D: Governance and rural–urban linkages

Governance and rural-urban linkages

"Smart Region" governance for innovation: Cooperative approaches in Hamburg-Southern Elbe Region

Galya Vladova and Jorg Knieling

Introduction

In the framework of implementing the Regional Research and Innovation Smart Specialization Strategy (R1S3) for Lower Saxony, the Hamburg-Southern Elbe Region has employed a new governance process for boosting economic performance and innovation called “Smart Region”. The process has a predominantly sectorial approach for project-based territorial and economic development, and attempts to identify and prioritize large-scale investments to support promising regional projects. Further it seeks to establish synergies between regional actors as well as to better integrate rural and peri-urban areas from the Hamburg-Southern Elbe Region within innovation processes. Aimed at promoting knowledge-based and technology development, the process goes in line with the R1S3 priorities while it builds on the local territorial and economic features (Brandt et al., 2015).

Contrary to other German federal states, the RIS3 for Lower Saxony is a joint strategy covering four independent districts, each represented by an office for regional development, namely the districts of Braunschweig. Lüneburg. Leine-Weser and Weser-Ems. Adopted in 2014, the RIS3 for Lower Saxony builds on broadly defined funding priorities and steps on what Kroll et al. describe as a “top-down [process] with little possibilities for participants to actually influence its final outcome” (2016, p. 1464). The authors further criticize the entrepreneurial discovery process conducted in the framework of the R1S3 strategy development, arguing that it did not result in the concentration of funding resources, but allowed the continuity of existing funding levels.

In the context of this protective attitude towards smart specialization, while also considering the high level of territorial heterogeneity in Lower Saxony, this chapter seeks to analyse the Smart Region approach to empowering local entrepreneurship and innovation. The chapter investigates the interrelationships between the new process and the existing policy and planning documents in the Hamburg-Southern Elbe Region. It studies the steps taken in the process for refining specialization priorities and discusses how far the process contributes to strengthening rural-urban linkages and promoting sustainable development. The analysis demonstrates both the success factors and the main challenges behind the process, which are discussed in the wider context of international literature on regional innovation and territorial cooperation.

The chapter is based on a thorough literature review, which sought to explore the role of multi-level cooperation in the definition of innovation priorities and the establishment of innovation processes. The findings from the literature review are reflected in the analysis of the Smart Region process. The investigation of the territorial, policy and cooperation context in Hamburg-Southern Elbe Region includes both insights from literature and policy documents as well as ideas gained in discussions and project meetings of the project RUMORE (Rural-Urban Partnerships Motivating Regional Economies). RUMORE is an Interreg Europe project funded by the European Regional Development Fund. During the first phase of the project in 2017-2019, local stakeholders from Lüneburg worked together to strengthen the synergies between urban and rural areas in the region, to establish new innovation collaborations and to improve the implementation of the regional development policies and programmes.

The chapter is organized in six sections. Following this introduction, section two explores the rationale behind the smart specialization framework and challenges related to its application at local level. Section three investigates the role of territorial cooperation for boosting innovation processes and supporting transitions to sustainable development. Section four introduces the Hamburg-Southern Elbe Region and explains the territorial context and institutional framework of the region. Section five analyses the different facets of the Smart Region process, and section six discusses the success factors and limitations of the process.

The smart specialization logic: A policy-prioritization framework for bundling resources through entrepreneurial discovery processes

The smart specialization concept made its way into the Innovation Union initiative and the European Union (EU) regional policy discourse in the late 2000s. The concept emerged as a response to assist regions in Europe with developing and translating new technologies and ideas into commercial applications (McCann and Ortega-Argilés, 2016). Both the limited opportunities for economic recovery after the financial crisis of 2007 and the growing asymmetries between regions in Europe necessitated the rethinking of existing industrial policy patterns (Foray, David and Hall. 2011). The smart specialization concept consequently entered the policy-making debates as a novel opportunity for European regions to push the boundaries of their traditional innovation styles. The concept emphasizes entrepreneurship processes as a main factor for driving innovation. In particular, it aims to promote technological diversification of regions through the adoption of a new policy-prioritization logic and the local concentration of resources and capabilities in new domains to catalyse transformations in existing production structures (McCann and Ortega-Argilés, 2013a; Foray, 2016).

Originally conceptualized as a sectoral approach, smart specialization is distinct from popular technology policy recommendations and traditional industrial policy. On the one hand, it moves away from the automatic prioritization of high-technology sectors and takes instead a broader system perspective (McCann and Ortega-Argiles, 2013a, p. 1293), considering a larger variety of innovation types (Capello and Kroll, 2016, p. 1393). On the other hand, smart specialization is also different from older policy approaches, which identify industrial development priorities mainly on the basis of centralized planning procedures. The approach is instead fundamentally based on an entrepreneurial discovery process that has the possibility to reveal the domains of research and development (R&D) and innovation, in which a region is likely to specialize making use of its existing capabilities, knowledge base and productive assets (Foray. David and Hall. 2011). Indeed, the entrepreneurial discovery is predominantly decentralized and a bottom-up process, complemented by public policy interventions applied in the processes of identification. assessment and targeted support of emerging regional specialization domains (Foray, David and Hall, 2011).

Different patterns of structural changes are possible as an outcome of smart specialization processes. As identified by Foray, David and Hall (2011, pp. 8-9), outcomes can range from the modernization of an existing industry through to the emergence of a new domain in the regional economy as a result of synergies. Considering the low probability of radical structural changes in the economy, the authors emphasize that

the main policy issue is to identify which structural conditions and policies in a specific region would increase the likelihood that there would be one or more new industrial (and/or service) localizations appearing and surviving within the next 20 years.

(Ibid., p. 10)

Smart specialization entered into the European regional policy debates as a response to the recognized need for higher efficacy of the EU cohesion policy and for better justification of expenditures (Kroll, 2015). During the last few decades, resources have mainly been allocated in a horizontal manner, which has not equally influenced regions with different development levels (Foray, 2016). Foray (2016, p. 1429f.) advocated that less advanced and transition regions should instead be supported by innovation policies which go beyond horizontal measures, and assist the establishment of networks of companies, research institutions. specialized services and complementary capabilities. This argument and the evaluation of the 2007-2013 spending period called for reforms of the cohesion policy framework and for the positioning of smart specialization as an element of these reformative efforts. It is in this context that RIS3 evolved as a new mainstream logic for alignment of funds and programmes along with a number of thematic priorities to facilitate a result-oriented policy agenda (McCann and Ortega-Argiles. 2013b). The elaboration of R1S3 subsequently evolved into a main requirement for European regions seeking European Regional Development Fund (ERDF) support in the years post 2014.

While smart specialization is widely used in current ED innovation practices and regional policy, there are a number of challenges related to the design and application of smart specialization strategies. Regions lacking preconditions for innovation, such as industrial diversity, and few or no research institutions and high-tech clusters, could have significant difficulties in identifying smart specialization domains (Capello and Kroll, 2016). Building on this argument. McCann and Ortega-Argiles (2013a, p. 1294f.) question the appropriateness of smart specialization as a regional policy tool for EU cohesion policy. The authors raise the question whether this policy favours core urban areas over regions that are lagging behind and are the primary target of the cohesion policy.

A further challenge concerning the design and implementation of smart specialization strategies is related to difficulties in policy prioritization. This is particularly the case for backward regions, which might replicate strategic priorities defined at national or even international level at a local level due to problems in identifying technological domains (Capello and Kroll. 2016). Regarding prioritization, it is important to emphasize that in regions where small and medium-sized enterprise (SME) sectors are comparatively weak priorities are often set by local scientific actors. These actors are more easily accessible to the local government, but this type of entrepreneurial discovery process does not result in application-oriented strategies (Capello and Kroll. 2016). Moreover, there is a series of policy and governance challenges which could hinder smart specialization processes, such as a mismatch between functional and political-administrative regions, or the lack of political support for bottom-up participatory processes (Capello and Kroll, 2016). Finally, successful policies depend on the capacities and competences of actors as well as on the existing political habits, practices and routines, which could hamper specialization processes (Kroll, 2015). At the same time the contribution of smart specialization processes towards changing governance practices is perceived as one of the main merits of these processes (Kroll, 2015).

Even though smart specialization and its applicability to different types of regions in Europe are well documented, there are limited empirical studies on its added value for reducing internal disparities in regions. As entrepreneurial and innovation processes depend on various factors including but not limited to population density, market potential and number of large firms, they could differ significantly between parts of a single region. In most cases the territorial coverage of R1S3 strategies coincides with administrative borders of regions, which raises the question of how far R1S3 strategies take into consideration the variety of place-based challenges and territorial characteristics of regions. The refinement of specialization priorities for actions with local added value requires place-tailored governance processes and consideration of functional logic to achieve result-oriented innovation and improve territorial cohesion in EU regions in the long term.

Territorial cooperation as an impetus to innovation processes and sustainability transitions

The economic changes over the last two decades have redefined the roles of the state in securing economic development in a globalizing economy and have reinforced "the dynamization of territory towards a continuous changing patchwork of functional and policy spaces” (Herrschel, 2014, p. 9). An important step into putting functional logics in the focus of planning policies at European level was made with the adoption of the European Spatial Development Perspective (ESDP) in 1999. The document calls for the development of balanced urban systems and for overcoming the existing divide between cities and their surrounding countryside and rural areas (ESDP. 1999). Today, both spatial and regional economic policies at European, national and regional levels are increasingly recognizing the importance of interregional interdependencies and functional connections. Interdependencies in regions manifest themselves in physical linkages in the labour market, e.g. flows of people and goods, the interconnection of production and consumption activities or even the flows of information (Caffyn and Dahlstrbm, 2005). The consideration of internal interdependencies and the building of partnerships is an important aspect for promoting innovation activities in regions.

The recognized interdependency between actors from the urban core and the surrounding peri-urban and rural areas is manifested in the initiation of different cooperation activities in regions. The body of literature on regional innovation processes defines the thematic networks, clusters and platforms as important cooperation formats for knowledge transfer and innovation promotion. Research evidence suggests that innovation activities in a certain technological field tend to be clustered regionally as they might benefit from spatial proximity. As summarized by Fritsch (2004, p. 831), the advantages of spatial proximity in the first place originate from the inclusion in established regional supply chains and the easier access to information, research and educational institutions. From a territorial perspective, densely populated areas tend to benefit from a higher level of knowledge spillover compared to regions with lower density of R&D activities.

Yet, spatial clustering does not necessarily result in closer cooperation between companies and research institutions in a region (Fritsch, 2004). While the collaboration between organizations and institutions is widely acknowledged as a motor for innovation, innovation systems such as technological clusters and regional networks could only be effective if the companies involved in the system respond with related actions (Rubach, 2013). Referring to his studies on collaborative regional innovation initiatives and the work of Hakansson et al. (2009) on business in networks, Rubach (2013, p. 3) argues that in cases when collaboration initiatives are externally imposed and constructed. companies might perceive them as an add-on to their ordinary business relations. Consequently, there is the threat that new collaborative initiatives are only weakly anchored in the companies’ own innovation processes.

New developments such as service innovation and digitalization have accelerated innovation processes and have stimulated the development of open approaches to innovation that include not only actors from science and industry, but also the civil society (Warnke et al., 2016). As argued by Weber and Truffer (2017, p. 102), “the initial emphasis on innovation as a means of enhancing competitiveness [.] has given way to growing concerns about the contribution of innovation activities to tackling major societal, environmental, and developmental challenges”. This stipulates that public investments in innovation and R&D should ultimately support the development of new ideas and solutions to foster sustainability transitions while considering the territorial contexts and specificities.

The transition to more sustainable production and consumption patterns requires closer collaboration between innovation actors in both urban and rural areas. Urban and rural spaces are closely linked economically, socially and environmentally. They can marginally realize their innovation potential and initiate transformation processes in isolation from one another. Rural-urban partnerships are essential for the creation of synergies between existing resources and assets, for strengthening regional value chains and for promoting new green and circular economy solutions (Vladova et al., 2019). Regions are expected to benefit from building rural-urban partnerships around jointly defined priorities for regional smart specialization. The translation of strategic priorities to concrete on-the-ground actions requires consideration of the territorial specifics of the area, its innovation potential and assets.

The following sections investigate a new bottom-up process for innovation and cooperation support in the Hamburg-Southern Elbe Region. The process seeks to boost cooperative activities and to promote the implementation of lighthouse projects, which give impetus to development of the local economy.

Hamburg-Southern Elbe Region in focus: Territorial context and institutional framework

The Hamburg-Southern Elbe Region has more than 650,000 inhabitants and covers an area of 6,500 km². It stretches from the south of the river Elbe over the counties of Harburg, Lüchow-Dannenberg, Lüneburg. Stade and Uelzen, and the city of Lüneburg (Brandt et al., 2015). The delineation of the Hamburg-Southern Elbe Region as defined in the Smart Region process should not be confused with the spatial coverage of Southern-Elbe Ltd. (Süderelbe AG), an economic development agency, which was established in the late 1990s based on a formal agreement between the municipalities in the southern hinterland of Hamburg. Besides the city of Lüneburg and the counties of Harburg. Lüneburg and Stade, Southern-Elbe Ltd. also includes the administrative district of Harburg, which is the most southern district of the Free and Hanseatic City of Hamburg (Süderelbe AG, n.d.). Similar to Berlin and Bremen, the Free and Hanseatic City of Hamburg is both a municipality and a city-state. It is divided into seven administrative districts with their own district offices and district councils.

Administratively, the Hamburg-Southern Elbe Region is under the jurisdiction of the federal state of Lower Saxony. Following administrative reforms of 2014, the territory of Lower Saxony was divided into four districts: Braunschweig, Lüneburg, Leine-Weser and Weser-Ems. The districts substitute the four administrative sub-regions which previously existed in the federal state. Each of the districts is represented by an office for regional development, which is responsible for the coordination of regional policy and ERDF funds in its territory (Ministry of Federal and European Affairs of Lower Saxony, n.d.). The establishment of the offices for regional development was motivated by the need for more efficient allocation and better coordination of responsibilities and tasks between the German federal and the local public administration (Bogumil, Grohs and Seuberlich, 2018). Today, the territory of Hamburg-Southern Elbe Region belongs to the district of Lüneburg. The district has a population of altogether 1.7 million inhabitants and covers an area of 15,500 km^-. It is represented by the Office for Regional Development Lüneburg (ArL Lüneburg) and is categorized as a transition region in the EU cohesion policy framework (ArL Lüneburg, 2014).

The Hamburg-Southern Elbe Region is characterized by the co-existence of economically well-performing medium-sized towns and agriculture and tourist-oriented sparsely populated rural areas. The territorial and economic development of the region has always been largely determined by its location between the three big metropolitan cities of Hamburg. Bremen and Hannover. Stakeholder group discussions in the RUMORE project revealed that the location of the region as well as its internal heterogeneity brings both opportunities and challenges for the area. Specifically, while close proximity to markets and infrastructure in the metropolitan cities creates a good basis for SMEs development, the lack of critical mass in the sparsely populated regional peripheries and the small number of research institutions in the region slow down innovation processes and lead to unequal allocation of growth opportunities and jobs.

Throughout the decades, the close proximity to the port of Hamburg and the fertile land along the banks of the river Elbe played an important strategic role for the economic development of the Hamburg-Southern Elbe Region. Today, the region is part of the southern economic zone of the Hamburg Metropolitan Area. It is characterized by high sectoral heterogeneity with a limited but well-established economy for chemical, aerospace, health, agriculture and food industries (Brandt et al., 2015). Local SMEs, research institutions and public governments benefit from a well-developed network of support mechanisms. Here count the Economic Development Agencies in the district’s counties, the Southern-Elbe Ltd. and the Chambers of Commerce as well as the ARTIE network with the Transfer Centre Elbe-Weser, which support technological development and innovation processes in enterprises. All these parties, together with the Leuphana University

Lüneburg and a variety of local SMEs create a stable basis for economic development and innovation in the region. Yet experiences show that despite the existence of cooperation structures in the Hamburg-Southern Elbe Region, the high territorial heterogeneity and the location of the area between three different metropolitan areas with their own cooperation relationships and governance regulations have hindered cooperation efforts (RUMORE stakeholder discussions; ArL Lüneburg, 2014, pp. 7-8).

The territorial development of the district of Lüneburg as a whole, and of the Hamburg-Southern Elbe Region in particular, is guided by the Regional Development Strategy of Lüneburg. Adopted in 2014, the strategy identifies the main goals and strategic priorities for the period 2014-2020. It seeks to further develop the strengths and assets in the different parts of the region and to contribute to more balanced territorial and economic development. The strategy explicitly emphasizes the heterogeneous character of the area in terms of infrastructure provision, innovation potential and educational level. It identifies the demographic developments and the on-going technological changes as key challenges for the region (ArL Lüneburg, 2014).

The Regional Development Strategy of Lüneburg builds on the R1S3 for Lower Saxony and aims to generate synergies between existing local and regional funding sources. The document provides a main basis for the evaluation of new project proposals seeking funding from the European Regional Development Fund (ERDF), the European Social Fund (ESF) and the European Agricultural Fund for Rural Development (EAFRD). In particular, the strategy sets evaluation criteria, which should be used in assessing new development interventions and projects. The evaluation is based on the award of points, which assess the sustainability and the regional relevance of newly proposed actions (ArL Lüneburg, 2014).

To translate the R1S3 strategic goals for Lower Saxony into concrete innovation activities in the Hamburg Southern-Elbe Region the bottom-up Smart Region process was newly launched in 2014.

The Smart Region process: A new governance approach for regional innovation

Initiated by the Regional Development Agency of Lüneburg, the Smart Region is a bottom-up process for collaborative design and the execution of strategic lighthouse projects in the Hamburg Southern-Elbe Region. The process played a significant role in the preparation of the EU funding period 2014-2020. It is considered an important step towards the implementation of strategic actions from the regional RIS3 specialization fields, which have the potential to foster and scale-up innovation (Glaser, 2016). Overall, the process seeks to counteract the challenges and consequences of the economic structural changes in the urban and rural parts of the region by promoting new technologies and knowledge-based regional development. In line with the regional RIS3 priorities, the process aims to support the knowledge transfer

‘‘Smart Region" governance for innovation 185 between SMEs and research institutions, and to improve inter-regional cooperation (Brandt et al., 2015).

The Smart Region process was coordinated by Southern-Elbe Ltd. and financed by Lower Saxony ERDF funds. The process covered a number of workshops conducted between October and December 2014. The main aim of the open participation process was to collectively identify and agree on innovative interregional projects, which could foster the future development of the area, build on its economic potentials and increase the competitiveness of the local SMEs. All identified projects fall within the six expertise areas of "health and social economy”, "digital and creative economy”, “agriculture and food”, "energy”, “production technology / new materials" and "mobility”. They are to contribute to the accomplishment of the four superior development goals "intelligent economy”, “modern infrastructure”, "regional cohesion” and “sustainable development" (Brandt et al., 2015).

The execution of the Smart Region process was monitored by a steering committee, consisting of representatives of the five regional counties of Harburg, Lüchow-Dannenberg. Lüneburg, Stade and Uelzen, and the City of Lüneburg. The process included approximately 30 expert interviews and two rounds of nine thematic workshops. During the process, more than 200 local SMEs, regional networks and NGOs exchanged views about the future challenges and trends in different thematic fields and jointly developed ideas for future regional projects. More than 40 ideas that were collected were then discussed in a mid-term conference under the motto “market place for innovation”. They were further elaborated by a specially formed team, which compiled all project ideas in a Master Plan document that served as a basis for the monitoring and evaluation of the future projects’ implementation. All proposed project ideas were evaluated according to the level of their innovation, visibility and interregional cooperation. Moreover, all ideas had to demonstrate clear implementation and potential ownership of regional public and/or private actors. Subsequently, the project ideas were assessed by external evaluators with regard to their eligibility for funding from the EU structural funds. Finally, the steering committee members carried out a technical assessment of the project ideas and identified nine priority lighthouse projects (see Table 11.1). Detailed business development plans were designed for each of the nine lighthouse projects (Brandt et al., 2015).

So far, two of the nine lighthouse projects have been successfully implemented in practice. First, the “Competence Centre on New Materials and Production" was established in 2018 in the medium-sized town Stade. The Centre acts as a cooperation network between CFK Valley, the counties of Stade, Harburg, Lüneburg, Uelzen and Lüchow-Dannenberg, Southern-Elbe Ltd. and Helmut Schmidt University Hamburg. The network seeks to support SMEs from the Southern-Elbe Region to integrate new lightweight materials in their production processes and to increase their competitiveness (Besser im Blick, n.d; Glaser, 2016). Second, the "Bionic Smart Factory 4.0" is a new 3D campus in Lüneburg, dedicated to bionic product design of

Table 11.1 Overview of lighthouse projects, designed in the course of the Smart Region process

Source: Brandt ct al. (2015).

components and their economic 3D printing production. It is the first nonuniversity research institution in Lüneburg, and offers both researchers and start-ups the possibility to test new ideas and develop joint cooperation projects (Bionicproduction, 2017).

In view of the range and variety of involved regional stakeholders, the Smart Region can be described as an innovation process with a focus on implementation. It involved representatives of different levels and competencies from the region and promoted possibilities for interregional networking and dialogue on new market opportunities. Yet, the pre-definition of innovation priorities for the region also pre-defined the selection of stakeholders that were involved in the process. As a logical consequence, the main target groups of the process were specialized large companies, cluster organizations and research institutes, while traditional SMEs from the rural areas with limited or no R&D capacities were only marginally involved. A possible explanation for this division is the strong focus of the Smart Region process towards the future acquisition of funds from the Lower Saxony Multi-fund Operational Programme (OP). Recent discussions reveal that the majority of SMEs from rural areas identify the long and complex application procedures and the high co-financing rates as the main obstacles for their participation in ERDE- and ESF-funded cooperation projects. Against this background, regional actors call for simplified low-threshold innovation possibilities in the OP. which could complement the more accessible existing regional and national funds (ArL Lüneburg, 2018).

Besides being criticized for its strong orientation towards EU funds acquisition, the Smart Region process also faced criticism with regard to its specific

"Smart Region” governance for innovation 187 self-conception. Participants in the process argued that the Smart Region is perceived by enterprises as a top-down process dominated by strong public interest (see press reports in Business & People, 2015; Landeszeitung, 2015). Furthermore, they added that regional development policies should not focus too much on support funds, but should predominantly promote grass-roots projects and ideas. The same argument is valid when it comes to new cooperation initiatives. As introduced by Rubach (2013), externally imposed and constructed collaboration initiatives are threatened by their own weak anchoring in regional companies' innovation processes.

Concluding discussion

The bottom-up strategic planning process Smart Region supported the identification of priority directions for future economic development and technological specialization within the Hamburg-Southern Elbe Region. Organized as a small-scale entrepreneurial discovery process, the initiative is an attempt to specify the R1S3 priorities in the form of concrete regional projects. Today, the jointly developed and agreed Master Plan guides the implementation of the innovation projects, contributing to the long-term strategic specialization priorities of the region.

The Smart Region process supported Hamburg-Southern Elbe Region to intensify the dialogue with local actors from the public administration, private economy and academia. It contributed to discovering lighthouse projects with regional importance, as well as strengthening the cooperation between the five regional counties and the City of Lüneburg. At the same time, the process helped regional actors to identify potential coordination failures and project implementation barriers. Currently, shortly before the end of the funding period 2014 2020, two out of nine lighthouse projects are under implementation and are likely to become real drivers for regional economic development and technological innovation in the region. The two projects “Competence Centre on new materials and production” and "Bionic Smart Factory 4.0” involve enterprises and research institutions from both Lower Saxony and Hamburg and illustrate a successful example of cooperation beyond federal state borders. The maintained low realization level of the other lighthouse project ideas raises the issue of how to ensure project ideas’ ownership and accountability of action implementation.

It could be argued that the pre-defined “ICT-related” technological innovation priorities, which guided the Smart Region process, are most useful and relevant to universities, large companies with expertise in the technological development field, network organizations and thematic clusters, which often have the capacity, resources and networks to build up cooperative project consortia for the Structural Fund programmes. However, they represent a minority in the Hamburg-Southern Elbe Region, an area characterized by rural territories and a high percentage of traditional local scale SMEs. It is therefore not surprising that at the time of the Smart Region’s Master Planfinalization, the ownership and responsibility for the newly developed lighthouse projects were left in the hands of a limited number of project promoters.

Ongoing regional discussion confirms that cooperation with innovation actors from the closely located metropolitan cities of Hamburg, Bremen and Hannover does provide possibilities for boosting innovation in the Hamburg-Southern Elbe Region. However, joint cooperation efforts are limited by the federal states’ administrative borders (OECD 2019), which determine the territorial coverage and eligibility of EU funding programmes. This fact, together with the high territorial and economic heterogeneity of the Hamburg-Southern Elbe Region, display that the pathways towards innovation in this area are highly dependent on a combination of contextual conditions and that it is unlikely for a single overall strategy to provide the right incentives for innovation.

Bottom-up governance approaches such as the Smart Region process can give impetus to innovation projects, which promote sustainable regional development and contribute to territorial cohesion. They can provide partial solutions to local economic, societal or environmental challenges. Yet, these solutions are often temporal and dependent on the availability of funding possibilities and leadership. To promote long-term sustainability transitions, a broader view on innovation is needed that goes beyond the understanding of innovation as technological improvements in products and services. By incentivizing process and organizational innovation, regions can support the establishment of cooperation structures and networks, which generate synergies between urban and rural areas and contribute to more integrated rural-urban development.

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