In search of a happy medium: How the structure of interorganizational networks influence community economic development strategies

Abstract

Routes to economic development attract considerable attention among social scientists, policy makers, and community activists. Increasingly, social scientists examine various attributes of communities, their members, and their natural surroundings that facilitate and inhibit economic development. However, few empirical analyses exist that analyze the impact of a community's network structure on different forms of economic development such as on industrial recruitment and self-development. Using data collected from six communities in Washington State, the impact of a community's interorganizational network structure on industrial recruitment and self-development is examined. Results suggest that different types of network structures are better suited for different economic development strategies. A certain level of cohesiveness among community organizations and institutions are favorable for implementing self-development projects. However for industrial recruitment, networks that are bridging facilitate more types of economic development. While bonding and bridging network structures appear to be at odds with one another, it is possible for communities to increase both forms of economic development by maintaining a certain level of cohesiveness among subcomponents and increasing the number of organizations that serve as cut-points connecting non-redundant sources of information. These findings illustrate the need for communities and local activists to consider a community's network structure when deciding on an economic development strategy.

Introduction

In recent decades, many rural communities have witnessed an employment decline in traditional resource-based sectors, such as agriculture, fishing, and forestry due to technological advances, environmental awareness, and a deteriorating resource base. This decline in traditional rural sectors often poses a threat to the survival of rural communities as homes and places of work as people lose their jobs in these traditionally high paying sectors and are forced to live and work elsewhere (Brown, 1995, Sharp et al., 2002). In response, many communities see a need for change in their economic base and have initiated economic development strategies to try to recruit, create, keep, and boost local economic endeavors. Recently, social scientists have taken an interest in researching which characteristics of a local community facilitate effective economic development (e.g. Crowe, 2006, Flora et al., 1997, Putnam, 1993, Shaffer and Summers, 1989, Sharp et al., 2002). In particular the concept of social capital, “the connection among individuals—social networks and the norms of reciprocity and trustworthiness that arise from them” (Putnam, 2000, p. 19), has received much attention as a causal mechanism that can facilitate economic development (e.g. Crowe, 2006, Flora et al., 2004, Sharp et al., 2002). The recent popularity of bonding and bridging social capital has further stimulated an interest in the potential for network structures to facilitate effective community-level economic development. An argument exists in the literature as to whether tightly knit, cohesive networks (e.g., Putnam, 1993) or loose, expansive networks (e.g., Woolcock and Narayan, 2000) are more conducive for implementing local economic development. Drawing on economic development research (Flora et al., 2004, Sharp and Flora, 1999, Sharp et al., 2002, Summers, 1986) community network analysis (Burt, 1992, Burt, 2002, Scott, 2004), and social capital literature (e.g. Portes, 1998, Putnam, 1993), I propose that instead of being in direct conflict with one another, different types of network structures are better suited for different economic development strategies. To evaluate this proposition, I analyze associational membership data and recent economic development activities provided by key informants in six rural communities in Washington State. I conclude by exploring implications the findings have for studying community-level economic development.