This story is part of an initiative led by the CEOs of Indiana Corporate Partnership (CICP) to highlight entrepreneurship and innovation across Indiana's universities. Learn more about the initiative here.
In the world of economic development, we often treat "startup growth" as the ultimate pulse check for a community's ecosystem health. It can be tempting to look solely for the next "lone ranger" entrepreneur or the flash of a high-tech unicorn. But what if a region is thriving—boasting high per capita income and declining poverty—while its startup rates remain below average?
This is the "Elkhart Paradox" that Dr. Stephanie Fernhaber and her colleagues, Dr. Hessam Sarooghi and Dr. Marleen McCormick Pritchard at Butler University's Lacy School of Business, set out to explore. In a recent conversation for our INfluence series, Dr. Fernhaber shared how their research challenges the traditional "startup-or-bust" narrative and offers a more nuanced framework for how Indiana's mid-sized and rural communities can chart their own paths to prosperity.
Moving Beyond the "Lone Ranger"
For many, the word "entrepreneurship" conjures images of brand-new companies. However, Dr. Fernhaber argues that entrepreneurship in a mature region like Elkhart County is actually a much broader pursuit of opportunity "through innovation, market expansion, industry specialization, and community engagement."
When economic developers look solely at startup birth rates, they miss the invisible entrepreneurial engine driving established firms. In Elkhart, innovation isn't just happening in garages; it's happening inside corporate boardrooms and on existing factory floors through intrapreneurship.
As Dr. Fernhaber emphasized in our interview, we must stop looking for isolated success stories:
"We tend to look for the 'lone ranger' entrepreneur or that one unicorn company that's going to save the day. But true regional resilience comes from the collective whole—how existing companies evolve, expand into new markets, and reinvent themselves from within."
This perspective completely reframes how we measure success. Long-term prosperity doesn't require a constant influx of brand-new tech startups if a region's existing foundations are dynamically adapting. As Dr. Fernhaber noted, "Our findings suggest that long-term prosperity emerges from specific configurations of entrepreneurial activity, and more than one configuration can produce similarly strong outcomes if it fits a region's underlying strengths."
Proximity Breeds Prosperity: The Power of Industry Clusters
It's no secret that Elkhart is the undisputed "RV Capital of the World," pumping out an astonishing 80% of all recreational vehicles on the planet. But the real economic magic revealed by the Butler research isn't just about the trailers rolling off the assembly lines; it's about the massive network supporting them. Elkhart has quietly built an ecosystem where diverse sectors—like automotive components, specialized plastics, furniture manufacturing, and global distribution—live right next door to one another.
This proximity is the region's secret sauce. When suppliers, specialized talent, and shared infrastructure are packed into the same geographic footprint, you get an economic multiplier effect. Brainstorms happen at local pubs, supply chains shorten, and fresh ideas spread at lightning speed. It transforms innovation from an uphill battle into a natural byproduct of daily business.
As Dr. Fernhaber noted, these mature clusters completely change how we look at an ecosystem's success metrics:
"A lower startup rate may reflect the maturity of an entrepreneurial or innovation ecosystem… You have some firms that started as small startups. They're no longer startups, but they've grown into these large established companies… and then created this ecosystem around them, which is really this industry cluster."
Rather than relying on a continuous cycle of startup creation and exits, Elkhart's model relies on these powerhouse clusters to anchor generationally sustained jobs and continuous intrapreneurship within established firms.
The Secret Ingredient: The Role of Nonprofits
Perhaps the most surprising nugget from the Butler study was the critical role of impact-oriented firms, or nonprofits, in successful economic configurations.
While they aren't often the first thing that comes to mind in an "entrepreneurial ecosystem," the research found that in small metro counties like Elkhart, nonprofits are a staple of successful economic models. They provide:
- A Social Safety Net: Creating stability through programs, services and community support that help people meet basic needs and weather financial setbacks. These critical supports reduce some of the risk of starting a business and allow individuals the freedom to pursue new opportunities.
- A "Giving Back" Loop: Successful entrepreneurs often pour their wealth back into the community through philanthropy, creating a self-reinforcing cycle of support.
- Civic Infrastructure: Strengthening the workforce and local institutions that impact the population's overall well-being and make the region attractive to talent.
And none of this happens in a vacuum. In fact, the findings of Dr. Fernhaber and her colleagues suggest that it's the overlap and connective tissue between the various elements of Elkhart County's ecosystem, all acting in concert, that have had the biggest impact. Just as one standout unicorn startup doesn't create a thriving region, neither does one element of the ecosystem alone.
Not Every County Should Be Elkhart
One of the most important takeaways for Indiana's economic leaders is that there is no "one-size-fits-all" strategy. Dr. Fernhaber's team used a complex analysis called fuzzy set qualitative comparative analysis to identify eight different combinations of factors that lead to high economic success in small metro counties.
"The biggest lesson I hope people hear is that they should not try to become Elkhart County," Dr. Fernhaber explained. Instead, regions should "use data to take stock of their unique assets"—whether that is a strong manufacturing base, high patent activity, or a robust nonprofit sector—and lean into those specific strengths.
A New Model for University-Community Partnership
This research wasn't just an academic exercise; it was a collaboration with the Institute for Entrepreneurial Communities (IEC) and enFocus. Institute for Entrepreneurial Communities is identifying communities that have a web of entrepreneurial activity, studying the impact of entrepreneurship on the quality of life within the community and identifying ways to inspire entrepreneurship. IEC is an initiative designed and managed by enFocus, a nonprofit dedicated to building better communities through talent attraction, innovation and entrepreneurship.
This collaboration serves as a powerful example of how Indiana's universities can act as objective partners, helping local leaders move beyond anecdotes and stories toward data-driven storytelling and decision-making for future investment.
As we look toward the future—where AI and automation will undoubtedly reshape manufacturing—this baseline provides exactly what is needed. By understanding the many paths to development, Indiana's communities can stop trying to mimic Silicon Valley and start perfecting the unique economic engines they have in their own backyards.
*Dr. Stephanie Fernhaber is a Professor of Entrepreneurship at Butler University. The full report, "Entrepreneurship's Many Paths to Economic Development," was published in January 2026.*
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Across Indiana, our universities are fostering the next generation of entrepreneurs and innovators who are shaping our state's future. In collaboration with our university partners, CICP is excited to share and amplify those stories; which highlight students, faculty, and alumni who are turning ideas into action. By celebrating these efforts, we aim to strengthen the connections between higher education, industry, and community, and to shine a light on the innovation happening throughout our state. Click here to learn more about this initiative.
