Learnings from the recent 'Community business in place' report

Our Head of Impact Evaluation, Stephen Miller, explores the recent report by Renaisi – ‘Community Business in Place’

John Hitchin’s recent paper ‘Community business in place’ is a welcome addition to the conversation about place-based working and enabling local economic change. The paper draws on data from the evaluation of the Power to Change Community Business Fund, to explore three areas:

  • Community business creation in place: in which places are individual community businesses created, and is there something particular about these places?
  • Geographic clustering of community businesses: is it possible to encourage places to grow an ecosystem of community businesses?
  • Impact on place: what do community businesses do to the places they exist in?

 

Business creation in place

The analysis is based on data for 80 Community Business Fund grantees as well as a range of secondary data sources. It finds that the places captured through the data share a number of common characteristics.

For example, they tend to be economically deprived, with above average levels of recent migration, a higher level of skills than is typical for their deprivation level, with a history of alternative approaches to challenging social problems. This means they are more likely to have existing assets and institutions supporting new community business models.

Geographic clustering of businesses

The paper finds that, while not a specific intention of the Community Business Fund, the programme has supported clusters of community businesses in four local authority areas across England – Bradford, City of Bristol, Liverpool and Tower Hamlets. The significance of this clustering is still to be explored, but existing evidence highlights the benefits for local economies through  like-minded businesses within  a business-supportive area, with available capital and access to skilled workers.

The impact of the businesses on place

Measuring the impact of community businesses on places is a long-term objective for Power to Change but given it was established in 2015, it is too early to say for certain that Power to Change has made a difference. However, evaluation data from the Community Business Fund provides some indication that we have.

It shows that community businesses are highly likely to employ staff and use volunteers from local communities, draw their customers from local communities, and have members of those communities as members of the business.

However, the data shows that over time, employment does not change in the first months after investment. While not addressed in the report, one possible explanation may be that these investments help improve productivity, maximising output per worker and thus reducing the total number of workers required. Improved productivity is good for wages, but the implications on  the number of employment opportunities within an area may need to be explored further.

Either way, this counter-intuitive data point reminds us that we don’t know what these models do to local economies when businesses are established. Longer-term tracking and comparison is therefore required.

What next?

The report concludes with some challenging recommendations that Power to Change, along with our partners and community businesses, will be seeking to address over the next few years.

Firstly, it highlights the importance of recognising that the places which stimulate and support community business development have a particular set of socio-economic characteristics (high migration, high level of skills, but also high levels of deprivation). The paper recommends supporting places with these characteristics, as they are best placed to take advantage of the opportunities which come with funding and support for community businesses.

The second recommendation observes that these business models may not be the right approach to bring economic resilience and local well-being to a place. The author highlights there is a risk that a focus on ‘people-powered localism’ celebrates the defaults of places, and not what it might take to improve them. The report recommends that the emergence of community businesses in a place should not automatically be equated with success.

The final recommendation highlights that there is still not enough known about neighbourhood level enterprises and what happens around them. We do not yet know what happens to a local economy when a community business is set up. More and new data is required to develop a more nuanced understanding of what changes happen at this level.

The report therefore makes an important contribution to the discussion about place-based change by highlighting what the sociologist Anthony Giddens refers to as ‘the duality of structure’ – the local conditions which give rise to community businesses are then potentially impacted upon by the community business itself, thus changing the context in which future economic and social activity occurs.

This topic requires further investigation – not only to unpack these assertions some more (are community businesses more likely to emerge in these types of places, or is it that the Community Business Fund is more likely to fund community businesses from these types of places?) but also to better understand the historical, cultural and socio-economic conditions of places which best support the development and growth of community business.

This is why Power to Change has dedicated five per cent of its endowment to undertaking research and evaluation, to grow the evidence base and help make the case for community businesses. Over the next few years we will be building on work such as this, undertaking longer-term tracking and calculating counterfactuals to better understand if and how community businesses impact on places.