An Iowa State University professor is on a team of researchers using “big data,” or extremely large data sets, to match rural communities with businesses that would have the best likelihood of success in specific geographic areas.
The multi-state project is believed to be one of the first of its kind to analyze vast amounts of data to reveal patterns and trends that can match rural communities with businesses, and ultimately stimulate economic development.
Linda Niehm, a professor in apparel, events, and hospitality management and a Dean’s Faculty Fellow in the College of Human Sciences, is working with Craig Carpenter and Rebekka Dudensing of Texas A&M University, and Scott Loveridge of Michigan State University on the four-year, USDA NIFA-funded project.
Niehm is well-known for research and expertise in helping small rural, community-based, and family-owned businesses enhance competitive options and identify innovative best practices in social media.
“Linda has developed a vast network with rural business owners and community leaders through her community outreach and business consulting activities in Iowa, which the project team will lean on as we develop our focus group and modeling efforts,” said Carpenter, the principal investigator of the project who’s an assistant professor and extension specialist in agricultural economics.
The project received a $499,996 rural development grant that’s one of 47 grants totaling $17.5 million awarded in May by the U.S. Department of Agriculture’s National Institute of Food and Agriculture.
The researchers are analyzing data from the U.S. Census, as well as federal employment and payroll statistics, to help them more accurately estimate the sustainability of rural business establishments. They’re examining socioeconomic, geographic, and industrial factors that influence business success in a region.
“This new USDA NIFA grant project is very exciting as it uses a combination of big data from both restricted-access government databases and publically available data to create algorithms or predictive models,” Niehm said. “Instead of going with a ‘try this’ and ‘try that’ approach, economic development specialists, community leaders, and business owners will have a more accurate way to estimate what industries and types of businesses are most likely to be successful (or not) in a given rural area.”
The team will develop an online modeling tool to identify potential economic development opportunities in rural communities. The tool will identify which industries are underrepresented in a county, and then determine whether a community could support a certain business, such as a grocery store or barber shop.
The work is breaking new ground in the use of big data.
“Big data are continuing to grow, but research and extension/outreach struggle with best practices for utilization of that data, especially in the development of practical uses,” Carpenter said. “In this case, we know that there are numerous factors that influence the survival and growth of rural businesses, but current efforts have not yet utilized big data to dig into the relative importance of those various factors. Our work will do just that.”
Iowa, Texas, and Michigan are the states where pilot communities will be identified for the project. Researchers completed a pilot focus group this past summer, which sought feedback from home-based business owners on the kinds of training and tools that would be beneficial to their work.
“Major needs of small rural businesses included access to funding, need for quality employees, and training concerning innovative marketing and technology applications for rural businesses,” Niehm said. “The Small Business Development Centers are not able to serve the demand that they have for business assistance, so the community-business matching data would be very helpful in user-friendly forms.”
After completion of the four-year study, researchers plan to extend the program nationally — with a product that would match nearly every county in the United States with industries that are relatively likely to succeed there.
“Business needs and industrial composition can vary substantially by state,” Carpenter said. “This project is national in scope and, as such, it is helpful to have a variety of perspectives and experiences from different states across the nation. The final research product will involve data from every county in Iowa.”
Iowa Retail Initiative
Economic development can be difficult in rural communities that lack the resources and data that are often available in more urban areas. Compounding that difficulty are trends of declining population and a relative lack of diversity in industries and employment opportunity.
“All businesses everywhere face increased competition from the internet and other market forces,” Niehm said. “Small businesses in rural areas have even greater challenges due to population decline and market change. Most rural businesses do not have ready access to business assistance that can help them respond to change effectively, and innovate in terms of their offerings, methods of marketing, and modes of distribution.”
Niehm is no stranger to Main Street. Since 2004, she and Ann Marie Fiore, a professor in apparel, events, and hospitality management, have led College of Human Sciences students and faculty members in doing “makeover marathons” for more than 30 small Iowa businesses.
Four years ago, Iowa State took that outreach to the next level. Working with associate professor Jessica Hurst, Niehm became a leader of the Iowa Retail Initiative (IRI), which provides a single point of contact for rural communities and retailers seeking help.
Niehm's total small business outreach efforts over the past 13 years, including the IRI, have served approximately 200 retailers in 50 communities across the state and provided more than 530 students with real-world learning experiences. The IRI project was funded by the vice president for ISU Extension and Outreach office, in collaboration with the College of Human Sciences and College of Design. This semester, Niehm and the IRI are working with another 30 students in Garner, where they are conducting consulting projects for five small rural retailers.
“Rural businesses that are successful and sustainable have figured out a way to grow their customer base through approaches such as creating a destination business, providing an unparalleled customer experience, and being multi-channel in the ways that they reach and serve their customers — in store, online, through social media, mobile product trucks, or pop-up shops,” Niehm said.
All of that experience gave Iowa State a seat at the table for this “big data” project that has the potential of making a significant impact to rural communities nationwide.
“Dr. Niehm’s community-based research experience, which includes both quantitative and qualitative modes of data collection and analysis, fits well with the aims and needs of this project, especially the focus groups that we are running this year, which aim to learn more about factors related to business survival and growth,” Carpenter said.
Niehm is in the second year of serving as a Dean’s Faculty Fellow, an honor made possible by an anonymous gift to the College of Human Sciences. As part of the fellowship, Niehm is receiving $30,000 a year in fiscal years 2017 and 2018 to extend her well-known work in developing entrepreneurship programming and outreach unique to the College of Human Sciences. Some of those funds will be used to supplement Niehm’s travel and conference costs related to this USDA grant.