Scandinavian Working Papers in Economics

Papers in Innovation Studies,
Lund University, CIRCLE - Centre for Innovation Research

No 2019/16: Does long-term proactive agency matter for regional development?

Markus Grillitsch (), Bjørn Asheim () and Hjalti Nielsen ()
Additional contact information
Markus Grillitsch: Lund University, Postal: Sweden
Bjørn Asheim: University of Stavanger, Postal: Norway
Hjalti Nielsen: Lund University, Postal: Sweden

Abstract: Agency is concerned with the ways and the extent to which individuals, groups of individuals and organisations shape regional development within and beyond the corset of historically developed pathways. Linking the time horizon of agency to the exploration-exploitation trade-off in regional development and the recent literature on industrial path development, we argue that agency becomes more powerful with a long-term perspective. In the long-run knowledge, networks, and institutions can be moulded in a strategic manner, whereas in the short-term these are highly rigid. We illustrate our arguments with an in-depth case study of a labour market in Western Norway, which, over the past 20 years, was subject to two crises and one remarkable growth phase. We show that long-term agency with a focus on innovation shaped the development opportunities and identity of the region. Conversely, short-term agency was mainly about exploiting existing opportunities, often associated with entrepreneurship. The unintended consequence of short-term agency was an increasing vulnerability of the regional economy to changes in demand. This has far-reaching policy implications because short-term pressures and policy cycles often undermine long-term perspectives.

Keywords: Change agency; exploration exploitation; new industrial path development; regional development; innovation

JEL-codes: O18; O30; P48; R11; R58

40 pages, November 13, 2019

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