Economic adjustment in the knowledge economy relies upon innovative and entrepreneurial activity to create value within firms, to create employment for
individuals, and to create resilience in regional economies. The pressures of globalization and the rapid diffusion of economic knowledge demand that organizations and
institutions adapt new patterns of economic activity. This paper has examined how this transition is taking shape in Rhode Island.
The method used here for investigating this process has been to observe the effectiveness of institutional entrepreneurship in leading these changes. Taking this institutional perspective requires background on how and why Rhode Island’s economic environment has evolved as it has. An historical look at the state’s economic decline and the renaissance of Providence provides the context of economic and institutional change that is currently emerging in the region. Rhode Island’s adjustment to the knowledge economy is taking place through two over-arching initiatives that aim at strengthening innovation and entrepreneurship in the state. These initiatives are being led in part by the regional innovation system and the enterprise development system. In order to detail the effectiveness of institutional entrepreneurship in the process of economic adjustment, this paper has focused on the stories of two state-level organization, the Business Innovation Factory and Every Company Counts, which have played central roles instigating
institutional change.
The aim of this research is to demonstrate how the effectiveness of institutional entrepreneurship – as a means of enacting economic adjustment – is influenced by the social structure of regional alliances. In order to answer this question the effectiveness of institutional entrepreneurship is measured by three conditions. The selection of these three measures is based upon the merits of the agency-based perspective of economic development. First, the balance of power in the process of institutional change is selected because balanced power combats corruption and protects individual freedoms. Second, participation is selected as a measure of effectiveness because greater participation reflects lower barriers to the universal human capacity for agency. Third, shared values
are used as a measure because they represent the freedom to participate in public dialogue as well as the capacity for individuals and organizations to empathize with others.
Each of these measures allows for greater integration within a changing economy. Economic integration is necessary because it promotes change that has a net social benefit. Net social benefits are achieved when a wider range of resources can be recycled into more productive forms of economic activity. Without integration in the process of economic change innovation and entrepreneurship can become destructive forces, and they may lose legitimacy within the local culture.
Furthermore, a variety of concepts related to the organization of social relations are used to describe ways that economic activity may become integrated across otherwise insulated industries and across organizational boundaries. Trust, identity maintenance, social mobilization, and institutional change are all factors that influence and reveal the structure of social relations.
In both cases of the regional innovation system and the enterprise development system the effectiveness of institutional entrepreneurship has been mixed. In the case of supporting innovation the strong identities of “innovators” and the tightly allied
mobilization of social networks has led to deeply shared values among a select group, but weak participation in terms of volume, and an uneven balance of power. Innovative activity seems to be taking hold in elite circles, though there are substantial challenges in terms of integrating innovation throughout the regional economy. On the other hand, the enterprise development system has a wide base of participation, but institutional
entrepreneurship in the field has been challenged by a lack of trust relations and an inability to mobilize support organizations around common interests.
Innovation and entrepreneurship are intimately related in the knowledge economy. As Rhode Island moves forward with initiatives to support innovation and entrepreneurship, it may become increasingly important for the efforts of the innovation system and the enterprise development system to become more closely aligned. In many ways the weaknesses of one system are complemented by the strengths of the other.
If the ECC and other support organizations that follow the client-focused
approach do not have the influence to get the transaction-focused support organizations to enter into conversations about integrating the enterprise development system, then
perhaps organizations involved with the innovation initiative may hold the power to do so. By acting as a third parties that have a shared interest the development of
entrepreneurial capital in the region, innovation organizations such of BIF may be able to facilitate trust-building conversations within the enterprise development system.
Conversely, collaboration between the innovation system and the enterprise development system may assist in diffusing innovation throughout the various segments of the region’s business environment.
Ultimately, the goal of institutional entrepreneurship is to lower the barriers to organizational collaboration and integration of regional economic activity. Performing the role of an institutional entrepreneur may require a perspective this is unattached to the success of any single organization in order to bridge alliances. Institutional
entrepreneurship focuses on creating non-threatening environments where participants can form synergistic relationships even where they are least expected. In this way the institutional entrepreneur harnesses the universal human characteristic of agency by reducing the barriers to its expression.
The Rhode Island economy has witnessed the extremes of economic growth and decline over a 200 year period, and now it witnesses a critical opportunity for growth once again. The degree to which the region will be able to seize this opportunity for growth in the knowledge economy relies heavily on the abilities of its institutional entrepreneurs to create environments for social learning where the productivity of knowledge can be increased.
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List of Interviews
1. Robert Leaver, New Commons / Entrepreneurship Forum of New England - 6/13/05 Justin Aina, Urban Ventures - 6/14/05
2. Thorne Sparkman, Slater Funds - 6/14/05 3. Adriana Dawson, RISBDC - 6/15/05
4. Garrett Hunter, Business Development Company of Rhode Island – 6/16/05 5. Saul Kaplan, Rhode Island Economic Development Corporation -6/17/05 6. Sheila Hoogeboom, Rhode Island School of Design / Center for Design and
Business – 6/17/05
7. Louis Soares, Every Company Counts / RIEDC – 6/23/05
8. Ann Marie Marshall, RI Micro-enterprise Association / Youth Entrepreneurship Program – 6/27/05
9. Deborah Schimberg, Social Venture Partners - 6/27/05
10. Kip Bergstrom, Rhode Island Economic Policy Council - 6/27/05 11. Janet Raymond, Greater Providence Chamber of Commerce -6/29/05
12. Larry Bennett, The Larry Friedman International Center for Entrepreneurship / Johnson & Wales University - 6/29/05
13. Charles Kingdon, Brown Technology Partnership & Brown Forum for Enterprise 6/30/05
14. Donald Eversley, Providence Economic Development Partnership - 7/8/05 15. John Cronin, Rhode Island Manufacturing Extension Service - 7/8/05 16. Katherine O'Dea, Tech Collective - 7/11/05
17. Melissa Withers, Rhode Island Economic Development Corporation / Business Innovation Factory – 3/30/06