SBA GRANT – FINAL REPORT
EXECUTIVE SUMMARY
SECTION ONE
CONTEXTS
Chapter I
Small Businesses, Process Innovations, and Spatial Solutions
1. SMEs
2. Ease of Doing Business: A Global Perspective
3. SME Survival Rates
4. Competitive Business Environments
5. Process Innovation
6. Spatial Thinking
7. Spatial Technology
8. Other Considerations
9. Modeling Relationships
10. Assessing Results
Chapter II
Geographic Information Systems (GIS): Concepts and Tutorials
1. A Brief History
2. Basic Terminology
3. Literature Review: GIS and Business Marketing
4. Literature Review: GIS and Business Logistics
5. Literature Review: GIS and Business Strategy
6. Spatial Data: Sources and Complications
7. Commercial GIS Software: ArcGIS
8. Open-Source GIS: A Sampler of GIS Programs
9. Open-Source GIS: Statistical Computing Programs
10. Web-Based GIS: The Present and the Future
Chapter III
[ArcGIS]
[MapWindows]
[GeoDa, R]
[Google]
The Inland Empire: A Spatial Definition
1
SECTION TWO
CASE STUDIES
Chapter IV
Case Study A: Training the Trainers at CHARO
Chapter V
Case Study B: ABC Blinds
Chapter VI
Case Study C: Bodas Hispanic Bridal Magazine
Chapter VII
Case Study D: An Application of “Community Tapestry”
Chapter VIII
Case Study E: Dynamic Analysis of Housing and Mortgage Markets
Chapter IX
Case Study F: Real-Time Data for Property Appraisal
SECTION THREE
FOOTPRINTS
Chapter X
Diffusion of Knowledge
1. Workshops, Templates, Presentations, Conferences
2. The Redlands Business GIS Vortal
Chapter XI
Sustainability of Efforts
1. The Redlands Relative Advantage Global Atlas
2. The Redlands Inland Empire Business Atlas
Chapter XII
Future Directions
2
SBA GRANT – FINAL REPORT
EXECUTIVE SUMMARY
SECTION ONE
CONTEXTS
Chapter I
Small Businesses, Process Innovations, and Spatial Solutions
JP
Chapter II
Geographic Information Systems (GIS): Concepts and Tutorials
rg
Chapter III
The Inland Empire: A Spatial Definition
rg
SECTION TWO
CASE STUDIES
Chapter IV
Case Study A: Training the Trainers at CHARO
rg
Chapter V
Case Study B: ABC Blinds
jp
Chapter VI
Case Study C: Bodas Hispanic Bridal Magazine
rg
Chapter VII
Case Study D: An Application of “Community Tapestry”
as
Chapter VIII
Case Study E: Dynamic Analysis of Housing and Mortgage Markets
jm
Chapter IX
Case Study F: Real-Time Data for Property Appraisal
jp
SECTION THREE
FOOTPRINTS
Chapter X
Diffusion of Knowledge and
JP,rg,rama
Chapter XI
Sustainability of Efforts
ri,jm,JP
Chapter XII
Future Directions
jp
3
SBA Final Report
0. Overview and Summary
DRAFT OUTLINE
4. The Inland Empire
- Definition
1. Contexts for Appraising SME Success
- Demographics
- Global
- Spatial Autocorrelations


- Growth Patterns, SME Opportunities
Doing Business in …
Relative Advantage in Trade
- National, State, Local Regions




Survival Indices
Competitiveness Indices
Statistical Associations
MAUP and Ecological Fallacy
2. Define and Explaining SME Success
- SME Access to Capital
5. GIS for SMEs
Case Studies



Selection
Implementation (see Appendices)
Assessment
- Response Measure: Survival
Vignettes
- Primary Predictor: Process Innovation

- Statistical Controls: Age, Environment, etc.
Stimulus Studies

Global Relative Advantage
Faculty Research
3. GIS as a Process Innovation
- What is a Process Innovation?
6. GIS for SMEs: Diffusion of Knowledge
- What is GIS?
- Workshops
- GIS Technology and Resources
- Presentations
- Spatial Solutions to Bus. Problems
- Conferences



Academic Literature
Best Practices
Focus on SMEs
- Templates
- Web Vertical Portal
7. Conclusions and Recommendations
.
8. Appendices
4
DRAFT OUTLINE
SBA Final Report
0. Overview and Summary
PLATT
This grant has examined the state of small and medium-sized enterprises (SMEs), and has
considered the potential for spatial approaches to refining business models and positively
influencing business operations and SME success. Although study focus is the Inland
Empire region of Southern California, results and outcomes help inform SMEs everywhere.
1. Contexts for Appraising SME Success
Global
- Doing Business in …
PLATT
The “Doing Business” project (The World Bank, Doing Business 2009, International
Finance Corporation) provides objective measures of business regulations and their
enforcement across 181 economies. Analysis of this data indicates relative strengths and
weaknesses of the U.S. climate for SMEs, and provides evidence of global spatial
autocorrelation patterns. Survey instruments are used to ascertain the extent to which
perceptions of small business owners in the Inland Empire reinforce these measures.
- Relative Advantage in Trade
MOENIUS
“Many, if not most, SMEs are subject to the impacts of globalization” (Winch & Bianchi,
Journal of Small Business and Enterprise Development, Dec. 2006; 13, 1, p.73).
Utilizing a comprehensive database of trade data involving about 3,000 industries, 200
economies and nearly 50 years, we examine SME relative advantages and competitive
pressures. Again, there is evidence of global spatial autocorrelation patterns.
National, State, Local Regions
- Survival Indices
PLATT
An aggregate measure of SME Risk-to-Survival is the ratio of business births to the sum
of business terminations and bankruptcies. For the United States, the overall ratio is 1.15,
indicating a 15% annual net growth in new businesses. However, for California the ratio
is 0.78, ranking 44th among the 50 States. What are the contributing factors to this ratio?
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- Competitiveness Indices
PLATT
The Kauffman Foundation provides benchmark rankings of technological innovation and
resultant economic transformation of the 50 States. According to their “2007 State New
Economy Index”, California ranks 5th among the 50 States. There is evidence of spatial
autocorrelation among regions of the United States.
- Statistical Associations
PLATT
Is there a statistical association between SME risk-to-survival rates and competitiveness
indices, or between survival rates and various measures of socio-economic well-being?
- MAUP and Ecological Fallacy
PLATT
A phenomenon known as the “modifiable areal unit problem” suggests that the strength of
observed statistical associations may vary by unit of analysis. Do measures of statistical
association with survival rate differ when measured at the State vs. county level?
2. Define and Explaining SME Success
- Response Measure: Survival
PLATT
It is evident that the first and primary objective of SMEs is business survival. The rates
of survival are depressingly constant across sectors, but vary across regions. As the 2007
edition of the “Small Business Survival Index” states, public policies often raise costs and
diminish incentives for starting, investing, or building small businesses. The report ranks
the States on each of 31 costs impacting small businesses. In aggregate, California ranks
49th of the 50 States. There is evidence of spatial autocorrelation among regions of the
United States. Survey instruments here ascertain the extent to which small business
owner perceptions in the Inland Empire mirror these relative rankings.
- Primary Predictor: Process Innovation
PLATT
An empirical analysis of more than 3,000 SME failures indicates that small firms that
innovate have on average an 11% higher survival rate than those without innovations;
furthermore, process innovations contribute more to survival than do product innovations.
- Statistical Controls: Age, Environment, etc.
PLATT
Survival rates also vary by age and size of the firm. Do these associations also exhibit
spatial autocorrelaton, and do they also vary by level of aggregation for measurement?
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3. GIS as a Process Innovation
- What is a Process Innovation?
PLATT
Process innovation can be defined as new elements introduced into an organization’s
production or service operations in an attempt to increase effectiveness or efficiency.
Multiple sources of process innovation and resultant impacts are reviewed here.
- What is GIS?
GREENE
A geographical information system (GIS) can be defined as an organized means of
capturing, storing, manipulating, analyzing and displaying layer of spatial data. It is
suggested here that GIS can be a process innovation for organizations, including SMEs.
- GIS Technology and Resources
GREENE
A taxonomy of GIS technology is presented, surveying both commercial and freeware
solutions, as well as both stand-alone and web-server solutions. Guidelines are
developed for mapping GIS process innovation technology to specific SME needs.
- Spatial Solutions to Business Problems
GREENE
GIS is a process innovation that can have positive impacts upon business performance
measures, which correspondingly improves survival probability. GIS process innovation
can be at the enterprise level, or can be specific to critical functional areas of the business.
- Academic Literature
MOENIUS – PERRY - SARKAR
Academic research can enrich the knowledge in this field by utilizing methodologies,
concepts, and theories from business, management, and other disciplines to apply to GIS
in business. A study has shown that academic research publications on GIS have been
sparse in the business sub-discipline of information systems (Huerta, Navarrete, and
Ryan, 2005) and the same situation extends to other business areas. Here faculty reviews
existing academic literature regarding GIS in marketing, logistics and strategy.
- Best Practices
MOENIUS – PERRY - SARKAR
In addition to a faculty review existing academic literature regarding GIS in marketing,
logistics and strategy, there are many examples of successful applications of GIS to real
business problems. A sampling of these experiences are presented, relying heavily upon
the documented case studies at the ESRI website and presented in their publications.
- Focus on SMEs
GREENE
Most academic literature and best practices have been applicable to, or involved, large
corporations. It is suggested that many similar benefits, and others, can accrue to SMEs.
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4. The Inland Empire
- Definition
GREENE
This grant defines the Inland Empire as a quantitative entity, rather they simply as
Riverside and San Bernardino Counties. It takes an economic approach based upon
location quotients by first defining job centers within the two counties, then eliminating
virtually empty areas by selecting a 10 percent commuting flow contour to job centers.
- Demographics
GREENE
“Inland Empire”, as defined by the U.S. Bureau of the Census, is that Metropolitan
Statistical Area notated as “Riverside-San Bernardino-Ontario (CA). With just over four
million inhabitants, compared to 1.5 million in 1980, today it is the 14th largest
metropolitan area in the U.S., and has been the fastest-growing in California. What is the
ethnic and linguistic composition of this population, and how does it vary over space?
- Spatial Autocorrelations
PLATT
Neighborhoods and businesses arrange by spatial pattern, and detection of such patterns
can provide insights to housing prices, unemployment rates, or demand for public
schools. Here the “Community Tapestry” segmentation system, which identifies 65
community segments, 12 “LifeMode” summary groups, and 11 “Urbanization” summary
groups, is applied to examine spatial autocorrelation patterns at the zip-code level.
- Growth Patterns, SME Opportunities
PLATT
The population base of Southern California has shifted over time, with growth primarily
inland from the coastline. This shift has not been evenly distributed, over space, over
time, across ethnicities, or across industries. We catalog and map the flow of people and
businesses into and across the Inland Empire. Examination of the alignments of people
relative to jobs suggests opportunities for growth in employment through new business.
- SME Access to Capital
PLATT
The Board of Governors of the Federal Reserve System recently (October 2007)
submitted its “Report to the Congress on the Availability of Credit to Small Businesses”.
It states that small firms (compared to larger corporations) have more difficulty gaining
access to credit sources, are considered riskier, and are much more affected by swings in
the economy – and that these influences vary by region and local economy. Here is an
assessment of how such patterns in the Inland Empire support or diverge from national
and regional patterns identified in the Report.
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5. GIS for SMEs
Case Studies
- Selection
PLATT
There are tens of thousands of SMEs scattered throughout the Inland Empire. This grant
could only conduct a small set of case studies, so it was important to sample from a broad
cross-section – but select on what basis? After much consideration, it was decided to
sample cells from a two-dimension grid: the first dimension is stage in the life cycle of
the firm (Start-up, Growth, Mature, Stable); the second dimension is placement within
the firm value chain (Inbound Logistics [including Site Location], Operations, Outbound
Logistics, Sales and Services). To the extent practical, consideration also was given to
variations in size, sector, etc.
- Implementation (see Appendices)
 Case 1: ABC Blinds
GREENE
PICK
This mature retail firm has been doing business for 28 years, and now faces new
challenges due to explosive population growth in High Desert. GIS proved highly
effective in providing insights for a mature firm seeking both growth and efficiency.
 Case 2: Above-the-Limit
RAMA
Focusing on providing technological solutions to the “digital divide”, this
entrepreneurial group of engineers develops low-cost web-related products. Although
sophisticated in the use of technology, the firm changed its focus several times during
the study period and never settled on a clear business plan; as a result, GIS was not an
effective tool at this stage in the evolution of this organization.
 Case 3: CHARO
GREENE
A not-for-profit organization serving as a Department of Commerce Minority Business
Enterprise Center, CHARO provides loan package and related support to nearly 100
SMEs. This association provided the opportunity to develop and test GIS templates.
 Case 4: Bridal Magazine
SARKAR
Bodas USA La Revista is a start-up business founded by a journalist who perceived
demand for a Spanish-language bridal magazine. She entered into a contract with a
major bookstore chain to distribute the magazine, and GIS was used to target outlets.
Case 5: Property Appraisers
PICK
Jacobs Appraisal and Affiliates is a small real estate appraisal group that provides raw
land, residential, and commercial appraisals, as well as litigation and consulting services.
The group, has conducted its mapping work manually or by consolidating disparate web-
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based maps from government services, rather than using GIS.
 Case 6: Dance Apparel
GREENE
A current student in the MBA program at the University of Redlands enrolled in the
program for one reason: to prepare himself to create a small business that builds upon
specialty skills and knowledge of his wife. The student believes that GIS can guide
initial business planning, and has requested assistance through the grant.
 Case 7: GIS for Small School Performance
PLATT
Public schools share many characteristics with other small and medium-sized enterprises,
and therefore may be able to benefit from GIS. In particular, spatial analysis of the
distribution of performance measures is shown to provide a useful guide to school
resource allocation. It also provides a substantive response to recent state legislation
mandating school utilization of data analyses based on academic performance indicators.
 Case 8: Inland Empire Mortgage Market
SARKAR
The Inland Empire has been particularly impacted by the sub-prime mortgage crisis, and
its housing default rates are among the highest in the nation. Spatial analysis of mortgage
loan and repayment patterns can guide decisions by loan officers, brokers, and realtors; of
course, such guidelines must conform to laws against discrimination through redlining.
 Vignette 1: Textiles
ZHAO
Since the Multi-Fiber Agreement expired on January 1st 2005, radical changes in the
international competitiveness in textiles have been observed. This vignette
demonstrates how competitive pressures changed for textile firms in the US, and
provides guidance for a local firm with a focus on women's dresses, suits and skirts.
 Vignette 2: Telecommunications
PLATT
Outsourcing parts in telecommunication: This vignette illustrates how global trade
data can support the search for joint venture partners for a small local company that
produces intelligent parts for the telecommunication industry.
 Vignette 3: Insecticides
MOENIUS
A local firm has a patent pending on a systemic insecticide almost 40% more
effective than current products, but at the same time with a much faster decay time.
Now that the credit crunch has hit, their investor has suddenly gotten cold feet and
the bank has reduced their line of credit. What should they do? Using a global trade
GIS database, they select the optimal international production location for their
target market, produce insecticide there, and sell it into the most attractive market
in terms of insecticide importers / vegetable exporters.
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- Assessment
PLATT
Finance literature and practice provide accepted guidelines for ex ante valuation of
capital investment opportunities. For small firms, there are at least three
impediments to successful implementation: (i) Choice of an appropriate discount
rate; (ii) Identification and measurement of expected net cash flows, and (iii)
Recognition of embedded real options. Through this grant methods and measures
of each are developed and demonstrated within the context of considering adoption
of a geographic information system (GIS) as a capital investment.
Concept Studies
- Global Relative Advantage
MOENIUS
In “Small Firms, Global Markets”, a recent book edited by J. Haar, the case is made that
small businesses are no more immune to global competition than are large corporations,
and for many small businesses advances in technology provide untapped global market
opportunities. A comprehensive global trade database, comprising thousands of
industries in hundreds of economic states over decades of experience, has been geocoded for easy visual extraction of meaningful cross-sections of relative trade advantage.
Stimulus Studies
- Faculty Research
PICK
GIS and spatial thinking is not in evidence at most business schools. If that were to
change, it is likely that GIS awareness, technology and applications would increase
dramatically, to the benefit of small businesses. Because the corporate leader in GIS
technology is headquartered in the City of Redlands, because the University of Redlands
already has a GIS focus, and because the School of Business is an interdisciplinary unit
without functional departments, grant funds have been used to induce and support faculty
research through a competitive award system. Summaries of these diverse studies are
presented here; full details are available from cited sources, and at the web portal.
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6. GIS for SMEs: Diffusion of Knowledge
- Workshops
PLATT
A series of tutorial workshops were held throughout the grant period, at University of
Redlands locations on the main campus and in Ontario, Temecula, and Riverside, at the
Ontario Conference Center during an SBA conference, and at SBA Regional offices in
New England. Each workshop introduced GIS and its potential usefulness in providing
spatial solutions to business problems, demonstrated how GIS could be incorporated into
business planning, offered introductory tutorials on GIS software, and concluded with a
specialty focus on GIS for marketing, logistics, or strategy.
- Presentations
PLATT
Faculty has made presentations at regional, national, and international conferences,
disseminating knowledge gained from this grant. A brief synopsis of the presentations is
provided; full details are available from cited sources, and at the web portal.
- Conferences
PERRY
In summer of 2007, the University of Redlands School of Business commenced to
organize an academic conference of university experts in GIS and spatial technologies for
business. This conference was merged in winter of 2008 with the ESRI Business GIS
Summit, with the combined conference being held in Chicago, Illinois, April 27-30,
2008. ESRI Inc. has been a partner on the academic conference and supportive of the
academic program. The combined conference has the advantages of a combined audience
of business leaders and managers and academic experts and those with interest in
learning about GIS. The blending and interacting of viewpoints and perspectives of
academic thought and the real world applications and strategies are highly beneficial but
too rarely achieved. Following the success of the original joint venture, a second
Business GIS Summit is scheduled for May 4-6, 2009 in Denver CO.
- Templates
GREENE
One of the many benefits of the association with CHARO has been the opportunity to
work with them in developing a set of generic templates for GIS applications in small
businesses. The specific templates that have been developed are: Geo-coding, from
spreadsheets to spatial databases, using MapQuest and ArcGIS; Geo-demographics, from
points to maps; Map and Report Generation, quality maps for clients; Site Location
Analysis, a gravity model based on grant literature review; Distribution and Logistic
Analysis, based on grant literature review; Targeted Marketing Analysis, based on grant
literature review; Strategic Business Analysis, based on grant literature review; and Web
Mesh-ups, using Google.
- Web Vertical Portal
RAMA
To assure that efforts from this grant have a meaningful and sustainable impact that
extends beyond the individual firms that participated in case studies, beyond the Inland
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Empire, and beyond the limited time frame, it is essential that a comprehensive vertical
web portal (vortal) be developed and maintained. The vortal provides complete
documentation of all grant activities and products, provides links to other spatial and
GIS-related resources of interest to small businesses, and is easily accessible.
7. Conclusions and Recommendations
PLATT
Is spatial analysis and the usage of GIS a process innovation? If so, can it increase the
success of SMEs, as measured directly by survival rates or indirectly by other proxy
indicators? How can we tell, in the process demonstrating that net benefits exceed net
costs? Under what circumstances is GIS most likely to provide net benefits? Can
standardized templates provide value to SMEs? Where can SME personnel turn for more
information on spatial solutions to business problems?
8. Appendices

Case 1: ABC Blinds
PICK

Case 2: Above-the-Limit
RAMA

Case 3: CHARO
GREENE

Case 4: Bridal Magazine
SARKAR

Case 5: Property Appraisers
PICK

Case 6: Dance Apparel
GREENE

Case 7: GIS for Small School Performance
PLATT

Case 8: Inland Empire Mortgage Market
SARKAR

Vignette 1: Textiles
ZHAO

Vignette 2: Telecommunications
PLATT

Vignette 3: Insecticides
MOENIUS
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