Awakening Entrepreneurial Spirit In The Humber Valley

The Town of Pasadena, on the west coast of Newfoundland, was successful in attracting federal government funding for a number of entrepreneurial awareness projects in the second half of the 1980s. This funding required independent evaluations of the projects. While generally favourable, the evaluations expressed some concerns about the ability of local initiatives to enhance entrepreneurship.

In the Spring of 1991, the Pasadena Economic Development Committee had to decide whether to continue these efforts. Complicating the Committee's decision was the fact that Bill Pardy, Pasadena's Economic Development Officer and the driving force behind the projects, had left the community to work for a federal economic development agency in Halifax. Could the momentum established under Pardy's leadership be maintained without him? Perhaps even more fundamental, was it possible - with or without Pardy - for a small town to influence the entrepreneurial spirit in its region?


This case was prepared by Professor Robert Greenwood of Memorial University of Newfoundland for the Atlantic Entrepreneurial Institute as a basis for classroom discussion, and is not meant to illustrate either effective or ineffective management.

Copyright 1992, the Atlantic Entrepreneurial Institute. Reproduction of this case is allowed without permission for educational purposes, but all such reproduction must acknowledge the copyright. This permission does not include publication.


Background

'Think global, act local' became the rallying cry for environmentalists, community activists and proponents of small enterprise development throughout the industrialized world in the 1980s. For Pasadena, a town of 3,500 people, local action focused on the potential of global contacts to enhance entrepreneurial awareness. Former Pasadena Mayor, Bill Pardy, was the driving force behind a range of local and international activities in his role as municipal Economic Development Officer from 1985 to 1990.

One of Pardy's earliest successes was the construction of an 'incubator mall' in the town. While municipal government economic development activities in Newfoundland were extremely limited, both by financial constraints and provincial legislation and regulations, Pardy was able to attract federal government support for a state-of-the-art facility, known as the Pasadena Venture Centre. Once the incubator mall was in place, however, few businesses showed an interest in the combined warehouse and office space, despite subsidized rents, secretarial support and business advice.

Pardy, with the support of the Town's Economic Development Committee, had to come up with a way to attract businesses to the incubator mall. Offering incentives to outside firms was rejected as an outdated economic development approach. Pardy maintained that more and more manufacturing was being carried out by small firms, which were likely to be locally owned.

In a region traditionally dependent on forestry and agriculture, though, few people were interested in starting new firms. The answer, according to Pardy and the Town of Pasadena, was to launch a campaign to change attitudes - to create an entrepreneurial spirit in the Humber Valley.

The Region

The Humber Valley consists of the region stretching from the headwaters of the Humber River, just south of White Bay, along Deer Lake, and out to the Bay of Islands on the Province's west coast (Exhibit 1). Historically, the region had been integrated as an economic unit based on the forest industry. Comer Brook, at the mouth of the Humber River, was the location of a paper mill since 1915. The Town of Deer Lake, fifteen miles east of Pasadena, grew around a hydroelectric plant constructed to power the mill. Most other communities in the valley were based on logging, although those on the coast also took part in the fishery as did virtually all coastal Newfoundland communities.

Pasadena was an exception to other communities in the region, due to its good quality agricultural land -a rarity in Newfoundland. A St John's businessman and part-time farmer acquired some 2,500 acres of land adjacent to the rail line in the 1930s to establish a farming operation. The Commission of Government which replaced responsible government in Newfoundland during the Depression attempted to resettle fishermen in the region with land grants, but lack of agricultural knowledge and alternative employment in American bases during World War II, meant few farms continued into the 1950s. Instead, Pasadena benefitted from its easily developed land and location midway between Comer Brook and the region's airport in Deer Lake. From 450 residents in 1955, the year it was incorporated, Pasadena's population grew to 3,500 people by 1991 as a result of in-migration and amalgamation with a neighbouring community.

Pasadena benefitted from its proximity to Comer Brook, as the latter grew into a regional service centre, in addition to the direct employment in the mill. Mechanization of the logging industry had greatly reduced the number of logging jobs in outlying areas, however, and modernization of the mill and international competition in the paper industry reduced employment levels in Comer Brook. With increasing government restraint throughout the 1980s, moreover, even service sector employment was threatened.

Local Leadership

Largely because of its agriculture origins, with subdivision of land based on agricultural plots, Pasadena was one of the first Newfoundland communities to establish a town plan, one component of which was economic development. The Town's Economic Development Committee included representatives of the local business community, as well as the mayor and a member of the municipal staff. Among them, these individuals represented a significant body of expertise and experience.

The Chairman of the Committee was a retired school teacher who now worked in financial planning and who had been one of the leaders of the rural development movement in Newfoundland. The Committee also included the Town Mayor, employed at the Comer Brook paper mill as a computer programmer, the Town Manager, trained as an accountant; two local businesspeople (involved in retail and convenience stores); and the Provincial Government's Director of Forest Management for the region, who also operated a private silviculture business.

Bill Pardy worked on the establishment of the incubator mall while he was Pasadena Mayor. When federal government funds provided for economic development staff. to promote the facility, he decided to move into economic development work full-time.

Pardy had a diverse employment background. He had worked in electronics early in his career, moved into management in an engineering firm, and then used his substantial communications skills in public relations. Throughout this period, he had been active in voluntary organizations and community groups, party politics, and municipal government. As Manager of the Venture Center and as Economic Development Officer for the Town of Pasadena, he reported to the Economic Development Committee. As the full-time staff person, though, he exercised considerable influence with the Committee, and provided the initiative and networking skills to become the key player in the drive to fill the incubator and to generate a spirit of entrepreneurship in the Humber Valley.

Awakening Entrepreneurial Spirit

From the time the incubator mall opened in 1986, Pardy's strategy was to publicize the facility in any way possible. Groups of school children were invited through on tours, business opportunity forums were held, and the news media was courted - 'anything to create activity around the building.' Promotion gradually evolved into education, in an effort to combat what Pardy called the region's 'rural, inward-looking mentality.' The' Awakening Entrepreneurial Spirit' (AES) project began in 1987, when the Pasadena Economic Development Committee decided that awareness of entrepreneurship and economic activities had to be created in the Humber Valley before new firm creation would materialize.

The AES project called for promotional material to be placed on video tape and a live satellite broadcast to be produced which would reach out to the people of the Humber Valley. The Pasadena Economic Development Committee accepted Pardy's view:

'In today's technological age, we felt that to reach a populace of approximately 60,000, we needed an innovative approach that would truly awaken the entrepreneurial spirit and at the same time involve this populace in the process.

The federal Department of Employment and Immigration responded favourably to the Committee's application for funding of the AES initiative. The goals of the project were to:

  1. increase an awareness of the contribution small business makes towards job creation;
  2. increase the number of people showing an interest in starting business;
  3. create an awareness of the forms of business structures available;
  4. increase an awareness of how local people in the area of the project can play a role in the development and support of small business;
  5. encourage the participation of youth in activities that will make them more aware of the role of small business in the economy, and aware of how they might become involved in business;
  6. encourage educational and other agencies to provide training and education opportunities for the development of skilled entrepreneurs;
  7. increase an awareness of the forms and sources of support available to business entrepreneurs in starting, maintaining, or expanding a business;
  8. develop a supply of resource materials to be used during the project and available in the region for similar uses in the future;
  9. develop a local expertise in the use of local television programming as a tool for development;
  10. evaluate how locally based educational television can be used effectively in the region.

The core of the AES project had been the production of video tapes which highlighted local business successes, explained the principles of entrepreneurship, provided information on government programs in place to support small business formation, and profiled local communities.

The last of these indicated the Pasadena Economic Development Committee's awareness of the Town's place in the regional economy. Pasadena could not attempt to develop small business within its own boundaries unless the entire region became more entrepreneurial. Project committees were formed with representation invited from communities throughout the Humber Valley, to promote 'a feeling of ownership in the project'.

With a combined budget of $259,000 from Employment and Immigration, the Atlantic Canada Opportunities Agency (ACOA) - the primary federal government agency responsible for regional development in the Atlantic provinces - the Memorial University Extension Service, and the Town of Pasadena, a staff of five people was hired and situated in the incubator mall to carry out the project. A set of seven videos was researched and produced (Exhibit 2), and in January 1988 a live satellite broadcast premiered the video series to cable television viewers throughout the Humber Valley. The broadcast included panel discussions and opportunities for viewers to phone in with questions and comments. The eleven-hour production also included community events such as school choirs, that increased the general interest aspect of the broadcast.

Follow-up and First Evaluation

In the months following the broadcast, the videos were presented on cable television and to schools, community meetings and business workshops. An extensive, independent evaluation of the project's impact - required by Employment and Immigration - indicated that it had succeeded in making people 'more aware of small business,' although it 'detected no change in the general public to start a new business.'

By the end of 1988, nevertheless, the incubator mall was full and Pardy was applying to ACOA for additional funds to construct an annex. There was no evidence that any of the tenants decided to create a business as a result of enhanced entrepreneurial awareness. If anything, the subsidized facilities and support structure included in the incubator concept had been more crucial to their foundation than the AES initiative. In fact, one of the tenants was a plastic film and bag manufacturing company owned and operated by a Chinese investor with a similar operation in Ontario.

Pardy claimed that the AES project had enhanced the sense of confidence in the local population, particularly the project participants, by proving that a small community could carry out such an innovative, ambitious and technically challenging initiative. The educational contribution of the broadcast extended far beyond the live production, as copies of the videos were distributed provincially and internationally. The University of Waterloo Economic Development Program, of which Pardy was a graduate, incorporated the videos into its curriculum, highlighting the town across the country. Pardy and the AES Co-ordinator, Linda Foote, were also invited to numerous national and international conferences to explain their innovative use of television in local economic development.

Within the Humber Valley, the Pasadena Economic Development Committee focused on inculcating the entrepreneurial spirit in the youth of the region. The incubator mall and the Town of Pasadena sponsored a junior Achievement business normally sponsored by private firms. Additional business development programmes were researched and produced by the incubator mall staff for a local cable television program, and these were put on video together with the original programs for wider distribution. The AES committee presented the copyright for the video series to the provincial Department of Education for use in the expanded entrepreneurial curriculum throughout the Province, and it worked with the local school board and Community College in Port au Port on the development of a pilot entrepreneurial course.

International Links for Entrepreneurial Awareness

The international attention paid to the project reinforced Pardy's commitment to the need for local activities to respond to global trends. He saw the first AES funding as just the start of a 'long-term continuing education project! The next instalment, termed 'Employment Through Community Development,' built on the television production skills gained in the first project, but this time an international satellite link was made between the communities of the Humber Valley and a similar region in the United Kingdom. Whereas international networking was usually conducted on an individual or organisational basis, this one, according to Pardy, exchanged 'complete communities; simultaneously.' The project was founded on the commitment, expressed in an Economic Development Committee document, 'that exposure to business ideas elsewhere must be the cornerstone for future economic development.'

Employment and Immigration and ACOA responded once again to a proposal redolent with all the virtues of small business promotion, entrepreneurial training, local initiative and international communications. For 'between $150,000 and $200,000,' planning for a live international telecast began. Four people were hired in Pasadena, and development groups in the United Kingdom were contacted. The Highlands and Islands of Scotland, with similar resource and demographic conditions as the Humber Valley, was the initial focus, but when the group there backed out because of lack of funds, the AES committee had to scramble to find an international partner. An organization created to promote development and cooperation between Northern Ireland and the Republic of Ireland expressed interest, and a six-hour telecast was successfully aired on December 2nd, 1990 (Exhibit 3).

The telecast included a live three-hour interchange between studio audiences in Belfast and Comer Brook, moderated in Canada by well-known journalist Adrienne Clarkson. Following the live exchange, the programme continued for another three hours, with community and business profiles and information on local development approaches. Residents of Canada and the United States were then able to view the complete six-hour broadcast via the parliamentary channel or satellite.

Final Evaluation: The Need for Follow-up?

Another comprehensive, independent, evaluation was required by Employment and Immigration as part of the second funding provided. Published in March 1991, it reported similar results to the evaluation of the first broadcast within the Humber Valley. Some 45 percent of the viewing audience in the Humber Valley (those with cable television) saw all or part of the December 1990 broadcast. This compared to 61 percent in the first AES broadcast, although the 1988 broadcast had the advantage, in terms of viewing audience, of including community events as well as economic development information and discussion. While the viewing audience gave the 1990 broadcast relatively high ratings (7.7 out of 10), an attitude measurement survey detected little, if any, improvement in entrepreneurial awareness from similar surveys in 1987 and 1988. Knowledge of small business and attitudes towards investment had changed little, although 55 percent of respondents were aware of government agencies which provided business advice in 1990, compared to only 7 percent in 1987. Only 28 percent of people surveyed in 1990 thought there were business opportunities in the region, down significantly from 40 percent in the 1988 survey. The independent evaluation noted that this was possibly due to the downturn in the provincial economy.

The independent evaluation was more positive concerning the project's success in actually carrying out the international telecast, increasing the participants' confidence and skills, and revealing what approaches were used for small business development in other countries (although survey respondents expressed surprise at how little they differed from approaches already in place in their own region). The evaluation maintained a positive tone, accentuating any positive interpretations of the findings. It acknowledged that no direct employment creation or firm formation could be attributed to the project, although it was probably too early to expect results. The overarching conclusion was that this latest instalment in the AES process required further follow up if long-term results were to be achieved.

Specifically, the report suggested that the telecast should be packaged as videos in the same way as the first broadcast, and distributed to schools, business organizations and development agencies. If the potential of international networking was to be realized, the Pasadena - or some other - development group would have to follow up on possible joint ventures or development innovations with their Irish counterparts. Finally, while television could be an innovative development tool, the evaluation suggested that international telecasts were probably too taxing on a small community's fiscal and human resources.

The Decision

For the Pasadena Economic Development Committee, the question in the Spring of 1991 was whether to continue their campaign to enhance entrepreneurial awareness in the Humber Valley. Bill Pardy had submitted his resignation upon the completion of the Irish telecast and moved to Halifax to commence work with ACOA in December, 1990. The Committee now had a valuable ally working within the federal system, but Pasadena's local leadership had been significantly depleted.

The various projects had built up a pool of dedicated and skilled economic development workers. How could they be best employed by the Committee in the creation of a prosperous local economy for Pasadena?

Exhibit 1

The Humber Valley

Exhibit 2

Awakening Entrepreneurial Spirit
Video Series

Video #1 - "Small Business - A Regional View." Introduces the area around which the series was produced, how it has grown, and how it can continue to grow. The video takes you on a tour of the Humber Valley/ Bay of Islands region of western Newfoundland which encompasses 22 communities and highlights its small business development potential.

Video #2 - "You've Got What it Takes." Explains what it takes to be an entrepreneur and the common characteristics of successful entrepreneurs. The characteristics outlined vary from a sense of humour, to planning skills, to aggressiveness, to being slightly insane. The video emphasizes that a combination of any of these traits exists in all of us and are important to the success of your business.

Video #3 - "Stepping Stones." Highlights the steps involved in setting up your own small business venture. Statistics show that over 90% of the Canadian workforce is employed by small business. This video takes the potential entrepreneur through the steps involved in the start-up process. Financing and market studies, as well as the rewards of being in business are discussed and analyzed.

Video #4 - "Making it Work." Deals with making the business work and cites some of the common reasons for success/failure. It answers the question, "Do you have all the factors necessary to make your business work?" Problems encountered by the entrepreneur are examined, as well as reasons for business failure and success.

Video #5 - "Options for Youth." Examines entrepreneurship as a viable career option for youth. Business skills can be developed at an early age and programs such as junior Achievement help prepare students for the world of business.

Video #6 - "Business Women." Addresses the fact that women are responsible for a large percentage of small business start-ups in Canada. This video examines a training course that was available for women and elaborates on the importance of helping women make the transition from a home environment to a small business environment.

Video #7 - "Challenges and Opportunities." Takes a look at the potential for business development, as well as the resources and support available in our area to new entrepreneurs with solid business ideas. The video takes you to several businesses established in the Maritime provinces that could provide opportunities in Newfoundland if a potential entrepreneur possesses the initiative to explore their possibilities.'

Cited in Awakening Entrepreneurial Spirit. 'Small Business: An Awareness Program'. Video Series User's Guide. Produced by the Town of Pasadena in co-operation with the School of Continuing Studies and Extension, Memorial University of Newfoundland, 1988.

Exhibit 3

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