An interesting recent working paper, “Rural Innovation: Crucial, but rarely Systemic,” from the University of Kentucky’s David Freshwater takes a new look at patterns of rural innovation. Freshwater notes that innovation in rural and urban areas often occur via different channels and patterns. In urban areas, innovation systems are common, and large institutions, such as anchor companies, industry clusters, or universities, play a central role. Such systems rarely exist in rural areas. As such, rural innovation often looks different. In some cases (e.g. many agricultural innnovations), new breakthroughs occur via a systematic R&D process. But, it’s equally common for innovation to follow an idiosyncratic pattern typically driven by the vision of an individual entrepreneur. Freshwater points to many rural innovation-based companies that have emerged in this way. Examples include Walmart, LEGO, Bombardier, and even Kentucky Fried Chicken.
Freshwater concludes by noting that rural innovation policies must continue to place heavy emphasis on supporting individual entrepreneurs—as opposed to nurturing clusters or building new innovation systems. He also cautions that these new strategies may create dilemmas for rural development as the new entrepreneurial ventures are unlikely to generate numerous jobs akin to the branch manufacturing plants that were the primary past targets of rural economic developers. Because these new firms will be more innovative and productive, their needs for large local labor pools may be more limited.