Stimulating Rural Business Innovation

1. Stimulating Rural Business Innovation Dr. Kevin Heanue Rural Economy Research Centre (RERC) Teagasc, Athenry, Co. Galway, Ireland NPP Annual Conference, Bunratty Castle Hotel, Co. Clare, September 9th 2010 NPP Annual Conference 2010

2. Outline of presentation • Rural areas and economic development • Rural enterprise innovation • What is it? How does it happen? What types? • Industrial organisation of innovative rural enterprises • A case study • European Economuseum Project • Conclusions NPP Annual Conference 2010

3. Rural areas and economic development • The current recession: rural under development • Globalisation and localisation • Sources of economic development • Rural enterprise – innovation; industrial organisation NPP Annual Conference 2010

4. Evidence on rural enterprise innovation • UK (North and Smallbone, 2000) • Remoteness may stimulate new market development • Introducing products based on traditional rural craft skills (food and tourism) • Barriers – poor telecommunications infrastructure (internet access); • Lower levels of advanced manufacturing technology use • More innovative sectors under represented in remote rural areas • In Ireland (Audit of Innovation in the BMW Region, 2004) • Firms in BMW region less innovative • One third of companies involved in partnership/joint venture/network • Culture of innovation and entrepreneurship is neutral at best • Organisational capability needs improvement to upgrade performance NPP Annual Conference 2010

5. Innovation • What do we mean by innovation? • Innovation - using creativity to add value • Innovation - generating 'new combinations' of existing resources • Adds value by putting 'new combinations' into use as either new or changed products, processes, services, ways of organising businesses or entering new markets segments. NPP Annual Conference 2010

6. How do businesses develop and innovate? • Resources • E.g. knowledge, ideas, skills, physical assets • Activities • Research, production, marketing etc • Capabilities • Bundles of related routines governing the exploitation of resources. Capabilities are functionally based, e.g. technological and marketing. • Core competence • Competitive advantage • Co-ordination NPP Annual Conference 2010

7. Understanding types of innovation NPP Annual Conference 2010

8. Understanding economic co-ordination • Internally (within the firm) • The market • Cooperation/collaboration/networking NPP Annual Conference 2010

9. Understanding economic co-ordination (2) NPP Annual Conference 2010

10. The ENE project • Economuseum Northern Europe (ENE) • An Economuseum is a “private” craft business which : • Uses traditional techniques or knowledge in its production • Opens its doors to the public in order to promote its know-how and its craftspeople • Has an area designed for the animation and interpretation of its production • Completely funds its operation through the sale of its products. NPP Annual Conference 2010

11. Partners in the ENE project • Lead Partner • Norway: Hordaland County Council • Partners • Eastern Canada: IENS/Economusee • Greenland: Tourism and Business Council • Iceland: Innovation Centre, Høfn • Faroe Islands: Research Centre for SD • Ireland: Teagasc (Agr & Food Development Authority) • Northern Ireland: Causeway Coast & Glens Heritage Trust • Sweden: New partner (2011) NPP Annual Conference 2010

12. Objectives of the ENE project • Promote heritage that ‘earns its keep’ • Help artisans to become financially self sufficient so as to facilitate intergenerational knowledge transfer • Conserve the best of tradition • Meet a market need • Develop cultural tourism NPP Annual Conference 2010

13. The ENE Network in 2009-2010 • 53 ECONOMUSEUMS in Canada and Europe (crafts and agro- and fisheries food artisans): • 34 Economuseums in the province of Quebec • 17 Economuseums in Atlantic provinces • 2 Economuseums in Norway • Economic contribution • More than 500 employees (60% permanent, 16% casual and 24% seasonal); • Total sales :$27 500 000 • More than 825 000 visitors per year NPP Annual Conference 2010

14. Goals – for the end of 2010 & (2013) • 16 (40) new Economuseums • Preservation of heritage and crafts as well as creating new learning experiences. • Increased sales and value added • Increased competence and knowledge. • New organisational network structure. NPP Annual Conference 2010

15. Technological capabilities NPP Annual Conference 2010

16. Technological capabilities (2) NPP Annual Conference 2010

17. Market capabilities • ENE providing ‘club good’ • Cultural tourism market • Knowledge about, access to and communication with, different customers NPP Annual Conference 2010

18. ENE and enterprise innovation NPP Annual Conference 2010

19. ENE and industrial organisation NPP Annual Conference 2010

20. Agriculture and Food Development Authority National body providing integrated research, advisory and training services to the agriculture and food industry and rural communities. Teagasc NPP Annual Conference 2010

21. Teagasc (2) • Rural business and tourism specialists • Actual and/or potential partnerships • LEADER; Failte Ireland; Bord Bia; Crafts Council of Ireland • Mainstream • A ‘node’ for rural development NPP Annual Conference 2010

22. Conclusion • ENE - niche/regular innovation; club good; institutional mechanism; possible technological capability building • One model for rural enterprise development • Mainstreaming • Parallel model for start up enterprises/early stage – what would this look like? NPP Annual Conference 2010

23. Thank You Email: Kevin.Heanue@teagasc.ie Tel: + 353 91 845 834 NPP Annual Conference 2010