How local resources shape innovation and path development in rural regions. Insights from rural Estonia

Abstract

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.

The effect of population size and technological collaboration on firms' innovation

“…In other words, technological collaboration has become a cornerstone for overcoming the limited absorptive capacity of firms located in peripheral and less populated areas (Cooke, 2002;Oughton et al, 2002;García-Cortijo et al, 2019). Additionally, the difficulty of collaborating with the a priori few similar actors can encourage firms to do it with non-similar actors (McPherson et al, 2001;Reidolf and Graffenberger, 2019) such as specialized innovation agents.…”

“…Previous literature mostly provides evidence that firms located in less populated territories have more difficulties accessing to DUI and STI innovation modes (McPherson et al, 2001;Cooke, 2002;Fitjar and Rodríguez-Pose, 2013;Florida et al, 2017;Reidolf and Graffenberger, 2019;Chen et al, 2021). However, the extent to which population size may affect the relationship between DUI and STI partnerships and innovation has not been analysed.…”

Understanding conditions for path development after path exhaustion

“…Path upgrading into higher value-added activities is suggested to be the most likely type of path development process for peripheral regions (Barzotto et al 2019), given constraints in locally available resources (Isaksen 2015). Whereas path upgrading can be achieved primarily based on local resources, the literature suggests that cases of path diversification are unlikely to be achieved without substantial inflows of resources from extra-regional sources (Reidolf and Graffenberger 2019). Firms may compensate for peripheral location by, e.g.…”

Innovations at the edge: how local innovations are established in less favourable environments

“…Empirical work on local innovations mainly focus on big cities, thus reproducing the biased view of urban centres as breeding grounds for innovation (Florida, Adler, and Mellander 2017). Consequently, local innovations in peripheral places and less favourable environments attract little attention in innovation research (Eder 2019;Reidolf and Graffenberger 2019). For the purpose of this research an approach is required that builds on a collaborative understanding of local innovations, on communicative negotiation processes and on locally prevailing meanings, beliefs and knowledge that might also exist in small-and medium-sized cities.…”