One of the core hypotheses underpinning the Brexit vote has been the disproportionate attention afforded to urban areas at the expense of smaller towns and rural areas who have felt left behind and unbeholden to the various benefits globalization has delivered.

As such, there has been various proposals designed to ignite innovation and economic growth in rural areas, primarily through various regional innovation agencies.  Many of these agencies are in their umpteenth variation however, and the fact that economic growth hasn’t emerged equally around the UK is not a great indicator that such bodies are equipped to deliver it in the future.

A recent study from the University of East Anglia and De Montfort University suggests that specific policies are required to support rural innovation rather than adapting those designed for urban areas with all of the usual trappings of innovation ecosystems.

Perception of home

The authors believe that how entrepreneurs view where they live is central to their views of entrepreneurship, and therefore policies have to be made with this perception of place in mind.  The researchers distinguish four different types of entrepreneur based upon their relationship to the location they have based their startup in.

Locally born entrepreneurs are those who have created their business in the place they have lived their entire lives.  Returnees by contrast left, often for studying, before returning to the place of their childhood.  The third category were ‘in-migrants’, who were born elsewhere in the UK before moving to the area they created their business, and then immigrants who came from another country.

The authors suggest that many of the unique characteristics of rural locations, such as natural beauty and traditional heritage are not factored into policies designed to encourage and support entrepreneurship.  They go on to suggest that the most successful rural entrepreneurs bring connections from their previous locations with them whilst also using these networks to ensure they have the knowledge and connections needed to thrive.

It’s a similar finding to that provided by an analysis of startups in rural Switzerland, which found that human capital was vital, and with many rural communities lacking comparable human resources to their urban counterparts, it’s imperative that entrepreneurs work extra hard to develop the networks they require.

Indeed, so important are these networks that in-migrant entrepreneurs were particularly likely to be successful, and so it may be fruitful to have specific policies aimed at supporting these people either to create a business or scale them up.

No place for bad policy

The British team believe that their research has clear implications for innovation policies that aim to bolster entrepreneurship in rural areas.  It’s an area that they believe is lacking at the moment, not least in the UK Industrial Strategy, which largely fails to give appreciation to the importance and complexities inherent in how place has meaning for entrepreneurs.

Instead, they tend to focus on developing innovation clusters in specific areas, and tend to regard people living in rural areas as a homogeneous blob, despite the considerable demographic changes these regions have undergone in recent years, especially as a result of labor mobility across the EU.

“The way people in the same rural area perceive and approach innovation is quite different and reflects their previous experiences and what the place means to them, for example in terms of being rich in resources or not, or being a good or bad place to live and do business,” the researchers explain.  “The importance attached in rural innovation policy to understanding innovative activity from the point of view of local people acquires particular relevance in the context of the changing demographic realities of rural areas, as these may underpin the emergence of different views among individuals.”

They urge policies makers to take a more bottom up approach to innovation policy that takes account of the complexity of rural life and supports the diversity of entrepreneurship that takes place there.  There is no ‘one-size-fits-all’ approach that can be applied.  What’s more, the findings are especially important given the Brexit process.

“Leaving the EU raises the question of whether this may lead to a reduction of immigration or its re-composition to include more arrivals, with very different experiences, from elsewhere in the world, and therefore new meanings of place and links, but also directs the focus of policy action on migration as central to rural innovation,” they explain.

Connected networks

Given the crucial role human capital plays in the growth of any startup, the authors recommend that policy makers strive to do more to bridge connections between innovation networks.  This will allow rural entrepreneurs to develop and maintain the connections they need to find customers and finance, gain regulatory approval, secure scientific and academic support, and the various other resources that are almost certainly going to reside outside of their area.

It will also allow them to expand their team beyond family units or the local labor market, whilst also allowing the entrepreneurs themselves to collaborate and share their personal experiences with one another.

As the Swiss research revealed, innovation can, and does, thrive in rural areas, but it is almost wholly dependent on the ability of entrepreneurs to tap into knowledge and human capital that inevitably exists outside of that region.  For policy makers to support more dispersed innovation, it would be no bad starting point to help those networks to thrive.