Rural Small Businesses in Turbulent Times

Abstract

This paper explores differences in behaviour and performance between rural and urban small firms during the economic downturn. The authors had anticipated that the ‘thinness’ of the rural environment would have had adverse effects. However, their survey of 6,300 respondents showed that rural small firms were performing marginally better. Both groups were proactively striving to cope with falling demand, not waiting for things to get better, but rural firms had better sales and fewer price reductions. The authors attribute this to local embeddedness, a more stable customer base and less competition. They note too the relative independence of rural businesses.