Embeddedness and innovation in low and medium tech rural enterprises

This paper is based on case studies of four low- and medium-technology firms, two in the furniture industry and two in the metal products industry. The research on innovation and geographic proximity, combined with a reconceptualisation of the Granovetterian concept of embeddedness, provides the theoretical context. Among the issues addressed are whether deep, local embeddedness is essential for innovativeness and whether there is a pattern of change over time in the nature of the relationship between embeddedness and innovation. For example, is deep, local embeddedness associated with innovation in the early but not later stages of the development of the firm? The particular elements of innovation that are examined in relation to firm embeddedness are network relations, interactive learning and knowledge base. The results of close examination of the case study firms suggest that different policies may be appropriate for different firms, in different industries, at different stages in their development. Interspersed throughout is discussion of the relevance of the research to rural industrial development.