*originally posted by go local austin

The results of a new study suggest that the key to reversing the long-term trend of stagnating incomes in the U.S. lies in nurturing small, locally owned businesses and limiting further expansion and market consolidation by large corporations.

Economists Stephan Goetz and David Fleming, both affiliated with Pennsylvania State University and the Northeast Regional Center for Rural Development, conducted the study, “Does Local Firm Ownership Matter?”  It was published in the journal Economic Development Quarterly.

Goetz and Fleming analyzed 2,953 counties, including both rural and urban places, and found that those with a larger density of small, locally owned businesses experienced greater per capita income growth between 2000 and 2007. The presence of large, non-local businesses, meanwhile, had a negative effect on incomes.

“Even after we control for other economic growth determinants … the non-resident-owned medium and large firms consistently and statistically depress economic growth rates … The other major result is that resident-owned small firms have a statistically significant and relatively large positive effect” on income growth, the authors report. Small firms are defined as those with fewer than 100 employees and large firms as those with over 500 employees.

“Subject to the caveat that the 2000-2007 period was unique in American economic history, results presented are remarkably robust in terms of the positive link between small firms that are locally owned and per capita income growth. Medium and larger firms appear to have the opposite effect, especially when they are not locally owned. These include big boxes as well as other chain and nonchain operations that are owned by individuals who are not also residents of the community. Although these types of firms may offer opportunities for jobs, as well as job growth over time, they do so at the cost of reduced local economic growth, as measured by income. Small-sized firms owned by residents are optimal if the policy objective is to maximize income growth rates,” the authors conclude.
—Stacy Mitchell, senior researcher with the New Rules Project

Going Local not only helps your neighbors, but your local economy too!  Gnaw on this economic study: for every $100 spent at a national chain store, only $12 is circulated back into the local economy. TWELVE DOLLARS.  The good news is that if you spend the same $100 at a local biz, your contribution to your local economy will TRIPLE! This is huge…and it’s the reason why we’re in Houston and in 20 other cities (and counting!).

And it just keeps getting better because there are even more benefits to shopping locally:

1. You are helping the environment! Since you’re not buying your apples from Wisconsin, but right in you local farmer’s back yard, you didn’t help to waste gas that causes pollution during the transportation of those mealy out-of-town apples. Who knew?

2. You are helping your community grow. By helping your local business owners, you are also helping them to give back to their community.  The more invested YOU are, the more invested THEY are through local causes and non-profits.  The longer they are around, the longer your own community keeps its youthful glow.

3. You are getting amazing customer service. According to research, in a reaction to stiff local competition, local businesses focus more on customer service…being better than the rest and treating customers like royalty. YOU the customer are a V.I.P., and feeling important is awesome!

So there you have it. GO LOCAL as often as possible. Sure it’s sometimes easier to go to Randall’s for a loaf of bread…but think about the quality you are missing out on by not visiting your local farmer’s market for fresh out of the oven bread. And yeah Starbuck’s has a drive-thru…we are all in a hurry, but think about the effects you could have on your community by taking the few extra minutes at your local coffee shop. The latte is probably better, anyway.

It’s super easy to find local businesses! Just ask! Or check out our website. If you know of any local biz that isn’t a part of Go Local Houston yet, shoot us an email. We want to help Houston be the best it can be by supporting local businesses and our community!