Case Study: Making a Difference in Rural Appalachia

Note: The following information provides an example of the input-output model approach to demonstrating impact, described in the How to Collect section.

Background

The Ohio University Innovation Center in Athens, Ohio, assists technology companies in Southeastern Ohio. Located on the campus of a state university in a very rural part of Ohio, the Innovation Center simultaneously enjoys the opportunities presented by university research and amenities, and the challenges presented by a depressed economy (Athens County is one of the poorest counties in Ohio).

Economic impact tracking at the incubator has been sporadic since its launch in 1983. Although staff tracked impact during the incubator’s early years, collection of data was not consistent over the decades to come. When Linda Clark took the job of assistant director for business and technology development in 1997, she began tracking some basic metrics regarding client firms. However, she didn’t begin reporting out on that tracking until more recently.

“I had a meeting with OU’s Institute for Local Government Administration and Rural Development to explore how I could report out on our impact on the [local] economy,” says Clark, who became director of the Innovation Center in 2000. ILGARD research analysts explained that one option was to do an input-output model, using IMPLAN software.
Clark liked the idea of hiring ILGARD to do the analysis. “I’m not an economist, and I have no idea how to take my data and [project local impact],” she says. “Having this office analyze the data would make it objective. I just let the chips fall where they landed.” Clark secured a grant to cover the costs.

Although none of the Innovation Center’s stakeholders require economic impact data, Clark says she “needed a way to objectively evaluate that we were headed in the right direction.”

Collection Method

Every December, Clark sends a spreadsheet to clients via e-mail requesting certain metrics, including gross sales, number of employees, and grant monies received. Clients may return the data either electronically or in hard copy. “Everybody does it because I hound them until I get it back,” Clark says. “It seems to be easy for them to fill out.”

Until 2003, the year the Innovation Center moved into a brand-new building, Clark had collected impact information on client firms only. However, coinciding with the 2003 move, Clark began collecting data for graduate companies as well. In any given year, she plans to collect data about graduates for the most recent five-year period.

Reporting Out

Because the Innovation Center is located in a depressed area (nearly 30 percent of Athens County residents live below the poverty line), local officials and residents are keenly interested in jobs and wages. Therefore, Clark’s reports clearly demonstrate the impact that the incubator has in these areas.

“Our numbers stand out in this community more than they might in a large city,” Clark says. “In a metropolitan area they’d just be more noise. But in a small depressed community, these numbers are heard.”

In 2006, clients of the incubator employed 217 people in Athens County, Ohio. The IMPLAN analysis estimated that those jobs created an additional 127 jobs through indirect and induced impacts. Those 344 jobs were estimated to have generated a total of approximately $12.6 million in labor income.

Benefits of Tracking

Clark says that demonstrating her program’s economic impact has had benefits locally, at the state level, and at the national level. The first time she released an economic impact report for the incubator, in 2005, one of the first recipients was the president of Ohio University. “[His office] was so happy to get it because they could use it in their marketing,” she says. “So it raised the level of interest in the incubator from the presidential level of the university. It’s one of their jewels.”

At the regional and national level, Clark’s numbers earned her attention and respect from both the Appalachian Regional Commission and the U.S. Department of Commerce’s Economic Development Administration. “I gave my report to ARC and EDA, and they both said this was the best economic impact study, in terms of methodology, that they had ever seen from the region.”

Clark believes it’s important for all incubators to track their economic impact. “Nationally, it helps attract funding from the federal government and within individual states,” she says. “And, it’s a good part of an incubator’s marketing plan. Why bother with incubation if you can’t show that you’ve been effective?”