the research was a literature review framed in the context of the five-level model for planning in complex systems. In addition, phone interviews were conducted with experts and practitioners in the field of community economic development (CED) in Canada. The five-level model is outlined briefly, in Figure 2.2. [10,11].
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System
Understand the overall principle functioning of the system, in this case, “community within society within the biosphere” Create a vision of success, for the system, constrained by sustainability principles (see section 1.1)
Success
Strategy
Develop strategic guidelines that will move the community towards the vision of success
Actions
Take concrete steps towards sustainability
Tools
Use tools that systematically monitor the actions to ensure they are strategically arriving at success in the system
Figure 2.2. Five-level model for planning in complex systems applied at the community level [10,11]. We used the five-level model to help structure the vast amount of literature and approaches to CED in existence. Rather than attempt to point out gaps in current approaches to CED, the five-level model was used to highlight strengths in existing approaches and lend a structured, whole-systems approach to CED processes. In combination with insights gained from CED experts and practitioners through telephone interviews, the five-level model demonstrates how CED can be improved to ensure it is moving communities strategically towards sustainability. The five-level model also proved useful to construct the CED interview questions. Interview participants were selected to provide a representative sample of the different levels in which CED is practiced or studied in Canada – local, regional, provincial, national and private, public and nonprofit sectors, as well as academia. In addition, we selected a diverse set of communities to participate in the interviews (i.e. communities with varied resource base and/or industrial sectors). In all, the following five organizations were selected to participate in the interviews: Western Economic Diversification Canada (regional, public); Community Futures Development Corporation of Thompson Country (regional, non-profit);
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Stormont Dundas Glengarry Community Futures Development Corporation (regional, non-profit); Canmore Community Economic Development Authority (local, non-profit); Centre for Sustainable Community Development (national, academia). The phone interviews were conducted via telephone during the month of April 2005. Answers were recorded by hand and later typed, using a consistent template. Following each interview, the interviewer recorded additional notes or points of interest, which often included contextual information about the community in question or recommendations of literature for further review. The interview questions are found in Appendix A, and the results are recorded in Chapter Four. 2.1.3 Small Business A literature review of small business (SB) and sustainability helped to establish a basic understanding of the Canadian SB climate and its relation to sustainability issues. It served to strengthen our ability to interpret the results of our SB survey (discussed below) and laid a foundation for the creative development of our ideas related to SB sustainability and its interaction with or contribution to strategic community economic development. The literature review covered issues ranging from SB in the Canadian economy, especially the tax treatment of SB; to SB and sustainability, including reporting, drivers and challenges for sustainability and the value of SB networks; to the role of SB in linking local and global economies. The purpose of the survey was to understand SB viewpoints on sustainability issues, specifically the drivers and challenges encountered at the community level. An online survey of SB in the Town of Canmore, Alberta was conducted using a web-based survey tool called Survey Monkey. In cooperation with Canmore’s Community Economic Development Authority (CEDA), the survey went out to approximately 760 businesses in the Kananaskis Valley, via CEDA’s electronic newsletter. In all, 32 firms responded to the survey during the period from April 22 to May 9, 2005. The full survey questions can be found in Appendix B, and key results of the survey are discussed in Chapter Four.
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3 Literature Review
The purpose of our literature review is to establish a basic understanding of Community Economic Development (CED), the Canadian small business (SB) climate and its relation to the sustainability movement. It strengthens our ability to interpret the results of CED interviews and SB survey and provides a foundation for the creative development of our ideas related to SB and its interaction with strategic CED (see Chapter Five). We begin with general information about CED then build CED into the five-level framework for planning in complex systems. This is followed by a review of literature surrounding SB and sustainability in Canada.
3.1 Community Economic Development
Canada’s natural capital and culture have shaped the values of Canadians, their visitors and the opinions of people from around the world. At 9,976,140 square kilometers, Canada’s vast territory has come to be known for its resources that contribute to healthy living and high quality of life for its inhabitants. Within this diverse landscape, many small, independent and often isolated communities exist and have been struggling to survive economically for decades. Work and jobs in the past, in most places, were based on subsistence living vocations like farming and resource extraction. The global market place and economy have made business in these communities more complicated as international trade, the value and outsourcing of raw materials and globalization within Canadian borders have prompted the diversification of their products, goods and services. These ‘diversified’ communities have now created a potential resilience to survive within both local and global contexts [12]. Community economic development (CED) is action by people locally to create economic opportunities and enhance social conditions, particularly for those who are most disadvantaged, on an inclusive and sustainable basis [6]. It is a comprehensive, multi-faceted strategy, conceived and directed locally, for the revitalization and renewal of community economies. Its abiding interest is the local development, management, and strengthening of community resources for community benefit [6].
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CED (sometimes known as Liberal Community Development) is characterized by the goal of maintaining or repairing the economic fabric of a community in order to create jobs and create a trickle-down effect [13]. Its development is focused on the quantitative expansion of the local economy, private entrepreneurship and employability [13]. Theories and goals of CED tend to wrap around neoclassical economic models of development [13], but there is research to suggest that traditional economic models are insufficient and that to be successful, CED must embrace a more holistic and inclusive economic model. According to research by Hochachka, CED is people-centered development that embodies sociocentrism and has cooperation, collaboration and teamwork as a driving force [3]. It emerges to meet social and economic needs, while integral community development encapsulates the expansion of world-centric perspectives [3]. CED creates economic opportunity in communities that are typically marginalized by the mainstream economy [6]. It is based on the recognition that “a rising tide does not lift all boats.” Even when the mainstream economy is buoyant, many communities lag behind. Globalization has increased inequality in local economic conditions, particularly for resource-based communities, which need to find new ways to create local opportunities and advantages [6]. In Canada, according to a research study by Chaland and Downing, CED activities, based on the level of highest frequency, include [6]: • Community capacity building (public education and organizational development); • Human capital development (training for income generation); • Enterprise development (Small and medium business development); • Organizational collaboration and partnering (mobilization and networking); • Access to capital; • Sector development (tourism development); • Research; • Other [6].
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A core group of CED activities that emerged in Canada focuses on human capital development, enterprise development, and community engagement and planning [6]. Some barriers identified in the profile of CED in Canada study include: • Lack of government support • Lack of community capacity • Lack of leadership and collaboration • Barriers to citizen participation • Economic conditions [6]. Chaland and Downing therefore suggest that the CED sector needs a comprehensive policy response that supports CED on an equitable and inclusive basis across the country [6]. In the Canadian community of Canmore, Alberta, the local Community Economic Development Strategy (2004), conducted by the Community Economic Development Authority (CEDA), uses the following definition of Economic Development. “Economic development means supporting existing businesses, and attracting appropriate businesses to the community, to encourage the creation of jobs and employment opportunities, which foster and improve a strong, diversified economy for the future [14].” CEDA (2004) also created three guiding principles to help develop the Economic Development Strategy, which include: 1. Maintain quality of life for all residents; 2. Ensure the natural environment is protected and preserved for the future; 3. Balance the tax base [14]. This introduction to CED has offered insight into the complexity of the subject. Many professionals and organizations define CED differently; use it at different levels in society, and frame central concepts to suit their situation. In the following section we use the five-level model (as shown in Figure 2.2.) for planning and decision-making for sustainability in situations of high complexity to introduce a common structure for the central concepts and components of CED. This structure is useful in
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determining the tools to introduce the common characteristics and components of CED and identify important considerations when attempting to find the tools required to measure actions taken as part of an overall strategy for achieving success in the system (i.e. sustainability). 3.1.1 CED System To fully understand complex systems one of the best ways is to describe the system with all its constituent parts and processes, interrelationships and functions and avoid reductionism by keeping a bird’s eye view of society in the biosphere. This can be accomplished by starting with basic elements of ecology and society. Understanding ecology through basic science – the conservation laws, thermodynamics, matter, energy and exergy – we see that all things are related and interconnected. Changing one part of the system, affects another. Understanding society and all its constituent parts – global, national, regional, local, political, social, economic and ecological – also helps to reveal the local community’s place within the broader system. Hochachka notes that ‘community’ exists in a global political economy and must seek ways to carve out a niche within this. Stratification is inherent in the nature of communities, where multiple actors with diverse interests, combination of state and community activities, and smaller units are embedded within the whole [3]. For instance, local communities must contend with domestic economic polices focus on private industry and import substitution rather than small-scale agriculture and local production [3]. Traditional planning theories, (social reform, social mobilization, policy analysis, social learning) according to Roseland (2000), reveal that they are inadequate as they lack structure for sustainable development [15]. Planning attempts to link scientific and technical knowledge either: (1) to actions in the public domain; (2) to processes of societal guidance; or (3) to processes of social transformation [15]. Planning theory does not fully incorporate sustainability into its actions [15]. Canadian Community Economic Development includes two different classes of CED: establishmentarian (EM) and communitarian (CM) [16]. EM is highly mechanical, derived from the optimization of concepts and from mathematics that is largely inspired from physics [16]. CM features
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concepts of empowerment, self-reliance, community control of natural resources, micro-enterprise loans, meeting basic needs and building community structure [16]. Our research is concerned with the latter class of CED. In a 1991, British Columbia Ministry of Development, Trade and Tourism Community Economic Development Manual, it is recommended that development committees be created by municipal law [16]. Before a government commits funds they should determine if an economic development plan is at all possible and if the community has local leadership capable to emerge and direct the effort [17]. If a community is unable to create viable development initiatives based on their strengths and capabilities, then external forces are more likely to have a larger role in determining the future of the community [18]. As McCall (2003) notes, CED models tend to emerge in regions and communities facing major crises, often a result of labour force displacement from a key industry [18]. Communities suffering from sustainability problems generally face problems of market failure, which can be human, institutional or informational [16]. The National Roundtable on the Environment and the Economy (2003) sees that the economic case for conservation is linked to the global economy as the international market for Canadian sustainable natural resource products is on the increase [12]. Canadian companies are demonstrating their willingness to conserve nature to remain competitive with international markets. They recognize the environment has ecological values that can be seen as economic capital [12]. Integrated planning can lead to solutions that maintain and balance ecological, social and economic objectives [12]. CED has the potential to offer services, solutions and support to aid business and their respective communities, in line with integrated planning initiatives. This shows the complexity of the CED system itself, within the broader socio-ecological system. Multiple, diverse and vested interests from a variety of stakeholders can influence the direction that CED activities take. Once we have an understanding of the complex system in which CED operates, we can begin to define ‘success’ in that system.
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3.1.2 CED Success Determining what success is and what it means for CED requires an understanding of the basic principles of success for social and ecological sustainability, i.e. the four system conditions or sustainability principles. These principles should be: (a) based on a scientifically agreed upon view of the world; (b) necessary to achieve sustainability; (c) sufficient to achieve sustainability; (d) general enough to structure all societal activities relevant to sustainability; (e) concrete enough to guide action and serve as directional aids in problem analysis and solutions, and preferably (f) non-overlapping, or mutually exclusive in order to enable comprehension and structured analysis of the issues [11,21]. Converting the four global sustainability principles to four community sustainability principles helps to define success for any sustainable community. These four principles for community sustainability phrased as constraints within which community success (i.e. sustainability) must occur, read as follows. 1. Eliminate the community’s contribution to systematic increases in concentrations of substances extracted from the Earth’s crust. 2. Eliminate the community’s contribution to systematic increases in concentrations of substances produced by society. 3. Eliminate the community’s contribution to systematic physical degradation of nature. 4. Eliminate the community’s contribution to conditions that systematically undermine people’s capacity to meet their needs [1]. Framing these principles in this manner helps establish boundaries within which our minds are free to create solutions to reach the community’s visions of success. As Senge (2003) states, “understanding your constraints frees you to create” [22]. Creating a vision of success based on the sustainability principles is the second step for CED to guide the strategic phase of the five-level framework. As CED has the potential to involve many individuals, businesses and other organizations in their sustainable community planning efforts, notions of organizational learning are key to create space for dialogue that is purposeful, meaningful and ‘learningful’. Creating a shared purpose,
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meaning and vision, has the capacity to energize the organization, or network of organizations, and move it/them towards success [23]. The research by Hamstead and Quinn (2005), in defining sustainable development, reinforces this notion of creating success through ecologically sustainable values [13]. Where success is dependent upon finding a human – non-human balance [13]. Community success is context dependent, as different communities live in different ecosystems, regions and areas in the world and success can only be optimally reached through continuous dialogue and consensus (amongst community members) [13]. To build success for an organization, visions in the past have been developed by internalizing guiding principles. An example of CED principles from the British Columbia Working Group (1995) includes: • Equity • Participation • Community building • Cooperation and collaboration • Self-reliance and community control • Integration • Interdependence • Living within ecological limits • Capacity building • Diversity • Appropriate indicators [24]. Another example of how organizations may frame their values of success comes to us from Boverket (2004), where they note several prerequisite values for a good town environment. Some of these necessary values are: • Transportation as a part of life and the town • Conversation and participation • The life and soul of the town • Accessibility for everyone • The structure and energy requirements of the town • Beauty, comfort and well-being • Greenery and fresh air • The sounds and noise of the town • Road safety and security [19].
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Övertorneå is a Swedish example of their first fully integrated ecomunicipality, found in Northern Sweden on the Arctic Circle. They were facing a collapse of their social systems, agriculture and economy, but when they came together and discussed their place in the world within Sweden, incorporating sustainability principles, they were able to turn their community around [25].
3.1.3 CED Strategy Once the sustainable vision of ‘success’ has been established for CED, a technique called backcasting can be used to formulate strategy towards success. Backcasting is a strategy for sustainable development. Developed by Holmberg and Robèrt (2000), backcasting from principles is a planning methodology used in complex systems where forecasting and trends are commonly used [1]. Backcasting is envisioning success in the future then looking back, from that place of success, to current reality and finding solutions to reach that desired future. According to Dreborg, backcasting is particularly useful when: • The problem to be studied is complex; • There is a need for major change; • Dominant trends are part of the problem; • The problem to a great extent is a matter of externalities; • The scope is wide enough and the time horizon long enough to leave considerable room for deliberate choice [26]. The benefits for CED to use the ‘backcasting from principles’ technique are that it offers simplicity without reduction, provides value at different scales, offers a shared mental framework, is non-prescriptive, and forces thinking upstream in causal chains [10]. All further reference to backcasting in this thesis implies that it is done from principles of sustainability. This technique is essential when used in the ABCD methodology. The ABCD methodology was developed by the not-forprofit organization, The Natural Step (TNS), and is described below [10]. For further information about TNS and the development of their framework refer to Broman, Holmberg, and Robèrt (2000) [27].
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The ABCD methodology begins by using a funnel as a metaphor to represent declining resources and potential for living prosperously and increasing populations and waste. If nothing changes in the global system then the lines will converge and result in the collapse of the system. The opening of the funnel represents sustainability and the beginning of a restorative phase or paradigm. This metaphor helps to give context for the first step (A), which is to create a shared mental model of the system. The second step (B), establishes a baseline assessment of the current reality from a sustainability perspective. The third step (C), involves brainstorming creative solutions in line with the sustainability principles (system conditions [1]). The fourth step (D), identifies and manages priorities from the C list that: provide a return on investment; are a flexible platform from which to build on and; move in the right direction (towards sustainability) [10]. See Figure 3.1 for a visual representation.
Declining natural resources
A
C B
Increasing global population and demand for resources
D
Figure 3.1. The Natural Step ABCD Framework. For CED this would be an invaluable strategy to move organizations, operations, organization, initiatives and communities towards success. In addition to the ABCD methodology, creating and building an atmosphere where decision makers will make good decisions, towards the vision of success, is to use the ‘Golden Rule Test’. The ‘Golden Rule Test’ includes; • Participation – does it involve people sufficiently? • Transparency – is it open to reasonable scrutiny? • Responsibility – is accountability clear? • Honesty – are we being truthful? [23]. 24
Most of these considerations are concerned where citizen engagement is a part of the CED process. Finding that the best suited development for the community comes through meaningful dialogue with its inhabitants [19]. Alberta Economic Development sees that long range planning is essential for successful economic development strategies. Planning must reflect the community’s strengths, needs and expectations, as well as considering the policies and strategies put in place by local government. Steps should be undertaken to ensure planning: (1) assesses the community’s past, present and future; (2) outlines a course of action; (3) collects information; (4) sets goals; (5) sets objectives; (6) prepares a draft plan; (7) tests the plan; (8) develops action steps; (9) consolidates the plan; (10) implements, manages and reports on activities and; (11) re-evaluates the plan [28]. McCall (2003) notes that CED models should be proactive and preventative rather than reactive – communities need to be vigilant, not complacent [18]. This implies looking upstream in causal chains and complements the ABCD methodology and backcasting technique [10]. Hamstead and Quinn (2005) suggest integrating economic, social and environmental strategies that are economically diverse, self-reliant and socially just. In addition, they recommend looking to principles from ecological economics (e.g. scale, distribution, allocation, non-human and scarce resources) when formulating CED strategies [13]. Building on principles from environmental and ecological economics, Hamstead and Quinn posit the following as central to the theory and practice of Sustainable Community Development: 1. Economic diversification and self-reliance; 2. Social justice through citizen empowerment and improved access to information, education, and meaningful and effective participation; 3. Ecological sustainability through community-based stewardship and the minimization of all forms of consumption and waste; 4. Integration of economic, social and ecological strategies for and models of well-being and change [13].
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Hochachka (2001) discusses an alternative development strategy from Integral Community Development. The three main components of this strategy include, 1. Community-based, bottom-up approach; 2. Informed by environmental integrity; 3. Includes participatory processes [3]. Nozick (1992) identifies four basic ‘tools’ for communities to generate local wealth: 1. Making more with less – maximizing use of existing resources; 2. Making money go around – circulating dollars within a community; 3. Making things ourselves – import replacement; 4. Making something new – creating a new product [29]. According to Kirk and Shutte (2004), a community leadership development framework has three integral parts, leading change through dialogue, connective leadership and collective empowerment [30]. Other strategies for CED from Simon Fraser University’s Centre for Sustainable Community Development include: 1. Address the primary needs of all community members 2. Develop a strong and sustainable local market economy 3. Strengthen civil society / increase civic participation 4. Create and support opportunities for community learning 5. Strengthen natural ecosystems 6. Strengthen the social / cultural economy through recognition, validation and structural support [31]. Strategies from the substantive literature on CED have been highlighted to reinforce and complement the ABCD methodology and backcasting technique and support the formulation of strategy towards sustainability. 3.1.4 CED Actions The actions level is about taking concrete actions towards sustainability. This is where a CED organization would determine what would tangibly occur. For CED initiatives to be truly in line with sustainability principles their actions must support the following generic solutions [10,23].
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•
Sustainability Principle 1 – substitute minerals that are scarce in nature with ones that are more abundant. Sustainability Principle 2 – substitute persistent and unnatural compounds with ones that are normally abundant or break down easily in nature. Sustainability Principle 3 – use natural resources from well managed eco-systems, pursuing productive and efficient use, and caution further modifications to nature. Sustainability Principle 4 – check whether an action or behaviour has consequences for people, now or in the future, which restrict their opportunity to lead a fulfilling life [10,23].
•
•
•
To further inform actions and ensure time, money and energy are spent on generating results, the proposed actions should be discussed and evaluated based on the following three key questions: 1. Is the action moving us in a direction towards success? 2. Is the action built on a flexible platform? 3. Does the action produce returns (on investment) of all kinds (social, financial, natural, manufactured)? [23] This is useful for CED as it serves to engage community stakeholders in the creation of meaningful action plans. There are however, barriers or challenges likely to be encountered when taking action at the local level, i.e., legislation, regulation, or a lack of understanding about sustainability. Hamstead and Quinn (2005) discuss how economic decision making for sustainable development should not be limited to aspects from the neoclassical and environmental economics perspectives (efficient allocation of resources amongst competitors), but include aspects of ecological economics (economic scale and distribution) [13]. The four centrally defining characteristics of ecological economics include: 1. Challenges the growth paradigm of neoclassical and environmental economics; 2. Integrates economic, social and ecological objectives in all models and decision-making processes; 3. Is concerned primarily with scale, secondarily with distribution and thirdly with allocation; and
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4. Considers the balance of human and non-human access to scarce resources [13]. To further illustrate the key question of ‘returns of all kinds’, Hamstead and Quinn (2005) stress the importance of performing full cost calculations, which include social and environment factors [13]. The aforementioned three key questions can further help to prioritize and manage CED actions by indicating whether actions are more likely to produce short term gains or benefit CED over the long term. Once they have been prioritized, tools to measure and monitor CED actions (aligned with the strategy for attaining success in the system) can be discussed. According to Boverket’s (National Board of Housing, Building and Planning in Sweden) ‘Make Towns’ initiative, the following are five new ways developers should act: • Make towns instead of traffic planning and housing developments; • Dismantle the barriers between the different sectors, and allow citizens to participate; • Go in the direction of sustainable towns, from the epoch of norms towards the epoch of directions; • Work for a coherent urban policy [19]. With respect to financing for CED efforts and projects, Roseland [20] suggests: • Local Development Corporations • Community Development Corporations • Downtown Development Authorities • Credit Unions • Community Development Credit Unions • Community Loan Funds • Revolving Loan Funds • Micro-Enterprise Loan Programs • Community Land Trusts and Housing Trusts • Trust Funds • Linkage Programs • Reinvestment Policies [20].
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3.1.5 CED Tools The final level of the five-level model is to identify tools that best monitor, measure and guide an organization’s actions towards success. Tools may be qualitative or quantitative and can fall into three general categories – strategic, systems and capacity – to help measure progress towards sustainability [10]. Strategic tools ensure actions agree with strategic principles to improve the likelihood of achieving success in the system [10,23]. A tool that Boverket uses to measure suitability assessments of towns and their interactions with nature and the built environment include holistic or everyday life impact assessments (HIA) or (ELIA) [19]. Systems tools make direct measurements in the system [10,23]. The National Roundtable on the Environment and the Economy (NRTEE) has identified various environment and sustainable development indicators for Canada. Their national indicators for measuring natural capital can be considered systems tools in that they take measurements within the ecological system. These include [32]: • Air quality trend indicator • Freshwater quality indicator • Greenhouse gas emission indicator • Forest cover indicator • Extent of wetlands indicator [32]. Capacity tools help people learn about sustainability and sustainable development [10,23]. An example of this type of tool could be the Human Needs Matrix from Human Scale Development, which works to identify individual needs [9]. The nine basic human needs according to axiological categories include; affection, creativity, freedom, identity, subsistence, participation, protection, idleness, and understanding. Needs according to existential categories include; being, having, doing, and interacting [9]. Tools such as the Human Needs Matrix represent an alternative to traditional views of measurement, in that they tend to be more qualitative, rather than quantitative, in nature. However, this does not undermine their merit, especially in the context of community development where
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individual’s needs and perspectives are a vital sign of community success. When used in conjunction with more traditional measures and indicators like Gross Domestic Product (GDP), they can provide data to satisfy and support the large diversity of stakeholders found at the community level. Information falls into two categories: indicators and stories. Indicators objectify components within the system, whereas stories are used to link indicators to goals in an effort to: gain understanding of the qualitative aspects of the system; develop the concept of reality favourable to one’s goals and objectives; and influence fellow citizens and institutional actors to make choices favourable to those goals [13]. Hamstead and Quinn (2005) suggest that if we are to shift away from quantitative economic expansion as the primary measure of success, we must also incorporate measures or indices that quantify traditionally qualitative aspects of our communities and products (e.g. quality of life, well being, longevity, stability and diversity) [13]. In this regard, interdisciplinary thinking provides unique, effective and locally meaningful solutions [13].
3.2 Small Business and Sustainability
This literature review is intended to provide an overview of the small business climate in Canada and how it currently relates to sustainability issues. Wherever possible, specific examples given relate to small business in Alberta, as the Town of Canmore, in the Rocky Mountains of Alberta, provides the setting for our small business survey. 3.2.1 Small Business in the Canadian Economy In Canada, small business is defined in a variety of ways, most often according to the number of employees, but also varying from national to provincial and regional levels. According to Industry Canada, small businesses – enterprises with fewer than 100 employees – account for approximately 98% of all enterprises in Canada [33]. These enterprises are further classified as those with annual revenues of between $30,000 and $5 million [34]. The vast majority (roughly 80%) of small firms in Canada are considered to be micro-enterprises, with fewer than 5 employees. Small to medium-sized enterprises (SMEs) are defined as 30
those with fewer than 500 employees and they account for almost all (99.8%) of enterprise in Canada [33]. The impact of small business is probably most noticeable at the local level. Small firms operating in our communities provide us with goods and services, employ our family members and friends and add vibrancy to our streets, while contributing to the health of the local economy. More and more, independent firms are competing with large chain stores for our business. So called “big box” malls are popping up all over the suburbs, attracting consumers as a result of the perceived convenience over shopping in urban centres. A recent study comparing the economic impact of independent firms and their chain competitors in a Chicago suburb, found that for every $100 of consumer spending at a local firm, $68 remains in the local economy, as compared to $43 for the chain store. In addition, local firms were found to spend 28% of their revenue on labour, compared to 23% for chain stores. Independent firms also procured local goods and services at more than twice the rate of chain firms and contributed more to local charities than their national counterparts [35]. While the impacts of small business are all framed in an economic perspective here, the implications reach beyond economics into the environmental health and social sustainability of our communities. Given that small business represents the majority of private enterprise in Canada, is it justified to say that they are an important part of the Canadian economy? Due to the dynamic nature and diversity of small business, measuring its contribution to gross domestic product (GDP) presents a challenge, especially when done on the basis of firm size. However, recent attempts have indicated that small business (those with fewer than 50 employees) may account for about 24% of Canadian GDP [33]. While this contribution may not seem significant, small businesses provide one in every three jobs in Canada and account for 47% of employees in the private sector labour force. In addition, these figures do not account for the approximately one million small firms that do not maintain a payroll, but that may provide contract employment [33]. These numbers would seem to imply that small businesses represent an important part of Canadian society, both at the local and national levels.
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Tax Treatment of Small Business. Taxation is probably one of the most important instruments or tools that governments have to influence behaviour and actions in the business sector. At the federal level, the Business Income Tax Division of Finance Canada provides economic and quantitative analyses of tax policy issues ranging from the relationship between federal and provincial tax systems, to tax competitiveness, tax burden among sectors, the taxation of privately held corporations, and the cost-effectiveness of tax incentives in delivering government assistance. In addition, they conduct evaluations on the effectiveness of specific tax measures [36]. Current federal-provincial fiscal arrangements stipulate that the federal government provides a tax credit for taxable corporate income earned in a province or territory to allow the provinces to levy their own corporate income tax. Providing the provincial government applies the federal definition of corporate taxable income, the federal government will collect the tax on the province’s behalf as a provincially imposed tax. Alberta, (Ontario and Quebec), administer their own corporate income taxes (at the provincial level). A corporation is also subject to a provincial corporate income tax in each province in which it has a permanent establishment. Any Provincial payroll and capital taxes are deductible when calculating income for the federal corporate tax, but provincial corporate income taxes are not [36]. Alberta levies no provincial capital or payroll taxes, which are common in many other provinces and U.S. states. In addition, Alberta is the only Canadian province that does not have a provincial retail sales tax [37]. In 2003, Alberta reduced tax rates for small business (4%), and increased the small business taxation limit from $350,000 to $400,000 of taxable net income. In 2004, the small business tax rate was further reduced to 3%. In addition, Alberta provides both a royalty tax credit and a royalty tax deduction in the calculation of provincial tax. [37] These actions benefit enterprises in Alberta, but have been criticized – specifically the royalty tax credit – by the opposition for favouring big business and contributing to the highest levels of wealth inequality in Canada [38]. From these figures, we can conclude that on a provincial basis, Alberta has a favourable tax environment for business. However, the difference between a favourable and an unfavourable tax environment for small business may be accounted for at the municipal level.
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Property taxes are probably the most visible impact that municipal governments have on the local business community. A 1999 report by the Organization for Economic Cooperation and Development, indicated that Canada has the highest property taxes in the world and that they are heavily skewed against the business community. Property taxes in Canada are, on average, twice as much for business properties as for residential properties, when comparisons are made on properties of equal value [39]. Nowhere is this higher than in Alberta, where businesses pay $5.33 in property tax for every dollar paid by homeowners. Calgary has the distinction of having the most unfair tax system among not only Alberta cities, but among major cities across Canada [40]. The general level of taxes is not the only concern for small business. Profit insensitive taxes – taxes that are not related to business profits – are a major concern for small firms, as they impose the same burden whether a business is doing well or going through difficult times. Profit insensitive taxes include property tax (mentioned above), as well as payroll levies such as unemployment insurance, health insurance premiums, and workers’ compensation premiums. Almost two-thirds of all profit insensitive taxes are imposed at the provincial and municipal levels [41]. In 1993, the Canadian Federation for Independent Business (CFIB) used tax data from Statistics Canada to show taxes as a percentage of differentsized corporation's profits. The results showed that the smallest firms ($1 million in sales and under) pay the most – 56% of profits, compared with 55% for medium-sized companies and only 43% for large corporations. This discrepancy is attributed to high property and payroll taxes, as corporate tax rates are higher for large corporations [42]. Generally speaking, the figures presented above would seem to imply that federal, provincial and municipal tax systems do not favour small business development. With regards to Alberta, it would seem that a balance has been struck between the high level of taxation at the municipal level and the comparatively low level of taxation at the provincial level. But, what do these figures imply with respect to small business sustainability? We did not find evidence to suggest a direct correlation between the tax environment and the overall ability of small businesses to achieve environmental, social and economic sustainability.
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The tax system affects the ability of small business to achieve environmental and social sustainability insofar as it impacts upon their ability to become economically viable (assuming a business that is struggling financially will be unable to devote the necessary resources towards achieving sustainability). This is supported by Hawken (1993) who suggests that by placing levies on incomes, profits, sales, payrolls and savings, the tax system suppresses the very elements we claim to value in a healthy economy including, jobs, savings, new investment and entrepreneurial activity [43]. Finally, taxes are just one of the ways in which communities and governments interact with small business. That is to say, other factors affect the capacity of small business to achieve sustainability in the community context, such as business networks, which are discussed in the next section of this literature review. 3.2.2 Sustainable Development Issues Here, the term ‘sustainable development’ refers to actions taken to address ecological and social impacts of a business (here defined as the four sustainability principles), while remaining economically viable. In the literature, some of these actions are often referred to as ‘corporate social responsibility’ or ‘triple bottom line’. We feel that the term sustainable development is more holistic, whereas the terms ‘corporate’ and ‘social’ are often difficult to identify with, especially from a small business perspective. This section of the literature review briefly discusses strategic planning for sustainability, reporting, drivers (often termed ‘the business case’) and challenges that are associated with sustainability in the business context. Strategic Planning for Sustainability. In formulating a strategic approach for achieving the vision, the small business should ask itself the following question, “What do we have to do now in order to optimize our chances of being successful?” This strategic way of thinking is termed backcasting (explained in section 3.1.3) and is most useful when employed with a set of principles (i.e. system conditions) that define success in the system. Therefore, backcasting from the vision of success allows the small business owner to take incremental steps towards
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achieving the vision. Most business owners will be more familiar with the term ‘forecasting’. Forecasting is another planning methodology, different from backcasting, which applies previous and current trends to the future. While it is likely that business owners will use some form of both forecasting and backcasting in their planning, backcasting offers some particular advantages in the context of planning for sustainability in a complex system (in this case, a business within a community). For example, forecasting is limited by our ability to assess the past and present in detail and risks projecting undesirable trends into the future, whereas backcasting is only limited by our creativity [21]. Strategic planning in the business context has been discussed extensively in management literature. Business owners are familiar with terms and concepts such as SWOT (strengths, weaknesses, opportunities, threats), and the Deming Cycle (plan, do, check, act). When used in parallel with the visioning process and backcasting from principles of success, these commonly used concepts become more broadly applicable to business planning – moving business beyond the traditional definition of success (i.e. meeting the economic bottom line) towards a more holistic definition of success (i.e. sustainability or triple bottom line). Figure 3.2. illustrates a process for business planning that incorporates the concepts of formulating a vision bound by sustainability constraints and backcasting from that principled vision, allowing for maximum creativity and broad engagement in the formulation of strategy [21].
What is our impact? What do we want? What are we going to do?
VISION
How are we going to do it?
Today
Measures
Prioritization
Business Plan
Figure 3.2. Strategic Business Planning [23].
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Reporting. Briefly, the vast majority of sustainability reporting today is done by large corporations in response to public and shareholder demand for increased transparency and accountability. Small firms in Canada have very few, if any, environmental regulations to comply with and therefore, reporting is not seen to be necessary [44]. While there are very few small firms currently engaged in sustainability reporting, this is gradually increasing and reputable organizations like the Global Reporting Initiative have responded by developing sustainability reporting guidelines specifically tailored to small business [45].
Drivers. In 2003, Canadian Business for Social Responsibility (CBSR) conducted a study of small businesses engaged in CSR activities. The study found that CSR activities in small firms are often driven by the business owner (or a long-term employee), as a result of their personal commitment and values or by customers and business partners, as an expression of interest in sustainable operations and products. Small business owners in this study felt that they were deriving business benefits from their CSR activities, however, these benefits were not the principle reason for undertaking CSR activities in the company [46]. A UK study of competitive advantage and environmental responsibility in small businesses, found that deriving business benefits from CSR activities was still somewhat of an abstract idea amongst the majority of small businesses. Though, it also acknowledged employee and stakeholder aspirations as one of the main drivers for CSR in small firms [47]. The focus on individual attitudes within a firm is evident in much of the literature on small business and sustainable development. Petts et al (1999) found that an understanding of the relationship between attitudes and behaviour within business is essential to implementation of effective sustainable development policies. The study revealed that individual employees in small firms regarded environmental compliance as ‘the right thing to do’, but that there was a disconnect between their positive attitude and the operational climate within the firm (i.e. their capacity and feasibility to act). They found that small businesses were generally ‘vulnerably compliant’, which was evidence of a mismatch between company climate and culture. Interestingly, this study also suggests that there may be a larger role for regulation to play in moving small firms towards sustainability. The evidence suggests that small firms may prefer
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appropriately implemented regulatory policies as a means of encouraging innovation in business operations [48]. This is substantiated by Porter and Van der Linde (1995), who contend that properly designed environmental regulations can trigger innovation, thereby enhancing resource productivity, making companies more competitive, not less [49]. In “The Sustainability Advantage”, Willard (2002) articulates the business case for sustainable development. He suggests the following seven areas of potential benefit for businesses making investments in sustainable development: 1. Easier hiring of the best talent 2. Higher retention of top talent 3. Increased employee productivity 4. Reduced expenses for manufacturing 5. Reduced expenses at commercial sites 6. Increased revenue/market share 7. Reduced risk, easier financing [50]. The drivers for engaging in CSR in a small firm are accompanied by a number of challenges such as high financial and human resource costs, limited availability of environmentally and socially responsible products, lack of consumer demand, and lack of support for employee training and education around CSR [46]. These challenges are enhanced by the additional outside pressures such as legislation, regulation, insurance costs, reduced opportunities for financial backing, waste disposal charges, and pressures in the supply chain [47]. Of great importance to the discussion on CSR and small business is the point made in most of the literature – the small business sector (in any country) is highly heterogeneous and generalizations are difficult to make. Further research is needed to understand attitudes and behaviour in different types (e.g. sector, size, management styles, corporate structure) of small business and if and how this impacts their sustainable development strategies. Networks. Networks exist at all levels – international, national, provincial, regional, local and even across business and industry sectors – to support the growth and development of small firms in Canada. Some examples of networks are the Canadian Federation of Independent Business; Tourism Industry Association of Canada; Chambers of
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Commerce; Community Futures Development Corporations; Better Business Bureau; Rotary Clubs; Business Alliance for Local Living Economies (BALLE); Canadian Business for Social Responsibility (CBSR); and many others. Networks can provide the extra support necessary for small businesses to learn more about their particular industry, policies and programs that affect them, and more recently, how to address social and ecological responsibility within the business context. Beyond networking with other businesses, formal networks often provide training and mentoring opportunities; business/professional services at more affordable rates than private consultants; and offer exposure and credibility to small businesses. Here, a distinction is made between networks that support core business development (the first six networks mentioned in the list above) and those whose focus is on the sustainable development of businesses (the last two networks listed). While social and environmental concerns are increasingly talked about in all business networks, those networks whose primary focus is sustainable development are of particular relevance to this paper. The Business Alliance for Local Living Economies (BALLE) envisions “a sustainable global economy as a network of Local Living Economies, which build long-term economic empowerment and prosperity in communities through local business ownership, economic justice, cultural diversity and a healthy natural environment[51].” In Canada, BALLE British Columbia is a relatively young network with few practical examples (as yet) of small businesses impacting sustainable community development. However, the network is growing and improving the sustainable development learning curve by connecting leaders-to-leaders and business-to-business around the idea of local living economies. It builds on established examples from BALLE US and communicates successful examples of local living economies, such as that of the Emilia Romagna region in Northern Italy, widely recognized as one of the world's leading examples of a successful co-operative economy, with one third of the region's GDP derived from co-operative enterprises [52]. Canadian Business for Social Responsibility (CBSR) has been connecting business leaders on issues of sustainability since 1995, in an effort to
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“harness the power of business to create positive change.” CBSR runs a small-to-medium enterprise (SME) program that delivers tools for corporate social responsibility (CSR) engagement, including do-ityourself toolkits and peer-to-peer training sessions to help further CSR in SMEs [53]. These types of networks are critical to the sustainable development of the business sector, yet they represent the minority of business networks. Moreover, sustainable business networks at the local level are lacking. This is of particular concern in the context of sustainable community economic development and will be further discussed in Chapter five of this paper. 3.2.3 Local and Global Economies At a broad level, it has been suggested that corporate social responsibility (CSR) is unlikely to ever result in genuine sustainability unless there is a shift in our dominant social paradigm – from neoclassical economics to that of a system that embraces sustainable development and corporate social responsibility. Korhonen (2002) suggests looking to nature as a source of a new sustainability paradigm, one in which the value of natural capital is not undermined. He draws parallels between natural systems and how an economic system might function under a new sustainability paradigm. Modern economies tend to separate production from end consumption, assuming an infinite availability of fossil energy, whereas natural systems are organized around local networks of producers, consumers, decomposers and recyclers. We might consider modeling our economic system on nature, allowing for recognition of local limiting factors, yet allowing for diversity within the system [54]. This is contrary to our current trend towards an increasingly globalized society, though the two concepts – the locality principle and globalization – are not entirely incompatible. Some globalization is necessary. It is more a matter of preserving the positive attributes of a global economy while strengthening our local economies. While globalization, in some instances, has brought increased wealth and therefore an increase in critical services to developing nations, in the context of sustainability, globalization presents some difficult challenges. In multinational corporations, product flows are difficult to trace, monitor
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and control as a result of the geographic separation of production and end consumption. This also results in increases in the overall use of energy and emissions, making it difficult to establish holistic environmental management policies. This current system does more to displace environmental problems from the developed nations to the developing nations, which also makes it more difficult to assign responsibility to any one corporation. Korhonen suggests globalization as only one of several features driving the dominant social paradigm. Specialization; mass production and economic growth; competition; and linear, reductionist and mechanistic approaches to science and society are other suggested drivers that underlie everyday corporate management practices and business strategy [54]. In “The Ecology of Commerce,” Hawken (1993) recalls the local market of days past, consigned to a specific place within a town. He asserts that, while we cannot return to the era of local markets, we can regain control of larger (global) markets by enforcing payment of costs – total costs (i.e. social and environmental costs) [43]. We end this literature review here, contemplating the role of small business in community economic development and the imperative to strike a balance between local and global economies for the sake of our communities and more broadly, our future sustainable society.
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4 Results
Here we present results of the primary research conducted for this project, namely, the telephone interviews with community economic development (CED) practitioners and experts and the web-based survey of small businesses.
4.1 Community Economic Development Interviews
The results from the telephone interviews with CED practitioners and experts highlight commonalities and differences in the responses. The interview questions, sent in advance to respondents, can be found in Appendix A. As outlined in Chapter 2, the CED interview questions were structured using the five-level model for planning in complex systems (see Figure 2.2.). We continue using this model here to add clarity to our reporting of results. 4.1.1 System At the systems level, questions were asked to help respondents situate CED within a larger context and better understand their perceptions of CED. “What is CED and what does it mean to your organization?” All respondents alluded to the idea of ‘livability’ of communities, including concepts such as ‘quality of life’, or statements around making community ‘a better place to live and do business.’ Another concept that came across clearly was that of community empowerment. That is, CED is development for (emphasis added) communities. This was communicated through terms such as capacity-building and enablement. One respondent offered:
CED is a process for community to initiate solutions to problems. Communities generate their own solutions to problems – economic, housing, education, natural environment, health, arts, etc – to meet their economic, environmental and social needs.
Another respondent related this idea of ‘enablement’ directly at small business, offering:
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Economic development can act as a catalyst to motivate city hall/municipal government to affect legislative change to enable small business development.
Respondents easily made connections between various issues affecting community, especially social, environmental and of course, economic. However, they didn’t necessarily look outside of the community to consider external factors or influences that might occur beyond their jurisdictional boundaries. Interestingly, four out of six interviewees identified culture as an important aspect for CED to consider. In addition, one respondent quoted a series of principles developed by the British Columbia Working Group on Economic Development, two of which include interdependence and diversity. These concepts – culture, interdependence and diversity – are mentioned in the introduction to this paper and (among others) form the basis of our vision for CED. 4.1.2 Success At the success level, we asked the following questions in an effort to understand how CED experts and practitioners define success: “What does sustainability mean to you?” “Do you incorporate it into your vision? How?” “What would you like to see your economic development program achieve?” Definitions for sustainability varied from one interviewee to the next, though there were some common threads. One participant noted that sustainability was about interconnectedness, “everything connected to everything else.” Another felt that sustainability referred to environmental issues, but noted through the use of terms such as, “lasting,” “enduring” and “ongoing,” that it implies a certain degree of stability in the community. Not surprisingly, one participant gave the widely known Bruntland definition of sustainable development, “meeting the needs of current generations without compromising the needs of future generations [5].” A couple of variations on this definition were also given, including: “Being able to meet all basic requirements and ensure quality of life over the long-term” and “We, in a responsible way, utilize resources to build strong communities and ensure that resources are there for future generations.” One participant uniquely commented, “communication is at the core of sustainability.” Explaining this, they
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noted the importance of “shared development of a common vision with principles for sustainability.” When asked if and how sustainability is incorporated in their organizational vision, respondents tended to make vague connections between their vision and sustainability. Instead, many spoke of operationalizing sustainability through their CED activities, suggesting perhaps that sustainability occurs on-the-ground, rather than at a highlevel or as a guiding vision. Only one respondent said that sustainability was an “inherent part of everything we do.” In addition, language in response to this question was focused on environmental, rather than social aspects of sustainability. Respondents spoke of environmentally sustainable activities that demonstrate the vision. They also suggested that bylaws, ‘green policy,’ and the Canadian Environmental Assessment Act were mechanisms available to ensure the environmental responsibility of CED activities, noting that the environment drives the economy. Responses varied widely when respondents were asked to articulate the vision of success for their economic development program. One respondent saw increased employment, diversification and long-term thinking (including use of renewable energy and resources) as key success criteria for their CED program. Another focused on the development of a strong business sector and the need to provide services efficiently, suggesting that innovative development, rather than growth, is a key criterion for success. Focusing on rural communities, one respondent underscored the need to enable communities to plan for the future. Building their capacity to take ownership of decisions and increase economic (business) opportunities from within through the exploration of non-traditional business models, such as cooperatives, was seen by this respondent to encapsulate responsible and successful CED. Another respondent illustrated a vision of leading edge sustainable development by describing a real-life example in Victoria, British Columbia, where development demonstrated stewardship values in line with the community vision. The respondent suggested looking to such success stories when working through the CED process.
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4.1.3 Strategy At the strategy level, respondents were asked, “What is your strategy for reaching success (achieving your vision)?” One respondent focused on due diligence and accountability, highlighting the need for measurement of and reporting on critical outcomes in order to ensure continuous improvement towards success. This was echoed by another respondent who was looking for tools to help measure success with the mind set that measurement could help the community to analyze what is needed, what the impacts of current activities are and what alternatives exist that could help them to reach success. A third respondent also spoke of the need for accountability and measurement, discussing how regional planning documents can help to hold CED and local authorities accountable for their actions, while at the same time guiding strategy towards achieving their vision. Another respondent said that their CED program ensures success by being very focused with their resources. Programs in five target areas help to attain and focus financial resources towards achieving success. This respondent also saw the diversification of industry in the region as a strategy towards success as it has helped to build resilience in the community. This creates an insular effect whereby the community can protect itself from the economic downturns and layoffs it has experienced in the past as a result of globalization. From an academic perspective, strategy towards the vision involves education, research, and project-based work around community mobilization and CED capacity building. Finally, one respondent felt that strategy involved bringing sustainability into the planning discipline through a focus on process in an effort to create a paradigm shift. 4.1.4 Actions At the actions level of the five-level model, respondents were asked to give concrete actions they are taking in order to reach success. Three of the respondents mentioned the use of formal planning mechanisms to encourage staff and broader stakeholder engagement in the CED process, including involvement of non-traditional groups, such as art and cultural organizations. One respondent related their concrete actions directly to business through the development of business plans for sustainable applications, feasibility studies for new development opportunities and by fostering private sector partnerships. Additional concrete actions taken to
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reach success included proposal writing, funding projects, and community mobilization and consultation. When asked if and how they engage small business in the CED process, respondents all asserted that they did engage small business and though their responses as to ‘how’ varied, most related to capacity-building in one form or another – encouraging entrepreneurship, interactive training, communications tools, energy management plans, financing, guest speakers and other core business support (i.e. strategic, business and marketing plans). Small businesses were not generally engaged at a deeper level (i.e. in community visioning or planning processes). 4.1.5 Tools At the tools level, respondents were asked which, if any, tools they use to measure, monitor and manage their activities. One of the respondents mentioned specific tools that had been developed for Community Futures Development Corporations some time ago, but went on to say that while quantitative measurements are important, they rely a lot on more anecdotal forms of measurement. This respondent felt that there was a lot of knowledge to be garnered from simply talking to community members and getting a sense of their pride of place. One respondent spoke of a computer-based client monitoring system developed by the Canadian federal government, which helps to track clients as well as to monitor small business loans. Qualitative tools such as questionnaires and interviews were offered by another respondent, who saw them as useful evaluation methods for measuring the success of their activities. Another respondent raised the issue of Gross Domestic Product (GDP) as an inadequate tool for measuring community livability and suggested that in the future, they would be looking for more comprehensive measurement tools that would provide a true indication of quality of life. Finally, annual reports were seen as a way of tracking progress against objectives. However, it was felt that in order to maximize the utility of reporting, targets should first be set, against which, progress is tracked.
4.2 Small Business Survey
Fifteen questions pertaining to general business operations, understanding of sustainability, drivers and challenges for sustainability, and level of 45
engagement in community/networks, were asked of survey respondents in an effort to better understand small business perspectives on sustainability. Questions are listed in Appendix B. In all, thirty-two respondents offered the insights summarized below. Using Industry Canada’s definition of small business (firms with 100 employees or less), 100% of firms surveyed fell into the small business category, with the majority (69%) of firms having fewer than five fulltime employees. (Figure 4.1.) 6% 3% 22%
0 to 5 (69%) 6 to 25 (22%) 26 to 50 (6%)
69%
51 to 100 (3%)
Figure 4.1. Number of full-time staff employed by business. When asked how long their business had been in operation, there was an almost even distribution between firms operating between 1 to 5 years and those in operation for more than 10 years (Figure 4.2.).
0% 33% 40%
Less than 1 yr (0%)
1 to 5 yrs (40%) 5 to 10 yrs (27%)
10 yrs + (33%)
27% Figure 4.2. Number of years the business has been in operation.
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Survey respondents came from a variety of sectors and industries. The retail trade provided the highest number of respondents (17%), while the construction industry followed closely behind at 13%. An additional 17% of respondents selected ‘other’ and proceeded to self-identify as printing; youth, culture and leadership; automotive repair; land development; and product manufacturing for retail. Other respondents (in order of magnitude) came from administrative and support services (10%); arts and entertainment, health and wellness, professional, scientific and technical services, tourism and recreation (7%); educational services, finance and insurance, information and cultural industries, real estate, and wholesale trade (3%). When asked about their involvement in networks, we found a high level of engagement (80%) in some form of network – chamber of commerce, business association, tourism association, civil society organization or a network not listed in the survey, including land development organizations and professional musician associations. Twenty percent of respondents had no affiliation with a network. (Figure 4.3.)
13%
21%
20% 22% 20%
Chamber of Commerce (21%) Business Network (22%) Tourism Assoc. (20%) Civil Society Org. (4%) None (20%) Other (13%)
4%
Figure 4.3. Small business membership in networks/associations. Once general business operations were established, the survey went on to ask questions related to sustainability. Respondents were asked to define what sustainability means to their business (Figure 4.4). Given several options and the ability to check all applicable options (as well as to define sustainability for themselves), 18% of firms solely selected ‘economically viable’ to define sustainability, while the remaining 82% selected more
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than one of the given options to round out their definition of sustainability. A further breakdown of results is shown in Figure 4.4, which should be read as the proportion of the 82% of respondents who offered more than one definition. A few respondents chose to add to the definition of sustainability using the comment option. Some of these additions included: the business must be profitable; the business should provide a needed service; and our business provides products that better the lives of our customers.
Economically viable (31%)
8%
5% 31%
Environmentally responsible (17%) Contribute to a better community/society (22%) Good working environment (17%) Stakeholder Mgmt (8%)
17%
22%
17%
Other (5%)
Figure 4.4. Define sustainability for your business. After giving their definition of sustainability, businesses were asked whether or not they considered themselves to be sustainable. Overwhelmingly, 86% of businesses said ‘yes.’ Although, given that 18% of businesses defined sustainability solely in terms of economic viability, this may not be surprising.
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14%
Yes (86%)
No (14%)
86%
Figure 4.5. Are you a sustainable business? Respondents that felt their business to be sustainable were then asked to consider what drove them to be sustainable and given the opportunity to select all applicable drivers. A majority of responses (33%) stated that sustainability came about as a result of the business owner’s commitment to sustainability issues. This was closely followed by ‘customer-driven’ (25%), while equal numbers of responses indicated that sustainability came about as a result of employees or of participation in business networks (15%). Only 10% felt that community members played a role in their business becoming sustainable (Figure 4.6). One respondent offered that the pursuit of ‘quality and competence’ acted as a driver for sustainable business operations.
15%
2% 33%
Owner commitment (33%) Employees (15%) Community (10%) Customers (25%0
25% 10% 15%
Business Networks (15%) Other (2%)
Figure 4.6. Contributions to business sustainability
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The few respondents that had felt their business was unsustainable, skipped past the ‘drivers’ question and were directed to a question around obstacles to achieving business sustainability. The main obstacles in achieving sustainability were felt equally to be ‘a lack of business networks to support businesses to become sustainable;’ ‘a lack of financial resources;’ and ‘a lack of driving forces’ (such as government regulations or incentives). A lack of information about sustainability; human resource constraints; and a lack of consumer demand were not seen by respondents to be obstacles for sustainability. All respondents were asked whether or not they felt their community (including local government, economic development authority, citizens) was supportive of small businesses becoming sustainable. The majority (50%) said ‘yes’, while the remaining respondents equally gave ‘no’ or ‘I don’t know’ as answers. A couple of respondents had ‘no opinion’, while one offered the following comment:
“I believe that Canmore is supportive, but I also think that Canmore has other priorities that limit its support, specifically to small business. The town has a lot to think about such as development, infrastructure, recreation and protecting its surroundings, that an emphasis on small business has yet to tie into these other issues. It is a young town with a lot to discover about itself.”
8% 21% 50%
Yes (50%)
No (21%)
I don't know (21%) No opinion (8%)
21% Figure 4.7. Community support for small business sustainability
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Canmore, Alberta has recently embarked on a community sustainability initiative entitled, The Natural Step Towards a Sustainable Canmore. The initiative is in its beginning phase, engaging what is known as the ‘early adopters’ in the community (organizations and businesses). Respondents were asked whether or not they were aware of the initiative, as it has been promoted in the local media. Just over half (54%) of respondents were aware of the initiative, while 46% had not heard about it. Those that were aware were then asked to comment on their willingness to become involved, while those that were unaware were given a brief overview of the initiative and then asked whether or not they would be willing to get involved. Figure 4.8 illustrates the willingness of small businesses to engage in the community sustainability initiative.
Very willing (14%)
14% 31% 14%
Willing (14%) Somewhat willing (34%) Not at all (7%)
7%
Need more info (31%)
34% Figure 4.8. Willingness to engage in community sustainability initiative
Engaging in such an initiative will obviously require commitment and resources from small businesses. When asked what resources would be required in order to facilitate their engagement in the community sustainability initiative, responses indicated the following would be helpful; information packages (35%), local business networks to support sustainability (19%), human resources (15%), training workshops (13%), and finally toolkits and financial resources (9%) (Figure 4.9).
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9% 15% 35%
Info packages (35%) Training workshops (13%) Toolkits (9%) Local networks (19%) Human resources (15%)
19% 9% 13%
Financial resources (9%)
Figure 4.9. Resources to assist engagement in sustainability initiative. Finally, respondents were asked to speculate on the business benefits to be gained from becoming sustainable. Given a variety of options and the ability to choose all those found to be applicable, the most frequently given response was ‘community support’ (27%). Benefits such as competitive advantage, increased efficiency, employee satisfaction and customer loyalty all received similar scores, while significantly fewer businesses saw ‘reduced costs’ or ‘increased workplace performance’ as benefits to be gained from becoming sustainable. Two respondents opted for ‘none of the listed benefits,’ but added that they were unsure about the potential for business benefits to be derived from sustainability. One respondent, after having selected several options from the list, added (in the ‘other benefits’ section) “hopefully!” Figure 4.10 breaks down the responses made with regards to the question, “Do you see any of the following as business benefits to be gained from becoming a sustainable business?”
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Reduced costs (6%)
3% 3% 27% 15% 15% 14% 6% 17%
Competitive advantage (17%) Increased efficiency (15%) Customer loyalty (14%) Employee satisfaction (15%) Community support (27%) Workplace performance (3%) None of the above (3%)
Figure 4.10. Business benefits derived through sustainable operations. We use these results in the next chapter to speculate at a high level as to how CED and small business can cooperate to advance communities towards sustainability.
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5 Discussion
This chapter begins by using the five-level framework for planning in complex systems to organize and discuss how community economic development can move strategically towards sustainability. Key results from the community economic development (CED) telephone interviews are brought into the discussion to substantiate the points made. Following this, we use relevant findings from the small business survey to expand on the role of small business in the proposed strategic approach to CED. The chapter ends with a brief discussion on the interplay between the two – strategic CED and the role of small business – and suggests opportunities for cooperation in an effort to create sustainable communities.
5.1 Strategic Community Economic Development
Our literature review and telephone interviews serve as a foundation for our understanding of the current reality for CED. To this we add – systems thinking, a scientific and principled definition of sustainability, a methodology for engaging individuals in the development of strategy, elements to consider when deciding on actions and developing monitoring plans; and a structure to help frame our thinking around CED (the five level model for planning in complex systems) – in an effort to answer the question, “When CED is strategic towards sustainability what might it look like?” 5.1.1 System We suggest that a CED organization, like any organization, can be understood according to its purpose, culture and institutional structure [23]. The purpose of any CED organization is to stimulate the well being of the entire community through self-driven initiatives – strengthening their economy through the creation and support of local business. The culture of CED depends on variables including, natural resources and surroundings, language, history, culture and of course the perspectives of the people living within the community. The institutional structure of CED (and in general of CED organizations) is small and non-hierarchical and heavily connected to external community networks. It takes into account legislation, regulations, and the nature of organization. For CED
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this can include, public sector agencies, non-governmental organizations, institutions, and municipalities. Communities need to understand the system they are operating in while keeping in mind they are connected to a bigger whole. Some of the key aspects communities should be aware of include: globalization, and how it impacts upon the local economy; natural, social and manufactured capital; human (individual or community) needs; and other principles of social sustainability such as self-organization, diversity and interdependence. Respondents from the CED interviews revealed that they made connections between various local issues affecting community, however they did not necessarily consider external factors or influences that may occur beyond their local boundaries (i.e. the larger system). As noted in the literature review, this can lead to reductionist thinking, which may diminish their capacity to be visionary in their CED initiatives by creating unnecessary constraints, thereby limiting creativity. An example of this includes how a respondent noted that, “CED is a process for the community to initiate solutions to problems.” Thus creating reactive solutions to problems rather than creating proactive systems perspective solutions. Interviews also raised the concept of community culture and the important role that it plays in creating vibrant communities. Culture is a key component of the community system and in parallel with the aforementioned principles of social sustainability, constitutes the critical elements that must be understood within the system. 5.1.2 Success The literature review (Chapter 3) describes success in the system as a vision bound by community sustainability principles (i.e. the four system conditions). Incorporating these sustainability principles into the vision ensures a scientific, non-overlapping and principled definition of sustainability, which can then be tailored further by the community to create a vision that fully encapsulates the local needs and culture. Furthermore, a shared vision of success invites all members of the community to engage in something meaningful and can help to focus energy and resources as individuals move towards their common goal.
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From our interview results and review of relevant literature we learned that CED lacks a principled definition of sustainability. For example, respondents defined sustainability using such varied terms as interconnectedness, enduring, community stability, improving quality of life over the long term, and communication. It should also be noted that most respondents had only vaguely incorporated sustainability into their vision and generally limited their definition of sustainability to include only environmental issues. Sustainability was not generally seen as something to be incorporated into the vision, but rather as something to be operationalized through on-the-ground action. However, responses at this level were not without merit. The importance of building community capacity was identified across the board (in various forms) as key success criterion for CED programs. 5.1.3 Strategy As mentioned in the previous section, CED success within a sustainable society is bound by the sustainability principles. At the strategy level, the backcasting technique (described in Chapter 3 as part of the ABCD methodology) is used in parallel with the sustainability principles to help an organization realize how it can move from its current reality to its desired future in a sustainable society. The ABCD methodology may be especially useful to CED, as it engages individuals and groups in the brainstorming and prioritization of creative solutions. It can be seen as much as a strategy for achieving success as a tool for helping people to engage in and learn about sustainability and systems thinking. Results from the CED interviews show that most practitioners relate strategy to accountability and the measurement of critical outcomes. Ensuring transparency and accountability through measurement of outcomes was seen as a strategy in and of itself. Respondents felt that providing decision-makers with baseline information increased their ability to make good, informed decisions. Accountability is an extremely important concept in the CED realm, not only in the initial stages of planning when citizen engagement should be a key input in the process, but throughout the process to ensure continuous improvement of processes and actions. While the ABCD methodology is useful in ensuring transparency through engagement in the development of solutions and actions, it does not expressly speak to the need for
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measurement of or accountability for critical outcomes. To increase accountability at the strategy level, we suggest using the Golden Rule test (introduced in Chapter 3), which questions decisions-makers on participation, transparency, responsibility and honesty. With respect to the measurement of critical outcomes, we direct the reader’s attention to the discussion in Section 5.1.5. 5.1.4 Actions The most important thing at the actions level is to ensure that any actions taken align with the vision for success. In order to ensure that actions are in alignment with the vision, they must answer yes to the following three key questions (initially outlined in Chapter 3): 1. Is the measure a step towards our vision? 2. Does the measure provide a platform for further development towards our vision? 3. Does the measure provide us with adequate returns of all kinds (financial, social, natural)? The first question requires the organization to consider their vision in the broader context of the community vision. The second question is concerned with the flexibility of the proposed measure – does it allow for further development or lead towards a dead end? The third question may be interpreted in a variety of ways, most often as a financial return on investment. However, the organization may find it useful to consider other forms of return on investment, including (increased social and natural capital). We suggest that for CED to be strategic, it should consider asking additional questions to assist in the prioritization of actions. For example, it would be important for CED to question the capacity of a given action to satisfy one or more of the human (community) needs. Or to consider how they may be enabling SB and encouraging new business development that compliments their unique cultural or community identity. CED interviewees did not relate the actions taken by their organization directly back to their strategy, nor for that matter, to their vision. However, actions taken were supportive of small business and tended to fall under capacity-building, though related more to core business support
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(such as feasibility studies and marketing plans), than to meaningful engagement of small business in CED processes. As discovered in the results due to the nature of most CED organizations they have limited resources and levels of influence in their community, and felt their capacity to conduct grand community vision sessions was restricted. However, in order for the accurate development of a community vision all members and individuals should contribute to and participate in the community visioning sessions. In our strategic approach to CED, we cannot be prescriptive at the actions level. Actions are context specific and must be examined on a case-bycase basis. What we propose here is simply to ensure actions align with the vision of success (which falls into sustainability constraints); build flexible platforms for subsequent steps; ensure a reasonable return on investment; and are considered in light of their capacity to satisfy human needs. As the actions are developed and viewed through the lens of sustainability and in their capacity to satisfy human needs – short, medium and long-term goals can be established. Ensuring attainable short-term goals are attainable will further mobilize and energize the organization to reach their medium and long-term goals, enabling them to have continuous success throughout their initiatives and development. 5.1.5 Tools Tools fall into three principal categories: strategic tools; systems tools and capacity tools. In discussing tools, we take a whole systems perspective and consider tools that help both at an institutional (CED organization) level, as well as those that can be used at a broader level to help engage small business (and community) in strategic CED. We also reiterate the importance of measuring outcomes through quantitative as well as qualitative means. Our telephone interviews revealed that CED practitioners rely on more anecdotal forms of measurement. They tended to identify qualitative rather than quantitative measures, such as questionnaires and interviews and spoke of tools used to track and communicate information, such as client monitoring systems and annual reports. Without going into detail on the plethora of tools that exist to help measure and track progress towards success and based on our results, we propose a few key tools
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(within the three aforementioned categories) for strategic CED to consider. At the organizational level, examples of strategic tools include employee questionnaires, sustainability or corporate social responsibility reports, and employee dialogue around indicators that help to evaluate progress towards the vision. Strategic tools that could apply at the community level to ensure small business engagement in sustainability, include but are not limited to measures such as green development bonuses, green procurement programs, employer transit passes, tradeable emissions credits, and policies that may help to influence small business, thus moving the community closer to its vision. At a more qualitative level, CED practitioners can engage small business through strategic tools in much the same way they engage employees in tracking progress towards the vision – surveys, questionnaires, dialogues, and everyday life impact assessments (ELIA) help to gather feedback from community members, providing a qualitative assessment of strategic progress. Systems tools take direct measurements on the state of the system and require, for example, that the CED organization consider its impacts within the system. This might include examination of their procurement policy and measurement of subsequent health or environmental impacts that occur as a result of materials used in the supply chain. It might also include more internalized measurements such as energy/water consumption in the office. These tools address questions that have trickle down effects through the system. Did employee performance improve as a result of improved indoor air quality and natural light in the building? Have our energy efficiency measures resulted in decreased costs? These tools can help position the CED organization as a leader in community sustainability. At a broader level, energy pricing structures (e.g. time of day pricing), gas taxes, and indicators for air and water quality or greenhouse gas emissions, all help to encourage sustainable behaviour within the system. Capacity tools are almost always qualitative measures of progress towards the sustainable vision. Examples for the CED organization include, training workshops, information packages, communications campaigns, toolkits, and just about anything else that helps people to learn and engage in sustainability. Games that encourage systems thinking and engage people in the co-creation of meaningful ideas are particularly useful at the
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institutional level when formulating visions or creative measures to move towards sustainability. These types of tools can also be very useful at the community level for engaging local business owners in community sustainability. Local business networks for sustainability, community dialogues, the human needs matrix, and corporate social responsibility or sustainability programs are all examples of capacity tools. Once again, a strategic approach to CED cannot prescribe tools for monitoring progress towards the vision. Tools and indicators used will depend on what occurs at all other levels (actions, strategy, success, system). Most importantly though, is the need for CED practitioners to consider available resources when developing monitoring plans. With limited human and financial resources, it will be important to begin with a suite of tools or indicators that are easily measurable. In addition, CED should make use of available community resources, such as non-profit organizations and educational institutions, in order to ensure the most comprehensive and engaging monitoring plan possible.
5.2 The Role of Small Business
Small business greatly impacts the economic well-being and social fabric in our communities and has the potential to positively influence ecological health through responsible use of natural resources. For this reason, small businesses are intimately related to community economic development (CED) issues and as such, should play a prominent role in CED processes within a sustainable community. Below, we build on the findings from our small business survey to suggest a role for small business within the strategic CED approach outlined in the previous section. We come at this not just from the point of view of what small business can do, but also from the perspective of how they can be supported to make significant contributions to strategic CED and community sustainability. Success for small business within a sustainable society is bound by the constraints of the four sustainability principles. Therefore, success for small business is defined according to the business owner’s values or goals within these constraints. As we are interested in the role of small business in the creation of sustainable communities, we take this a step further. Success for small business within a community requires that the business vision be supportive of the community vision to ensure that both
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are moving strategically towards sustainability. For this to happen, small business must be engaged in the strategic CED process early on, particularly at the ‘community visioning’ stage, where citizens (including small business) articulate how the community will look in the future based on their values, needs and unique sense of local culture. Community members should look to small business – as employers and providers of essential goods and services they have the potential to satisfy the needs of community members. In strategic CED, human needs are considered when developing a vision of success for the community in an effort to ensure social sustainability. As such, we see a role for small business to play, both in the shared development of a community vision, as well as in the consideration of how human needs are satisfied within a community setting. We look to Max-Neef’s nine categories of human needs (introduced in the first chapter) and consider how small businesses within the community can relate to and deliver on the satisfaction of basic human needs. Table 1.1 illustrates some potential ways in which small business can address human needs. Table 1.1. Potential ways for small business to satisfy human needs.
NEED Affection Creativity Freedom Identity Subsistence POTENTIAL CONTRIBUTION BY SMALL BUSINESS Respect for diverse values; interdependence and selforganization (cooperatives); applying the golden rule test Expression of ideas = innovation in operations and delivery of goods and services To express individual and community culture/values through business operations Helping to define small business role or purpose in community; reflecting local culture Provides essential goods and services to the community; employment opportunities; use of local supply chains and resources Participates in business networks; co-creation of vision; contribution to social and manufactured capital in community Helps create community resilience through diversity of businesses (goods and services); tax laws; insurance; job retention/creation; incentives Work/life balance for employees; leisure opportunities for community members through local business Community needs; place within the larger system (community – global); learning/training opportunities; empathy
Participation Protection
Idleness Understanding
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This is a high level overview of potential ways in which small business can satisfy human needs. We are confident that if small businesses were to do this exercise on their own or even in groups within the community, they could come up with numerous detailed and varied ways in which they could assist in enabling human needs to be met and thereby support community development. Another issue that featured prominently in our small business survey findings was that of community support for small businesses to move towards sustainability. Small businesses saw community support as the principal driver or business case for becoming sustainable. Additionally, just over half of small businesses in our survey felt their community was supportive of small businesses becoming sustainable. However, when asked to identify obstacles on the path towards sustainability, a lack of networks to support businesses in becoming sustainable was the most commonly identified barrier along with a lack of government or other incentives. From this evidence, we highlight the role of community in supporting small businesses to move towards sustainability. This could happen in a variety of ways ranging from consumer demand, to the development of policies or incentives to encourage sustainable business behaviour, to the creation of community-based business networks to support learning and engagement throughout the transition. Our literature review of small business identified a number of existing business networks at the community, national and sectoral levels and pointed to the fact that very few existing networks provide support on sustainability issues. With this in mind, there may be a role for business leaders to play in articulating an unmet need within these networks: education and training for sustainability. Additionally, business leaders in sustainability need to communicate and share their success stories and best practices in an effort to raise awareness around sustainability in their respective fields or communities. An additional challenge widely identified in our small business survey was the limited resources (human, financial and other) available to assist small businesses in their transition to sustainable operations. This issue is very closely related to that of community support and business networks, but it deserves to be highlighted as a separate issue because it may require support that cannot be gained through participation in networks alone. Our belief is that a much more collaborative approach between small
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businesses and CED practitioners must be taken within the community to ensure efficient assessment, allocation and distribution of community resources. At a more superficial, but still very important level, community-wide learning and awareness around sustainable development must take place. Small businesses in our survey expressed a desire for information packages related to sustainability and the majority expressed a medium to high degree of willingness to engage in sustainable development. For those that did not express a desire to engage in sustainable development, it was mostly because they wanted more information on the subject, not because they were closed to the idea. To reiterate, small businesses must be engaged in the community visioning process and especially in the discussion around human needs, as they have great potential to satisfy needs within the community. Small businesses must be supported in moving towards sustainability through the creation of local business networks for sustainability. Additionally, small businesses themselves should advocate within existing networks for education and training that is currently lacking (i.e. for sustainability). Finally, small businesses often require additional support or resources to engage in activities currently seen to be outside of the business realm. Communities and CED practitioners play an important role in raising awareness about sustainability within the local business community and may even have the capacity to alleviate resource pressures through collaborative action with community stakeholders.
5.3 Cooperation for Sustainability
Reflecting on strategic CED and the role of small business outlined in the previous two sections, here we highlight three potential opportunities for cooperation that have become apparent through our research: shared development of a community vision; local business networks for sustainability; and community capacity-building through dialogue. 5.3.1 Shared Development of a Community Vision Our interviews highlighted the fact that CED lacks a vision with a whole systems view and a principled definition of success. That is, CED visions are not anchored in a broader vision of community success and success is never defined in terms of scientifically grounded principles of sustainability. Lacking a vision and a definition of sustainability that can 63
be operationalized makes it very difficult for communities to move towards sustainability. It is virtually impossible to develop a strategy or take action towards a vision if you have no idea what your desired future looks like. Additionally, interviewees discussed the importance of culture and quality of life, but this was never related to the idea of enabling human needs to be met within the community. While practitioners understand that CED is intended to be development driven by community, there was little evidence to suggest that community members were being consulted on whether development was in line with their values, or for that matter, actually meeting human needs. Through our research into small business and sustainability, we discovered great potential for small business to contribute to the satisfaction of human needs through employment opportunities and the provision of essential goods and services (among other contributions). In Table 1.1., we suggested potential ways in which small business might accomplish this and suggested that similar exercises done at the small business or even the community level, would produce fruitful results. However, the ability for small businesses to address human needs in the community hinges greatly on their capacity to engage in the discussion. It is the responsibility of CED organizations and community planners to extend invitations to small business to participate in the co-creation of community visions reflective of local culture and human needs within the community. 5.3.2 Local Business Networks for Sustainability In our interviews of CED practitioners we tried to learn how they engage small business in their CED processes. What we found was that small businesses were engaged at a superficial level, though still in a way that is supportive of their work. CED organizations tended to provide business support services to small businesses (e.g. loans, professional expertise in creating business plans, marketing plans, etc.), rather than engaging them at a more meaningful level around issues of community sustainability (e.g. community visioning and planning). At the same time, our survey of small businesses found that ‘community support’ was the number one driver (or business case) for small business to become sustainable. When given a list of potential business benefits to be gained from becoming sustainable and asked to select all applicable options, the majority of respondents (27%) selected ‘community support,’ implying that buy-in
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from the community is the principal reason why they would choose to become sustainable. Additionally, there was an obvious willingness on the part of small business to engage in community sustainability and an assertion that the lack of networks (to support businesses becoming sustainable) acts as a major barrier in the change process. We see synergies in these results that suggest opportunities for collaboration in developing local networks for sustainability. Our literature review of small business highlighted a multitude of networks already in existence, however they were either (a) not local or, (b) not focused on sustainability. There may be benefits (i.e. economic efficiency) to re-orienting existing local business networks to include education and support for sustainability. However, where these networks do not exist, we suggest that establishing new local networks may be of great benefit to engage small business in moving towards sustainability. By situating small business within their community context (where the owner not only works, but often lives and raises a family) and by connecting them to other businesses (experiencing the same challenges), these local business networks for sustainability are set apart from existing networks, which may make all the difference to community sustainability.
5.3.3 Community Capacity-Building through Dialogue A widely identified challenge in both our CED interviews and our small business survey was the limited availability of resources (human, financial and other) to assist in moving strategically towards sustainability. CED organizations and small businesses often share the common trait of having few staff and strict budgets. As such, resources are strained and therefore limited to core organizational operations, of which sustainable development is often not seen to be one. From this, we observe an opportunity for cooperation around community capacitybuilding. This issue is very closely related to that of community support and local business networks, but is highlighted here because it implies deeper and more broadly engaging activities that go well beyond those covered through business networking. Our belief is that a much more collaborative approach between small business, CED practitioners and other community stakeholders must be taken to help alleviate resource constraints and ensure efficient assessment, allocation and distribution of shared community resources. Building capacity for sustainable
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development through community dialogue around common resources is a way of: • • • Allowing for diversity by providing a sense of security and stability around community resources; Fostering self-organization by ensuring efficient and just allocation of resources amongst community actors; Encouraging interdependence by acknowledging that all actors within the community are reliant upon certain shared resources.
In doing this, communities invite all stakeholders to engage in meaningful discussion around the desired future for their community and how it can be achieved (in very practical terms) through collaborative community action and continual stakeholder engagement. Dialogue of this nature helps individuals to see their place within the broader community system and recognize the interconnectedness of their actions. While there are no doubt numerous other opportunities for collaboration between CED and small business in communities across Canada, we feel the three opportunities highlighted above represent the most strategic possibilities available for CED and small business revealed through our research. By collaborating on the development of a shared community vision; supporting local businesses to participate in community sustainability initiatives; and building capacity through community dialogue on common resources, we feel that communities stand the best chance of not only surviving the challenges that we’ve all come to associate with our highly globalized world, but actually catalyzing a global mind shift that will gradually redefine our future, one community at a time.
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6 Conclusion
The research presented in this paper builds on existing work related to the sustainable development of our communities. Planning for sustainability is imperative as we gradually move deeper into the global resource funnel that was spoken of early on in this research paper. We feel this is best done at the community level because it is at this scale that sustainability issues are most relevant to the individual. However, we think this is known and so have chosen to focus our research on building a case for taking a strategic and cooperative approach to the sustainable development of our communities, focusing on two very important elements in the community system – community economic development (CED) and small business. As CED is a complex topic for the average community facing the deconstruction of its historical makeup, we have used the five-level model for planning in complex systems to present information in a way that takes all elements of the system into consideration: from understanding the whole system; to defining success in the system; creating a strategy to reach success; developing concrete actions to further the strategy; and using tools to monitor and evaluate progress towards sustainability. In this way, a strategic approach to CED was developed and reinforced using perspectives gained through interviews with CED practitioners. A role for small business within our strategic approach to CED was informed through literature review and a survey of 32 small businesses. We found important roles for small business to play related to: their capacity to satisfy human needs within the community; the need for local small business networks for sustainability; and participation in community-wide learning and capacity-building towards sustainability. After addressing our primary research questions, we reflected on opportunities for CED and small business to cooperate in an effort to lead communities towards sustainability. We found that, (1) collaborating on the development of a shared community vision; (2) supporting local businesses to participate in community sustainability initiatives and; (3) building capacity through community dialogue on common resources, revealed themselves as opportunities through our work. However, we do not intend for these opportunities to be taken as the only opportunities for collaboration between CED and small business. They represent the most obvious and strategic opportunities revealed over the course of our
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research. Further action research with communities on the subject of strategic sustainable development is encouraged, as it will certainly reveal additional challenges and opportunities encountered at a very practical level, thereby furthering this research. It is our intention that community leaders, including CED practitioners and small business owners, will read this research paper and garner new insight to inform their strategies towards sustainability.
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Appendix A
CED Interview Questions
This interview constitutes part of a Masters thesis project for the program, Strategic Leadership Towards Sustainability at the Blekinge Institute of Technology in Karlskrona, Sweden. Our research explores the interaction between community economic development and small business, as it relates to sustainability. The purpose of this interview is to gain a better understanding of community economic development in Canada. The findings of our research will be published at the Blekinge Institute of Technology. Please review these questions prior to your telephone interview. We anticipate the interview to last approximately one hour. Thank you for your participation. research. Karl A. Fulson [email protected] Questions: 1. a) What is Community Economic Development (CED)? b) What does CED mean to your organization? 2. a) What does sustainability mean to you? b) Do you incorporate it into your vision? How? c) What would you like to see your economic development program achieve? 3. What is your strategy for reaching success (achieving your vision)? 4. a) What concrete actions are you taking to reach success? b) Do you engage small business in your activities and how? 5. a) Which tools do you use to measure / monitor / manage your activities? b) What resources do you offer to support small business? Your input is invaluable to our Amy Seabrooke [email protected]
Appendix B
Small Business Survey Questions
1. How many full-time staff does your business employ? 0-5 6-25 26-100 100 or more 2. How long has your business been in operation? Less than 1 year 1-5 years 6-10 years More than 10 years 3. What is the main focus of your business operations? Accommodation and Food Services Administrative and Support Agriculture, Forestry Arts & Entertainment Construction Educational Services Finance and Insurance Health & Wellness, Social Assistance Information and Cultural Industries Management of Companies and Enterprises Manufacturing Mining and Oil and Gas Extraction Professional, Scientific and Technical Services Real Estate and Rental and Leasing Retail Trade Tourism and Recreation Transportation and Warehousing Utilities Waste Management and Remediation Services Wholesale Trade Other (please specify)
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4. Do you belong to any of the following? (Check all that apply) Chamber of commerce Business association/network Tourism association Civil society organization (i.e. NGO)? No 5. What does ‘sustainability’ mean to your business? (Check all that apply) Economically viable Environmentally responsible Contributing to the betterment of the community/society Providing a good working environment for your employees Stakeholder management Other (please list) 6. Would you consider your business to be ‘sustainable’? Yes (if yes, go to question 7) No (if no, skip to question 8) 7. What contributed to your business becoming sustainable? (Check all that apply) Owner commitment/values Employee-driven Community-driven Customer-driven Business networks Other (please list) 8. What obstacles stand in the way of your business becoming sustainable? (Check all that apply) Information/education about sustainability Lack of networks to support small businesses to become sustainable Financial resources Human resources Lack of consumer/customer demand to justify moving towards sustainability
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Lack of driving forces (i.e. government policies/incentives, competitive advantage) Other (please list) 9. In your opinion, is Canmore (local government, economic development authority, citizens) supportive of small businesses moving towards sustainability? Yes No I don’t know No opinion 10. Are you aware of the recently embarked upon sustainability initiative in Canmore, led by the Biosphere Institute of the Bow Valley? Yes (if yes, skip to question 11) No (if no, skip to question 12) 11. Given what you know about Canmore’s sustainability initiative, how willing is your business to become involved? Very willing Willing Somewhat willing Not at all Would need more information 12. The Town of Canmore, in partnership with organizations in the community, has just launched “The Natural Step Towards a Sustainable Canmore.” This endeavour is an ambitious education, visioning and planning process to help Canmore move strategically towards sustainability. “The Natural Step Towards a Sustainable Canmore” will involve a series of education and training workshops, leading to a process whereby participants create a common vision for a sustainable Canmore and a plan to move the community strategically towards its vision. Given what you now know about Canmore’s sustainability initiative, how willing is your business to become involved? Very willing Willing Somewhat willing
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Not at all Would need more information 13. What resources would be needed in order for your business to engage in this initiative? (Check all that apply) Information packages Training workshops/toolkits Local business networks to support sustainability Human/financial resources Other (please list) 14. Do you see any of the following as benefits to be gained from becoming a sustainable company? (Check all that apply) Reduced costs Competitive advantage Increased efficiency Customer loyalty Employee satisfaction Community support Improved workplace performance None of the listed benefits Other benefits (please list) 15. Would you be willing to be contacted further about this survey or Canmore’s Community Sustainability Initiative? Yes (please provide contact information below) No
End of survey
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doc_249524787.pdf
Small businesses are normally privately owned corporations, partnerships, or sole proprietorships
Strategic Community Economic Development and Small Business: Cooperation for Sustainability
Karl A. Fulson Amy Seabrooke
School of Engineering Blekinge Institute of Technology Karlskrona, Sweden 2005 Thesis submitted for completion of Masters of Strategic Leadership Towards Sustainability, Blekinge Institute of Technology, Karlskrona, Sweden. Abstract This thesis aims to increase the knowledge and capacity of Canadian communities and their small businesses in order to enable their transition towards sustainability. This was accomplished through interviews with Canadian Community Economic Development (CED) experts, and surveys from Small Business (SB) operators in Canmore, Alberta, Canada. We suggest the potential roles for CED proponents and SB operators include: (1) Shared development of community vision; (2) Local business networks for sustainability; (3) Community capacity building through dialogue. Keywords Sustainability, Community Economic Development, Small Business, Capacity Building, Vision
Acknowledgements
Our work was carried out at the Department of Mechanical Engineering, Blekinge Institute of Technology, Karlskrona, Sweden, under the supervision of Sophie Byggeth and David Waldron. Initiated in February 2005, our thesis research would not have been possible without the cooperation and assistance from Blekinge Institute of Technology, The Natural Step Canada and Canmore Community Economic Development Authority. We wish to express our sincere appreciation to Lisa Princic and Michael Barkusky for their professional guidance through our work on small business. For providing access to resources and information in Canmore, we thank Chad Park, Teresa Mullen and Bart Robinson. We thank all the participants of our interviews and surveys for their time and thoughtful input into our research. We extend our warmest appreciation to our families in Canada and finally, to our colleagues in the Masters in Strategic Leadership Towards Sustainability program. Thank you for offering your friendship and for creating a truly vibrant community for us here in Sweden. Karlskrona, June 2005 Karl A. Fulson Amy Seabrooke
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Executive Summary
This research paper uses a systems perspective of sustainability within the biosphere in order to explore community economic development and small business and propose opportunities for cooperation that will lead communities strategically towards sustainability. We begin by introducing the topic from a sustainable starting point or desired future. Next, we identify some of the core components of community economic development (CED) and small business in Canada, proposing a rationale and purpose for our research and establishing the primary research questions for investigation. The research questions are (1) When CED is strategic towards sustainability what might it look like; and (2) What is the role of small business within this strategic approach to CED? Chapter 2 on methodology outlines our research design. To better understand the substantive literature on CED, we framed our thinking using a five-level model for planning in complex systems. We used this model again when structuring questions for our CED telephone interviews. For small business, a web-based survey and literature review were used to gather primary and secondary data to inform our investigation. The first literature review situates CED within a broader context or system and then gives a more detailed picture, specifically focusing on the Canadian context for CED. The second literature review explores the relation between small business and sustainability, looking at such varied topics as: the Canadian economy and tax treatment of small business; sustainability issues, such as reporting, the ‘business case’ for sustainability, and the value of networks; and finally, the role of small business in linking local and global economies. Chapter 4 presents the results of our primary research. Here a summary of the findings from the CED telephone interviews is presented using the five-level model to help structure and clarify our findings. Following that, the outcomes from the small business survey are offered using pie charts as visual aid to assist in interpretation of results. Our discussion once again uses the five-level model for planning in complex systems to develop a strategic approach to CED. This is
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substantiated using the findings from our research. Following that, we propose a role for small business to play within this strategic approach to CED. Finally, we use evidence from the research to identify opportunities where CED and small business can cooperate to move communities strategically towards sustainability. We conclude the research paper by identifying the value of creating a strategic, sustainable approach to community economic development. Building on the strengths of current CED processes, we advocate for: an understanding of the whole system; a principled definition of success within that system; backcasting from a vision of success when developing strategy; creating actions in line with the vision; and using tools to engage people and monitor and evaluate progress made towards sustainability. Then, we reinforce the importance of engaging small business in sustainability, due, in part, to their capacity to enable human needs to be met within the community. Finally, we reflect on opportunities for CED and small business to cooperate in an effort to lead communities strategically towards sustainability within the biosphere.
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Table of Contents
List of figures ............................................................................................7 1 Introduction..........................................................................................8 1.1 Overview ....................................................................................8 1.2 Rationale...................................................................................11 1.3 Purpose .....................................................................................11 1.4 Research Questions ..................................................................11 2 Methodology .......................................................................................12 2.1 Research Design .......................................................................12 2.1.1 General .....................................................................12 2.1.2 Community Economic Development .......................13 2.1.3 Small Business .........................................................15 3 Literature Review ..............................................................................16 3.1 Community Economic Development .......................................16 3.1.1 CED System .............................................................19 3.1.2 CED Success ............................................................21 3.1.3 CED Strategy............................................................23 3.1.4 CED Actions.............................................................26 3.1.5 CED Tools................................................................29 3.2 Small Business and Sustainability............................................30 3.2.1 Small Business in the Canadian Economy ...............30 3.2.2 Sustainable Development Issues ..............................34 3.2.3 Local and Global Economies ...................................39 4 Results .................................................................................................41 4.1 Community Economic Development Interviews .....................41 4.1.1 System ......................................................................41 4.1.2 Success .....................................................................42 4.1.3 Strategy.....................................................................44 4.1.4 Actions......................................................................44 4.1.5 Tools.........................................................................45 4.2 Small Business Survey .............................................................45 5 Discussion ...........................................................................................54 5.1 Strategic Community Economic Development ........................54 5.1.1 System ......................................................................54 5.1.2 Success .....................................................................55 5.1.3 Strategy.....................................................................56 5.1.4 Actions......................................................................57 5.1.5 Tools.........................................................................58 5.2 The Role of Small Business .....................................................60
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Cooperation for Sustainability................................................. 63 5.3.1 Shared Development of a Community Vision......... 63 5.3.2 Local Business Networks for Sustainability............ 64 5.3.3 Community Capacity-Building through Dialogue... 65 6 Conclusion.......................................................................................... 67 References............................................................................................... 69 Appendix A............................................................................................. 75 CED Interview Questions ................................................................... 75 Appendix B ............................................................................................. 76 Small Business Survey Questions....................................................... 76
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List of figures
Figure 1.1. Interaction between CED and small business .........................9 Figure 2.1. Schematic of action plan to answer research questions.......13 Figure 2.2. Five-level model for planning in complex systems applied at the community level [10,11].............................................................14 Figure 3.1. The Natural Step ABCD Framework.....................................24 Figure 3.2. Strategic Business Planning [23]..........................................35 Figure 4.1. Number of full-time staff employed by business. ..................46 Figure 4.2. Number of years the business has been in operation. ...........46 Figure 4.3. Small business membership in networks/associations...........47 Figure 4.4. Define sustainability for your business. ................................48 Figure 4.5. Are you a sustainable business?............................................49 Figure 4.7. Community support for small business sustainability ...........50 Figure 4.9. Resources to assist engagement in sustainability initiative...52 Figure 4.10. Business benefits derived through sustainable operations..53
List of tables
Table 1.1. Potential ways for small business to satisfy human needs ..... 61
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1 Introduction
1.1 Overview
In order to reach success in a complex system, it is useful to begin with a high-level overview. Understanding the components of that system and being sure not to get caught up in the details is essential to sustaining the whole. This research paper begins with a broad vision of a sustainable society, which then permits the mind to search out creative solutions for achieving that vision by eliminating reductionism in our thinking. Local communities are inevitably set within global society and the biosphere. It is therefore essential to consider global scale socioecological sustainability as a pre-condition for sustainable communities. Holmberg and Robèrt (2000) have developed the following four system conditions for a sustainable society in the biosphere [1]: In a sustainable society, nature is not subject to systematically increasing: 1. … concentrations of substances extracted from the Earth’s crust; 2. … concentrations of substances produced by society; 3. … degradation by physical means; and in that society, 4. … people are not subject to conditions that systematically undermine their capacity to meet their needs [1]. Within a sustainable society in the biosphere1, there will be distinct communities, each defined, in part, by the nature of their associations with the habitat (and natural resources) they use. We suggest that, in these communities, a business sector (among other sectors) will exist and help to support a stable local economy – one where small businesses cooperate to offer complimentary services and products that reflect the culture of the local community. Respect for local culture provides a foundation for social sustainability – where self-organization, diversity and
Biosphere: part of the earth system in which life can exist, between the outer portion of the ecosphere and the inner portion of the atmosphere.
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interdependence amongst community members are fostered in an effort to meet the needs of the individuals that constitute the community. According to Daly and Cobb a society should not be called a community unless (1) there is extensive participation by its members in the decisions by which its life is governed, (2) the society as a whole takes responsibility for the members, and (3) this responsibility includes respect for the diverse individuality of these members [2]. “Community is an effective unit of change in the yawning chasm between rich and poor in all nations, the widespread erosion of culture at the hands of economic clout and global marketing schemes, and life threatening environmental problems [3].” Keeping these system conditions and our broad vision of community sustainability in mind, our focus on Community Economic Development (CED) and its interaction with Small Business (SB) will begin to take shape and explore what it means to have cooperation, between the two, for sustainability.
Biosphere
Sustainable Society CED Small Business
Local Community
Figure 1.1. Interaction between CED and small business In North America, Community Economic Development (CED) has evolved as a process away from the industrial development of the 1930’s and the economic development of the 1970’s, to incorporate both concepts with a more holistic, social and environmental view of development [4]. CED has existed in governments and development organizations since the 1980’s and the birth of the sustainability
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movement [4,5]. Since then, CED has continued to employ a more holistic perspective, but has evolved and changed its meaning to meet the mandate of its host agency or organization. A working definition of CED from the Canadian CED Network is: “Community economic development is a way of creating economic development that is responsive to locally defined priorities. It strives to increase the self-reliance of local communities. It focuses on local control and local ownership of resources, and aims to locate assets in the hands of low-income residents. It seeks to ensure that the benefits of economic development flow equitably to those who are frequently left out. It is an approach to development, which integrates the social, cultural, economic and ecological goals of the local community [6].” As the definition implies, the principle of CED is to stimulate the local economy by encouraging business growth that is essentially driven by the community members and their resource capacity. More detailed concepts of CED are discussed later in this paper, however understanding the high level functioning of CED reveals notions of local economy, business growth, and natural resource management. In Canada, small business (SB) (firms with less than 100 employees), accounts for nearly 98% of all enterprise, represents an integral part of our communities and contributes to the well being of the national economy [7,8]. SB impacts the local community through commerce and the provision of essential goods and services, but it also has the potential to strengthen political will to stimulate change at the local level. Meeting needs of SB in the community is one of the first steps to creating a vibrant, enduring business climate and economy. As each community has different values, cultural norms, and types of business (i.e. resource extraction vs. information technology), the way in which their needs will be met differs. In his work on Human Scale Development, Max-Neef identified nine basic human needs, which include; affection, creativity, freedom, identity, subsistence, participation, protection, idleness, and understanding [9]. Creating a community atmosphere in which these needs may be satisfied is the shared responsibility of CED and SB to ensure sustainability initiatives are respectful of local culture.
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1.2 Rationale
We want to gain a better understanding of some of the more prevalent theories surrounding CED in Canada and organize this data based on a five-level model for planning in complex systems [10]. We believe this unique approach will inform strategic CED and reveal an important role for SB to play within this strategic approach.
1.3 Purpose
The purpose of this research is to explore the interaction between CED and SB, as it relates to sustainability. What does a strategic approach to CED look like and how does it further sustainable business development in the local community? What is the potential for SB to contribute to strategic CED towards sustainability? Optimizing this interaction may help to foster economic, social and ecologically sound development at the local community level.
1.4 Research Questions
The primary focus of our research is to explore the interaction between CED and SB at the local level. In an attempt to better understand this interaction and recommend opportunities moving forward, we will address two main research questions: (1) When CED is strategic towards sustainability what might it look like? (2) What is the role of small business within this strategic approach to CED?
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2 Methodology
The problem area and the research questions introduced in the previous chapter set the stage for the methodological approach outlined below. There are several plausible approaches for answering the research questions posed in this thesis project. As the purpose was to explore and understand contemporary events (i.e. current realities for community economic development and small business as they relate to sustainability), we chose to use a combination of interviews and surveys, basing these on a solid general and historical understanding of the two topics, achieved through literature review and the use of a five-level model for planning in complex systems. Below, we give a rationale for these methods and illustrate their use in greater detail.
2.1 Research Design
2.1.1 General The design of our methodology can also be described as our action plan for obtaining answers to or for drawing conclusions on our research questions. Our basic approach was to: • Develop a foundation for our understanding of community economic development and small business; • Formulate interview and survey questions based on that understanding and on the knowledge that could be gained through asking questions of practitioners and experts in these respective fields; • Compare interview and survey results with what we had learned through literature review and use the five-level model to frame our understanding and ensure a systems approach; • Illustrate how community economic development can move strategically towards sustainability and; • Identify a role for small business within this process. This process is illustrated in Figure 2.1.
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Introduce the concept of Community Economic Development (CED)
Suggest a potential role for Small Business (SB)
Literature Review
Five-level model
CED Interviews
SB Surveys
Reasoning from principles (deduction) and reasoning to principles (induction) Understand how CED and SB may cooperate to achieve community sustainability.
Figure 2.1. Schematic of action plan to answer research questions. 2.1.2 Community Economic Development The methodological approach to this portion of the research was a literature review framed in the context of the five-level model for planning in complex systems. In addition, phone interviews were conducted with experts and practitioners in the field of community economic development (CED) in Canada. The five-level model is outlined briefly, in Figure 2.2. [10,11].
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System
Understand the overall principle functioning of the system, in this case, “community within society within the biosphere” Create a vision of success, for the system, constrained by sustainability principles (see section 1.1)
Success
Strategy
Develop strategic guidelines that will move the community towards the vision of success
Actions
Take concrete steps towards sustainability
Tools
Use tools that systematically monitor the actions to ensure they are strategically arriving at success in the system
Figure 2.2. Five-level model for planning in complex systems applied at the community level [10,11]. We used the five-level model to help structure the vast amount of literature and approaches to CED in existence. Rather than attempt to point out gaps in current approaches to CED, the five-level model was used to highlight strengths in existing approaches and lend a structured, whole-systems approach to CED processes. In combination with insights gained from CED experts and practitioners through telephone interviews, the five-level model demonstrates how CED can be improved to ensure it is moving communities strategically towards sustainability. The five-level model also proved useful to construct the CED interview questions. Interview participants were selected to provide a representative sample of the different levels in which CED is practiced or studied in Canada – local, regional, provincial, national and private, public and nonprofit sectors, as well as academia. In addition, we selected a diverse set of communities to participate in the interviews (i.e. communities with varied resource base and/or industrial sectors). In all, the following five organizations were selected to participate in the interviews: Western Economic Diversification Canada (regional, public); Community Futures Development Corporation of Thompson Country (regional, non-profit);
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Stormont Dundas Glengarry Community Futures Development Corporation (regional, non-profit); Canmore Community Economic Development Authority (local, non-profit); Centre for Sustainable Community Development (national, academia). The phone interviews were conducted via telephone during the month of April 2005. Answers were recorded by hand and later typed, using a consistent template. Following each interview, the interviewer recorded additional notes or points of interest, which often included contextual information about the community in question or recommendations of literature for further review. The interview questions are found in Appendix A, and the results are recorded in Chapter Four. 2.1.3 Small Business A literature review of small business (SB) and sustainability helped to establish a basic understanding of the Canadian SB climate and its relation to sustainability issues. It served to strengthen our ability to interpret the results of our SB survey (discussed below) and laid a foundation for the creative development of our ideas related to SB sustainability and its interaction with or contribution to strategic community economic development. The literature review covered issues ranging from SB in the Canadian economy, especially the tax treatment of SB; to SB and sustainability, including reporting, drivers and challenges for sustainability and the value of SB networks; to the role of SB in linking local and global economies. The purpose of the survey was to understand SB viewpoints on sustainability issues, specifically the drivers and challenges encountered at the community level. An online survey of SB in the Town of Canmore, Alberta was conducted using a web-based survey tool called Survey Monkey. In cooperation with Canmore’s Community Economic Development Authority (CEDA), the survey went out to approximately 760 businesses in the Kananaskis Valley, via CEDA’s electronic newsletter. In all, 32 firms responded to the survey during the period from April 22 to May 9, 2005. The full survey questions can be found in Appendix B, and key results of the survey are discussed in Chapter Four.
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3 Literature Review
The purpose of our literature review is to establish a basic understanding of Community Economic Development (CED), the Canadian small business (SB) climate and its relation to the sustainability movement. It strengthens our ability to interpret the results of CED interviews and SB survey and provides a foundation for the creative development of our ideas related to SB and its interaction with strategic CED (see Chapter Five). We begin with general information about CED then build CED into the five-level framework for planning in complex systems. This is followed by a review of literature surrounding SB and sustainability in Canada.
3.1 Community Economic Development
Canada’s natural capital and culture have shaped the values of Canadians, their visitors and the opinions of people from around the world. At 9,976,140 square kilometers, Canada’s vast territory has come to be known for its resources that contribute to healthy living and high quality of life for its inhabitants. Within this diverse landscape, many small, independent and often isolated communities exist and have been struggling to survive economically for decades. Work and jobs in the past, in most places, were based on subsistence living vocations like farming and resource extraction. The global market place and economy have made business in these communities more complicated as international trade, the value and outsourcing of raw materials and globalization within Canadian borders have prompted the diversification of their products, goods and services. These ‘diversified’ communities have now created a potential resilience to survive within both local and global contexts [12]. Community economic development (CED) is action by people locally to create economic opportunities and enhance social conditions, particularly for those who are most disadvantaged, on an inclusive and sustainable basis [6]. It is a comprehensive, multi-faceted strategy, conceived and directed locally, for the revitalization and renewal of community economies. Its abiding interest is the local development, management, and strengthening of community resources for community benefit [6].
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CED (sometimes known as Liberal Community Development) is characterized by the goal of maintaining or repairing the economic fabric of a community in order to create jobs and create a trickle-down effect [13]. Its development is focused on the quantitative expansion of the local economy, private entrepreneurship and employability [13]. Theories and goals of CED tend to wrap around neoclassical economic models of development [13], but there is research to suggest that traditional economic models are insufficient and that to be successful, CED must embrace a more holistic and inclusive economic model. According to research by Hochachka, CED is people-centered development that embodies sociocentrism and has cooperation, collaboration and teamwork as a driving force [3]. It emerges to meet social and economic needs, while integral community development encapsulates the expansion of world-centric perspectives [3]. CED creates economic opportunity in communities that are typically marginalized by the mainstream economy [6]. It is based on the recognition that “a rising tide does not lift all boats.” Even when the mainstream economy is buoyant, many communities lag behind. Globalization has increased inequality in local economic conditions, particularly for resource-based communities, which need to find new ways to create local opportunities and advantages [6]. In Canada, according to a research study by Chaland and Downing, CED activities, based on the level of highest frequency, include [6]: • Community capacity building (public education and organizational development); • Human capital development (training for income generation); • Enterprise development (Small and medium business development); • Organizational collaboration and partnering (mobilization and networking); • Access to capital; • Sector development (tourism development); • Research; • Other [6].
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A core group of CED activities that emerged in Canada focuses on human capital development, enterprise development, and community engagement and planning [6]. Some barriers identified in the profile of CED in Canada study include: • Lack of government support • Lack of community capacity • Lack of leadership and collaboration • Barriers to citizen participation • Economic conditions [6]. Chaland and Downing therefore suggest that the CED sector needs a comprehensive policy response that supports CED on an equitable and inclusive basis across the country [6]. In the Canadian community of Canmore, Alberta, the local Community Economic Development Strategy (2004), conducted by the Community Economic Development Authority (CEDA), uses the following definition of Economic Development. “Economic development means supporting existing businesses, and attracting appropriate businesses to the community, to encourage the creation of jobs and employment opportunities, which foster and improve a strong, diversified economy for the future [14].” CEDA (2004) also created three guiding principles to help develop the Economic Development Strategy, which include: 1. Maintain quality of life for all residents; 2. Ensure the natural environment is protected and preserved for the future; 3. Balance the tax base [14]. This introduction to CED has offered insight into the complexity of the subject. Many professionals and organizations define CED differently; use it at different levels in society, and frame central concepts to suit their situation. In the following section we use the five-level model (as shown in Figure 2.2.) for planning and decision-making for sustainability in situations of high complexity to introduce a common structure for the central concepts and components of CED. This structure is useful in
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determining the tools to introduce the common characteristics and components of CED and identify important considerations when attempting to find the tools required to measure actions taken as part of an overall strategy for achieving success in the system (i.e. sustainability). 3.1.1 CED System To fully understand complex systems one of the best ways is to describe the system with all its constituent parts and processes, interrelationships and functions and avoid reductionism by keeping a bird’s eye view of society in the biosphere. This can be accomplished by starting with basic elements of ecology and society. Understanding ecology through basic science – the conservation laws, thermodynamics, matter, energy and exergy – we see that all things are related and interconnected. Changing one part of the system, affects another. Understanding society and all its constituent parts – global, national, regional, local, political, social, economic and ecological – also helps to reveal the local community’s place within the broader system. Hochachka notes that ‘community’ exists in a global political economy and must seek ways to carve out a niche within this. Stratification is inherent in the nature of communities, where multiple actors with diverse interests, combination of state and community activities, and smaller units are embedded within the whole [3]. For instance, local communities must contend with domestic economic polices focus on private industry and import substitution rather than small-scale agriculture and local production [3]. Traditional planning theories, (social reform, social mobilization, policy analysis, social learning) according to Roseland (2000), reveal that they are inadequate as they lack structure for sustainable development [15]. Planning attempts to link scientific and technical knowledge either: (1) to actions in the public domain; (2) to processes of societal guidance; or (3) to processes of social transformation [15]. Planning theory does not fully incorporate sustainability into its actions [15]. Canadian Community Economic Development includes two different classes of CED: establishmentarian (EM) and communitarian (CM) [16]. EM is highly mechanical, derived from the optimization of concepts and from mathematics that is largely inspired from physics [16]. CM features
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concepts of empowerment, self-reliance, community control of natural resources, micro-enterprise loans, meeting basic needs and building community structure [16]. Our research is concerned with the latter class of CED. In a 1991, British Columbia Ministry of Development, Trade and Tourism Community Economic Development Manual, it is recommended that development committees be created by municipal law [16]. Before a government commits funds they should determine if an economic development plan is at all possible and if the community has local leadership capable to emerge and direct the effort [17]. If a community is unable to create viable development initiatives based on their strengths and capabilities, then external forces are more likely to have a larger role in determining the future of the community [18]. As McCall (2003) notes, CED models tend to emerge in regions and communities facing major crises, often a result of labour force displacement from a key industry [18]. Communities suffering from sustainability problems generally face problems of market failure, which can be human, institutional or informational [16]. The National Roundtable on the Environment and the Economy (2003) sees that the economic case for conservation is linked to the global economy as the international market for Canadian sustainable natural resource products is on the increase [12]. Canadian companies are demonstrating their willingness to conserve nature to remain competitive with international markets. They recognize the environment has ecological values that can be seen as economic capital [12]. Integrated planning can lead to solutions that maintain and balance ecological, social and economic objectives [12]. CED has the potential to offer services, solutions and support to aid business and their respective communities, in line with integrated planning initiatives. This shows the complexity of the CED system itself, within the broader socio-ecological system. Multiple, diverse and vested interests from a variety of stakeholders can influence the direction that CED activities take. Once we have an understanding of the complex system in which CED operates, we can begin to define ‘success’ in that system.
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3.1.2 CED Success Determining what success is and what it means for CED requires an understanding of the basic principles of success for social and ecological sustainability, i.e. the four system conditions or sustainability principles. These principles should be: (a) based on a scientifically agreed upon view of the world; (b) necessary to achieve sustainability; (c) sufficient to achieve sustainability; (d) general enough to structure all societal activities relevant to sustainability; (e) concrete enough to guide action and serve as directional aids in problem analysis and solutions, and preferably (f) non-overlapping, or mutually exclusive in order to enable comprehension and structured analysis of the issues [11,21]. Converting the four global sustainability principles to four community sustainability principles helps to define success for any sustainable community. These four principles for community sustainability phrased as constraints within which community success (i.e. sustainability) must occur, read as follows. 1. Eliminate the community’s contribution to systematic increases in concentrations of substances extracted from the Earth’s crust. 2. Eliminate the community’s contribution to systematic increases in concentrations of substances produced by society. 3. Eliminate the community’s contribution to systematic physical degradation of nature. 4. Eliminate the community’s contribution to conditions that systematically undermine people’s capacity to meet their needs [1]. Framing these principles in this manner helps establish boundaries within which our minds are free to create solutions to reach the community’s visions of success. As Senge (2003) states, “understanding your constraints frees you to create” [22]. Creating a vision of success based on the sustainability principles is the second step for CED to guide the strategic phase of the five-level framework. As CED has the potential to involve many individuals, businesses and other organizations in their sustainable community planning efforts, notions of organizational learning are key to create space for dialogue that is purposeful, meaningful and ‘learningful’. Creating a shared purpose,
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meaning and vision, has the capacity to energize the organization, or network of organizations, and move it/them towards success [23]. The research by Hamstead and Quinn (2005), in defining sustainable development, reinforces this notion of creating success through ecologically sustainable values [13]. Where success is dependent upon finding a human – non-human balance [13]. Community success is context dependent, as different communities live in different ecosystems, regions and areas in the world and success can only be optimally reached through continuous dialogue and consensus (amongst community members) [13]. To build success for an organization, visions in the past have been developed by internalizing guiding principles. An example of CED principles from the British Columbia Working Group (1995) includes: • Equity • Participation • Community building • Cooperation and collaboration • Self-reliance and community control • Integration • Interdependence • Living within ecological limits • Capacity building • Diversity • Appropriate indicators [24]. Another example of how organizations may frame their values of success comes to us from Boverket (2004), where they note several prerequisite values for a good town environment. Some of these necessary values are: • Transportation as a part of life and the town • Conversation and participation • The life and soul of the town • Accessibility for everyone • The structure and energy requirements of the town • Beauty, comfort and well-being • Greenery and fresh air • The sounds and noise of the town • Road safety and security [19].
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Övertorneå is a Swedish example of their first fully integrated ecomunicipality, found in Northern Sweden on the Arctic Circle. They were facing a collapse of their social systems, agriculture and economy, but when they came together and discussed their place in the world within Sweden, incorporating sustainability principles, they were able to turn their community around [25].
3.1.3 CED Strategy Once the sustainable vision of ‘success’ has been established for CED, a technique called backcasting can be used to formulate strategy towards success. Backcasting is a strategy for sustainable development. Developed by Holmberg and Robèrt (2000), backcasting from principles is a planning methodology used in complex systems where forecasting and trends are commonly used [1]. Backcasting is envisioning success in the future then looking back, from that place of success, to current reality and finding solutions to reach that desired future. According to Dreborg, backcasting is particularly useful when: • The problem to be studied is complex; • There is a need for major change; • Dominant trends are part of the problem; • The problem to a great extent is a matter of externalities; • The scope is wide enough and the time horizon long enough to leave considerable room for deliberate choice [26]. The benefits for CED to use the ‘backcasting from principles’ technique are that it offers simplicity without reduction, provides value at different scales, offers a shared mental framework, is non-prescriptive, and forces thinking upstream in causal chains [10]. All further reference to backcasting in this thesis implies that it is done from principles of sustainability. This technique is essential when used in the ABCD methodology. The ABCD methodology was developed by the not-forprofit organization, The Natural Step (TNS), and is described below [10]. For further information about TNS and the development of their framework refer to Broman, Holmberg, and Robèrt (2000) [27].
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The ABCD methodology begins by using a funnel as a metaphor to represent declining resources and potential for living prosperously and increasing populations and waste. If nothing changes in the global system then the lines will converge and result in the collapse of the system. The opening of the funnel represents sustainability and the beginning of a restorative phase or paradigm. This metaphor helps to give context for the first step (A), which is to create a shared mental model of the system. The second step (B), establishes a baseline assessment of the current reality from a sustainability perspective. The third step (C), involves brainstorming creative solutions in line with the sustainability principles (system conditions [1]). The fourth step (D), identifies and manages priorities from the C list that: provide a return on investment; are a flexible platform from which to build on and; move in the right direction (towards sustainability) [10]. See Figure 3.1 for a visual representation.
Declining natural resources
A
C B
Increasing global population and demand for resources
D
Figure 3.1. The Natural Step ABCD Framework. For CED this would be an invaluable strategy to move organizations, operations, organization, initiatives and communities towards success. In addition to the ABCD methodology, creating and building an atmosphere where decision makers will make good decisions, towards the vision of success, is to use the ‘Golden Rule Test’. The ‘Golden Rule Test’ includes; • Participation – does it involve people sufficiently? • Transparency – is it open to reasonable scrutiny? • Responsibility – is accountability clear? • Honesty – are we being truthful? [23]. 24
Most of these considerations are concerned where citizen engagement is a part of the CED process. Finding that the best suited development for the community comes through meaningful dialogue with its inhabitants [19]. Alberta Economic Development sees that long range planning is essential for successful economic development strategies. Planning must reflect the community’s strengths, needs and expectations, as well as considering the policies and strategies put in place by local government. Steps should be undertaken to ensure planning: (1) assesses the community’s past, present and future; (2) outlines a course of action; (3) collects information; (4) sets goals; (5) sets objectives; (6) prepares a draft plan; (7) tests the plan; (8) develops action steps; (9) consolidates the plan; (10) implements, manages and reports on activities and; (11) re-evaluates the plan [28]. McCall (2003) notes that CED models should be proactive and preventative rather than reactive – communities need to be vigilant, not complacent [18]. This implies looking upstream in causal chains and complements the ABCD methodology and backcasting technique [10]. Hamstead and Quinn (2005) suggest integrating economic, social and environmental strategies that are economically diverse, self-reliant and socially just. In addition, they recommend looking to principles from ecological economics (e.g. scale, distribution, allocation, non-human and scarce resources) when formulating CED strategies [13]. Building on principles from environmental and ecological economics, Hamstead and Quinn posit the following as central to the theory and practice of Sustainable Community Development: 1. Economic diversification and self-reliance; 2. Social justice through citizen empowerment and improved access to information, education, and meaningful and effective participation; 3. Ecological sustainability through community-based stewardship and the minimization of all forms of consumption and waste; 4. Integration of economic, social and ecological strategies for and models of well-being and change [13].
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Hochachka (2001) discusses an alternative development strategy from Integral Community Development. The three main components of this strategy include, 1. Community-based, bottom-up approach; 2. Informed by environmental integrity; 3. Includes participatory processes [3]. Nozick (1992) identifies four basic ‘tools’ for communities to generate local wealth: 1. Making more with less – maximizing use of existing resources; 2. Making money go around – circulating dollars within a community; 3. Making things ourselves – import replacement; 4. Making something new – creating a new product [29]. According to Kirk and Shutte (2004), a community leadership development framework has three integral parts, leading change through dialogue, connective leadership and collective empowerment [30]. Other strategies for CED from Simon Fraser University’s Centre for Sustainable Community Development include: 1. Address the primary needs of all community members 2. Develop a strong and sustainable local market economy 3. Strengthen civil society / increase civic participation 4. Create and support opportunities for community learning 5. Strengthen natural ecosystems 6. Strengthen the social / cultural economy through recognition, validation and structural support [31]. Strategies from the substantive literature on CED have been highlighted to reinforce and complement the ABCD methodology and backcasting technique and support the formulation of strategy towards sustainability. 3.1.4 CED Actions The actions level is about taking concrete actions towards sustainability. This is where a CED organization would determine what would tangibly occur. For CED initiatives to be truly in line with sustainability principles their actions must support the following generic solutions [10,23].
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Sustainability Principle 1 – substitute minerals that are scarce in nature with ones that are more abundant. Sustainability Principle 2 – substitute persistent and unnatural compounds with ones that are normally abundant or break down easily in nature. Sustainability Principle 3 – use natural resources from well managed eco-systems, pursuing productive and efficient use, and caution further modifications to nature. Sustainability Principle 4 – check whether an action or behaviour has consequences for people, now or in the future, which restrict their opportunity to lead a fulfilling life [10,23].
•
•
•
To further inform actions and ensure time, money and energy are spent on generating results, the proposed actions should be discussed and evaluated based on the following three key questions: 1. Is the action moving us in a direction towards success? 2. Is the action built on a flexible platform? 3. Does the action produce returns (on investment) of all kinds (social, financial, natural, manufactured)? [23] This is useful for CED as it serves to engage community stakeholders in the creation of meaningful action plans. There are however, barriers or challenges likely to be encountered when taking action at the local level, i.e., legislation, regulation, or a lack of understanding about sustainability. Hamstead and Quinn (2005) discuss how economic decision making for sustainable development should not be limited to aspects from the neoclassical and environmental economics perspectives (efficient allocation of resources amongst competitors), but include aspects of ecological economics (economic scale and distribution) [13]. The four centrally defining characteristics of ecological economics include: 1. Challenges the growth paradigm of neoclassical and environmental economics; 2. Integrates economic, social and ecological objectives in all models and decision-making processes; 3. Is concerned primarily with scale, secondarily with distribution and thirdly with allocation; and
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4. Considers the balance of human and non-human access to scarce resources [13]. To further illustrate the key question of ‘returns of all kinds’, Hamstead and Quinn (2005) stress the importance of performing full cost calculations, which include social and environment factors [13]. The aforementioned three key questions can further help to prioritize and manage CED actions by indicating whether actions are more likely to produce short term gains or benefit CED over the long term. Once they have been prioritized, tools to measure and monitor CED actions (aligned with the strategy for attaining success in the system) can be discussed. According to Boverket’s (National Board of Housing, Building and Planning in Sweden) ‘Make Towns’ initiative, the following are five new ways developers should act: • Make towns instead of traffic planning and housing developments; • Dismantle the barriers between the different sectors, and allow citizens to participate; • Go in the direction of sustainable towns, from the epoch of norms towards the epoch of directions; • Work for a coherent urban policy [19]. With respect to financing for CED efforts and projects, Roseland [20] suggests: • Local Development Corporations • Community Development Corporations • Downtown Development Authorities • Credit Unions • Community Development Credit Unions • Community Loan Funds • Revolving Loan Funds • Micro-Enterprise Loan Programs • Community Land Trusts and Housing Trusts • Trust Funds • Linkage Programs • Reinvestment Policies [20].
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3.1.5 CED Tools The final level of the five-level model is to identify tools that best monitor, measure and guide an organization’s actions towards success. Tools may be qualitative or quantitative and can fall into three general categories – strategic, systems and capacity – to help measure progress towards sustainability [10]. Strategic tools ensure actions agree with strategic principles to improve the likelihood of achieving success in the system [10,23]. A tool that Boverket uses to measure suitability assessments of towns and their interactions with nature and the built environment include holistic or everyday life impact assessments (HIA) or (ELIA) [19]. Systems tools make direct measurements in the system [10,23]. The National Roundtable on the Environment and the Economy (NRTEE) has identified various environment and sustainable development indicators for Canada. Their national indicators for measuring natural capital can be considered systems tools in that they take measurements within the ecological system. These include [32]: • Air quality trend indicator • Freshwater quality indicator • Greenhouse gas emission indicator • Forest cover indicator • Extent of wetlands indicator [32]. Capacity tools help people learn about sustainability and sustainable development [10,23]. An example of this type of tool could be the Human Needs Matrix from Human Scale Development, which works to identify individual needs [9]. The nine basic human needs according to axiological categories include; affection, creativity, freedom, identity, subsistence, participation, protection, idleness, and understanding. Needs according to existential categories include; being, having, doing, and interacting [9]. Tools such as the Human Needs Matrix represent an alternative to traditional views of measurement, in that they tend to be more qualitative, rather than quantitative, in nature. However, this does not undermine their merit, especially in the context of community development where
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individual’s needs and perspectives are a vital sign of community success. When used in conjunction with more traditional measures and indicators like Gross Domestic Product (GDP), they can provide data to satisfy and support the large diversity of stakeholders found at the community level. Information falls into two categories: indicators and stories. Indicators objectify components within the system, whereas stories are used to link indicators to goals in an effort to: gain understanding of the qualitative aspects of the system; develop the concept of reality favourable to one’s goals and objectives; and influence fellow citizens and institutional actors to make choices favourable to those goals [13]. Hamstead and Quinn (2005) suggest that if we are to shift away from quantitative economic expansion as the primary measure of success, we must also incorporate measures or indices that quantify traditionally qualitative aspects of our communities and products (e.g. quality of life, well being, longevity, stability and diversity) [13]. In this regard, interdisciplinary thinking provides unique, effective and locally meaningful solutions [13].
3.2 Small Business and Sustainability
This literature review is intended to provide an overview of the small business climate in Canada and how it currently relates to sustainability issues. Wherever possible, specific examples given relate to small business in Alberta, as the Town of Canmore, in the Rocky Mountains of Alberta, provides the setting for our small business survey. 3.2.1 Small Business in the Canadian Economy In Canada, small business is defined in a variety of ways, most often according to the number of employees, but also varying from national to provincial and regional levels. According to Industry Canada, small businesses – enterprises with fewer than 100 employees – account for approximately 98% of all enterprises in Canada [33]. These enterprises are further classified as those with annual revenues of between $30,000 and $5 million [34]. The vast majority (roughly 80%) of small firms in Canada are considered to be micro-enterprises, with fewer than 5 employees. Small to medium-sized enterprises (SMEs) are defined as 30
those with fewer than 500 employees and they account for almost all (99.8%) of enterprise in Canada [33]. The impact of small business is probably most noticeable at the local level. Small firms operating in our communities provide us with goods and services, employ our family members and friends and add vibrancy to our streets, while contributing to the health of the local economy. More and more, independent firms are competing with large chain stores for our business. So called “big box” malls are popping up all over the suburbs, attracting consumers as a result of the perceived convenience over shopping in urban centres. A recent study comparing the economic impact of independent firms and their chain competitors in a Chicago suburb, found that for every $100 of consumer spending at a local firm, $68 remains in the local economy, as compared to $43 for the chain store. In addition, local firms were found to spend 28% of their revenue on labour, compared to 23% for chain stores. Independent firms also procured local goods and services at more than twice the rate of chain firms and contributed more to local charities than their national counterparts [35]. While the impacts of small business are all framed in an economic perspective here, the implications reach beyond economics into the environmental health and social sustainability of our communities. Given that small business represents the majority of private enterprise in Canada, is it justified to say that they are an important part of the Canadian economy? Due to the dynamic nature and diversity of small business, measuring its contribution to gross domestic product (GDP) presents a challenge, especially when done on the basis of firm size. However, recent attempts have indicated that small business (those with fewer than 50 employees) may account for about 24% of Canadian GDP [33]. While this contribution may not seem significant, small businesses provide one in every three jobs in Canada and account for 47% of employees in the private sector labour force. In addition, these figures do not account for the approximately one million small firms that do not maintain a payroll, but that may provide contract employment [33]. These numbers would seem to imply that small businesses represent an important part of Canadian society, both at the local and national levels.
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Tax Treatment of Small Business. Taxation is probably one of the most important instruments or tools that governments have to influence behaviour and actions in the business sector. At the federal level, the Business Income Tax Division of Finance Canada provides economic and quantitative analyses of tax policy issues ranging from the relationship between federal and provincial tax systems, to tax competitiveness, tax burden among sectors, the taxation of privately held corporations, and the cost-effectiveness of tax incentives in delivering government assistance. In addition, they conduct evaluations on the effectiveness of specific tax measures [36]. Current federal-provincial fiscal arrangements stipulate that the federal government provides a tax credit for taxable corporate income earned in a province or territory to allow the provinces to levy their own corporate income tax. Providing the provincial government applies the federal definition of corporate taxable income, the federal government will collect the tax on the province’s behalf as a provincially imposed tax. Alberta, (Ontario and Quebec), administer their own corporate income taxes (at the provincial level). A corporation is also subject to a provincial corporate income tax in each province in which it has a permanent establishment. Any Provincial payroll and capital taxes are deductible when calculating income for the federal corporate tax, but provincial corporate income taxes are not [36]. Alberta levies no provincial capital or payroll taxes, which are common in many other provinces and U.S. states. In addition, Alberta is the only Canadian province that does not have a provincial retail sales tax [37]. In 2003, Alberta reduced tax rates for small business (4%), and increased the small business taxation limit from $350,000 to $400,000 of taxable net income. In 2004, the small business tax rate was further reduced to 3%. In addition, Alberta provides both a royalty tax credit and a royalty tax deduction in the calculation of provincial tax. [37] These actions benefit enterprises in Alberta, but have been criticized – specifically the royalty tax credit – by the opposition for favouring big business and contributing to the highest levels of wealth inequality in Canada [38]. From these figures, we can conclude that on a provincial basis, Alberta has a favourable tax environment for business. However, the difference between a favourable and an unfavourable tax environment for small business may be accounted for at the municipal level.
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Property taxes are probably the most visible impact that municipal governments have on the local business community. A 1999 report by the Organization for Economic Cooperation and Development, indicated that Canada has the highest property taxes in the world and that they are heavily skewed against the business community. Property taxes in Canada are, on average, twice as much for business properties as for residential properties, when comparisons are made on properties of equal value [39]. Nowhere is this higher than in Alberta, where businesses pay $5.33 in property tax for every dollar paid by homeowners. Calgary has the distinction of having the most unfair tax system among not only Alberta cities, but among major cities across Canada [40]. The general level of taxes is not the only concern for small business. Profit insensitive taxes – taxes that are not related to business profits – are a major concern for small firms, as they impose the same burden whether a business is doing well or going through difficult times. Profit insensitive taxes include property tax (mentioned above), as well as payroll levies such as unemployment insurance, health insurance premiums, and workers’ compensation premiums. Almost two-thirds of all profit insensitive taxes are imposed at the provincial and municipal levels [41]. In 1993, the Canadian Federation for Independent Business (CFIB) used tax data from Statistics Canada to show taxes as a percentage of differentsized corporation's profits. The results showed that the smallest firms ($1 million in sales and under) pay the most – 56% of profits, compared with 55% for medium-sized companies and only 43% for large corporations. This discrepancy is attributed to high property and payroll taxes, as corporate tax rates are higher for large corporations [42]. Generally speaking, the figures presented above would seem to imply that federal, provincial and municipal tax systems do not favour small business development. With regards to Alberta, it would seem that a balance has been struck between the high level of taxation at the municipal level and the comparatively low level of taxation at the provincial level. But, what do these figures imply with respect to small business sustainability? We did not find evidence to suggest a direct correlation between the tax environment and the overall ability of small businesses to achieve environmental, social and economic sustainability.
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The tax system affects the ability of small business to achieve environmental and social sustainability insofar as it impacts upon their ability to become economically viable (assuming a business that is struggling financially will be unable to devote the necessary resources towards achieving sustainability). This is supported by Hawken (1993) who suggests that by placing levies on incomes, profits, sales, payrolls and savings, the tax system suppresses the very elements we claim to value in a healthy economy including, jobs, savings, new investment and entrepreneurial activity [43]. Finally, taxes are just one of the ways in which communities and governments interact with small business. That is to say, other factors affect the capacity of small business to achieve sustainability in the community context, such as business networks, which are discussed in the next section of this literature review. 3.2.2 Sustainable Development Issues Here, the term ‘sustainable development’ refers to actions taken to address ecological and social impacts of a business (here defined as the four sustainability principles), while remaining economically viable. In the literature, some of these actions are often referred to as ‘corporate social responsibility’ or ‘triple bottom line’. We feel that the term sustainable development is more holistic, whereas the terms ‘corporate’ and ‘social’ are often difficult to identify with, especially from a small business perspective. This section of the literature review briefly discusses strategic planning for sustainability, reporting, drivers (often termed ‘the business case’) and challenges that are associated with sustainability in the business context. Strategic Planning for Sustainability. In formulating a strategic approach for achieving the vision, the small business should ask itself the following question, “What do we have to do now in order to optimize our chances of being successful?” This strategic way of thinking is termed backcasting (explained in section 3.1.3) and is most useful when employed with a set of principles (i.e. system conditions) that define success in the system. Therefore, backcasting from the vision of success allows the small business owner to take incremental steps towards
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achieving the vision. Most business owners will be more familiar with the term ‘forecasting’. Forecasting is another planning methodology, different from backcasting, which applies previous and current trends to the future. While it is likely that business owners will use some form of both forecasting and backcasting in their planning, backcasting offers some particular advantages in the context of planning for sustainability in a complex system (in this case, a business within a community). For example, forecasting is limited by our ability to assess the past and present in detail and risks projecting undesirable trends into the future, whereas backcasting is only limited by our creativity [21]. Strategic planning in the business context has been discussed extensively in management literature. Business owners are familiar with terms and concepts such as SWOT (strengths, weaknesses, opportunities, threats), and the Deming Cycle (plan, do, check, act). When used in parallel with the visioning process and backcasting from principles of success, these commonly used concepts become more broadly applicable to business planning – moving business beyond the traditional definition of success (i.e. meeting the economic bottom line) towards a more holistic definition of success (i.e. sustainability or triple bottom line). Figure 3.2. illustrates a process for business planning that incorporates the concepts of formulating a vision bound by sustainability constraints and backcasting from that principled vision, allowing for maximum creativity and broad engagement in the formulation of strategy [21].
What is our impact? What do we want? What are we going to do?
VISION
How are we going to do it?
Today
Measures
Prioritization
Business Plan
Figure 3.2. Strategic Business Planning [23].
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Reporting. Briefly, the vast majority of sustainability reporting today is done by large corporations in response to public and shareholder demand for increased transparency and accountability. Small firms in Canada have very few, if any, environmental regulations to comply with and therefore, reporting is not seen to be necessary [44]. While there are very few small firms currently engaged in sustainability reporting, this is gradually increasing and reputable organizations like the Global Reporting Initiative have responded by developing sustainability reporting guidelines specifically tailored to small business [45].
Drivers. In 2003, Canadian Business for Social Responsibility (CBSR) conducted a study of small businesses engaged in CSR activities. The study found that CSR activities in small firms are often driven by the business owner (or a long-term employee), as a result of their personal commitment and values or by customers and business partners, as an expression of interest in sustainable operations and products. Small business owners in this study felt that they were deriving business benefits from their CSR activities, however, these benefits were not the principle reason for undertaking CSR activities in the company [46]. A UK study of competitive advantage and environmental responsibility in small businesses, found that deriving business benefits from CSR activities was still somewhat of an abstract idea amongst the majority of small businesses. Though, it also acknowledged employee and stakeholder aspirations as one of the main drivers for CSR in small firms [47]. The focus on individual attitudes within a firm is evident in much of the literature on small business and sustainable development. Petts et al (1999) found that an understanding of the relationship between attitudes and behaviour within business is essential to implementation of effective sustainable development policies. The study revealed that individual employees in small firms regarded environmental compliance as ‘the right thing to do’, but that there was a disconnect between their positive attitude and the operational climate within the firm (i.e. their capacity and feasibility to act). They found that small businesses were generally ‘vulnerably compliant’, which was evidence of a mismatch between company climate and culture. Interestingly, this study also suggests that there may be a larger role for regulation to play in moving small firms towards sustainability. The evidence suggests that small firms may prefer
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appropriately implemented regulatory policies as a means of encouraging innovation in business operations [48]. This is substantiated by Porter and Van der Linde (1995), who contend that properly designed environmental regulations can trigger innovation, thereby enhancing resource productivity, making companies more competitive, not less [49]. In “The Sustainability Advantage”, Willard (2002) articulates the business case for sustainable development. He suggests the following seven areas of potential benefit for businesses making investments in sustainable development: 1. Easier hiring of the best talent 2. Higher retention of top talent 3. Increased employee productivity 4. Reduced expenses for manufacturing 5. Reduced expenses at commercial sites 6. Increased revenue/market share 7. Reduced risk, easier financing [50]. The drivers for engaging in CSR in a small firm are accompanied by a number of challenges such as high financial and human resource costs, limited availability of environmentally and socially responsible products, lack of consumer demand, and lack of support for employee training and education around CSR [46]. These challenges are enhanced by the additional outside pressures such as legislation, regulation, insurance costs, reduced opportunities for financial backing, waste disposal charges, and pressures in the supply chain [47]. Of great importance to the discussion on CSR and small business is the point made in most of the literature – the small business sector (in any country) is highly heterogeneous and generalizations are difficult to make. Further research is needed to understand attitudes and behaviour in different types (e.g. sector, size, management styles, corporate structure) of small business and if and how this impacts their sustainable development strategies. Networks. Networks exist at all levels – international, national, provincial, regional, local and even across business and industry sectors – to support the growth and development of small firms in Canada. Some examples of networks are the Canadian Federation of Independent Business; Tourism Industry Association of Canada; Chambers of
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Commerce; Community Futures Development Corporations; Better Business Bureau; Rotary Clubs; Business Alliance for Local Living Economies (BALLE); Canadian Business for Social Responsibility (CBSR); and many others. Networks can provide the extra support necessary for small businesses to learn more about their particular industry, policies and programs that affect them, and more recently, how to address social and ecological responsibility within the business context. Beyond networking with other businesses, formal networks often provide training and mentoring opportunities; business/professional services at more affordable rates than private consultants; and offer exposure and credibility to small businesses. Here, a distinction is made between networks that support core business development (the first six networks mentioned in the list above) and those whose focus is on the sustainable development of businesses (the last two networks listed). While social and environmental concerns are increasingly talked about in all business networks, those networks whose primary focus is sustainable development are of particular relevance to this paper. The Business Alliance for Local Living Economies (BALLE) envisions “a sustainable global economy as a network of Local Living Economies, which build long-term economic empowerment and prosperity in communities through local business ownership, economic justice, cultural diversity and a healthy natural environment[51].” In Canada, BALLE British Columbia is a relatively young network with few practical examples (as yet) of small businesses impacting sustainable community development. However, the network is growing and improving the sustainable development learning curve by connecting leaders-to-leaders and business-to-business around the idea of local living economies. It builds on established examples from BALLE US and communicates successful examples of local living economies, such as that of the Emilia Romagna region in Northern Italy, widely recognized as one of the world's leading examples of a successful co-operative economy, with one third of the region's GDP derived from co-operative enterprises [52]. Canadian Business for Social Responsibility (CBSR) has been connecting business leaders on issues of sustainability since 1995, in an effort to
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“harness the power of business to create positive change.” CBSR runs a small-to-medium enterprise (SME) program that delivers tools for corporate social responsibility (CSR) engagement, including do-ityourself toolkits and peer-to-peer training sessions to help further CSR in SMEs [53]. These types of networks are critical to the sustainable development of the business sector, yet they represent the minority of business networks. Moreover, sustainable business networks at the local level are lacking. This is of particular concern in the context of sustainable community economic development and will be further discussed in Chapter five of this paper. 3.2.3 Local and Global Economies At a broad level, it has been suggested that corporate social responsibility (CSR) is unlikely to ever result in genuine sustainability unless there is a shift in our dominant social paradigm – from neoclassical economics to that of a system that embraces sustainable development and corporate social responsibility. Korhonen (2002) suggests looking to nature as a source of a new sustainability paradigm, one in which the value of natural capital is not undermined. He draws parallels between natural systems and how an economic system might function under a new sustainability paradigm. Modern economies tend to separate production from end consumption, assuming an infinite availability of fossil energy, whereas natural systems are organized around local networks of producers, consumers, decomposers and recyclers. We might consider modeling our economic system on nature, allowing for recognition of local limiting factors, yet allowing for diversity within the system [54]. This is contrary to our current trend towards an increasingly globalized society, though the two concepts – the locality principle and globalization – are not entirely incompatible. Some globalization is necessary. It is more a matter of preserving the positive attributes of a global economy while strengthening our local economies. While globalization, in some instances, has brought increased wealth and therefore an increase in critical services to developing nations, in the context of sustainability, globalization presents some difficult challenges. In multinational corporations, product flows are difficult to trace, monitor
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and control as a result of the geographic separation of production and end consumption. This also results in increases in the overall use of energy and emissions, making it difficult to establish holistic environmental management policies. This current system does more to displace environmental problems from the developed nations to the developing nations, which also makes it more difficult to assign responsibility to any one corporation. Korhonen suggests globalization as only one of several features driving the dominant social paradigm. Specialization; mass production and economic growth; competition; and linear, reductionist and mechanistic approaches to science and society are other suggested drivers that underlie everyday corporate management practices and business strategy [54]. In “The Ecology of Commerce,” Hawken (1993) recalls the local market of days past, consigned to a specific place within a town. He asserts that, while we cannot return to the era of local markets, we can regain control of larger (global) markets by enforcing payment of costs – total costs (i.e. social and environmental costs) [43]. We end this literature review here, contemplating the role of small business in community economic development and the imperative to strike a balance between local and global economies for the sake of our communities and more broadly, our future sustainable society.
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4 Results
Here we present results of the primary research conducted for this project, namely, the telephone interviews with community economic development (CED) practitioners and experts and the web-based survey of small businesses.
4.1 Community Economic Development Interviews
The results from the telephone interviews with CED practitioners and experts highlight commonalities and differences in the responses. The interview questions, sent in advance to respondents, can be found in Appendix A. As outlined in Chapter 2, the CED interview questions were structured using the five-level model for planning in complex systems (see Figure 2.2.). We continue using this model here to add clarity to our reporting of results. 4.1.1 System At the systems level, questions were asked to help respondents situate CED within a larger context and better understand their perceptions of CED. “What is CED and what does it mean to your organization?” All respondents alluded to the idea of ‘livability’ of communities, including concepts such as ‘quality of life’, or statements around making community ‘a better place to live and do business.’ Another concept that came across clearly was that of community empowerment. That is, CED is development for (emphasis added) communities. This was communicated through terms such as capacity-building and enablement. One respondent offered:
CED is a process for community to initiate solutions to problems. Communities generate their own solutions to problems – economic, housing, education, natural environment, health, arts, etc – to meet their economic, environmental and social needs.
Another respondent related this idea of ‘enablement’ directly at small business, offering:
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Economic development can act as a catalyst to motivate city hall/municipal government to affect legislative change to enable small business development.
Respondents easily made connections between various issues affecting community, especially social, environmental and of course, economic. However, they didn’t necessarily look outside of the community to consider external factors or influences that might occur beyond their jurisdictional boundaries. Interestingly, four out of six interviewees identified culture as an important aspect for CED to consider. In addition, one respondent quoted a series of principles developed by the British Columbia Working Group on Economic Development, two of which include interdependence and diversity. These concepts – culture, interdependence and diversity – are mentioned in the introduction to this paper and (among others) form the basis of our vision for CED. 4.1.2 Success At the success level, we asked the following questions in an effort to understand how CED experts and practitioners define success: “What does sustainability mean to you?” “Do you incorporate it into your vision? How?” “What would you like to see your economic development program achieve?” Definitions for sustainability varied from one interviewee to the next, though there were some common threads. One participant noted that sustainability was about interconnectedness, “everything connected to everything else.” Another felt that sustainability referred to environmental issues, but noted through the use of terms such as, “lasting,” “enduring” and “ongoing,” that it implies a certain degree of stability in the community. Not surprisingly, one participant gave the widely known Bruntland definition of sustainable development, “meeting the needs of current generations without compromising the needs of future generations [5].” A couple of variations on this definition were also given, including: “Being able to meet all basic requirements and ensure quality of life over the long-term” and “We, in a responsible way, utilize resources to build strong communities and ensure that resources are there for future generations.” One participant uniquely commented, “communication is at the core of sustainability.” Explaining this, they
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noted the importance of “shared development of a common vision with principles for sustainability.” When asked if and how sustainability is incorporated in their organizational vision, respondents tended to make vague connections between their vision and sustainability. Instead, many spoke of operationalizing sustainability through their CED activities, suggesting perhaps that sustainability occurs on-the-ground, rather than at a highlevel or as a guiding vision. Only one respondent said that sustainability was an “inherent part of everything we do.” In addition, language in response to this question was focused on environmental, rather than social aspects of sustainability. Respondents spoke of environmentally sustainable activities that demonstrate the vision. They also suggested that bylaws, ‘green policy,’ and the Canadian Environmental Assessment Act were mechanisms available to ensure the environmental responsibility of CED activities, noting that the environment drives the economy. Responses varied widely when respondents were asked to articulate the vision of success for their economic development program. One respondent saw increased employment, diversification and long-term thinking (including use of renewable energy and resources) as key success criteria for their CED program. Another focused on the development of a strong business sector and the need to provide services efficiently, suggesting that innovative development, rather than growth, is a key criterion for success. Focusing on rural communities, one respondent underscored the need to enable communities to plan for the future. Building their capacity to take ownership of decisions and increase economic (business) opportunities from within through the exploration of non-traditional business models, such as cooperatives, was seen by this respondent to encapsulate responsible and successful CED. Another respondent illustrated a vision of leading edge sustainable development by describing a real-life example in Victoria, British Columbia, where development demonstrated stewardship values in line with the community vision. The respondent suggested looking to such success stories when working through the CED process.
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4.1.3 Strategy At the strategy level, respondents were asked, “What is your strategy for reaching success (achieving your vision)?” One respondent focused on due diligence and accountability, highlighting the need for measurement of and reporting on critical outcomes in order to ensure continuous improvement towards success. This was echoed by another respondent who was looking for tools to help measure success with the mind set that measurement could help the community to analyze what is needed, what the impacts of current activities are and what alternatives exist that could help them to reach success. A third respondent also spoke of the need for accountability and measurement, discussing how regional planning documents can help to hold CED and local authorities accountable for their actions, while at the same time guiding strategy towards achieving their vision. Another respondent said that their CED program ensures success by being very focused with their resources. Programs in five target areas help to attain and focus financial resources towards achieving success. This respondent also saw the diversification of industry in the region as a strategy towards success as it has helped to build resilience in the community. This creates an insular effect whereby the community can protect itself from the economic downturns and layoffs it has experienced in the past as a result of globalization. From an academic perspective, strategy towards the vision involves education, research, and project-based work around community mobilization and CED capacity building. Finally, one respondent felt that strategy involved bringing sustainability into the planning discipline through a focus on process in an effort to create a paradigm shift. 4.1.4 Actions At the actions level of the five-level model, respondents were asked to give concrete actions they are taking in order to reach success. Three of the respondents mentioned the use of formal planning mechanisms to encourage staff and broader stakeholder engagement in the CED process, including involvement of non-traditional groups, such as art and cultural organizations. One respondent related their concrete actions directly to business through the development of business plans for sustainable applications, feasibility studies for new development opportunities and by fostering private sector partnerships. Additional concrete actions taken to
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reach success included proposal writing, funding projects, and community mobilization and consultation. When asked if and how they engage small business in the CED process, respondents all asserted that they did engage small business and though their responses as to ‘how’ varied, most related to capacity-building in one form or another – encouraging entrepreneurship, interactive training, communications tools, energy management plans, financing, guest speakers and other core business support (i.e. strategic, business and marketing plans). Small businesses were not generally engaged at a deeper level (i.e. in community visioning or planning processes). 4.1.5 Tools At the tools level, respondents were asked which, if any, tools they use to measure, monitor and manage their activities. One of the respondents mentioned specific tools that had been developed for Community Futures Development Corporations some time ago, but went on to say that while quantitative measurements are important, they rely a lot on more anecdotal forms of measurement. This respondent felt that there was a lot of knowledge to be garnered from simply talking to community members and getting a sense of their pride of place. One respondent spoke of a computer-based client monitoring system developed by the Canadian federal government, which helps to track clients as well as to monitor small business loans. Qualitative tools such as questionnaires and interviews were offered by another respondent, who saw them as useful evaluation methods for measuring the success of their activities. Another respondent raised the issue of Gross Domestic Product (GDP) as an inadequate tool for measuring community livability and suggested that in the future, they would be looking for more comprehensive measurement tools that would provide a true indication of quality of life. Finally, annual reports were seen as a way of tracking progress against objectives. However, it was felt that in order to maximize the utility of reporting, targets should first be set, against which, progress is tracked.
4.2 Small Business Survey
Fifteen questions pertaining to general business operations, understanding of sustainability, drivers and challenges for sustainability, and level of 45
engagement in community/networks, were asked of survey respondents in an effort to better understand small business perspectives on sustainability. Questions are listed in Appendix B. In all, thirty-two respondents offered the insights summarized below. Using Industry Canada’s definition of small business (firms with 100 employees or less), 100% of firms surveyed fell into the small business category, with the majority (69%) of firms having fewer than five fulltime employees. (Figure 4.1.) 6% 3% 22%
0 to 5 (69%) 6 to 25 (22%) 26 to 50 (6%)
69%
51 to 100 (3%)
Figure 4.1. Number of full-time staff employed by business. When asked how long their business had been in operation, there was an almost even distribution between firms operating between 1 to 5 years and those in operation for more than 10 years (Figure 4.2.).
0% 33% 40%
Less than 1 yr (0%)
1 to 5 yrs (40%) 5 to 10 yrs (27%)
10 yrs + (33%)
27% Figure 4.2. Number of years the business has been in operation.
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Survey respondents came from a variety of sectors and industries. The retail trade provided the highest number of respondents (17%), while the construction industry followed closely behind at 13%. An additional 17% of respondents selected ‘other’ and proceeded to self-identify as printing; youth, culture and leadership; automotive repair; land development; and product manufacturing for retail. Other respondents (in order of magnitude) came from administrative and support services (10%); arts and entertainment, health and wellness, professional, scientific and technical services, tourism and recreation (7%); educational services, finance and insurance, information and cultural industries, real estate, and wholesale trade (3%). When asked about their involvement in networks, we found a high level of engagement (80%) in some form of network – chamber of commerce, business association, tourism association, civil society organization or a network not listed in the survey, including land development organizations and professional musician associations. Twenty percent of respondents had no affiliation with a network. (Figure 4.3.)
13%
21%
20% 22% 20%
Chamber of Commerce (21%) Business Network (22%) Tourism Assoc. (20%) Civil Society Org. (4%) None (20%) Other (13%)
4%
Figure 4.3. Small business membership in networks/associations. Once general business operations were established, the survey went on to ask questions related to sustainability. Respondents were asked to define what sustainability means to their business (Figure 4.4). Given several options and the ability to check all applicable options (as well as to define sustainability for themselves), 18% of firms solely selected ‘economically viable’ to define sustainability, while the remaining 82% selected more
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than one of the given options to round out their definition of sustainability. A further breakdown of results is shown in Figure 4.4, which should be read as the proportion of the 82% of respondents who offered more than one definition. A few respondents chose to add to the definition of sustainability using the comment option. Some of these additions included: the business must be profitable; the business should provide a needed service; and our business provides products that better the lives of our customers.
Economically viable (31%)
8%
5% 31%
Environmentally responsible (17%) Contribute to a better community/society (22%) Good working environment (17%) Stakeholder Mgmt (8%)
17%
22%
17%
Other (5%)
Figure 4.4. Define sustainability for your business. After giving their definition of sustainability, businesses were asked whether or not they considered themselves to be sustainable. Overwhelmingly, 86% of businesses said ‘yes.’ Although, given that 18% of businesses defined sustainability solely in terms of economic viability, this may not be surprising.
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14%
Yes (86%)
No (14%)
86%
Figure 4.5. Are you a sustainable business? Respondents that felt their business to be sustainable were then asked to consider what drove them to be sustainable and given the opportunity to select all applicable drivers. A majority of responses (33%) stated that sustainability came about as a result of the business owner’s commitment to sustainability issues. This was closely followed by ‘customer-driven’ (25%), while equal numbers of responses indicated that sustainability came about as a result of employees or of participation in business networks (15%). Only 10% felt that community members played a role in their business becoming sustainable (Figure 4.6). One respondent offered that the pursuit of ‘quality and competence’ acted as a driver for sustainable business operations.
15%
2% 33%
Owner commitment (33%) Employees (15%) Community (10%) Customers (25%0
25% 10% 15%
Business Networks (15%) Other (2%)
Figure 4.6. Contributions to business sustainability
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The few respondents that had felt their business was unsustainable, skipped past the ‘drivers’ question and were directed to a question around obstacles to achieving business sustainability. The main obstacles in achieving sustainability were felt equally to be ‘a lack of business networks to support businesses to become sustainable;’ ‘a lack of financial resources;’ and ‘a lack of driving forces’ (such as government regulations or incentives). A lack of information about sustainability; human resource constraints; and a lack of consumer demand were not seen by respondents to be obstacles for sustainability. All respondents were asked whether or not they felt their community (including local government, economic development authority, citizens) was supportive of small businesses becoming sustainable. The majority (50%) said ‘yes’, while the remaining respondents equally gave ‘no’ or ‘I don’t know’ as answers. A couple of respondents had ‘no opinion’, while one offered the following comment:
“I believe that Canmore is supportive, but I also think that Canmore has other priorities that limit its support, specifically to small business. The town has a lot to think about such as development, infrastructure, recreation and protecting its surroundings, that an emphasis on small business has yet to tie into these other issues. It is a young town with a lot to discover about itself.”
8% 21% 50%
Yes (50%)
No (21%)
I don't know (21%) No opinion (8%)
21% Figure 4.7. Community support for small business sustainability
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Canmore, Alberta has recently embarked on a community sustainability initiative entitled, The Natural Step Towards a Sustainable Canmore. The initiative is in its beginning phase, engaging what is known as the ‘early adopters’ in the community (organizations and businesses). Respondents were asked whether or not they were aware of the initiative, as it has been promoted in the local media. Just over half (54%) of respondents were aware of the initiative, while 46% had not heard about it. Those that were aware were then asked to comment on their willingness to become involved, while those that were unaware were given a brief overview of the initiative and then asked whether or not they would be willing to get involved. Figure 4.8 illustrates the willingness of small businesses to engage in the community sustainability initiative.
Very willing (14%)
14% 31% 14%
Willing (14%) Somewhat willing (34%) Not at all (7%)
7%
Need more info (31%)
34% Figure 4.8. Willingness to engage in community sustainability initiative
Engaging in such an initiative will obviously require commitment and resources from small businesses. When asked what resources would be required in order to facilitate their engagement in the community sustainability initiative, responses indicated the following would be helpful; information packages (35%), local business networks to support sustainability (19%), human resources (15%), training workshops (13%), and finally toolkits and financial resources (9%) (Figure 4.9).
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9% 15% 35%
Info packages (35%) Training workshops (13%) Toolkits (9%) Local networks (19%) Human resources (15%)
19% 9% 13%
Financial resources (9%)
Figure 4.9. Resources to assist engagement in sustainability initiative. Finally, respondents were asked to speculate on the business benefits to be gained from becoming sustainable. Given a variety of options and the ability to choose all those found to be applicable, the most frequently given response was ‘community support’ (27%). Benefits such as competitive advantage, increased efficiency, employee satisfaction and customer loyalty all received similar scores, while significantly fewer businesses saw ‘reduced costs’ or ‘increased workplace performance’ as benefits to be gained from becoming sustainable. Two respondents opted for ‘none of the listed benefits,’ but added that they were unsure about the potential for business benefits to be derived from sustainability. One respondent, after having selected several options from the list, added (in the ‘other benefits’ section) “hopefully!” Figure 4.10 breaks down the responses made with regards to the question, “Do you see any of the following as business benefits to be gained from becoming a sustainable business?”
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Reduced costs (6%)
3% 3% 27% 15% 15% 14% 6% 17%
Competitive advantage (17%) Increased efficiency (15%) Customer loyalty (14%) Employee satisfaction (15%) Community support (27%) Workplace performance (3%) None of the above (3%)
Figure 4.10. Business benefits derived through sustainable operations. We use these results in the next chapter to speculate at a high level as to how CED and small business can cooperate to advance communities towards sustainability.
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5 Discussion
This chapter begins by using the five-level framework for planning in complex systems to organize and discuss how community economic development can move strategically towards sustainability. Key results from the community economic development (CED) telephone interviews are brought into the discussion to substantiate the points made. Following this, we use relevant findings from the small business survey to expand on the role of small business in the proposed strategic approach to CED. The chapter ends with a brief discussion on the interplay between the two – strategic CED and the role of small business – and suggests opportunities for cooperation in an effort to create sustainable communities.
5.1 Strategic Community Economic Development
Our literature review and telephone interviews serve as a foundation for our understanding of the current reality for CED. To this we add – systems thinking, a scientific and principled definition of sustainability, a methodology for engaging individuals in the development of strategy, elements to consider when deciding on actions and developing monitoring plans; and a structure to help frame our thinking around CED (the five level model for planning in complex systems) – in an effort to answer the question, “When CED is strategic towards sustainability what might it look like?” 5.1.1 System We suggest that a CED organization, like any organization, can be understood according to its purpose, culture and institutional structure [23]. The purpose of any CED organization is to stimulate the well being of the entire community through self-driven initiatives – strengthening their economy through the creation and support of local business. The culture of CED depends on variables including, natural resources and surroundings, language, history, culture and of course the perspectives of the people living within the community. The institutional structure of CED (and in general of CED organizations) is small and non-hierarchical and heavily connected to external community networks. It takes into account legislation, regulations, and the nature of organization. For CED
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this can include, public sector agencies, non-governmental organizations, institutions, and municipalities. Communities need to understand the system they are operating in while keeping in mind they are connected to a bigger whole. Some of the key aspects communities should be aware of include: globalization, and how it impacts upon the local economy; natural, social and manufactured capital; human (individual or community) needs; and other principles of social sustainability such as self-organization, diversity and interdependence. Respondents from the CED interviews revealed that they made connections between various local issues affecting community, however they did not necessarily consider external factors or influences that may occur beyond their local boundaries (i.e. the larger system). As noted in the literature review, this can lead to reductionist thinking, which may diminish their capacity to be visionary in their CED initiatives by creating unnecessary constraints, thereby limiting creativity. An example of this includes how a respondent noted that, “CED is a process for the community to initiate solutions to problems.” Thus creating reactive solutions to problems rather than creating proactive systems perspective solutions. Interviews also raised the concept of community culture and the important role that it plays in creating vibrant communities. Culture is a key component of the community system and in parallel with the aforementioned principles of social sustainability, constitutes the critical elements that must be understood within the system. 5.1.2 Success The literature review (Chapter 3) describes success in the system as a vision bound by community sustainability principles (i.e. the four system conditions). Incorporating these sustainability principles into the vision ensures a scientific, non-overlapping and principled definition of sustainability, which can then be tailored further by the community to create a vision that fully encapsulates the local needs and culture. Furthermore, a shared vision of success invites all members of the community to engage in something meaningful and can help to focus energy and resources as individuals move towards their common goal.
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From our interview results and review of relevant literature we learned that CED lacks a principled definition of sustainability. For example, respondents defined sustainability using such varied terms as interconnectedness, enduring, community stability, improving quality of life over the long term, and communication. It should also be noted that most respondents had only vaguely incorporated sustainability into their vision and generally limited their definition of sustainability to include only environmental issues. Sustainability was not generally seen as something to be incorporated into the vision, but rather as something to be operationalized through on-the-ground action. However, responses at this level were not without merit. The importance of building community capacity was identified across the board (in various forms) as key success criterion for CED programs. 5.1.3 Strategy As mentioned in the previous section, CED success within a sustainable society is bound by the sustainability principles. At the strategy level, the backcasting technique (described in Chapter 3 as part of the ABCD methodology) is used in parallel with the sustainability principles to help an organization realize how it can move from its current reality to its desired future in a sustainable society. The ABCD methodology may be especially useful to CED, as it engages individuals and groups in the brainstorming and prioritization of creative solutions. It can be seen as much as a strategy for achieving success as a tool for helping people to engage in and learn about sustainability and systems thinking. Results from the CED interviews show that most practitioners relate strategy to accountability and the measurement of critical outcomes. Ensuring transparency and accountability through measurement of outcomes was seen as a strategy in and of itself. Respondents felt that providing decision-makers with baseline information increased their ability to make good, informed decisions. Accountability is an extremely important concept in the CED realm, not only in the initial stages of planning when citizen engagement should be a key input in the process, but throughout the process to ensure continuous improvement of processes and actions. While the ABCD methodology is useful in ensuring transparency through engagement in the development of solutions and actions, it does not expressly speak to the need for
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measurement of or accountability for critical outcomes. To increase accountability at the strategy level, we suggest using the Golden Rule test (introduced in Chapter 3), which questions decisions-makers on participation, transparency, responsibility and honesty. With respect to the measurement of critical outcomes, we direct the reader’s attention to the discussion in Section 5.1.5. 5.1.4 Actions The most important thing at the actions level is to ensure that any actions taken align with the vision for success. In order to ensure that actions are in alignment with the vision, they must answer yes to the following three key questions (initially outlined in Chapter 3): 1. Is the measure a step towards our vision? 2. Does the measure provide a platform for further development towards our vision? 3. Does the measure provide us with adequate returns of all kinds (financial, social, natural)? The first question requires the organization to consider their vision in the broader context of the community vision. The second question is concerned with the flexibility of the proposed measure – does it allow for further development or lead towards a dead end? The third question may be interpreted in a variety of ways, most often as a financial return on investment. However, the organization may find it useful to consider other forms of return on investment, including (increased social and natural capital). We suggest that for CED to be strategic, it should consider asking additional questions to assist in the prioritization of actions. For example, it would be important for CED to question the capacity of a given action to satisfy one or more of the human (community) needs. Or to consider how they may be enabling SB and encouraging new business development that compliments their unique cultural or community identity. CED interviewees did not relate the actions taken by their organization directly back to their strategy, nor for that matter, to their vision. However, actions taken were supportive of small business and tended to fall under capacity-building, though related more to core business support
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(such as feasibility studies and marketing plans), than to meaningful engagement of small business in CED processes. As discovered in the results due to the nature of most CED organizations they have limited resources and levels of influence in their community, and felt their capacity to conduct grand community vision sessions was restricted. However, in order for the accurate development of a community vision all members and individuals should contribute to and participate in the community visioning sessions. In our strategic approach to CED, we cannot be prescriptive at the actions level. Actions are context specific and must be examined on a case-bycase basis. What we propose here is simply to ensure actions align with the vision of success (which falls into sustainability constraints); build flexible platforms for subsequent steps; ensure a reasonable return on investment; and are considered in light of their capacity to satisfy human needs. As the actions are developed and viewed through the lens of sustainability and in their capacity to satisfy human needs – short, medium and long-term goals can be established. Ensuring attainable short-term goals are attainable will further mobilize and energize the organization to reach their medium and long-term goals, enabling them to have continuous success throughout their initiatives and development. 5.1.5 Tools Tools fall into three principal categories: strategic tools; systems tools and capacity tools. In discussing tools, we take a whole systems perspective and consider tools that help both at an institutional (CED organization) level, as well as those that can be used at a broader level to help engage small business (and community) in strategic CED. We also reiterate the importance of measuring outcomes through quantitative as well as qualitative means. Our telephone interviews revealed that CED practitioners rely on more anecdotal forms of measurement. They tended to identify qualitative rather than quantitative measures, such as questionnaires and interviews and spoke of tools used to track and communicate information, such as client monitoring systems and annual reports. Without going into detail on the plethora of tools that exist to help measure and track progress towards success and based on our results, we propose a few key tools
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(within the three aforementioned categories) for strategic CED to consider. At the organizational level, examples of strategic tools include employee questionnaires, sustainability or corporate social responsibility reports, and employee dialogue around indicators that help to evaluate progress towards the vision. Strategic tools that could apply at the community level to ensure small business engagement in sustainability, include but are not limited to measures such as green development bonuses, green procurement programs, employer transit passes, tradeable emissions credits, and policies that may help to influence small business, thus moving the community closer to its vision. At a more qualitative level, CED practitioners can engage small business through strategic tools in much the same way they engage employees in tracking progress towards the vision – surveys, questionnaires, dialogues, and everyday life impact assessments (ELIA) help to gather feedback from community members, providing a qualitative assessment of strategic progress. Systems tools take direct measurements on the state of the system and require, for example, that the CED organization consider its impacts within the system. This might include examination of their procurement policy and measurement of subsequent health or environmental impacts that occur as a result of materials used in the supply chain. It might also include more internalized measurements such as energy/water consumption in the office. These tools address questions that have trickle down effects through the system. Did employee performance improve as a result of improved indoor air quality and natural light in the building? Have our energy efficiency measures resulted in decreased costs? These tools can help position the CED organization as a leader in community sustainability. At a broader level, energy pricing structures (e.g. time of day pricing), gas taxes, and indicators for air and water quality or greenhouse gas emissions, all help to encourage sustainable behaviour within the system. Capacity tools are almost always qualitative measures of progress towards the sustainable vision. Examples for the CED organization include, training workshops, information packages, communications campaigns, toolkits, and just about anything else that helps people to learn and engage in sustainability. Games that encourage systems thinking and engage people in the co-creation of meaningful ideas are particularly useful at the
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institutional level when formulating visions or creative measures to move towards sustainability. These types of tools can also be very useful at the community level for engaging local business owners in community sustainability. Local business networks for sustainability, community dialogues, the human needs matrix, and corporate social responsibility or sustainability programs are all examples of capacity tools. Once again, a strategic approach to CED cannot prescribe tools for monitoring progress towards the vision. Tools and indicators used will depend on what occurs at all other levels (actions, strategy, success, system). Most importantly though, is the need for CED practitioners to consider available resources when developing monitoring plans. With limited human and financial resources, it will be important to begin with a suite of tools or indicators that are easily measurable. In addition, CED should make use of available community resources, such as non-profit organizations and educational institutions, in order to ensure the most comprehensive and engaging monitoring plan possible.
5.2 The Role of Small Business
Small business greatly impacts the economic well-being and social fabric in our communities and has the potential to positively influence ecological health through responsible use of natural resources. For this reason, small businesses are intimately related to community economic development (CED) issues and as such, should play a prominent role in CED processes within a sustainable community. Below, we build on the findings from our small business survey to suggest a role for small business within the strategic CED approach outlined in the previous section. We come at this not just from the point of view of what small business can do, but also from the perspective of how they can be supported to make significant contributions to strategic CED and community sustainability. Success for small business within a sustainable society is bound by the constraints of the four sustainability principles. Therefore, success for small business is defined according to the business owner’s values or goals within these constraints. As we are interested in the role of small business in the creation of sustainable communities, we take this a step further. Success for small business within a community requires that the business vision be supportive of the community vision to ensure that both
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are moving strategically towards sustainability. For this to happen, small business must be engaged in the strategic CED process early on, particularly at the ‘community visioning’ stage, where citizens (including small business) articulate how the community will look in the future based on their values, needs and unique sense of local culture. Community members should look to small business – as employers and providers of essential goods and services they have the potential to satisfy the needs of community members. In strategic CED, human needs are considered when developing a vision of success for the community in an effort to ensure social sustainability. As such, we see a role for small business to play, both in the shared development of a community vision, as well as in the consideration of how human needs are satisfied within a community setting. We look to Max-Neef’s nine categories of human needs (introduced in the first chapter) and consider how small businesses within the community can relate to and deliver on the satisfaction of basic human needs. Table 1.1 illustrates some potential ways in which small business can address human needs. Table 1.1. Potential ways for small business to satisfy human needs.
NEED Affection Creativity Freedom Identity Subsistence POTENTIAL CONTRIBUTION BY SMALL BUSINESS Respect for diverse values; interdependence and selforganization (cooperatives); applying the golden rule test Expression of ideas = innovation in operations and delivery of goods and services To express individual and community culture/values through business operations Helping to define small business role or purpose in community; reflecting local culture Provides essential goods and services to the community; employment opportunities; use of local supply chains and resources Participates in business networks; co-creation of vision; contribution to social and manufactured capital in community Helps create community resilience through diversity of businesses (goods and services); tax laws; insurance; job retention/creation; incentives Work/life balance for employees; leisure opportunities for community members through local business Community needs; place within the larger system (community – global); learning/training opportunities; empathy
Participation Protection
Idleness Understanding
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This is a high level overview of potential ways in which small business can satisfy human needs. We are confident that if small businesses were to do this exercise on their own or even in groups within the community, they could come up with numerous detailed and varied ways in which they could assist in enabling human needs to be met and thereby support community development. Another issue that featured prominently in our small business survey findings was that of community support for small businesses to move towards sustainability. Small businesses saw community support as the principal driver or business case for becoming sustainable. Additionally, just over half of small businesses in our survey felt their community was supportive of small businesses becoming sustainable. However, when asked to identify obstacles on the path towards sustainability, a lack of networks to support businesses in becoming sustainable was the most commonly identified barrier along with a lack of government or other incentives. From this evidence, we highlight the role of community in supporting small businesses to move towards sustainability. This could happen in a variety of ways ranging from consumer demand, to the development of policies or incentives to encourage sustainable business behaviour, to the creation of community-based business networks to support learning and engagement throughout the transition. Our literature review of small business identified a number of existing business networks at the community, national and sectoral levels and pointed to the fact that very few existing networks provide support on sustainability issues. With this in mind, there may be a role for business leaders to play in articulating an unmet need within these networks: education and training for sustainability. Additionally, business leaders in sustainability need to communicate and share their success stories and best practices in an effort to raise awareness around sustainability in their respective fields or communities. An additional challenge widely identified in our small business survey was the limited resources (human, financial and other) available to assist small businesses in their transition to sustainable operations. This issue is very closely related to that of community support and business networks, but it deserves to be highlighted as a separate issue because it may require support that cannot be gained through participation in networks alone. Our belief is that a much more collaborative approach between small
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businesses and CED practitioners must be taken within the community to ensure efficient assessment, allocation and distribution of community resources. At a more superficial, but still very important level, community-wide learning and awareness around sustainable development must take place. Small businesses in our survey expressed a desire for information packages related to sustainability and the majority expressed a medium to high degree of willingness to engage in sustainable development. For those that did not express a desire to engage in sustainable development, it was mostly because they wanted more information on the subject, not because they were closed to the idea. To reiterate, small businesses must be engaged in the community visioning process and especially in the discussion around human needs, as they have great potential to satisfy needs within the community. Small businesses must be supported in moving towards sustainability through the creation of local business networks for sustainability. Additionally, small businesses themselves should advocate within existing networks for education and training that is currently lacking (i.e. for sustainability). Finally, small businesses often require additional support or resources to engage in activities currently seen to be outside of the business realm. Communities and CED practitioners play an important role in raising awareness about sustainability within the local business community and may even have the capacity to alleviate resource pressures through collaborative action with community stakeholders.
5.3 Cooperation for Sustainability
Reflecting on strategic CED and the role of small business outlined in the previous two sections, here we highlight three potential opportunities for cooperation that have become apparent through our research: shared development of a community vision; local business networks for sustainability; and community capacity-building through dialogue. 5.3.1 Shared Development of a Community Vision Our interviews highlighted the fact that CED lacks a vision with a whole systems view and a principled definition of success. That is, CED visions are not anchored in a broader vision of community success and success is never defined in terms of scientifically grounded principles of sustainability. Lacking a vision and a definition of sustainability that can 63
be operationalized makes it very difficult for communities to move towards sustainability. It is virtually impossible to develop a strategy or take action towards a vision if you have no idea what your desired future looks like. Additionally, interviewees discussed the importance of culture and quality of life, but this was never related to the idea of enabling human needs to be met within the community. While practitioners understand that CED is intended to be development driven by community, there was little evidence to suggest that community members were being consulted on whether development was in line with their values, or for that matter, actually meeting human needs. Through our research into small business and sustainability, we discovered great potential for small business to contribute to the satisfaction of human needs through employment opportunities and the provision of essential goods and services (among other contributions). In Table 1.1., we suggested potential ways in which small business might accomplish this and suggested that similar exercises done at the small business or even the community level, would produce fruitful results. However, the ability for small businesses to address human needs in the community hinges greatly on their capacity to engage in the discussion. It is the responsibility of CED organizations and community planners to extend invitations to small business to participate in the co-creation of community visions reflective of local culture and human needs within the community. 5.3.2 Local Business Networks for Sustainability In our interviews of CED practitioners we tried to learn how they engage small business in their CED processes. What we found was that small businesses were engaged at a superficial level, though still in a way that is supportive of their work. CED organizations tended to provide business support services to small businesses (e.g. loans, professional expertise in creating business plans, marketing plans, etc.), rather than engaging them at a more meaningful level around issues of community sustainability (e.g. community visioning and planning). At the same time, our survey of small businesses found that ‘community support’ was the number one driver (or business case) for small business to become sustainable. When given a list of potential business benefits to be gained from becoming sustainable and asked to select all applicable options, the majority of respondents (27%) selected ‘community support,’ implying that buy-in
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from the community is the principal reason why they would choose to become sustainable. Additionally, there was an obvious willingness on the part of small business to engage in community sustainability and an assertion that the lack of networks (to support businesses becoming sustainable) acts as a major barrier in the change process. We see synergies in these results that suggest opportunities for collaboration in developing local networks for sustainability. Our literature review of small business highlighted a multitude of networks already in existence, however they were either (a) not local or, (b) not focused on sustainability. There may be benefits (i.e. economic efficiency) to re-orienting existing local business networks to include education and support for sustainability. However, where these networks do not exist, we suggest that establishing new local networks may be of great benefit to engage small business in moving towards sustainability. By situating small business within their community context (where the owner not only works, but often lives and raises a family) and by connecting them to other businesses (experiencing the same challenges), these local business networks for sustainability are set apart from existing networks, which may make all the difference to community sustainability.
5.3.3 Community Capacity-Building through Dialogue A widely identified challenge in both our CED interviews and our small business survey was the limited availability of resources (human, financial and other) to assist in moving strategically towards sustainability. CED organizations and small businesses often share the common trait of having few staff and strict budgets. As such, resources are strained and therefore limited to core organizational operations, of which sustainable development is often not seen to be one. From this, we observe an opportunity for cooperation around community capacitybuilding. This issue is very closely related to that of community support and local business networks, but is highlighted here because it implies deeper and more broadly engaging activities that go well beyond those covered through business networking. Our belief is that a much more collaborative approach between small business, CED practitioners and other community stakeholders must be taken to help alleviate resource constraints and ensure efficient assessment, allocation and distribution of shared community resources. Building capacity for sustainable
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development through community dialogue around common resources is a way of: • • • Allowing for diversity by providing a sense of security and stability around community resources; Fostering self-organization by ensuring efficient and just allocation of resources amongst community actors; Encouraging interdependence by acknowledging that all actors within the community are reliant upon certain shared resources.
In doing this, communities invite all stakeholders to engage in meaningful discussion around the desired future for their community and how it can be achieved (in very practical terms) through collaborative community action and continual stakeholder engagement. Dialogue of this nature helps individuals to see their place within the broader community system and recognize the interconnectedness of their actions. While there are no doubt numerous other opportunities for collaboration between CED and small business in communities across Canada, we feel the three opportunities highlighted above represent the most strategic possibilities available for CED and small business revealed through our research. By collaborating on the development of a shared community vision; supporting local businesses to participate in community sustainability initiatives; and building capacity through community dialogue on common resources, we feel that communities stand the best chance of not only surviving the challenges that we’ve all come to associate with our highly globalized world, but actually catalyzing a global mind shift that will gradually redefine our future, one community at a time.
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6 Conclusion
The research presented in this paper builds on existing work related to the sustainable development of our communities. Planning for sustainability is imperative as we gradually move deeper into the global resource funnel that was spoken of early on in this research paper. We feel this is best done at the community level because it is at this scale that sustainability issues are most relevant to the individual. However, we think this is known and so have chosen to focus our research on building a case for taking a strategic and cooperative approach to the sustainable development of our communities, focusing on two very important elements in the community system – community economic development (CED) and small business. As CED is a complex topic for the average community facing the deconstruction of its historical makeup, we have used the five-level model for planning in complex systems to present information in a way that takes all elements of the system into consideration: from understanding the whole system; to defining success in the system; creating a strategy to reach success; developing concrete actions to further the strategy; and using tools to monitor and evaluate progress towards sustainability. In this way, a strategic approach to CED was developed and reinforced using perspectives gained through interviews with CED practitioners. A role for small business within our strategic approach to CED was informed through literature review and a survey of 32 small businesses. We found important roles for small business to play related to: their capacity to satisfy human needs within the community; the need for local small business networks for sustainability; and participation in community-wide learning and capacity-building towards sustainability. After addressing our primary research questions, we reflected on opportunities for CED and small business to cooperate in an effort to lead communities towards sustainability. We found that, (1) collaborating on the development of a shared community vision; (2) supporting local businesses to participate in community sustainability initiatives and; (3) building capacity through community dialogue on common resources, revealed themselves as opportunities through our work. However, we do not intend for these opportunities to be taken as the only opportunities for collaboration between CED and small business. They represent the most obvious and strategic opportunities revealed over the course of our
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research. Further action research with communities on the subject of strategic sustainable development is encouraged, as it will certainly reveal additional challenges and opportunities encountered at a very practical level, thereby furthering this research. It is our intention that community leaders, including CED practitioners and small business owners, will read this research paper and garner new insight to inform their strategies towards sustainability.
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Appendix A
CED Interview Questions
This interview constitutes part of a Masters thesis project for the program, Strategic Leadership Towards Sustainability at the Blekinge Institute of Technology in Karlskrona, Sweden. Our research explores the interaction between community economic development and small business, as it relates to sustainability. The purpose of this interview is to gain a better understanding of community economic development in Canada. The findings of our research will be published at the Blekinge Institute of Technology. Please review these questions prior to your telephone interview. We anticipate the interview to last approximately one hour. Thank you for your participation. research. Karl A. Fulson [email protected] Questions: 1. a) What is Community Economic Development (CED)? b) What does CED mean to your organization? 2. a) What does sustainability mean to you? b) Do you incorporate it into your vision? How? c) What would you like to see your economic development program achieve? 3. What is your strategy for reaching success (achieving your vision)? 4. a) What concrete actions are you taking to reach success? b) Do you engage small business in your activities and how? 5. a) Which tools do you use to measure / monitor / manage your activities? b) What resources do you offer to support small business? Your input is invaluable to our Amy Seabrooke [email protected]
Appendix B
Small Business Survey Questions
1. How many full-time staff does your business employ? 0-5 6-25 26-100 100 or more 2. How long has your business been in operation? Less than 1 year 1-5 years 6-10 years More than 10 years 3. What is the main focus of your business operations? Accommodation and Food Services Administrative and Support Agriculture, Forestry Arts & Entertainment Construction Educational Services Finance and Insurance Health & Wellness, Social Assistance Information and Cultural Industries Management of Companies and Enterprises Manufacturing Mining and Oil and Gas Extraction Professional, Scientific and Technical Services Real Estate and Rental and Leasing Retail Trade Tourism and Recreation Transportation and Warehousing Utilities Waste Management and Remediation Services Wholesale Trade Other (please specify)
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4. Do you belong to any of the following? (Check all that apply) Chamber of commerce Business association/network Tourism association Civil society organization (i.e. NGO)? No 5. What does ‘sustainability’ mean to your business? (Check all that apply) Economically viable Environmentally responsible Contributing to the betterment of the community/society Providing a good working environment for your employees Stakeholder management Other (please list) 6. Would you consider your business to be ‘sustainable’? Yes (if yes, go to question 7) No (if no, skip to question 8) 7. What contributed to your business becoming sustainable? (Check all that apply) Owner commitment/values Employee-driven Community-driven Customer-driven Business networks Other (please list) 8. What obstacles stand in the way of your business becoming sustainable? (Check all that apply) Information/education about sustainability Lack of networks to support small businesses to become sustainable Financial resources Human resources Lack of consumer/customer demand to justify moving towards sustainability
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Lack of driving forces (i.e. government policies/incentives, competitive advantage) Other (please list) 9. In your opinion, is Canmore (local government, economic development authority, citizens) supportive of small businesses moving towards sustainability? Yes No I don’t know No opinion 10. Are you aware of the recently embarked upon sustainability initiative in Canmore, led by the Biosphere Institute of the Bow Valley? Yes (if yes, skip to question 11) No (if no, skip to question 12) 11. Given what you know about Canmore’s sustainability initiative, how willing is your business to become involved? Very willing Willing Somewhat willing Not at all Would need more information 12. The Town of Canmore, in partnership with organizations in the community, has just launched “The Natural Step Towards a Sustainable Canmore.” This endeavour is an ambitious education, visioning and planning process to help Canmore move strategically towards sustainability. “The Natural Step Towards a Sustainable Canmore” will involve a series of education and training workshops, leading to a process whereby participants create a common vision for a sustainable Canmore and a plan to move the community strategically towards its vision. Given what you now know about Canmore’s sustainability initiative, how willing is your business to become involved? Very willing Willing Somewhat willing
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Not at all Would need more information 13. What resources would be needed in order for your business to engage in this initiative? (Check all that apply) Information packages Training workshops/toolkits Local business networks to support sustainability Human/financial resources Other (please list) 14. Do you see any of the following as benefits to be gained from becoming a sustainable company? (Check all that apply) Reduced costs Competitive advantage Increased efficiency Customer loyalty Employee satisfaction Community support Improved workplace performance None of the listed benefits Other benefits (please list) 15. Would you be willing to be contacted further about this survey or Canmore’s Community Sustainability Initiative? Yes (please provide contact information below) No
End of survey
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