Activities per year
The failure of most developed western economies to return to the rates of economic growth enjoyed in earlier times has raised the spectre of secular stagnation first identified by Hansen in the 1930s. Central to secular stagnation is the complex link between capital investment and innovation, prompting fears that the recent collapse in investment is both a cause and an effect of the so-called end of innovation. The emergence of so-called zombie companies suggests a curtailment of creative destruction. The paper looks to the smart specialisation agenda and demand-led strategies for innovation as a means of removing innovation activity from reliance on large-scale top-down capital investment, instead shifting the focus to the role of the entrepreneur in the innovation and growth process. Key features of smart specialisation are used to underpin the construction of a conceptual model (the microsphere) that presents policymakers with a framework to reconnect with the entrepreneur to boost innovation and growth at the level of the region. The model frames the microsphere within which smart specialisation takes place, and how this can encourage innovation among small non-growth rural firms. Influenced by New Industrial Policy and the social geographies underpinning reflexive capitalism, the model builds on the entrepreneurial discovery process inherent in smart specialisation. The model provides policymakers with a guide to operationalise a smart specialisation strategy. Finally, the model is tested in a case study based on the priorities of an economic strategy of a rural region of Scotland.