Purpose – The purpose of this paper is to develop a framework for analysing the configuration of knowledge networks used by innovative rural small- and medium-sized enterprises, and the nature of the relationships between knowledge transferring actors. Design/methodology/approach – The research is based on semi-structured interviews with rural innovative entrepreneurs and regional key informants. Social network analysis (SNA) was used to identify configuration of relationships, and content analysis to understand the nature of the knowledge relationships. Findings – Higher innovation levels are related to proactive and strong relationships with extra-local actors, usually from the international level, mainly from the Baltic Sea region. The actors, who have a greater role in innovation, are special customers, scientific organisations and non-human actors (e.g. trade fairs). Greater variety in proactive relationships helps achieve higher-level innovations. Reactive and weaker relationships tend to be related to lower innovation levels. Originality/value – This study contributes to the development of rural innovation research practice through the development of a framework for analysing the configuration of knowledge networks and the nature (activity and strength) of relations between actors. Thus, two different dimensions not used together previously are combined and advanced. In addition, in this paper, the relations that go beyond a region’s borders are also included, compared to earlier studies, where SNA was commonly used only with reference to relations inside a territory. An example from Central and Eastern Europe supplied to the literature on rural innovation networks is of additional value.

Regional economic performance is positively linked to entrepreneurship capital because it creates new direction for public policy that focuses on instruments to enhance entrepreneurship capital. However, studies related to Entrepreneurship and Innovation had somewhat established a disadvantage position for knowledge-intensive enterprises located in rural area. The EU Smart Specialization approach supports the promotion of innovation activities in regions and embraces the concept of open innovation, not just investment in R&D but a system approach that exploits complementarities, promises high potential, are new and aimed at experimenting and discovering technological and market opportunities that can provide learning spill overs to other economy. This paper present a case study of an Estonian production company for Maritime function wear. This example reveals that despite the fact that the company's headquarters is located in Western Estonia countryside (peripheral part of Europe and rural part of the country) an enterprise can gain the position of an international market leader based on interregional operations. The discussed model highlights how high-tech enterprises can benefit from different smart specialization strategies in different regions by implementing organizational innovation strategies. The underlying business concept and its related success factors, exhibits strong affinities with the concept of smart production and logistics in relationship with fractal enterprises, paved way for a sustainable development and demonstrated that even in rural areas high-tech entrepreneurship can be successfully implemented.

This paper examines the role of local resources (physical, human, immaterial, social and community, and fi nancial) in shaping fi rm innovati on and path development in rural areas. Existi ng research in spati ally informed innovati on studies has largely overlooked the place-specifi c resources of rural regions as innovati on facilitati ng qualiti es. This paper addresses the following research questi ons: (i) what is the role of local rural resources in a fi rm's innovati on acti viti es, and (ii) how do these resources shape regional development paths? We propose a framework that takes a holisti c view of rural resources and their role in shaping innovati on and regional development paths. The empirical analyses suggest that rural resources off er valuable and diverse opportuniti es for fi rm innovati on, providing that fi rms (pro-)acti vely mobilize and purposefully exploit these resources as part of their innovati on endeavors. We fi nd that rural resources have the potenti al to extend and upgrade regional development paths and operate as ingredients to enrich existi ng paths with additi onal functi ons and, thereby, to make them more future-oriented. However, merely relying on rural resources does not suffi ce to facilitate substanti al changes in regional paths. Our analyses are based on semi-structured interviews with representati ves of fi rms located in rural Estonia, acti ve in diff erent manufacturing and service industries. This paper contributes to the emerging, but sti ll fragmented, literature on rural innovati on and off ers a contextually grounded micro-level framework on the role of local rural resources for fi rm innovati on in rural areas. Furthermore, the study adds an empirical contributi on from a rarely studied Central and Eastern European regional context.

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