Small Business in the Age of ‘Big Game Hunting’

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CED Program Interns & Students

Lindsay Moriarty is a graduate student at UNC-Chapel Hill pursuing dual masters’ degrees in Health Behavior and Health Education and City and Regional Planning.  She is currently working with the Lumber River Council of Government through the Carolina Economic Revitalization Corps (CERC).

In Economic Development, there’s always been a focus placed on ‘big game hunting’.   You needn’t look hard for examples nor for the justification to do so.  Take for instance Monday’s announcement that Red Hat, a provider of open source software and support, was staying in Wake County.  Less than an hour after the Governor’s office tweeted that big news for Raleigh jobs was coming later in the day, news wires and social media were ablaze with speculations and assumptions about Red Hat’s decision to stay put rather than relocate to Boston, Austin, or even to nearby Durham.

Governor Perdue went all out for Red Hat, going so far as donning a red fedora to announce that the company would be keeping its headquarters in the state.  What followed was a blitz of questions about the number of new jobs promised and potential locations for a new 600,000 square foot headquarters.  It’s easy to see how such announcements create excitement.  540 new jobs in the next decade is good news for Wake County, which just days before learned that Progress Energy would be reducing the number of Raleigh-based employees as part of its acquisition by Duke Energy.

The environment of ‘big game hunting’ is fast paced and promises high, albeit unguaranteed returns for those involved.  But what about those who aren’t?  And what does this practice say about the role of small business in economic development?  This problem was highlighted in early December at a minority-owned small business roundtable chaired by Lt. Gov. Walter Dalton.  One participant, a representative of the NC Indian Economic Development Initiative, complained that state and local governments are unable to recognize the benefit of small business.  One way this plays out is through the allocation of state incentives, which for Red Hat meant $18 million for the promise of 540 new jobs.

To put things in perspective, consider that Raleigh is approximately 140 times the size of Red Springs, a Robeson County town.  Red Hat’s announcement of 540 jobs in Raleigh would carry the same weight as just four jobs for the town of Red Springs.  If Red Hat can receive upwards of $30,000 per new job, what types of incentives can North Carolina promise to a firm of five locating in Red Springs?

The recruitment of new factories or corporate headquarters can have a transformative effect on struggling small towns.  That being said, given the realities of many of these municipalities, the creation of five jobs in the same environment should not be undervalued.

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