From Idea to Innovation Part 2: Perspectives on innovation and entrepreneurship in rural areas

In this blog, I continue from the Idea to innovation part 1 blog to the special features of business operations in rural areas and to the presentation of the implementation of the VAU!HAUTOMO business incubator. Entrepreneurship has a connection to the environment in which it is implemented. The implementation environment sets the starting frame for the implementation of entrepreneurship and guides the entrepreneur consciously and unconsciously in a certain direction. Thus, the different environments of entrepreneurship set different starting points for entrepreneurship.
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Different environments have their own entrepreneurial challenges and strengths, which can be changed with the help of various regional development measures. In an ideal situation, the challenges of entrepreneurship are explored and the entrepreneurship opportunities of the environment are utilized in a variety of ways in business operations. In an ideal environment, entrepreneurs have a good starting point to innovate and implement innovations. This is why it is worth investing in understanding and developing the entrepreneurial environment.

Connection of entrepreneurship to the environment - case rural

Entrepreneurial environments can be viewed in different ways. The findings of traditional entrepreneurship research are often well suited to the development of entrepreneurship in urban environments, as they mainly deal with medium-sized and large companies and various research trends in entrepreneurship, which appear more in cities and growth centers than in rural and remote areas. The findings of these studies will eventually be used by rural actors, but their application to the implementation environment of rural entrepreneurship can weaken the effectiveness of entrepreneurial activities in rural areas. At worst, this can lead to a distorted picture of rural entrepreneurship opportunities and reduce decision-makers' interest in rural entrepreneurship development measures.

Aspects of rural entrepreneurship

How rural entrepreneurship should then be approached? When looking at business activities in the rural environment, it is meaningful to distinguish at least two perspectives: rural entrepreneurship and business activities in the countryside. Both of these are business activities that take place in rural areas, but the influence of the rural environment manifests itself in them in different ways. Rural entrepreneurship, such as farm activity, is strongly socially and economically dependent on the rural environment, while business activity in the countryside, such as an advertising agency located in the rural area, is less dependent on the rural environment than rural entrepreneurship [1].

A review of rural dependence is meaningful because it helps us to understand the different starting points, needs, and goals of different companies in rural areas. It helps us to understand why actions some entrepreneurship research finding-based actions suit some rural companies better than others: the more dependent a rural company is on its rural environment, the less suitable the findings of the urban environment are for its operations.

The effect of rural dependence on rural entrepreneurship has been studied in many ways. Although views on the rural environment and rusticity differ internationally between studies, some general challenges and strengths of entrepreneurship in rural environments can be distinguished. Challenges of entrepreneurship in a rural environment include detachment of entrepreneurship from the fast-paced innovation and digital transformation of urban environments, socio-economic challenges of rural environment and infrastructure, low population density, aging population, and distance from markets and services [2, 3, 4]. Strengths of entrepreneurship in a rural environment include little competition in several industries, entrepreneurs strong experience of belonging to a rural community and the responsibilities associated with it, and employees strong commitment to the workplace [5,6, 7].

VAU!HAUTOMO – A business incubator in a rural environment

In the VAU!HAUTOMO EAKR project, VAU!HAUTOMO business incubator, which takes into account the rural dependence on entrepreneurship, was launched in the Nivala-Haapajärvi sub-region. The Nivala-Haapajärvi sub-region includes municipalities of Haapajärvi, Kärsämäki, Nivala, Pyhäjärvi, and Reisjärvi. The business incubator was planned and implemented in stages. At first, together with NIHAK's business service actors, we mapped the starting points and goals of entrepreneurship in the rural environment in the sub-region, after which we started the business incubator operations in municipalities.

The incubator was open to all residents of the region, and through the networks of business service providers, we got a lot of entrepreneurs and other interested actors in different stages involved. We evaluated the current status and shortcomings of incubatees with various tools throughout the incubator. This information was used in the planning of workshops and the development of the incubator. The development of VAU!HAUTOMO continues today in the VAU!START+ project, where the operations are supplemented and internationalized with various services for the further needs of the sub-region. You can find more information about the VAU!HAUTOMO business incubator in Innovaatiot kyliltä maailmanmarkkinoille publication.

Peetu Virkkala, DI, PhD researcher, University of Oulu's Kerttu Saalasti Institute, Microentrepreneurship Center MicroENTRE

[1]: McElwee, G., & Smith, R. (2014). Researching rural enterprise. In Handbook of research on entrepreneurship: What we know and what we need to know (pp. 307–334). Edward Elgar Publishing Ltd.
[2]: Brown, D. L., & Schafft, K. A. (2011). Rural people and communities in the 21st century: Resilience and transformation. Polity.
[3]: Easterlin, R. A., Angelescu, L., & Zweig, J. S. (2011). The impact of modern economic growth on urban–rural differences in subjective well-being. World development, 39(12), 2187-2198.
[4]: OECD (2020). OECD regions and cities at a glance 2020.
[5]: Korsgaard, S., Müller, S. and Tanvig, H.W. (2015). Rural entrepreneurship or entrepreneurship in the rural - between place and space. International Journal of Entrepreneurial Behavior & Research, 21(1), 5-26.
[6]: Müller, S. (2016). A progress review of entrepreneurship and regional development: What are the remaining gaps? European Planning Studies, 24(6), 1133–1158. Routledge.
[7]: Kalantaridis, C., & Bika, Z. (2006). Local embeddedness and rural entrepreneurship: Case-study evidence from Cumbria, England. Environment and Planning A: Economy and Space, 38(8), 1561– 1579.