New Zealand rural small businesses and their entrepreneurial behaviour

This paper analyses data from the New Zealand Centre’s annual survey of a panel data set of 1500 New Zealand SMEs undertaken from 2007 to 2009 to examine the performance and strategies of small businesses in a rural location in New Zealand. In theory rural SMEs are at disadvantage when compared to small business in urban locations in their abilities to react to changing economic conditions and undertaking investment in new product development and innovative activities such as new management and marketing activities. It has been well documented that rural SMEs, compared to urban SMEs, tend to be smaller in size, less likely to be classified as growth firms, have access to limited resources due to the leanness of the environment (as opposed to munificence of urban areas) and tend to be less innovative (e.g., Telford, 2006). It is arguable that in the case of rural SMEs in New Zealand such factors are compounded by remoteness of markets and greater ‘rurality’ of the environment. In this paper we compare theoretical explanations to results from the New Zealand Centre for SME Research (NZSMERC) annual mail survey of New Zealand’s SMEs, the BusinesSMEasure. We examine the strategies of rural small business owners in the face of changing economic conditions and how they have responded over time from 2007 to 2009. Comparisons are made in the annual surveys with firms from urban locations. We report initial findings that suggest that firms in rural locations have to be at least as innovative as their urban counterparts as the recession deepened in 2009. We discuss the entrepreneurial behaviour of rural SMEs in New Zealand as demonstrated over time in the light of theoretical expectations, their strategies and their level of innovative activities.