The Arts as a Force for Rural Business Innovation

This is the NEA’s Spotlight on Research. I’m Josephine Reed, here with Sunil Iyengar—he’s the director of research for the National Endowment for the Arts.

Jo Reed: Hello, Sunil.

Sunil Iyengar: Hi, Jo.

Jo Reed: How are you?

Sunil Iyengar: Good. Doing okay.

Jo Reed: So what's new and interesting and on your plate in the world of arts research?

Sunil Iyengar: Well, late last year, we produced a new report about rural arts design and innovation, and in doing that report, which, you know, we did with the Department of Agriculture, actually, of all people. We found that, in fact, there's as you look at rural counties where there are performing arts centers, you find that there tend to be a lot of innovative-- highly innovative businesses and productive businesses that cluster near those settings-- in those settings, near those centers. That is to say they almost seem to be magnets for innovation and industry, and we're wondering why that might be the case.

Jo Reed: Well, that was exactly my question. Why do you think it might be the case?

Sunil Iyengar: Well, you know, this is interesting. Because we thought there might be a variety of reasons that could have made a difference or overlapped with this. For example, some of these might be university towns, and we know that there tend to be a lot of start-ups and things like that in university towns or around university towns. They may have some other assets in their communities that may positively impact innovation. But, in fact, we controlled for a lot of other things, and we found that holding everything constant, you still found that this was the case, and so it does lead us to believe that there may be something to do-- may have something to do with the type of people who move to communities where there are vibrant arts opportunities. That is a theory that's been around for a long time in the urban communities, urban centers. You may have heard, of course, creative economy idea, this idea of what's called agglomeration, the agglomeration effect, which is businesses tending to cluster around arts, in arts ecosystems, for example. But this was something we didn't quite expect in the rural communities. Again, the prevalence of performing arts centers is quite less, compared to in urban centers, but nevertheless, even in rural communities where it's easier to, kind of, detect these performing arts centers, when you look at the data, we find that there's a high incidence of these highly innovative firms. Now, these innovative firms were chosen by this rigorous criteria that was applied by the US Department of Agriculture, their Economic Research Service Unit.

Jo Reed: But let me ask you, and this is true in rural centers all around the country? It's not just the...

Sunil Iyengar: Yes.

Jo Reed: ...Southwest? Or...

Sunil Iyengar: That's our belief, yeah...

Jo Reed: ...the Southeast?

Sunil Iyengar: Yeah, again, we controlled for a variety of factors and we found this to be generalizable from the data, and again, I have to credit, very strongly, some of the economic research analysts over at the US Department of Agriculture, particularly Tim Wojan who really was a lead author on this, with our own Bonnie Nichols at the NEA. So I think some of that work is-- again, it's on a frontier here, because there hasn't been a lot of work on economic development in rural communities, as it relates to the arts, and so this is, I think, pioneering work that could set an agenda for future research.

Jo Reed: And what struck me about it is that it's performing arts, quite specifically.

Sunil Iyengar: Yes, that's right. We didn't find the same effect when we looked at other kinds of arts organizations, but I wouldn't rule that option out. In other words, we just have better data, in many cases, where performing arts centers are concerned. So we looked at the performing arts and one of the things I will say, also, is some of this is, maybe, unique to rural communities. I mean, like I just said, you know, in mainstream economics, there's a general belief that there's this agglomeration effect that happens. That is to say this clustering of businesses and innovative economic vital industries around some of these arts and cultural venues, in the urban setting. But in the rural setting, there's some unique dynamics. For example, we find that rural businesses, in general, tend to be much more customer conscious. They're much more about local customers and trying to fulfill their needs. They seek feedback from them, actively. They then use that to transform their business practices. We also found that rural arts organizations tend to be much more, as we've said, customer conscious, integrating feedback from the local people, We also found that rural arts organizations tend to draw out of state, out of country, visitors at much higher rates than in even urban centers, as a whole. And so that was surprising to us that rural arts organizations have such a large proportion of their audience or visitors coming from out of local surroundings. And so there is something to be said for the rural environment that may, in fact, have as much to do with this innovative factor as the presence of a performing arts organization. So these are some things we didn't quite know before the study.

Jo Reed: What I found so interesting, Sunil, is that a rural business will increase in innovation, in design...

Sunil Iyengar: Yes.

Jo Reed: ..., for example, from 17 percent to 44 percent, if there's only one performing arts organization...

Sunil Iyengar: Yes.

Jo Reed: the county. One...

Sunil Iyengar: Yeah.

Jo Reed: ...makes that kind of a difference.

Sunil Iyengar: Well, so again, this is where, in the familiar research lingo, you know, we have to be careful not to say that something is causing this.'s a very strong association, and that's what we believe, too.

Jo Reed: Okay. Now, what is next on the research docket for this very, very provocative and really interesting study?

Sunil Iyengar: Sure. So what we're doing now-- these are statistics we've gathered and we've analyzed. But what we really want to do is understand real world practice, what's going on. So we're very proud to be collaborating with the Rural Policy Research Institute at the University of Iowa for what's called an NEA Research Lab, where they will be investigating, over the period of a few years, this very connection between arts, rural communities, and entrepreneurship and innovation. They've just done an exhaustive literature review, and they plan to now develop what's called a conceptual framework, which is a model-- not so much a playbook or a how-to guide, but to understand structurally what's happening in these communities, and then put data behind it. So they're going to develop some tools for arts organizations, for policy makers, to start to tell the story more effectively and also learn what's going on in their own communities.

Jo Reed: I look forward to it. Thank you so much, Sunil...

Sunil Iyengar: Thank you, Jo.

That was Sunil Iyengar, director of research at the NEA/ I’m Josephine Reed. Thanks for listening.

Research from the NEA, in partnership with the U.S. Department of Agriculture, shows that measurably innovative firms tend to cluster near performing arts centers in rural communities.