Dynamic place-based innovation in rural areas

The following blog post has been written by the project team (Dr Inge Hill, Tess Hartland, Dr Serdal Ozusaglam and Dr Hamisu Salihu) working on the Dynamics of Place-Based Innovation Flex Fund project.

“So, yeah, it was really having that sort of diverse capability, just to be able to turn your hand to different things. That’s what I feel that you have to do in a rural situation as well. You have to be able to do whatever you can, really, to make your, make your services more viable. If you’re in a city, perhaps you know, you could live on one thing, do one thing. But I think when you’re here, you have to be able to maybe do a few different things.”

Image source: Shutterstock

“Dynamics of Place-Based Innovation” is a pioneering project in the first IRC funding round that aims to explore how place-based innovation strategies facilitated by external advisors can unlock rural SME’s innovation potential. The team led by Dr Inge Hill is a collaboration between The University of Warwick and The Open University, with Dr Serdal Ozusaglam, Dr Hamisu Salihu and Tess Hartland.

Scotland was chosen as research area as it has a significant amount of rural areas (98% of the land mass, with 17% of the population, 2022) and a distinct government led approach to providing business support (including training, 1-2-1 support, financial support with grants and loans) free for businesses at the point of delivery. The Scottish Government’s National Innovation Strategy 2023 – 2033 highlights its ambitions to develop the business and innovation ecosystem.

Our research examines the intricate interplay between small and micro-businesses (including the self-employed) and their socio-economic contexts to illuminate pathways to foster place-based rural innovation. By engaging directly with SMEs and innovation stakeholders in focus groups and interviews, the research investigates the root causes of low levels of innovation and identifies actionable solutions for more thriving innovating activities.

Initial findings

Initial findings in March 2025, from interviews with SMEs and advisers, indicate that while some SMEs may not refer to their activities as “innovative”, a policy term, they are often implementing changes to their business (i.e. engaging in innovation) in response to challenges and to stimulate business growth without external business support from existing agencies.

“I really. I’m not doing anything innovative, and I’m not intending doing anything innovative. But I mean literally, somebody is wanting a bag of food, and I have designed a subscription service, many companies do it, nothing innovative about it.”

Challenges faced by first time innovators

Challenges for first time innovators include the language used by business support providers and policy makers for the changes they seek to make, where the label ‘innovation’ does not cover in their perception what they are doing, as outlined above. Internet connectivity is still an issue in 2025 for many that limits their ability to source and sell online quickly and effectively and access external support. Other challenges refer to transport issues – insufficient public transport – when so much important business activity is happening in urban centres, Edinburgh and Glasgow.

Next steps

All research participants have highlighted the need for this research to:
1. Find ways to access the funding that exists and to raise the profile of rural remote and businesses and
2. Address their ongoing mis-representations: these misrepresentations refer to being misjudged as ‘not-productive’ and only running ‘life-style’ businesses.

The results will feed into a theory of change on how to unlock the potential of micro-businesses in rural areas. The outcomes will include more effective strategies and resources to create a greater reach for existing government funded business support agencies, increase rural small businesses benefiting from existing offers to achieve thriving business communities in their local contexts in remote and dispersed locations, not just in Scotland.

The team are keen to talk to experts and stakeholders for the Scottish innovation ecosystem. Please reach out to Dr Inge Hill.