NC_temp1100: Improving Innovation Systems in Rural and Agricultural Regions

(Multistate Research Project)

Status: Draft Project

NC_temp1100: Improving Innovation Systems in Rural and Agricultural Regions

Duration: 10/01/2020 to 09/30/2025

Administrative Advisor(s):


NIFA Reps:


Statement of Issues and Justification

The overarching goal of this project is to improve regional innovation systems. Specifically, we focus on rural and agricultural areas, exploring new opportunities for university technology transfer, public and private R&D funding, and entrepreneurship coaching and innovation dissemination models. Our approach builds on the successful technology-assisted faculty-investor matching program by expanding our target scientists and innovations in two ways. First, we will explore a wider array of agricultural technologies, to include innovations that may not be patentable to cutting-edge applications of artificial intelligence, as well as other technologies relevant to rural regions or where rural regions have a comparative advantage. Second, we will engage with scientists across a broader range of innovation development stages, to include those at earlier levels where end-user feedback, entrepreneurship-coaching, and pursuing public R&D funding is mote likely to improve outcomes. We will also engage multi-disciplined researchers and extension professionals by exploring new applications of traditional communications and new media-marketing tools, establishing new linkages to private-sector and community stakeholders, and identifying research opportunities related to regional innovation systems, entrepreneurship, public and private R&D, university technology transfer, and rural and agricultural economies.                

There remain myriad challenges and obstacles impacting the innovative process which is further complicated in rural and agricultural contexts (Adner & Kapoor, 2016; Aryal et al., 2018; Wojan, Dozel, & Low, 2015). Some of these factors include accessing: (1) R&D capital and follow-on private equity; (2) new information and knowledge; (3) high-skilled human capital; and (4) markets. We use an innovation systems framework by considering the full path of the innovative process, from creation to adoption of new technologies. This allows for a broader and more complete understanding of different parts of the regional innovation systems and relevant strategies to achieve project goals (Feldman, Siegel, & Wright, 2019). For example, part of the R&D leading to a commercialized product is understanding the market need (Dmitriev et al., 2014; Hall & Link, 2015). Effectively understanding the need is, in turn, tied to other aspects of innovation development, such as obtaining R&D capital through public (e.g., Small Business Innovation Research or the Foundation for Food and Agriculture Research programs) or private (e.g., angel investors or venture capital) sources.  At the same time, technology adoption may be reduced if end-users are unable to fully capitalize on an innovation’s potential, for example, where limited broadband infrastructure impacts use of advanced, wireless precision-agriculture tools (Sandberg & Håkansson, 2014; Stenberg, 2018). Additionally, within the innovation system framework, different stakeholder groups may influence the efficiency and effectiveness of innovation creation and adoption strategies and policies (Huang-Saad, Fay & Sheridan, 2017; Pierrakis & Saridakis, 2019). The approach is to understand: (1) specific pieces of the innovative process in rural and agricultural contexts; and (2) how the different pieces link to other parts and to the broader system. Based on this new knowledge, we are able to identify policy changes and develop extension strategies to improve regional innovation systems.

In summary, society will be better served by its investments in public research as a result of this project. A better understanding of different aspects of regional innovation systems in rural and agricultural contexts and how these aspects are interconnected will lead to recommendations to improve these systems. Some short-term impacts include expanded marketing for the featured scientists and their institutions, new public R&D funding topics pursued (e.g., through the SBIR or FFAR programs), and earlier-stage faculty entrepreneurship engagement.

Related, Current and Previous Work

The goal of this project is to expand our understanding of the innerworkings of regional innovation systems by exploring the broad process of innovation creation and adoption. Our focus is on the linkages between rural and agricultural firms and communities, university knowledge and technology transfer, public and private R&D funding, and models of entrepreneurship coaching and innovation dissemination. We also explore the efficacy of public-private partnerships in this regard.

Romer (1990) demonstrated that sustainable economic growth is driven by technological change (innovation) which results from deliberate investment decisions of firms. Schumpeter asserts that competitive forces drive innovation and technological progress through “creative destruction,” as current practices are abandoned for new and improved methods (Aghion and Howitt 1990). Although there is a rich literature on many facets of innovation recent studies highlight differences between rural and urban regions and firms in this regard (Demircioglu et al. 2019; Dotzel & Faggian 2019; Whitacre et al. 2019; Wojan 2019; Wojan et al. 2018).

One area in particular is a knowledge gap in understanding rural and agricultural firms’ behaviors related to innovation creation. Some evidence points to obstacles related to capital access, such as, R&D capital and private equity, as reasons rural areas lag urban areas (Aryal, et al. 2018). There are well documented benefits and links between public and private R&D. For example, firms with SBIR funding experienced higher growth and rates of obtaining private equity (Lerner 1999). Additionally, follow-on PE appears to accelerate the commercialization process (Link et al. 2014) and SBIR funded projects with intellectual property retained more employees (Link & Scott 2012).

However, many of our assumptions about innovative rural and agricultural firms are derived from our understanding of the behaviors, characteristics, and motivations of innovative urban-firms. Thus, outcomes and policy recommendations often assume urban-based strategies in terms of encouraging future innovations. The primary concern is that while a significant literature across multiple disciplines and focused on different aspects of innovation exits, the majority is urban- or metro-centric and results may not accurately reflect rural firms or environments (Aryal et al. 2018).

Additionally, recent testimony before the US Senate Committee on Small Business and Entrepreneurship indicates a renewed and intensified focus from publicly funded R&D on innovation commercialization (ITIF, 2019). This means that more emphasis will be placed at the onset of funded a project’s potential for commercial success. Some examples of these early indicators may include firms’ willingness and ability to: (1) seek formal and informal IP protection; (2) pursue PE; and (3) identify and access product markets. These early indicators may also be reflected by firms’ level of “innovation capital” (e.g., as defined by Audretsch & Link, 2018). These policy adjustments may also negatively impact the competitiveness of rural and agricultural firms.

Other literature highlights the challenges rural and agricultural areas face due to lack of agglomeration economies (Artz et al. 2016; Aryal et al. 2018; Olfert & Partridge 2010; Partridge & Rickman 2008). One idea to mitigate some of these is to increase the role universities play, especially among land-grant universities (Lyons et al. 2018). However, firms may not recognize the full value of university knowledge, developed innovations and partnerships, and thus, may be reluctant to enter into relationships with universities (Howells et al. 2012). At the same time, academic engagement (interactions and relationships developed between university actors such as faculty and industry) is critical as industry partners help maintain focus on intermediate and end users, and the earlier in the innovation development stage engagement occurs, the more likely is commercial success (Perkmann et al. 2013). Thus, it is important to improve models that: (1) link universities to rural and agricultural firms; (2) increase entrepreneurial skills of faculty and firms; and (3) effectively convey the public-private partnership value proposition    

Finally, recent research using new data sources and focused on rural innovation highlight important differences between innovative urban and rural firms (Demircioglu et al. 2019; Dotzel & Faggian 2019; Whitacre et al. 2019; Wojan 2019; Wojan et al. 2018).  First, there are many differences in the intellectual property strategies used by innovative rural firms, compared to urban firms. Second, there are differences in the types of industries and innovations developed by rural versus urban firms. Third, the rates of different types of innovative activity appear lower for rural innovative firms compared to their urban counterparts, even after controlling for a number of factors such as firm, geographic, and industrial characteristics.

Based on practical experience working with small, rural innovative firms, there are also limitations in terms of the knowledge, information access, and networks among the rural entrepreneurs leading these firms. To aid entrepreneurs, including new academic faculty pursuing innovation creation, there are four basic questions to understand in terms of innovation commercialization: (1) Is there a market? (2) Does the technology work? (3) Do customers get it? and (4) Will they pay for it (Nastas 2016)? This process occurs through effective academic engagement (Aylor 2016; Biondi 2016; Nastas 2016; Perkmann et al. 2013). One solution to this dilemma is to provide entrepreneurs support that enhances their communication, marketing and networking skills and opportunities which, in turns, improves innovation commercialization outcomes (D'Este et al., 2012; Rasmussen et al., 2014).

This project builds on the successful technology-assisted faculty-investor matching program and the NCRCRD’s Innovations in Agricultural and Rural Development series by expanding our focus (Lyons et al. 2018). We will increase the range of innovations considered, engage with researchers across a wider array of innovation development stages, focus on public and private R&D funding resources and programs, engage multi-disciplined researchers and extension professionals, establish new connections to private-sector and community stakeholders, and identify research opportunities relevant to regional innovation, entrepreneurship, university technology transfer, rural and agricultural economies.  

Objectives

  1. Determine stakeholder barriers and incentives as well as experiences and preferences regarding next generation agricultural innovations, such as artificial intelligence and automation.
  2. Identify new strategies that increase broader stakeholder engagement in the technology transfer of land-grant developed agricultural and other technologies.
  3. Assess the effectiveness of public and private R&D funding opportunities and identify policy changes that improve related stakeholder experiences.
  4. Explore entrepreneurship-coaching and innovation dissemination models designed to improve regional innovation ecosystems.
  5. Identify institutional, state, and federal policy changes that improve the success of commercializing innovations.

Methods

First, we will engage researchers across multiple disciplines, from bench sciences in agriculture to other sciences leading to new innovations relevant to rural areas, as well as those in social and other applied sciences focused on rural prosperity. Second, we will increase our attention on scientists at earlier stages of innovation development, where end-user feedback, entrepreneurship-coaching, and pursuing public R&D funding is more likely to improve outcomes. Third, we will explore applications of traditional communications and new media-marketing tools to create new and manage existing relationships with stakeholder and identify relevant research opportunities. Finally, we will employ social sciences tools, such as econometric methods, to study the relationships between policies and outcomes.

 

Objective 1. Determine stakeholder barriers and incentives as well as experiences and preferences regarding next generation agricultural innovations, such as artificial intelligence and automation.

We will employ a mixed methods approach using surveys, interviews, focus groups and secondary data to identify and understand different stakeholder groups within regional innovations systems, and specifically focused on rural and agricultural areas. Additionally, our information communication and dissemination approaches will provide opportunities to observe firsthand the interactions between different stakeholder groups. Survey and interviews questions and focus group topics will be based on prior feedback as well as new insights. We will also collect institutional data on formal and informal intellectual property practices for integration into databases and further analysis.    

 

Objective 2. Identify new strategies that increase broader stakeholder engagement in the technology transfer of land-grant developed agricultural and other technologies.

We will build on our prior experience with traditional and web-based communication tools to expand our network of scientists as well as other stakeholders who may influence regional innovating systems. This will include applications of new-media marketing and virtual communication tools (such as virtual meeting spaces and social media) combined and/or reinforced with other more traditional opportunities for meeting and communication.          

 

Objective 3. Assess the effectiveness of public and private R&D funding opportunities and identify policy changes that improve related stakeholder experiences.

We will use newly acquired firm-level big data and our relationships and partnerships with USDA to explore and econometrically evaluate the Small Business Innovation Research program, across industries, regions, and funding agencies. Our specific focus is on firms in rural and agricultural regions. Outcomes can be matched to other data linking SBIR to private equity. Additionally, we will use a similar approach to explore other public-private opportunities impacting innovation creation and adoption.

 

Objective 4. Explore entrepreneurship-coaching and innovation dissemination models designed to improve regional innovation ecosystems.

We will build on our prior approach to the faculty/investor matching process which includes considerable coaching of the faculty-presenters. Additionally, we will employee our innovative firm coaching pilot program designed to help new and small firms identify and pursue SBIR opportunities relevant to rural and agricultural firms. We will also include qualitative and quantitative analyses from objectives one, two, and three and from the post-presentations in our Innovation in Agriculture and Rural Development series for improving innovation marketing and dissemination outreach. The results will enhance our existing web-based training program for faculty interested in commercializing their work.

 

Objective 5. Identify institutional, state, and federal policy changes that improve the success of commercializing innovations.

We will conduct econometric analyses of all primary and secondary data collected during this project will be conducted, which may include additional follow up interviews of each stakeholder group. We will also use current and new data sources to explore the effectiveness of existing public R&D program. More generally, empirical evidence of the effectiveness of federal, state and university policies will help formulate recommendations to improve the technology transfer process, and more broadly regional innovation systems.  

Measurement of Progress and Results

Outputs

  • Webinars linking faculty-researchers with potential users of technology
  • Virtual focused group between regional innovation stockholders
  • Enhanced virtual and webinar training and coaching for faculty-entrepreneurs
  • Virtual and webinar coaching for inovativie firms pursuing public R&D
  • Proposals to USDA, NSF, DOE and FFAR for additional funding
  • Multiple peer-reviewed journal articles on rural entrepreneurship and innovation, SBIR, virtual coaching models, and public-private partnerships

Outcomes or Projected Impacts

  • Matches between featured faculty innovations and investors/firms
  • Improved ability of faculty to engage with industry and explain their work to investors
  • Ideas for improved practices in university knowledge technology transfer
  • Enhanced marketing of faculty innovations
  • Improved understanding and policy ideas for regional innovation systems

Milestones

(2021):Faculty technology webinars/virtual presentations; virtual focus groups; one SBIR training; USDA and NSF proposals; Conference papers.

(2022):Faculty technology webinars/virtual presentations; virtual focus groups; USDA, NSF DOE proposals; Journal submissions and new conference papers.

(2023):Faculty technology webinars/virtual presentations; virtual focus groups; SBIR impact analyses; USDA and NSF proposals; Journal submissions and new conference papers.

(2024):Faculty technology webinars/virtual presentations; virtual focus groups; USDA, NSF and DOE proposals; Journal submissions and new conference papers.

(2025):Faculty technology webinars/virtual presentations; virtual focus groups; USDA, NSF and FFAR proposals; Journal submissions.

Projected Participation

View Appendix E: Participation

Outreach Plan

This project follows the traditional Land Grant approach of engagement, reflection, research, and re-engagement. Major platforms for our outreach are webinars, new-media marketing of presentations, and virtual focused groups which provide the foundation for the research. Our goal is to greatly expand our network of individuals with interests in LGU-developed innovations, especially in agriculture and technologies relevant to other rural regions. Interactions with researchers, inventors, investors and potential innovation end-users will inform recommendations for enhancing regional innovations systems and improving LGU technology transfer. These findings will be offered to APLU and AES administrators, other interested stakeholder groups, and submitted to peer-reviewed journals in related disciplines.

Organization/Governance

The North Central Regional Center for Rural Development will provide coordination services for the multi-state project. Dialog and consensus modes will be used to form work teams and execute joint projects.

Literature Cited

Adner, R., & Kapoor, R. (2016). Innovation ecosystems and the pace of substitution: Re‐examining technology S‐curves. Strategic management journal, 37(4), 625-648.

Aghion, P., & Howitt, P. (1990). A model of growth through creative destruction (No. w3223). National Bureau of Economic Research.

Artz, G. M., Kim, Y., & Orazem, P. F. (2016). Does agglomeration matter everywhere?: new firm location decisions in rural and urban markets. Journal of Regional Science, 56(1), 72-95.

Aryal, G., Mann, J., Loveridge, S., & Joshi, S. (2018). Exploring innovation creation across rural and urban firms: Analysis of the National Survey of Business Competitiveness. Journal of Entrepreneurship and Public Policy, 7(4), 357-376.

Audretsch, D. B., & Link, A. N. (2018). Innovation capital. The Journal of Technology Transfer, 43(6), 1760-1767.

Aylor, W. Director SDSO TTO. Personal Communication, July 14, 2016

Bondi, J. Discovery to Product (D2P), UW-Madison. Personal Communication, January 27, 2016

D’Este, P., Iammarino, S., Savona, M., & von Tunzelmann, N. (2012). What hampers innovation? Revealed barriers versus deterring barriers. Research policy, 41(2), 482-488.

Demircioglu, M. A., Audretsch, D. B., & Slaper, T. F. (2019). Sources of innovation and innovation type: firm-level evidence from the United States. Industrial and Corporate Change.

Dmitriev, V., Simmons, G., Truong, Y., Palmer, M., & Schneckenberg, D. (2014). An exploration of business model development in the commercialization of technology innovations. R&D Management, 44(3), 306-321.

Dotzel, K. R., & Faggian, A. (2019). The impact of external knowledge sourcing on innovation outcomes in rural and urban businesses in the US. Growth and Change.

Feldman, M., Siegel, D. S., & Wright, M. (2019). New developments in innovation and entrepreneurial ecosystems. Industrial and Corporate Change.

Hall, M. J., & Link, A. N. (2015). Technology-based state growth policies: the case of North Carolina’s Green Business Fund. The Annals of Regional Science, 54(2), 437-449.

Howells, J., Ramlogan, R., & Cheng, S. L. (2012). Innovation and university collaboration: paradox and complexity within the knowledge economy. Cambridge Journal of Economics, 36(3), 703-721.

Huang-Saad, A., Fay, J., & Sheridan, L. (2017). Closing the divide: accelerating technology commercialization by catalyzing the university entrepreneurial ecosystem with I-Corps™. The Journal of Technology Transfer, 42(6), 1466-1486.

Information Technology and Innovation Foundation. (2019). Testimony of Stephen Ezell Before the Senate Committee on Small Business and Entrepreneurship. Available at: https://itif.org/publications/2019/05/15/testimony-senate-small-business-and-entrepreneurship-committee-reauthorizing  

Lerner, J. (2000). The government as venture capitalist: the long-run impact of the SBIR program. The Journal of Private Equity, 3(2), 55-78.

Link, A. N., & Scott, J. T. 2012. Employment Growth from Public Support of Innovation in Small Firms. Kalamazoo, MI: W. E. Upjohn Institute for Employment Research

Link, A. N., Ruhm, C. J., & Siegel, D. S. (2014). Private equity and the innovation strategies of entrepreneurial firms: Empirical evidence from the Small Business Innovation Research Program. Managerial and Decision Economics, 35(2), 103-113.

Nastas, T. President & Founder of Innovation Ventures, Inc. Personal Communication, April 12, 2016.

Olfert, M. R., & Partridge, M. D. (2010). Best practices in twenty‐first‐century rural development and policy. Growth and Change, 41(2), 147-164.

Partridge, M. D., & Rickman, D. S. (2008). Distance from urban agglomeration economies and rural poverty. Journal of Regional Science, 48(2), 285-310.

Perkmann, M., Tartari, V., McKelvey, M., Autio, E., Broström, A., D’Este, P., Fini, R., Geuna, A., Grimaldi, R., Hughes, A. & Krabel, S. (2013). Academic engagement and commercialisation: A review of the literature on university–industry relations. Research policy, 42(2), 423-442.

Pierrakis, Y., & Saridakis, G. (2019). The role of venture capitalists in the regional innovation ecosystem: a comparison of networking patterns between private and publicly backed venture capital funds. The Journal of Technology Transfer, 44(3), 850-873.

Romer, P. M. (1990). Endogenous technological change. Journal of political Economy, 98(5, Part 2), S71-S102.

Sandberg, K. W., & Håkansson, F. (2014). Barriers to adapt eCommerce by rural Microenterprises in Sweden: a case study. International Journal of Knowledge and Research in Management and E-Commerce, 4(1), 1-7.

Stenberg, Peter L. "The purchase of Internet subscriptions in Native American households." Telecommunications Policy 42, no. 1 (2018): 51-60.

Whitacre, B. E., Meadowcroft, D., & Gallardo, R. (2019). Firm and regional economic outcomes associated with a new, broad measure of business innovation. Entrepreneurship & Regional Development, 1-23.

Wojan, T. R. (2019). Geographical differences in intellectual property strategies and outcomes: establishment-level analysis across the American settlement hierarchy. Regional Studies, Regional Science, 6(1), 574-595.

Wojan, T. R., Crown, D., & Rupasingha, A. (2018). Varieties of innovation and business survival: Does pursuit of incremental or far-ranging innovation make manufacturing establishments more resilient?. Research Policy, 47(9), 1801-1810.

Wojan, T. R., Dotzel, K. R., & Low, S. A. (2015). Decomposing regional patenting rates: how the composition factor confounds the rate factor. Regional Studies, Regional Science, 2(1), 535-551.

Attachments

Land Grant Participating States/Institutions

IL, MI

Non Land Grant Participating States/Institutions

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