Does a rural location matter for innovative small firms? How rural and urban environmental contexts shape strategies of agri-business innovative small firms

Abstract

Purpose The purpose of this paper is to present qualitative evidence on strategies undertaken by 34 innovative small firms. Design/methodology/approach The sample of innovative firms is solely recruited from the agri-business sector that are located in contrasting environments varying from rural areas with low urban influence to areas with high urban influence and “main” urban or city areas. The authors discuss strategies in the light of a theoretical approach that incorporates a resource-based view, dynamic capabilities (DCs) and social network theory. Findings Although there is diversity in strategies across the 34 innovative small firms, irrespective of their “rural” or “urban” environment, qualitative evidence sheds light on differences in the way that strategies are pursued. Research limitations/implications The study indicates that small firms in rural environments can be just as innovative as their counterparts in urban environments; however, the authors demonstrate that they adopt different strategies, which have been shaped by their environment, to achieve innovation. The authors use the qualitative evidence to develop the theory of DCs and classify the sample into four clusters which marries the environmental context and innovative DCs. Originality/value The paper makes a contribution to a research gap on the way that the environment can shape management strategies in innovative small firms. It contributes to a limited literature in this area.