Building an inclusive ecosystem for minority and women entrepreneurs: A case study of Columbus

Abstract

We all agree that it is essential to build an inclusive entrepreneurship ecosystem for all kinds of people, particularly minority and women entrepreneurs, as the past studies are clear to demonstrate underperformance of those demographic groups. At the same time, we are only beginning to understand what kind of systemic barriers exist for women or minority entrepreneurs at the regional system level. Furthermore, it requires a different set of knowledge about how we can practically create an inclusive ecosystem. This paper applies the concept of equity planning for the context of economic development. This paper examines a case study of the City of Columbus, Ohio, in 2018–2019 in which the City Government actively promoted to build an inclusive ecosystem for women and minority entrepreneurs. We induce five essential steps that we could learn from this inclusionary practice which provide tangible implications for other city governments, nonprofit organizations, foundations, and other stakeholders of local entrepreneurship systems.

Keywords

economic development entrepreneurship women and minority entrepreneurs equity planning inclusive economy

Introduction

Economic development is one of the most essential aspects of any region. Without a healthy economy, which includes a healthy income per household, people cannot sustain daily living or social mobility. The traditional method to achieve economic development is to attract firms to the area or to invest in physical infrastructure projects (Blakeley and Green Leigh, 2010; Malizia et al., 2020). The underlined assumption here is that as new jobs are created, the benefits will spill over to a large portion of the population. Unfortunately, the outcome may be of benefit only in the short term, such as construction jobs or the zero-sum game of attracting one company to the area over another (LeRoy, 2005). Moreover, the benefits may be captured by firms, but they may not necessarily reach people in need, particularly the poor, minorities, and women (Giloth, 2007; Krumholz and Wertheim Hexter, 2018).

This paper explores a case of economic development through entrepreneurship using two perspectives: the intersection between entrepreneurship and equity planning, as well as the public sector process of building an inclusive local entrepreneurship system through participatory action research. In the past decade, both academics and practitioners have been paying increasing attention to the “entrepreneurship ecosystem” (Malecki, 2018; Qian, 2018). Rather than relying on firms to generate jobs, entrepreneurship can open doors for economic independence and upward social mobility (Bradshaw, 2022). At the same time, scholars are finding that entrepreneurship is not purely an individual act; rather, it requires a local support system (Bahrami and Evans, 1995; Van de Ven, 1993) because entrepreneurs face myriad challenges and identify solutions through interactions with other peer entrepreneurs and support organizations (Motoyama and Knowlton, 2016; Spigel and Vinodrai, 2021). Consequently, two essential questions emerge: (1) How is such a local entrepreneurship system structured? (2) How can such a local system be designed to include more vulnerable populations, such as minority and women entrepreneurs?

We find that the extant literature has answered only the first question about the structure of regional entrepreneurship systems (see review articles by Autio et al. (2014); Brown and Mason (2017); Stam and Van de Ven (2021)). Indeed, there is a lack of research on the second question. At best, there are only a few studies exploring the underperformance of African American entrepreneurs (Harper-Anderson, 2019) and the structural divisions between men and women entrepreneurs (McAdams et al., 2019; Sperber and Linder, 2019; Motoyama et al., 2021). In other words, we have some incomplete knowledge about how a local entrepreneurship system is fractured within a region, and there is no understanding about how we can mend such fractures. As far as the authors know, this case will be the first study to examine the how-to part of the question that is toward building an inclusive economic development system. Here, we present a case study of participatory action research conducted in the City of Columbus, Ohio, from 2018 to 2020. After examining detailed processes between the city government and the Small Business Assessment Committee, we induce five steps that a community or local government can take to build an inclusive ecosystem.

Literature review

To begin, the starting point of our discussion is literature on inclusive strategies that promote citizens as being part of policy-making processes at the local level. Most notably, the equity planning proposed by Krumholz gave “priority attention to the task of promoting a wider range of choices for those individuals and groups who have few, if any, choices” (Cleveland City Planning Commission, 1975: 9). This Cleveland Plan, as well as the Chicago Policy Plan produced by Louis Wetmore (1967), challenged the mainstream planning practice that had historically focused on physical development through land use and zoning. Instead, it diagnosed root problems at the core of the lives of poor and working-class residents, and it questioned who benefits, and does not, from local policy-making (Krumholz, 1999; Metzger, 1996; Reardon and Forester, 2018). The underlining philosophy is to listen and advocate for those underrepresented (Davidoff, 1965).

To date, planners—both practitioners and scholars—have applied this framework of equity planning to various planning contexts, such as housing (Costigan, 2018; Sarmiento and Sims, 2015; Zapata and Bates, 2017), transportation (Bates and Golub, 2017; Cervero and Duncan, 2002; Dawkins and Moeckel, 2016), climate change (Schrock et al., 2015), and health (Corburn et al., 2015).

At the same time, we find that there were few applications of equity planning in the context of economic development nor in the extent of its effectiveness being limited for structural reasons. First, while the major objective of local economic development is to generate more jobs and increase the tax base, it often results in large physical development projects. Much of the development process goes through rational planning—such as data gathering, projecting scenarios, and analyzing financial alternatives with costs and benefits (Blakeley, 1988; Blakeley and Green Leigh, 2010). However, this textbook planning process is deeply flawed as it is usually led by private developers (Krumholz, 1999). Therefore, the strategy for new investment in impoverished areas is translated into new hotels, office buildings, convention centers, stadiums, etc. (Krumholz and Wertherim Hexter, 2018); however, this strategy generated few actual permanent jobs for the poor and failed to increase the tax base due to the tax abatements and other incentives offered by local governments (Reardon and Forester, 2018).

A second reason is the limitations and the nature of this redistributive strategy. Local government often tries to achieve equity planning in economic development by combining it with the goals of social justice and so-called equity employment (Clavel, 1991; Giloth, 2007; Krumholz and Wertheim Hexter, 2018). In other words, equity planning in economic development is generally translated as, and is limited to, job creation particularly for vulnerable populations. For example, Chicago’s planning efforts targeted the contracting of 60% of the city’s total purchases with local businesses and of those, 25% were to be minority- and/or female-owned (Mier, 1993). Similarly, community-benefit agreements were formed with anchor institutions, such as university and large corporations, for large economic development projects to hire a certain number of low-income community members, as well as to establish job quality standards and career pathways (Schrock, 2014; Wolf-Powers, 2010). However, those employment agreements have been tough to implement; contractors may not be required to follow the hiring agreements fully, nor are they required to collect data needed to analyze the results (Giloth, 2018). Even if hiring took place, it might not lead to career advancement, for example, workers who simply move from one construction job to another. Fundamentally, these redistributive approaches in economic development had to rely on the largess of existing corporations—undoubtedly major economic players. However, these approaches, Harvey (2005, 2014) and Brand (2015) have argued, are incompatible with neoliberal capitalism since corporations ultimately prioritize the accumulation of capital.

Given these limitations, scholars have examined economic development and equity issues from three different perspectives. First, Chapple (2005), Wolf-Powers (2012), Schrock (2015), Fitzgerald (2018), and Lowe (2021) examined workforce development which primarily concerns the training of disadvantaged population for hiring and career advancement. Second, Clark (2013), Lowe and Wolf-Powers (2017), and Doussard et al. (2017a, 2017b) analyzed the manufacturing and extension centers in terms of job creation for semi-skilled workers. Third, Doussard (2015), Schrock (2015), Doussard and Schrock (2022) and Doussard (2023) examined how the US$15 minimum wage or other viral cash transfer programs formed broader institutional arrangements for low-income populations. However, these three approaches do not address the intersection between entrepreneurship within economic development and equity issues. At the same time, studies on equity planning have neither specifically investigated entrepreneurship nor the ecosystem development process. Our case contributes by investigating the direct intersection between entrepreneurship and equity—or inclusionary practice—as well as the trial-and-error processes of one local government that got involved with a marginalized population of entrepreneurs.

Case and method

We investigate a case of equity planning based on entrepreneurship in Columbus, Ohio. Our rationale for researching this case of entrepreneurship is that it presents a different approach from the conventional method of equity planning in economic development which essentially asks corporations to create new jobs for specific segments of the population in impoverished neighborhoods. Recent detailed microdata demonstrated that new and young firms generated a disproportionate share of net new jobs in this country (Haltiwanger, 2012; Haltiwanger et al., 2013). Therefore, we posit that entrepreneurship through new firm creation and successfully scaling them up is the core of economic dynamism instead of relying on existing companies to generate more jobs (Baumol, 2010). In addition, in theory, anyone can be an entrepreneur, and that entrepreneurship can be a pathway out of poverty (Bradshaw, 2022). Households with self-employed have greater wealth than employed, which is notably and particularly true for minority and women entrepreneurs (Klein, 2021). Yet, it has been widely reported that both minority and women entrepreneurs underperform compared to their male, white counterparts (Fairlie and Robb, 2008; Giloth, 2018; Pantin, 2018). If the pathway for success is narrower for some segments of the population, it limits their upward social mobility. It is essential to understand why such disparity exists and how it can be improved.

The method of this research project was based on participatory action research (Hickey and Mohan, 2004; McNiff and Whitehead, 2002; Saija and Pappalardo, 2018). The two authors of this paper were actively involved in the project. Participatory action research is considered a participatory process that develops practical knowledge in the pursuit of social action (Fals-Borda and Rahman, 1991; Ozanne and Saaticioglu, 2008). McIntyre (2008) similarly defined it as a framework for codeveloping the research process between the researchers and participants, as well as promoting consciousness-raising and affecting change within the overall research experience. In other words, this was not a process where the researchers were neutral observers, nor were they only offering one-sided technical assistance as research experts. Rather, it was a process of mutual learning, and it drew on all members’ practical, experiential, local, and tacit knowledge (Dewar and Isaac, 1998).

This method is appropriate for the case discussed in this paper because participatory action researchers reject the divide between theory and practice, and believe instead that applied research can build theories and solve problems (Ozanne and Saatcioglu, 2008). The method is particularly suited when the case involves inclusive, empowering, power-sensitive, and reflective situations (Winkler, 2013). When a project requires the maximum participation of the stakeholders whose lives will be affected, participants become collaborators in the process as those who participate will be more committed, generate more thorough social accounts, provide their own knowledge, and be invested in the successful application of the findings (Reason and Bradbury, 2001). Here, solutions to problems may not be driven out of research findings, but are ultimately negotiated among the interests of stakeholders with varying power and resources (Herr and Anderson, 2005; McNiff and Whitehead, 2002).

As with any research method, participatory action research has limitations. One of them is the possibility of essentializing the local and ignoring power relations (Mohan and Stokke, 2000). Participation is never politically neutral and may be used to promote a range of interests (Cornwall, 2004). The authors must admit that power relations were present as they would be in any human interactions. To minimize such power relations, each of the two authors recognized several limitations and employed three mending methods in the process. Henry Golatt worked in the city government and as the architect of the inclusionary project had the most influential position. However, to maximize participation, receive the most input, and assure the highest commitment from the stakeholders, he first proposed to set up a committee consisting of more than 20 members. Most of them were members of the target population—minority and women entrepreneurs and their supporters. As the next section will describe, the committee was the place where research was conducted, findings presented, and new strategies discussed and agreed upon. Based on his experience of more than 25 years in economic development, Golatt believed that answers and output from the inclusion initiative must come from and be shared by all major stakeholders. Golatt secondly proposed the hiring of an external research group, Next Street, to conduct the research so that its scope would be expanded substantially and not be influenced heavily by only one, or a few, stakeholders. In addition, Golatt recruited Yas Motoyama, Assistant Professor at The Ohio State University—and coauthor of this paper—to advise the research process by Next Street to provide academic validity and depth to the research. Motoyama conducted academic and non-academic research about local entrepreneurship ecosystems in Kansas City (Motoyama, 2019; Motoyama et al., 2013), St. Louis (Motoyama and Knowlton, 2016, 2017), Indianapolis (Desai and Motoyama, 2015), and Chattanooga (Motoyama et al., 2016).

At the same time, Motoyama was aware of at least three limitations he faced: first, his prior research demonstrated that local entrepreneurship systems were heterogeneous. In other words, applying findings or framework from other cities might not be appropriate. Understanding the specific case of Columbus was essential, and he had to cultivate trust and listen to local stakeholders. Second, while the breadth of academic research was present, its focus was to describe how the system was structured, and there was little knowledge about how to make changes (Motoyama, 2020). Lastly, while he is a person of color (Asian), he does not represent Black or Hispanic perspectives and insights; as stated, solutions must come from the initiative’s target population. Thus, he focused on facilitating an understanding of what research could and could not reveal, as opposed to being influential on the outputs or the conclusions of research. In this sense, what the two authors mitigated through this participatory research process was highly complementary with the communicative approach proposed by Innes and Booher (1999, 2004), that is to facilitate discourse among stakeholders but to minimize inputs from the researchers themselves.

Describing the inclusive ecosystem project in Columbus

Origin

The origin of the recent experiment in Columbus of merging entrepreneurship development and equity planning dates to 2017 when Henry Golatt, who later became the chief architect of the Small Business Agenda of the City of Columbus and one of the authors of this paper, moved to Columbus for family reasons. Previously Golatt had worked at the University of Arkansas at Pine Bluff for 25 years in the field of economic development. His experience there included revitalizing the downtown, directing a small business incubation center, and managing economic development grants from the U.S. Small Business Administration, Department of Agriculture, and Department of Housing and Urban Development. The timing of his arrival in Columbus was fortuitous as the city had just in 2016 elected a new mayor, Andrew Ginther, who was looking for major initiatives in economic development. Golatt pitched Ginther on an idea to launch an initiative to support small businesses, particularly businesses owned by women and minority entrepreneurs. Mayor Ginther welcomed the idea, and Golatt was hired as the Development Program Coordinator under the city’s Economic Development Division in May 2017.

Golatt spent the next year analyzing the landscape of economic development and entrepreneurship in Columbus. Specifically, he devoted his time to understanding and networking with mainstream development agencies, such as the State of Ohio Division of Development, JobsOhio—a private and nonprofit counterpart of the state government to create jobs and attract investment—and the Columbus Chamber of Commerce. He also studied and networked with smaller organizations tailored for entrepreneurship, such as Rev1 Ventures, Economic and Community Development Institute, and Women’s Business Center of Ohio. One of the people who Golatt networked with during this time was Yas Motoyama, an assistant professor at The Ohio State University. Golatt knew Motoyama’s research work (Motoyama and Watkins, 2014; Motoyama and Wiens, 2015) as Motoyama had researched local entrepreneurship ecosystems during his tenure at the Kauffman Foundation—a nonprofit dedicated to the promotion of entrepreneurship. Golatt was particularly interested in exploring two concepts that Motoyama had previously investigated: 1. The importance of connections and learning mechanisms between entrepreneurs and 2. The gender or racial gap within a local ecosystem. Traditionally the method to support small businesses was to provide loans; however, Golatt and Motoyama discussed possibilities of exploring non-traditional methods to create a regionwide support system based on connectivity among minority and women entrepreneurs.

Launching small business assessment and committee

As Golatt cultivated sufficient networks of stakeholders in the region and gained knowledge about the organizational structure of Columbus’s Division of Development, the city government organized the first public event in December 2018. This event had two objectives: First, Mayor Ginther announced the launch of the Small Business Assessment which would “take a look on a comprehensive assessment of the current state of small business and entrepreneur landscape and review all city sponsored programs” (Mayor Ginther, 2018). This announcement was followed by a panel discussion of key local stakeholders consisting of (a) Bake Me Happy, a local business owned by an entrepreneur of color, (b) Enterprise Community Development Institute, a local support organization connecting Small Business Development Center, financial institutions, and entrepreneurs of color, and (c) Ohio State University’s professor specializing in entrepreneurship and development. The city government also announced the hiring of Next Street, a nonprofit, policy-oriented organization, to conduct this assessment for the next 9 months. In addition, Mayor Ginther announced “to form a small business advisory committee, which will be composed of key members of Columbus small business and entrepreneurial communities” (Mayor Ginther, 2018). This committee included local stakeholders as well as multiple university-based researchers because the university was considered an anchor institution and had expertise in research. This was a publicly open process, and the application was available online for 1 month through the city’s website. The city government selected the committee members in January 2019.

First phase of committee meetings (Intensive research from January to April 2019)

The first of five meetings by Small Business Assessment Committee (SBAC) took place in late January 2019 with 21 committee members, staff from the city government, and Next Street. While most committee members were selected based on nomination and self-nomination, the city government made conscious efforts to constitute a diverse body of committee members by outreaching to stakeholders with diverse backgrounds. Golatt’s personal connections cultivated in the past 2 years proved essential. Here, diversity was considered from two perspectives. The first was sectoral diversity; since entrepreneurship support organizations are considered as the most standard stakeholders in entrepreneurship ecosystem literature (Isenberg, 2011; Spigel, 2016), seven people from support organizations were recruited. At the same time, entrepreneurs were considered equally essential; therefore, seven entrepreneurs were also recruited. Other committee members included three from financial institutions and four from universities. The university members were included because the university was also considered as one of the key stakeholders in the region, due to its technology commercialization office and business school. The university members represented the expertise of the research process—the focus of the committee during the next few months. Motoyama was selected as the special adviser of the process and worked closely with Next Street on research aspects. Secondly and more importantly, the diversity of race, ethnicity, and gender was considered critical. Since the objective of the Small Business Initiative was to establish an inclusive ecosystem for minority and women entrepreneurs, the city government considered representation from the target population critical and recruited five African Americans, two Hispanics, and eight women committee members. See Table 1 for the sectoral and diverse backgrounds of those committee members.

Table 1.

List of small business assessment committee members and background.

Categories	Organization	Diversity background
Entrepreneur	Virtual Workplace and Staffing	African American
Entrepreneur	Two Men and Truck	Woman
Entrepreneur	Marsh Wagner	Woman
Entrepreneur	Root Insurance
Entrepreneur	Smith Construction	African American
Entrepreneur	On Air Communications
Entrepreneur	Social Ventures	Woman
Support Organization	OH Small Business Development Centers	Latina woman
Support Organization	Rev1 Ventures	Woman
Support Organization	Women’s Business Center of Ohio	African American woman
Support Organization	Columbus 2020
Support Organization	Columbus Chamber
Support Organization	Parsons Ave Merchants Association
Support Organization	Central Ohio African American Chamber	African American
Financial Organization	United Midwest Savings	African American
Financial Organization	Venture Ohio	Woman
Financial Organization	Finance Fund	Woman
University	Ohio Dominican Univ: Vice President	Latinx
University	Ohio State Univ: Technology commercialization
University	Ohio State Univ: Business school
University-	Ohio State Univ: City planning	Asian

Source: SBAC (2019a).

The initial meeting in January 2019 was to introduce each committee member, to set committee goals, and to receive feedback about the format and questions for focus groups and interviews that Next Street would be conducting. In addition, Next Street in consultation with Motoyama, presented a list of more than 30 reports reviewed on entrepreneurship and small businesses in Columbus and in Ohio, and they shared a list of 12 relevant reports. Those reports, first, included national and periodic surveys, such as County Business Patterns from Census Bureau, Small Business Friendliness Survey from thumbtack, and Kauffman Index from Kauffman Foundation, which presented quantitative data about entrepreneurial activities of the Columbus region or Ohio vis-à-vis other regions or states. Second, other occasional surveys were included which ranked various cities, such as 52 Places to Go by NYTimes (2019) and Top 10 Cities for Black Women to Start a Business by Black Enterprise (2016). The third type of reports was case studies of the Columbus region, such as Benchmarking Central Ohio by Columbus Foundation (2016), Columbus Region Factbook by Columbus 2020 (2018), a non-government economic development agency. The committee suggested five additional reports that Next Street should be investigating.

The second committee meeting took place in March 2019. Next Street primarily led the meeting by presenting findings from further analyses they had conducted. First, they presented GIS-based location analysis of small businesses (defined by firms with less than 20 employees) in Franklin County. They used InfoGroup’s Historical Business Data, which listed detailed, establishment-level business activity data. In addition, they pulled data from CoStar and analyzed the presence of Class A office buildings (the best kind of office space based on locational attributes (NAIOP, 2022)), as well as office vacancy rates by neighborhoods of Columbus. Lastly, Next Street presented information from eight interviews and five focus groups along with shared findings that had been conducted to date.

The research clearly indicated the underperformance of minority entrepreneurs. While Blacks and Latinx constituted 25% and 5%, respectively, of the population in Franklin County, Blacks’ share in non-employer firms shrank to 20% and even to 4% in employer firms. Similarly, the share of Latinx was 6% of non-employer firms and 3% of employer firms. (see Table 2).

Table 2.

Share of entrepreneurial activity by race and ethnicity.

	Non-employers(%)	Employers(%)	Demography(%)
White	72	87	65
Black	20	4	25
Latinx	6	3	5

Source: Annual Survey of Entrepreneurs by Census Bureau.

Next Street presented five identified themes from interviews and focus groups listed in Table 3 with quotes from the interviewees. First, while the city government and other nonprofit organizations provided various forms of small business support, business owners were less aware of those resources. Second, there was a demand for support services for entrepreneurs who had already launched businesses and who were looking for knowledge to scale up. Third, while the entrepreneurship ecosystem was becoming a familiar term in the Columbus region, several entrepreneurs noted that the focus was specifically on IT businesses and venture capital (VC) investment—the sexy side of entrepreneurship—and there was less attention for main street or other ordinary businesses. Fourth, there were several complaints about building codes and construction regulations that hindered business owners to maintain or expand their operations. Lastly, both entrepreneurs of color and women expressed limitations for capital access as they felt that banks imposed higher hurdles for entrepreneurs who were non-white and/or who were not men.

Table 3.

Identified themes from interviews and focus groups.

Identified theme	Quotes
Limited awareness of resources	“Running a small business makes can make you feel isolated and alone, how can we encourage people to work together and share information more?”
Support for post-launch business	“I want to talk to people at the next stage, who could help me map out the potholes so I can navigate getting to the next threshold better.”“We need more support sustaining businesses and getting them to the next level. I wish I could find help for both strategy (where we go and how we position ourselves), and execution (legal support on taxes, structural options, etc.)”
Ignoring main street businesses	“We talk about raising money in VC, not money invested in regular small businesses where it’s needed. Why are we only pushing technology? It’s okay to go open a coffee shop, a welding shop. We need those kinds of jobs, too.”
Cumbersome regulations	“My build out was doubled (in both time and cost) because of city regulations and curveballs. There needs to be support on the front end. It’s hard to navigate!”“When I built my add on, there were unexpected, expensive city roadblocks. I wish I had known about these in advance. Maybe the city could have a ‘call before you dig’ service.”
Difficulty in capital access	“Clear bias in the way bankers evaluate risk for business owners of color.”“Banks ask a man ‘how profitable is your business?’…on the other hand they will ask a woman ‘how will you pay back the loan?’”

Source: SBAC (2019b).

The committee members were then asked to provide feedback over the following few days and began to brainstorm how they should transform those research findings into actionable plans.

The third committee meeting took place in April 2019. This was a short meeting to select peer cities for deeper comparison. The committee has been reviewing many reports and statistics but wanted to understand the status of Columbus in a comparative context, as well as to understand the best practices from other cities to create an inclusive entrepreneurship ecosystem. Based on the size of metropolitan areas, median household income, and location, five peer cities were selected: Pittsburgh, PA; Cincinnati, OH; Nashville, TN; Minneapolis, MN; and Austin, TX (SBAC, 2019c).

Second phase of committee meetings (Planning for actions from June to October 2019)

While the first phase of committee meetings from January to April 2019 focused on research aspects intending to understand the state of entrepreneurship in Columbus and challenges faced, the second phase of committee meeting beginning in June concentrated on identifying actionable plans—what the city government and region could do to create an inclusive support system for entrepreneurs.

This series of research led to the understanding that Columbus was outperforming in overall economic and demographic trends compared to its peer cities, but that it lagged in certain areas. Specifically, capital lending lagged in Columbus compared to its peers, and it was also less distributed to minority neighborhoods. For instance, Next Street analyzed the lending by Community Development Finance Institutions (CDFIs); the lending amount was only US$31 per small business for Columbus, in contrast to US$101 for Minneapolis, US$68 for Nashville, and US$60 for Pittsburgh (SBAC, 2019d). The distribution of loans made by 10 banks was categorized by census tract areas; 27% of small business loans went to low- or medium-income tracts, while those areas constitute 41% of population. Further analysis on equity investment, based on six identified investment entities, revealed that investment is more skewed to later stage businesses, thus ignoring critical early-stage businesses (SBAC 2019d: 37). Based on these findings, the committee members discussed what was missing in the Columbus ecosystem and what could be done to improve it. The city government used these inputs to come up with actionable programs and policies for the next meeting.

In the final committee meeting in October 2019, the city government presented four major goals with each goal having specific actionable policy steps and measurement for progress (see Table 4). Since the biggest challenge was identified as the isolation of entrepreneurs—particularly among minorities—and their lack of awareness of support resources in the region, the first goal was to expand awareness by increasing general marketing efforts by establishing an online navigator on the city’s website and by appointing small business concierge who could speak directly to the target audience. There were more than 10 organizations pitched to the committee for the role of small business concierge, and three of them were subsequently selected due to their background and connections. In other words, since the target population of this inclusive ecosystem was women and minority entrepreneurs, the concierge should also have a female and/or minority background. Sadicka and Associates, Rev1 Ventures, and Ohio Minority Supplier Development Council were the three selected. All them were women, and one of them is African American. In addition, the city government would designate Neighborhood Liaisons in each underserved neighborhood who would partner with community organizations to better engage and share resources with entrepreneurs.

Table 4.

Four major goals and their action and measurement items.

Goals	Actions	Measurement
Expand awareness of resources	• Increase marketing efforts about resources	• # of events by ESOs
	• Establish online navigator	• # of businesses supported by ESOs
	• Appoint small business concierge	• # of businesses supported by ESOs
Increase capacity of stakeholders	• Establish capacity-building programs for ESOs	• # of applications for ESO technical assistance programs
Improve services and capital provision	• Create a capital readiness program	• # of applications received and approved
	• Establish loans with flexible options	• # and $ of debt funding
	• Establish loans with flexible options	• # and $ of equity funding
Increase connectivity amongst anchors and small businesses	• Convene anchor institutions to share best practices	• # of government contracts by women and minorities
Increase connectivity amongst anchors and small businesses	• Convene anchor institutions to share best practices	• # of collected success stories

Source: Based on SBAC (2019e: 6).

Second, while there were dozens of entrepreneurship support organizations in the region, most of them were small nonprofit organizations and reported staff shortages and lack of certain skills. Thus, the city government would establish programs to train those support organizations to build their capacities. The strategic focus here was to make minority entrepreneurs cognizant of support organizations about different culture and business practices among minority entrepreneurs.

Third, although a lack of financial support was always a common complaint from entrepreneurs or any business, the city government decided not to create more loan programs for political and economic feasibility reasons. New loan programs would require more budget allocation, which must be approved by both the mayor and the city council. That would be beyond the capacity of the city’s economic development division and the mayor’s office. Instead, the city government would establish a capital readiness program in which business owners would receive training for writing business and financial plans before they submitted applications to banks or investors. Moreover, the city government would provide shared services for ongoing operational functions in accounting and marketing.

Fourth, interviews and focus groups identified that many business owners expressed invisible entry barriers for government contracts and procurements. The main perception by small business owners of color was that large and mainstream companies dominated the procurements of the city government, and there were other complicated bureaucratic rules, such as who could qualify as suppliers, what kind of past business records were required, etc. To break this practice, the city government would work with city, county, and state governments, as well as key local anchor institutions, to track contracts and procurements by women and minority businesses. In addition, the city government would play a central role to collect and exchange success stories from those entities.

Small business agenda by Mayor (December 2019)

The culmination of works by the SBAC and city government came as the Small Business Agenda that Mayor Ginther announced on December 18, 2019. The event took place at Root Insurance, a rising local venture that received six rounds of private equity investment totaling more than US$534 million by August 2019 (DealRoom.co 2022). Approximately 200 people attended the event.

The city government revealed the four goals, as well as accompanying actions, by designating specific organizations to promote each of the four goals (e.g., Urban League, Columbus Minority Business Assistance Center, and Columbus Metropolitan Library would expand awareness of resources) and to make it clear who would be promoting each specific goal. In addition, the city government was able to get sponsorship from three foundations to fund the whole scheme: Columbus Foundation, JP Morgan Chase Foundation, and Goldman Sachs Foundation. A visualized summary of the Agenda is given in Figure 1.

Figure 1.

The visual of small business agenda in December 2019. Source: City of Columbus (2018).

To maintain momentum for these inclusion efforts, the city government started to track the progress measurements mentioned above. They designed two kinds of surveys to supplement the data tracking process: one for entrepreneurs to measure their level of connectivity in the region, and the other for support organizations, including capturing the number of supported entrepreneurs, events hosted, and their level of confidence in culturally sensitive supporting methods. The plan is to distribute the surveys every year to analyze progress.

Discussion

This whole process of the Small Business Agenda in Columbus by the city government, Small Business Assessment Committee, Next Street, and other stakeholders provides at least five important implications for the inclusionary practice and equity planning in the context of economic development and entrepreneurship.

First, it is most effective if the inclusionary equity planning is organized by people with the same background as the target population. The target populations in this case were women and minority entrepreneurs. The descriptor “minority” here did not have a clear boundary as the scope of inclusion should be open, not closed. For example, the committee discussed other minority terms, such as immigrant entrepreneurs. However, the key segments included African American and Latinx groups which represented 25% and 5% of population in the region, respectively. Henry Golatt is African American, and his experience and perspective were fundamental to initiating the project and listening to the voices from the target populations. With his 25 years of experience of economic development in Arkansas, he had the first-hand knowledge of how African American entrepreneurs struggled. He was able to share and connect with African American entrepreneurs in Columbus most effectively.

Second, in addition to the background of the architect, Henry Golatt, it was crucial in building a wider coalition at the regional level in the context of entrepreneurship. This required a deep networking period in which Golatt strategically spent one and half year to get to know key stakeholders in the region. Specifically, he networked with mainstream development agencies, such as the State of Ohio Division of Development, JobsOhio, the Columbus Chamber of Commerce, as well as small and tailored organizations for entrepreneurship, such as Rev1 Ventures, Economic and Community Development Institute, and Women’s Business Center of Ohio.

One challenge was a lack of effective and representative organizations for minority or women entrepreneurs, and the recognition that—unlike with housing or neighborhood revitalization projects—there was no clear geographic concentration or boundary of the target populations in the region. The committee did include several organizations associated with entrepreneurial activities, such as Ohio Small Business Development Centers, Women’s Business Center of Ohio, and Central Ohio African American Chamber. However, as the research by Next Street indicated, it was clear that many target entrepreneurs expressed a lack of support resources or at least the invisibility of such support from the entrepreneurs’ perspective. Thus, the committee did not assume that those support organizations had extensive reach to minority or women entrepreneurs. One way to strengthen the inclusion of the target population was to include the entrepreneurs, themselves, in the committee; influential entrepreneurs with the target background would be even better. Of the seven committee members with entrepreneurial backgrounds, two of them were African American, and three of them were women. The objective here was that each of those committee members with the target backgrounds would reach out, seek input, and disseminate information for and about the Small Business Agenda among and within their respective communities. Therefore, equity planning in Columbus was not just a creation of inclusion programs by the city government, but also a process that was publicly open and proactive in reaching out and in involving minority and female stakeholders. While the objective of diverse representation supported greater engagement of regional entrepreneurial networks with women and minority entrepreneurs, it also does place additional obligations and invisible labor on those representatives.

At the same time, Golatt made sure that mainstream organizations, such as the Columbus Chamber and Rev1, would be involved in the whole process because, upon implementation, those organizations would be instrumental in carrying out the core objective of the Small Business Agenda—to make an inclusive entrepreneurship ecosystem in the region. Previously, the practice of the mainstream support organizations had been to have an open-door policy; in theory, anyone could walk through the door and ask for help. However, throughout the committee process, those mainstream support organizations became aware that such open-door policies were invisible and ineffective to some segments of entrepreneurs, particularly women and minorities. Some of those organizations started to change their practices by designating a small business concierge (e.g., by Rev1), proactively outreaching or starting new programs to include minority or women entrepreneurs.

Third, the whole process was research-based. Everyone would agree that women and minority entrepreneurs underperformed and that the creation of an inclusionary ecosystem was important, giving enough rationale to start the Small Business Assessment Committee. However, to involve all stakeholders, including mainstream organizations, to receive inputs and disseminate them widely, and to establish new programs and change budget items within the city government, which is usually a highly political, zero-sum, and controversial process, there had to be research-based findings that could demonstrate the magnitude of underperformance of the target groups and possible methods for improvement. The city government hired Next Street to conduct a large-scale research project, and they spent the first 6 months on intensive research. Moreover, the vision of the city government was not to rely on a single consulting firm, but to conduct this assessment on a collaborative basis with stakeholders in the region. Thus, the Small Business Assessment Committee was formed and conducted various kinds of research with Next Street. The Committee included multiple university-based researchers. In particular, Motoyama from The Ohio State University was assigned as special adviser to the committee to guide research. He has extensive experience in the subject, including knowledge of the Kauffman Index. In addition, Next Street conducted interviews, focus groups, and examined approximately 30 reports to examine the performance of the Columbus region.

By the end of the first phase of the committee, in June 2019, multiple data pointed out gaps for minority entrepreneurs; for instance, African Americans underperformed compared to their demographic composition. The research element also uncovered some other nuanced areas where the city government and other support organizations could intervene. For example, while the Columbus region was performing well economically as a whole and increased equity investment substantially in the 2010s, those benefits concentrated on later stage entrepreneurial activities and did not advance the situations for early-stage entrepreneurs, including women or minority entrepreneurs. In addition, it was not the larger amount of loans, but more training for both entrepreneurs and support organizations that the region needed. Minority or women entrepreneurs had a perception that standard banks discriminated against women and minority entrepreneurs and were not interested in providing loans to them. This was partially true because loan application best practices, often shared among white and men entrepreneurs, were not shared among minority or women entrepreneurs. The isolation of minority or women entrepreneurs within the local community made that happen. There had to be more dialogue and training between banks and minority or women entrepreneurs about those practices and expectations. At the same time, past practices by banks did impose some implicit and systemic barriers for women or minority entrepreneurs, as well. The ways that loan reviews were conducted did not make minority or women entrepreneurs feel equal or worthy. There had to be a training for banks that recognized that they had to be more culturally sensitive to review and communicate with women and minority entrepreneurs. In sum, solid research can uncover these nuanced and structured challenges as well as intervention points.

Fourth, there must be clear milestones and tangible outputs in equity planning, particularly in this long process. After the kickoff event led by Mayor in December 2018, the committee was formed relatively quickly and had the first meeting in January 2019. Each committee meeting was long—more than two hours—and the committee members discussed significant research materials in the first three meetings, such as items to refine, add, and conclude thus far. As the committee was large, diverse, and included many inputs, the research process became extremely extensive and sometimes hard to navigate. The city government was deliberate in its process and set limits by dedicating only the first several months to induce major findings, and therefore not conducting overly comprehensive and endless research. There, the city government tirelessly coordinated with many committee members outside meeting hours to collect sufficient input. As a result, all were able to move onto the next stage of the committee work to discuss actionable plans by the city government and stakeholders for both the June and October meetings. Essentially, the committee was the central body that involved key stakeholders and received inputs, while the city government coordinated and navigated closely. Otherwise, too many meetings and endless discussion would dissipate committee members’ interest and hamper the momentum.

The final product of the inclusion process, the Small Business Agenda in December 2019, had four concrete goals: to expand awareness of resources, to build capacity of ecosystem stakeholders, to improve services and capital provision, and to foster connectivity among anchors and small businesses. Each of the four goals had actionable items, and at least two organizations were assigned to implement them. Thus, it was not a simple goal statement, but actions with organizations and with measurable indicators. In addition, the city government managed to have three local and national sponsors for this implementation stage of the project, from the Columbus Foundation, JP Morgan Chase Foundation, and Goldman Sachs Foundation. This recognition validated the works of the Committee, city government, and all the stakeholders.

Lastly, the whole process had the commitment from the highest political level by Mayor Ginther. He announced the establishment of the assessment committee in December 2018 and led the event of the Small Business Agenda with all the actionable items in December 2019. The committee, city government, and Next Street all saw tangible deliverables. However, tangible outputs also mean a requirement of concrete measurement of the progress. Thus, the city government provided metrics to track for each of the four goals and committed to tracking them over years to demonstrate that they were implementing what has been promised and how effectively the action items are materializing.

Concluding remarks

Through the participatory action research, we reported the details of equity planning in an entrepreneurship context, as well as its process-oriented knowledge basis. This case of Columbus further sheds light on a new perspective between economic development and equity planning. As mentioned in the literature review, the traditional method of equity planning in economic development relied on two methods that had major limitations: one was to provide physical infrastructure projects in impoverished areas, which would primarily create construction and service-oriented jobs in the designated area, and the other was to the redistribution strategy by relying on large existing firms to increase the percentage of minority hiring. This City of Columbus case was distinct in two terms. First, it shifted the goal of economic development by promoting entrepreneurship for and by minority and women entrepreneurs, which is a self-help-based strategy in contrast to dependence on other economic entities, such as large corporations. Second, the ultimate goal was not to create X number of jobs for minorities or change the percentage of hiring, but to create an inclusive environment for women and minority entrepreneurs. Thus, while providing more loans to women and/or minority entrepreneurs was not the central pillar, it was one of the action items, along with other and more important areas of intervention by the city government: to make support resources more visible through influential women and minority entrepreneurs, to appoint small business concierge, and to facilitate capacity building for support organizations. Most of the action items would not require a large budget, making it more politically feasible from the city government’s perspective. This is a new perspective of equity planning in economic development.

The timing of this inclusive practice preceded the pandemic in 2020. Evidently, the way people and entrepreneurs interacted shifted during the pandemic, thus radically changing the practice and networks of the small business concierge, support organizations, and entrepreneurs. This required a revision in some of the progress measurement indicators, such as the number of events hosted by support organizations and the number of entrepreneurs who attended those events. We are aware that our indicators are not perfect or comprehensive, but it is still critical to keep track and modify.

In the meantime, the pandemic created a new opportunity for the networks created by the coalition of the Small Business Agenda. In March 2022, the city government and the Franklin County Board of Commissioners jointly launched the Small Business Recovery Fund to support small businesses negatively impacted by the pandemic, “specifically those in underserved communities and/or are minority-owned businesses, disadvantaged businesses” (City of Columbus and Franklin County, 2022). In addition to the city and county, they leveraged an additional fund from Wells Foundation and allocated US$8 million: US$5000 was distributed to self-employment or sole proprietors, and US$10,000 to employer businesses (City of Columbus and Franklin County, 2022).

Here, the inclusion process through the Small Business Agenda raised the awareness of the importance of the topic, created this alliance of many stakeholders, and they were ready to act by disseminating the information of this pandemic fund. Instead of the city government or just one organization, six entrepreneurship support organizations were identified and agreed to operate the application process, and 11 more organizations cooperated for the outreach. In addition, the small business concierges, committee members, and other stakeholders got involved in the outreach process. More than 600 applications came in on the first day, March 9. Based on this high demand, the city and county governments organized Wave 2 on April 11 and Wave 3 on May 23 and subsequently received more than 800 applications in each round (Email communications with Small Business Coordinator of City Government, 3/10/2022, 4/11/2022, and 5/18/2022). Before the arrival of Henry Golatt in 2017, the city government had no database or explicit networks to minority-owned businesses, but now they could communicate with thousands of those businesses.

While inclusive entrepreneurship could be a new step for equity planning in economic development, the process is long, challenging, and it requires detail management and flexibility. It cannot be a top-down, government-led approach, but it must be led by members of the target population. It requires a prep-period of in-depth networking that can easily take one or even 2 years even before the official initiative for inclusion. This networking cannot be superficial—only to establish connections with conventional and mainstream organizations of economic development—but rather should be conducted with the intention of supporting the target population. In other words, if women and minority entrepreneurs are the target, we must network with various organizations that have direct connections with women and minority population. There is the chance that a disadvantaged population may not have an explicit organization representing it or that its representative organization is not already well embedded in regional networks. In such a case, we must network with several key individuals of the target population. This equity planning process requires research, as it is essential to build a common understanding of the state of the local region. The discussions to identify and reach common goals can take months because people with different backgrounds and interests are involved. The goals cannot consist of a wish list of what should be done, but rather must be to come up with actionable items for the local government and specific stakeholder organizations. In addition, it requires accountability checks, and the goals must come with measurable indicators. The prescriptions in this paper are likely basic steps; no doubt there are many other in-between steps. We must keep trying equity planning and building more cases to identify those in-between steps to be inclusive and to advance in the context of economic development for all in this changing and challenging environment.

Footnotes

Declaration of conflicting interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

ORCID iD

Yasuyuki Motoyama

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