3. National, regional and local policy framework conditions for rural innovation in Switzerland

Innovation in rural areas is more incremental, making use of locally available knowledge and taking time to experiment (see Chapter 1). This is a result of both limited accessibility of knowledge, finance and other resources in the countryside and the size of firms and their focus on sectors that do not lose value as quickly, including natural resources. As such, rural innovation is less time-dependent and characterised by high levels of meaningfulness to the community while still competing successfully in the market economy. Rural entrepreneurs often bridge knowledge gaps strategically, building networks with partners such as suppliers and higher education institutions when looking to steadily improve their products. A key element of rural innovation is also passing down knowledge through inter-generational links. In times of demographical change and increasing numbers of younger people leaving for the cities, this can become an increasing challenge, not only in terms of succession but also because young people are more likely to be innovative and use newer products and processes.

This chapter makes recommendations to enhance rural innovation in Switzerland. It starts with an overview of the policy landscape and its stakeholders for rural innovation and identifies drivers and barriers to innovation in rural Switzerland. It draws on evidence provided by the federal administration on the Swiss decentralised innovation policy approach as well as three regional innovation systems, notably, RIS Basel-Jura, RIS Central Switzerland and RIS Western Switzerland (ARI-SO). Considering the vast innovation potential in rural Switzerland, it investigates if local framework conditions are conducive to and account for the specific characteristics of rural innovation. Specifically, it focuses on broadening the concept of innovation, future-proofing innovation agendas, building a culture of experimentation and simplifying access to services, and developing rural-urban linkages to increase the flow of knowledge and people. Overall, the chapter shows that for rural innovation, policy makers should focus on adjusting innovation support to focus on the comparative advantages of rural regions, while enhancing enabling conditions in currently lagging behind rural areas, adjusting for the variety of rural places in their programming.

Switzerland has no overall innovation policy but follows a decentralised approach through several independent policy areas that are co-ordinated through mechanisms involving federal, cantonal and regional (cross-cantonal) actors. This organisation grants individual agents a high degree of autonomy and scope for action. It also allows for tailor-made answers to new emerging challenges. The binding element of this decentralised approach are principles shared by the main agents in the system. They include federal actors (e.g. Innosuisse), public education and research organisations, cantonal actors and programmes (e.g. Living Labs, projects), RIS and private programmes for start-ups. They form the basis of the structure of the Swiss innovation system and comprise subsidiarity, the autonomy of agents, co-operation, competitiveness and quality awareness. They are embodied in framework conditions, including democracy, federalism, liberal economy, social partnership and bottom-up institutions. This results in three other characteristics of the Swiss innovation system: diversity, stability and ability to adapt. The most important principles and framework conditions are presented graphically below (Figure 3.1).

Within the structure, both institutionalised and informal processes enable collaboration. Formal processes for instance include internal administrative procedures such as consultations and co-reporting procedures. This ensures that individual actors are informed about the activities of the others, insofar as they are affected by them. More informal or ad hoc processes also exist. They include steering groups, monitoring groups or other ad hoc bodies formed to contribute to individual projects. Co-ordination generally ensures that relationships between individual stakeholders are maintained and activities co-ordinates – especially if several actors are pursuing similar projects at the same time. Such co-ordination processes, which initially take place infrequently, can, if necessary, be institutionalised over time.

Because of its decentralised nature, the Swiss innovation system functions as a complex ecosystem. Figure 3.2 depicts the main elements of the decentralised regional innovation system in Switzerland, focusing on small- and medium-sized enterprises (SMEs) and entrepreneurs as the benefactors. A study by the State Secretariat for Education, Research and Innovation (SERI) in 2016 recorded 138 innovation promotion offerings at the national, cantonal and regional levels, which can sometimes be perceived as complex (SERI, 2016[2]).

From a legal perspective, public research and innovation funding is the responsibility of the federal government. The promotion of innovation is regulated by Federal Act on the Promotion of Research and Innovation (RIPA). RIPA is a framework law that governs the objectives and funding of research and innovation by the federal government. It includes legally enshrined principles such as freedom of research, the scientific quality of research and innovation, the diversity of scientific opinions and methods as well as scientific integrity, and good scientific practice principles of research that define federal innovation funding (see RIPA, Article 6, Paragraph 1, Fedlex (2012[3])).

RIPA (see Article 6, Paragraph 3) also establishes overarching goals including the sustainable development of society, economy and environment and the (national and international) co-operation of the actors. The instruments of the innovation promotion policy according to RIPA primarily cover knowledge-based innovation. They support processes by which scientific knowledge can be developed into marketable products. As part of the business-oriented approach to innovation, instruments of economic policy are also added, specifically location promotion policy, growth policy, SME policy and intellectual property protection (Swiss Federal Council, 2018[1]).

The responsibilities in research and innovation (R&I) funding at the federal level are primarily shared among the Federal Department of Economic Affairs, Education and Research (EAER), SERI, the State Secretariat for Economic Affairs (SECO), the Swiss Innovation Agency Innosuisse, as well as the council of the Swiss Federal Institutes of Technology (ETH Board) on behalf of the institutions of the ETH Domain. Other departments such as the Federal Department of the Environment, Transport, Energy and Communications (DETEC) are also directly or indirectly involved in R&I funding. The Swiss Science Council (SSC) is the advisory body of the Federal Council for issues related to science, higher education and R&I policy.

Furthermore, there are additional innovation activities within various sectoral policy areas. These activities seek to achieve specific political goals, such as nationally and internationally set goals for environmental protection and reduction of energy consumption. The primary purpose of these programmes is therefore to reach the respective policy objectives, while innovations are the means to achieve these goals.

In terms of funding, the Federal Council submits a request to parliament on the promotion of education, research and innovation (ERI) every four years. As part of this, it formulates the guidelines and measures of its policy for ERI for which the Swiss Confederation has primary responsibility. These include the ETH, vocational education and training, R&I promotion and international co-operation in education and research. The request also formulates the confederation’s commitment to those parts of the system that are primarily the responsibility of the regions (cantons), such as universities, universities of applied sciences, implementation of vocational education and training and the scholarship system. Based on this request, the parliament then decides on the funding framework.

Innovative entrepreneurship is largely executed by cantons, cities, municipalities and private actors, as well as the RIS. These will be discussed in more detail below. The federal level mostly tries to complement activities led by lower government levels and actors, for instance through its innovation agency Innosuisse. The role of the agency is to promote science-based innovation in the interest of the economy and society in Switzerland. To this end, Innosuisse promotes partnerships between academia and businesses and seeks to accelerate the transfer of knowledge from research to industry. It also helps innovators and start-ups to achieve a breakthrough in the market. The core of Innosuisse funding is the support of innovation projects. In these projects, innovative organisations such as companies, start-ups, administrative bodies and non-governmental organisations (NGOs) develop new services and products together with research institutions. Some projects also involve international partners. Further, the agency supports networking, training and coaching, with the goal of providing the foundation for successful Swiss start-ups as well as innovative products and services (Innosuisse, 2022[4]).

The vast majority of cantons engage in innovation and economic development activities. The range of services includes support for company start-ups or the promotion of regional networks or clusters in close contact with companies and sometimes specific coaching. Cantons generally have their own business development offices. They inform companies about location advantages, maintain contacts with investors, organise support for investors and handle customer care on site. Various cantons use tax breaks to promote businesses. Cantons also use their universities, universities of applied sciences and pedagogical universities to promote regional development and R&I. Cities and towns likewise are important in establishing technology or innovation parks (Swiss Federal Council, 2018[1]).

The federal government’s New Regional Policy (NRP) (for an in-depth description, see the following section) is important in financially supporting these subnational innovation projects and has allowed regional and cross-cantonal innovation initiatives to be established in most of Switzerland. Overall, the NRP has the objective to “enhance the competitiveness and added-value creation of individual regions and thus contribute to the creation of jobs to preserve decentralized settlement and to reduce disparities between regions”. The federal level is responsible for determining strategic objectives and spatial priorities as well as for ensuring legal conformity, while the cantons are in charge of policy implementation. They have maximum scope to define for their region how objectives are achieved, including project selection. The NRP is funded through the local promotion activities of the federal government (SECO, 2020[6]).

Part of the NRP is the regional innovation system (RIS). There are six RIS covering significant parts of the country (Figure 3.3). The RIS relate to functional (generally inter-cantonal and in some cases cross-border) economic zones. Complementary to the focus of the national research-driven innovation activities, their focus is on demand- and need-driven services, and a broader understanding of innovation that specifically targets SMEs. The RIS promote competitiveness and innovative capacity of SMEs by offering co-ordinated support and services in the areas of information, consulting, networking, infrastructure and financing. Following the principle of “no wrong door”, the RIS are meant to consolidate innovation and support activities from different governance levels and actors and connect SMEs with other sources of funding and assistance if necessary. Overall, the central tasks of the RIS can be summarised as follows:

  • Co-ordination of innovation promotion activities.

  • Coaching on the topic of innovation for start-up companies and SMEs.

  • Organisation of networking events.

  • Point of entry, referring individual companies to the right innovation funding agency (including universities and federal funding agencies) (SECO, 2017[7]; B,S,S Volkswirtschaftliche Beratung AG, 2018[8]).

This study specifically focuses on the NRP and its RIS structures because they, within the overall innovation ecosystem, have a specific territorial and rural focus. Understanding and analysing how they deliver for rural SMEs is thus crucial to understanding what works and what does not with regard to rural innovation in Switzerland and how policies to foster rural innovation can be improved. At the same time, these geographically focused policies are only small and financially limited mechanisms that need to complement and work in synergy with the more general policy tools and mechanisms described in this section.

Throughout the mid-1990s, the scope of Swiss regional policy shifted away from redistribution towards a new focus on impact orientation, competitiveness and the creation of value-added in rural areas. This shift was formalised with the introduction of the New Regional Policy (NRP) in 2008, which encourages an endogenous “growth-oriented” approach emphasising open markets, export capacity and competitiveness. The policy specifically targets rural and mountainous areas, which incorporate the vast majority of Swiss territory but excludes the large agglomerations of Basel, Bern, Geneva, Lausanne and Zurich and the urban cantons of Aargau, Basel-Landschaft, Basel City, Geneva, Solothurn, Zug and Zurich. Exceptionally, cantons may request that NRP funds be used for excluded areas (Figure 3.4). The seven urban cantons may also apply for NRP funds if they can demonstrate that the areas to be supported present the same structural challenges as the traditional target areas of NRP.

The NRP is a joint task of the federal government and the cantons. The Swiss Confederation is responsible for strategic management and orientation, while the operational responsibility for implementation and the decision as to whether a project can be supported with NRP funds lies with the cantons (OECD, 2011[9]). At the cantonal level, the NRP provides direct financial assistance (federal and cantonal) in order to enable the implementation of suitable projects and programmes. It also acts at a supra-cantonal level in order to enhance geographic coherence and economic functionality. This includes funding for Switzerland’s participation in cross-border EU programmes, in particular Interreg, and funding for inter-cantonal RIS (OECD, 2019[10]).

In 2016, the NRP multiyear programme started for a second eight-year period. The focus continues to be to “enhance the competitiveness and added-value creation of individual regions and thus to contribute to the creation and safeguarding of jobs in the regions, to the safeguarding of a decentralised settlement pattern, and to the reduction of regional disparities”. Its three pillars address: i) an increase in the economic strengths and competitiveness of regions (85% of total funding); ii) co-operation and synergies between the NRP and other sectoral policies (5-10% of total funding); and iii) capacity building in the knowledge system of regional policy (5-10% of total funding). The NRP also offers tax breaks to industrial companies and service providers whose business is closely linked to industrial production. With this, the government hopes to support the creation of new types of jobs in innovative fields in structurally weak regional centres (OECD, 2019[10]).

The latest additions to the NRP 2020 include support for pilot programmes for mountainous regions to provide additional stimulus where it is needed. The pilot measurements offer more flexible eligibility criteria for support for example, small, less profitable infrastructure initiatives can be co-financed with à-fonds-perdu contributions. Another new feature is the support of project preparations and the development of Living Labs for the development and implementation of unconventional ideas (SECO, 2020[12]).

The implementation period 2016-23 has a stronger focus on innovation and tourism. The emphasis is on innovation in SMEs. One part of the promotion is the aforementioned RIS that provide coaching and networking for innovation. The federal government supports these networks provided they have a functional area orientation, i.e. if they extend beyond cantonal or even national borders and are adapted to the needs of the defined target groups. Second, the multiannual programme 2016-23 sets a specific focus on promoting tourism in the regions, a sector that was exposed to strong challenges in recent years due to foreign exchange rates and that is increasingly exposed to the effects of climate change. Digitalisation is considered an overarching goal for economic development activities and needs to be transversally addressed.

The emphasis on competitiveness mirrors the early shift observed in other member countries from a sectoral focus which was codified by the OECD New Rural Paradigm1 in 2006. The OECD’s most recent Rural Well-being Policy Framework published in 2020 (OECD, 2020[13]) builds on the paradigm and calls for an even more robust model for rural development, one that considers the economy, society and the environment (see Table 3.1). It also stresses the importance of innovation for rural places to be able to deal with structural change and identifies important policy measures to enhance innovation capacity (OECD, 2020[13]). Some of these include strengthening rural-urban links, addressing the rural-urban digital divide in connectivity, as well as enhancing education and skills. This comes at a time when recovery from COVID-19 is starting, while the impacts of the megatrends of globalisation, digitalisation, climate change and demographic change continue to shape the economic landscape of rural economies.

In 2011, the OECD’s territorial review (2011[9]) found that there were no explicit regional innovation policies in Switzerland. The report recommended that existing cantonal initiatives needed to be better co-ordinated and more effectively implemented, especially highlighting the potential of inter-cantonal initiatives (OECD, 2011[9]). Generally, RIS refer to functional economic spaces – usually cross-cantonal and sometimes cross-border – where networks of important actors for innovation processes, such as companies, research and education establishments, as well as public authorities work together in a network and contribute to the innovation processes of a region. In Switzerland specifically, the term is also used to describe the organisation that acts on the development and management of RIS. Overall, these RIS promote the competitiveness and innovative capacity of SMEs by offering co-ordinated support and services in the areas of information, consulting, networking, infrastructure and financing. In addition, they bundle other already existing support offers and refer SMEs to other funding bodies if required.

The concept of regional innovation systems (RIS) was introduced in its current form with the adoption of the federal government’s multiyear programme for the implementation of the NRP 2016-23. It thus became the prerequisite for the further support of innovation promotion offers within the framework of the NRP. The cantons, in co-operation with the State Secretariat for Economic Affairs (SECO), have created RIS structures in six major regions of Switzerland (see also Figure 3.3).

The first RIS structures in the sense of an innovation promotion initiative motivated by regional policy date back to the activities in Central and Western Switzerland in the context of the 6th European Union (EU) Research Framework Programme. Building on already existing regional initiatives, the first RIS structure was created in Central and Western Switzerland until a federal regional innovation strategy was developed in a collaboration between SECO and the cantons in 2016. The introduction of RIS within the framework of the NRP established the RIS organisations as a central link between the federal government and the cantons in the operational implementation of an innovation-based regional policy (B,S,S Volkswirtschaftliche Beratung AG, 2018[8]). The system is also meant to provide complementary support to the national innovation promotion of Innosuisse, the Swiss Innovation Agency, focusing on knowledge absorption and more incremental innovation support.

The aim of the RIS created within the framework of the NRP is to simplify and harmonise innovation promotion for SMEs and start-ups. Thus, the innovation activity of companies in the NRP impact area is to be strengthened and the long-term economic development in these areas is to be supported. A central aspect of the funding activities to support innovation activity is the so-called "no wrong door" policy which is designed to ensure that a company’s request is always forwarded to the right place, depending on its specific needs.

In order to assure that RIS support fits with diverse local needs, it is important to consider that innovation in more rural areas functions differently than in the regional centres or the larger agglomerations. It seems like the support currently provided does not sufficiently take all geographic specificities and the corresponding needs into account. While research is limited, evidence suggests that rural innovators take a different approach (Table 3.2). They are experimental and strategic in that they take the time to steadily improve products and processes without pressure and acquire information to fill knowledge gaps. In this process, the meaningfulness of the work to the community and passing down knowledge through generations is also important as it ensures holistically following projects through from beginning to end (Mayer, 2020[14]).

The current Concept RIS 2020+ recognises the specific challenges of rural SMEs in the innovation process. It also notes that rural SMEs are often smaller and have less access to other innovation actors. It includes a call for stronger efforts to facilitate access to innovation support for rural SMEs (SECO, 2018[15]). To ensure this, funding from the NRP for the RIS programme areas “Point of entry-Function of RIS” and “Coaching” requires that 50% of all supported firms fall within the NRP geographic range (see Figure 3.1). The strategy exempts the programme areas “Control and development of the RIS” and “Intercompany platforms (cluster, networking events)” from this rule.

Still, RIS impact within the NRP perimeter is uneven. Evidence shows that SMEs and entrepreneurs in regional centres benefit more from RIS support than those in more remote regions and mountainous areas (Egli, 2020[16]; SECO, 2020[17]). In view of this, some stakeholders would like to see a redefining and reconsideration of the scale of policy intervention of the NRP. While the success of the NRP is acknowledged in regional centres, more targeted support for very rural regions and a reduction of the NRP perimeter have been part of the political discussion. In opposition, other opinions consider it crucial to include larger agglomerations in the NRP to facilitate knowledge transfer and make use of synergies in spaces that work closer with each other for progressing digitalisation and increased mobility (SECO, 2020[17]).

Switzerland’s federal system values cantonal independence, self-determination and local opportunities. In rural regions, there are smaller firms, higher shares of the agricultural, manufacturing and hospitality sectors and a growing services sector (see Chapter 1). While the current agenda for RIS includes a focus on SMEs, the relatively strong institutional focus is on research and development (R&D)-driven innovation. While there is already the possibility of coaching support in the tourism sector and further opportunity to widen the focus, support may be passing by some of the opportunities for innovation in other service sectors.

Despite a focus on bottom-up governance, innovation lacks diversity and is strongly focused on high-technology (high-tech) sectors, even if programmes are open to non-tech firms. The pharmaceutical and precision manufacturing industries are often the targets of innovation policies and programmes.

A large part of the offer of support that the RIS deliver is focused on coaching activities and providing space for SMEs and start-ups to work. RIS Basel-Jura provides different incubator and accelerator programmes that include support in: business plan development, funding, product development, communications, marketing, pricing and intellectual property. It also helps with business’ needs for more than just RIS tasks. It supports and establishes contacts, for example specialists, research institutions or potential co-operation partners, and offer start-ups the opportunity to have their project or business idea reviewed by established industry experts, entrepreneurs and investors. These programmes are accompanied by three co-working spaces in Allschwil, Basel and Delémont (Jura). An overview of the innovation support provided can be found in Table 3.3 below. In addition to these services, digitalisation is seen as a key enabling condition for innovation in businesses (Regio Basiliensis, n.d.[25]).

Similarly, RIS Central Switzerland also offers individual coaching and business support as well as workspaces. Overall, the support is largely technology-focused and seeks to: support the generation of new ideas for products, and sometimes process innovations; provide feedback and insights from experts; help assess technological feasibility, regulatory barriers and market potential; help provide information on access to finance; provide special support and advice on patents and the patent landscape; and implement specific digitalisation programmes in mountainous regions. For example, a programme called Idea Check assesses projects from SMEs that have a maximum of 50 employees and are either based in mountainous regions or have a significant impact in those regions. The projects are assessed by a jury, the winners receive the support of CHF 15 000 (Zentralschweiz innovativ, 2020[26]).

In Western Switzerland, the RIS also support innovation in a broad sense focusing on business and technological innovation for SMEs and start-ups. The support is carried out by two agencies, Platinn and Alliance. Platinn seeks to develop companies’ business innovation capacity by mobilising them and facilitating their access to innovation and providing coaching in different areas, while Alliance is a knowledge transfer programme whose mission is to develop synergies and set up technological projects between companies and universities or research centres in Western Switzerland, in order to enhance know-how and technology transfer. In addition, they also provide sectoral networking and knowledge exchange platforms in the life sciences (BioAlps), information and digital technologies (Alp ICT), micro-nanotechnologies (Micronarc) and clean technologies (CleantechAlps).

The support programmes of the RIS largely reflect the economic structure of the cantons as well as their different business fabric. Yet, in particular, rural innovation needs are often only partially reflected, leaving possibilities for improvement. Gaps can be found in catering for established but small businesses that are looking to innovate aside from the technological realm or in opportunities for services that go beyond traditional sectors.

Most RIS seem to conceptualise innovation mainly in technological and product innovation terms. For instance, many programmes are often specific to the high value-added industry within manufacturing industries such as precision watchmaking and pharmaceuticals. Continuously and sustainably growing the manufacturing industry may be a challenge. The Swiss manufacturing industry lost 30 000 jobs and 1 000 firms between 2012 and 2017, equivalent to 2% to 6% of manufacturing jobs in rural, peri-urban and metropolitan areas (see Chapter 1). Furthermore, even though an increasing amount of R&D funding is being spent in the manufacturing sector in metropolitan areas, it did not result in an increase in jobs associated with innovation in 2017, as observed in Chapter 1. In rural and peri-urban areas, there is both a drop in spending and jobs in the manufacturing sector.2

While local ties to precision manufacturing and expertise in the pharmaceutical industry may be an important determinant of current well-being and the logic of choosing high-value sectors is sound for attaining high levels of productivity, it underestimates the rate of change in the economy and overlooks opportunities for the future of industrial arrangements that include new sectors of activities and the importance of adapting traditional economies. For adaptions to pre-existing ways of working, traditional firms can benefit from the “fresh blood” of innovative SMEs through value chain links and strategic partnerships. For the development of diversified sectors, this can include supporting industries with services or encouraging the development of new industries. For example, in rural areas, we observe that increasing expenditures on R&D in the trade and services sector are also coinciding with increasing average jobs in research and expenditure. It is also notable that when R&D firms in rural areas spend funds on innovation, they are more likely to spend them within their own firms. Conversely, a higher share of average R&D spending in firms in metropolitan areas is spent outside the firm, either in other companies in Switzerland or outside Switzerland.

The wish to enlarge the concept of innovation present in the NRP and hence the RIS strategy also comes up in consultations for the new RIS strategy. Stakeholders perceive it as having a strong technical focus while organisational and social innovation are a less prominent part of the NRP. Public consultations have made suggestions to enlarge programmes to further include non-technical sectors and work with a broader range of stakeholders on a variety of challenges and solutions. A more agile, less risk averse innovation support and increased experimentation potential are recommended, for instance through Living Labs testing solutions for the future at the local level (SECO, 2020[17]).

Going forward, the RIS strategy and its implementation need to better recognise that, especially in rural regions, social, process and business model innovations can have positive effects and are needed to secure local well-being and prosperity. Therefore, to better reflect and enhance economic diversity, SECO, in collaboration with other national and regional actors, could lead to developing mechanisms that assure better reflection on needs in different geographies. One option would be to develop a high-level national innovation vision that incorporates experiences in the regional innovation system’s trials, successes and errors, using consultation and agenda-setting with local partners to enlarge the concept of innovation beyond high-tech sectors, to include agriculture and tourism for example.

A future-looking approach for rural regions and areas often starts by understanding how current trends are changing society and transforming policy implementation. Future-proofing policy agendas anticipate how economies are changing, often before local entities have the time to react. While governments and individuals cannot anticipate all change, establishing observatories for change and benchmarking institutional performance and financial indicators to carry out projections across regions can help ensure that the government does not inadvertently block change by not reacting fast enough. Subsequently, once trends are identified, innovation support needs to accommodate them and help businesses and societies successfully manage these transformations.

Currently, detecting change and implementing the needs of different geographies happens through a report on territorial megatrends, which is published every four years by the council for spatial planning. The report makes 18 recommendations to the confederation, cantons and municipalities. Findings for 2019 specifically highlight:

  • Automatising the agricultural industry.

  • Safeguarding national capital, biodiversity and landscapes.

  • Digitalisation as a basis for Industry 4.0, autonomous mobility and new modes of work and business.

  • Service delivery for elderly people especially in rural areas.

  • Reducing the use of resources and specifically enhancing renewable energy (Council for Spatial Planning, 2019[27]).

However, it is currently unclear how these findings are used to structure the RIS strategy and other innovation support given across territories. It seems that, within the RIS, identified megatrends are largely acted upon under the leadership of individual people or entities but not in a strategic way.

To address this gap, SECO could provide a regional lens for other national innovation outlooks and could, in collaboration with other government departments responsible for innovation at the federal and cantonal levels, reinforce existing monitoring practices, such as the existing regional development monitoring by regiosuisse. It could also contribute to establishing a cross-agency observatory to monitor trends that signal structural change and projected trends within rural regions. An example of a pan-government task force to monitor and anticipate change is available in Box 3.3. This entity should:

  • Provide guidance for national and regional innovation strategies and agendas.

  • Be composed of partners from regional and local authorities, academic institutes, the private sector and social partners.

  • Anticipate change and develop strategies for supporting the transition of current firms in rural areas into new business models.

  • Encourage adaptability to new market conditions or other global factors such as climate and demographic change, while avoiding over-dependence on traditional industries.

  • Monitor challenges for women, youth and older workers.

  • Consider extending and building a rural lens for the current Swiss Perspective 2030 described in Box 3.3.

  • Promote innovation inside the policy-making process. This can include the adoption of new policy tools (e.g. open government) and re-enforcing the consultation process with non-government actors.

A forward-looking and inclusive innovation policy also needs to address barriers to participation in the labour market and entrepreneurship for under-represented populations, including women, youth and migrants. Increasing diversity, for example by activating female, young and migrant entrepreneurs increases positive outcomes for innovation and has the potential to solve challenges that may impact women and men unequally. For example, one Swiss start-up driven by a young female migrant, studying at the Swiss Federal Institute of Technology Lausanne (EPFL) has built a business based on a circular economy model that breaks down polyethylene terephthalate (PET) plastic (of which only 9% is recycled every year) at landfills and sells it back to industry. Another example is the start-up Kokoro Lingua, whose female migrant founder provides virtual English language classes for over 100 000 children taught by other children whose native tongue is English. Having started prior to COVID, this start-up was well-positioned to grow when education during lockdowns was transitioned on line.

As observed in Chapter 2, there is a lower rate of females participating in the workforce, where there are two men employed to every woman in low-density peri-urban areas. While the rate is still high in metropolitan regions, it is lower than in most non-metropolitan regions. Rural and peri-urban regions suffer from a loss of opportunities for a competitive and diverse labour market through a lower activation of the female workforce. Thus, there seems to be significant potential for supporting rural women in entrepreneurship by addressing the systemic barriers that many rural women face in growing their businesses. There is a growing understanding that gender-neutral business support measures do not assist women’s enterprise development to the extent that they assist its male equivalent. Yet, no specific objectives for encouraging entrepreneurship and opportunities for women and other harder-to-reach communities are included in the government’s NRP.

Young entrepreneurs have a high potential to innovate. However, given the relatively low share of youth in rural regions, in part due to the pursuit of higher education in denser areas, enjoying the benefits of innovation through young entrepreneurship is limited. According to recent work by the EC and OECD (2020[30]), young people between the ages of 18-30 consider entrepreneurship as a desirable outcome and have a higher potential to be innovative. In European OECD countries, in 23 out of 27 countries for which data is available, young entrepreneurs tend to offer products or services that their customers find to be new and unfamiliar. However, they also tend to report having the knowledge and skills to start a business and have difficulties accessing finance and entering networks, have few role models and low levels of awareness of programmes to support business ventures. The findings are similar to the analysis of characteristics of young start-up entrepreneurs from the upcoming report on Understanding Innovation in Rural Regions (forthcoming[31]).

More inclusive policies might include specific support, for instance through empowering initiatives, knowledge-building activities as well as reforms to correct for market failures in access to government services for all parts of society, including women and youth. Furthermore, there are long argued gains in productivity through more inclusive policies. Improved knowledge of the specifics of women-led or youth-led innovation, more supportive innovation ecosystems and smart solutions coming from women, youth and migrant-led innovations will empower rural people to act for change and get rural communities prepared to achieve positive long-term prospects, including jobs for all, in particular women, youth and migrants. Further guidelines on engaging with youth and women in rural areas are available in Box 3.4.

To achieve this, SECO and the RIS should:

  • Improve knowledge on women, youth innovation in rural areas and create a better understanding of why the proportion of women in established start-ups is low.

  • Set objectives for encouraging entrepreneurship and opportunities for women and other harder-to-reach communities in the NRP and develop business support measures targeted to different population groups.

  • Consider analysing the impact of policies on harder-to-reach populations such as women, older workers and younger workers in the monitoring and evaluation strategy.

  • Establish a gender strategy within the RIS structure to evaluate how programme policies can better accommodate female entrepreneurs and workers in STEM.

  • Establish a youth strategy within the RIS structure to evaluate how programme policies can better accommodate young entrepreneurs.

Transitioning to a zero-carbon economy and adjusting to climate change implications is the task of this century. Switzerland has set itself the goal to become climate neutral by 2050. Overall, rural regions are pivotal in the transition to a net-zero-emission economy and building resilience to climate change because of their natural endowments. Many rural economies (e.g. agriculture, forestry, tourism, energy, etc.) are already suffering from the increased frequency and intensity of extreme weather events such as storms, floods, torrents and landslides. In many rural regions across the world, increasing heat waves will contribute to water scarcity, with risks to food production. As nature loses its capacity to provide important services, rural economies will suffer significant losses as they rely on the direct extraction of resources from forests, agricultural land or the provision of ecosystem services such as healthy soils, clean water, pollination and a stable climate (OECD, 2021[39]).

Transitioning to net-zero will require a massive deployment of alternative energy technologies as well as new technologies that are not yet on the market or are currently in the demonstration or prototype phase. This means that significant innovation efforts must take place this decade in order to bring these new technologies to market (IEA, 2021[40]). Many of these innovations will need to occur in rural regions where their renewable energy can be generated from sun, wind and water and where there is massive potential to develop the circular economy and bioeconomy. Supporting innovation in these areas not only diversifies ongoing business activities, it can also create new businesses while contributing to environmental and climate protection.

The private sector, and particularly SMEs, are considered a potential driving force for the zero-emission transition – notably through innovation in their products and processes. Product innovations include design that replaces non-renewable materials and resources with renewable, recycled, permanent, biodegradable, non-hazardous and compostable materials and resources; and processes innovation involves the recreating processes, so that products are made to be more easily disassembled, recycled, modular (replacement of parts, recovery and reuse of systems and sub-systems) and repairable (OECD, 2020[41]).

In Switzerland, the circular economy has also gained in importance, especially through various parliamentary initiatives, interpellations and postulates that have been developed in recent years. Furthermore, at the federal level, a first National Research Programme (NRP 73) aims to combine research on all natural resources, all stages of the value chain and the integration of the environment, economy and society. A number of projects include a focus on the circular economy. Legal framework conditions for fostering a circular economy are still under discussion in the Swiss parliament3 and the federal administration for the environment is in charge. More grassroots and private initiatives have also emerged. For example, in 2018, the initiative Circular Economy Switzerland was launched, supported by the MAVA Foundation and the Migros Group. The initiative aims to promote the circular economy in Switzerland with various projects and events such as a circular economy incubator, in which 27 Swiss start-ups are supported in building a more circular Switzerland (regiosuisse, n.d.[42]). At the regional scale, regiosuisse has developed a toolbox aiming to support regions, municipalities or cities in advancing on circular economy. The toolbox offers a methodological framework, inspiration, assistance and practical tips. The toolbox is set up in a modular structure or, depending on interests, consulted selectively (regiosuisse, n.d.[43]).

By providing the right support, RIS have the potential to become enablers of the net-zero transition and attaining climate objectives. Currently, climate change and the way businesses can move to more sustainable, less-emitting ways of doing business only marginally feature in the RIS programming (mostly events) and strategy.

There is great potential for the future NRP and RIS strategies to put greater emphasis on innovation that can advance climate change mitigation and adaptation. This can be done by:

  • Adapting RIS coaching to feature business support on innovation for climate change: preparing businesses to assess possible climate risks (physical, price, product, regulation), improving energy and waste efficiency in their businesses and across value chains, and helping them to source power from renewable resources or minimising waste, saving energy, water and materials, recycling and reusing materials or waste, while offering green products and services.

  • Facilitating connections and dialogue around innovation for climate change, fostering system thinking and collaboration amongst public, not-for-profit actors and businesses. In addition to workshops and events, RIS could also explore using tools and competitions for climate-friendly innovations similar to the ones organised by Glasgow, where businesses are asked to find a circular solution to local challenges.

  • Ensuring the RIS strategically connects to other circular economy initiatives and measures being developed in Switzerland. In this context, the RIS could also further leverage learning from the circular economy toolbox under development through the NRP as well as establish a connection to the Innosuisse Innovation Booster “Applied Circular Sustainability”, where appropriate, helping businesses to engage in this transition.

  • Encouraging the development of any mechanisms related to innovation in line with net-zero-emission targets and contributions to climate change. Alternatively, requiring all businesses that receive support for innovations to demonstrate their compatibility with net-zero-emission targets and contributions to climate change. This way, the RIS and the businesses it supports function as a role model for other businesses and government agencies to climate-proof their work.

Another way to prepare for and adapt to change is the use of experimental tools, such as regulatory sandboxes, Living Labs or other experimentation processes that can provide new public services to a changing economy. To develop and foster a culture of experimentation, Living Labs have provided good results across the globe (see Box 3.6). These mechanisms allow innovators to test solutions for the future at the local level, mimicking real-life situations. Germany for instance has developed a federal strategy to systematically establish Living Labs as an economic and innovation policy instrument in the area of digitisation. Since May 2017, a ministerial project group Reallabore has been conducting a needs analysis, contributing to a comprehensive research agenda on the requirements for Living Labs in digital transformation, has established a wide range of stakeholder contacts and developed an implementation agenda. The aim is to systematically establish Living Labs in Germany and to make a significant contribution to the development of Living Labs in contributing to a new digital regulatory framework. These temporally and spatially limited test spaces for predominantly digital innovation and regulation are an instrument for gaining concrete experience in the interplay of innovation and regulation, aiming to improve regulation in a digital age. To that end, temporary modifications to the legal framework, e.g. in the form of experimentation clauses, will create the flexibility for innovations, can be tested in practice and regulation can quickly be adapted to new developments (BMWi, 2018[44]).

Rural places are often particularly suited for these types of experimentation. This is because they, in comparison to more urban counterparts, have the benefit of available space, function as a rather independent system and have lower living expenses. Consequently, by creating a regulatory environment that eases other pressures on firms, individuals in rural regions may experiment more easily than in high-income, high-turnover regions. Likewise, government public innovation service delivery cannot only benefit from learnings and experiences but must also involve businesses that have found the practice useful for building consensus and ownership.

In Switzerland, Living Labs are largely being initiated at the cantonal level and in the forms of accelerator or co-working paces. For instance, in Jura, the programme Day One Accelerator supports innovative ventures that solve problems across a broad range of healthcare. Another example is the Innovation Park Biel/Bienne, which offers an innovative environment for around 500 people that work on and seeking an exchange in the areas of digitalisation/industry 4.0, and all kinds of interdisciplinary innovation projects in the fields of medical technology and health technology or the area of energy storage. It offers workstation rental as well as digitalisation and electronics laboratories workshops and clean rooms where innovations in the form of prototypes and small production series can be established (SIPBB, n.d.[45]).

Other programmes such as so-called “model projects” are also supported by the federal level, for instance, between 2020 and 2021, 31, innovative projects in villages, regions, agglomerations and cantons from the perspective of spatial development. These projects are supported with a total of CHF 3.9 million and are divided into five themes including digitalisation, development of local development strategies, the usability of public space, improving rural areas and demographic change. While not all of these model projects have the more “open innovation” laboratory characteristic of Living Labs, some do. For example, in the mountainous region of Albula und Prättigau/Davos, actors from the public sector, the housing industry and civil society join forces in lab structures and develop approaches and measures to investigate how to adjust housing stock to demographic change and increase liveability for elderly people (ARE, n.d.[46]).

In addition to fostering a culture of experimentation for SMEs and entrepreneurs, RIS can also consider doing this for themselves, creating more diversity, experimentation and flexibility and their own way of working. This can allow them to adjust to changes in client needs or to pick up specific trends.

Unlocking the potential of innovation in rural regions thus implies a need for the RIS to become more agile and increase the level of experimentation in the innovation support they provide. This would include broadening and changing the RIS support portfolio and adding more experimental measures and approaches to their work to improve outcomes.

They can do this by:

  • Experimenting in delivering and adjusting already existing mentoring and coaching services. Such experiments should incorporate:

    • Varying offers based on the needs of different target groups, based on gender, age and territory, drawing on behavioural insights.

    • In the selection of coaches, an increase in the number and variety of potential coaches to foster interlinkages between sectors and reduce existing silos, paying attention to the different qualifications and backgrounds of coaches, supplementing R&D coaches with those with a background in business development or other areas.

    • Experiments with setting up peer-to-peer engagements, for instance through mentors who have already started a business and have solved similar problems. Matches with firms with well-performing peers have offered promising results in research (McKenzie and Woodruff, 2021[47]), although the impacts depend on the type of peer and only certain information will diffuse this way.

    • New methods of impact evaluation and monitoring, for instance using rigorous measurement procedures that include counterfactuals or randomised control trials.

  • In addition to standard support provided, engaging in collaborative initiatives in physical spaces, such as innovation sandboxes and Living Labs that allow innovators to test solutions for the future at the local level, mimicking real-life situations. This would require close co-ordination with other government bodies on the cantonal and municipal levels.

    • Innovation sandboxes can be narrow in focus and time-limited. Based on the outcomes of such experiments, governments can decide whether to adapt policies to encourage the upscaling of such experiments.

    • Living Labs are physical spaces where individuals may experiment with the development of new products and services, often accompanied by material and in-kind services.

  • Supporting a culture of experimentation by providing specific grants through cantons that allow companies to access networks that help them to think outside the box or test porotypes or new services. Furthermore, adjusting programmes to integrate greater lead times, accepting incremental advances as programme outcomes, or encouraging learning from failures as advances should be considered in RIS support.

  • Allowing for certain agility in the programme, giving entrepreneurs the opportunity to bring forward ideas and requests for what they would like to see and provide bespoke support if a good case is made.

Monitoring and evaluation systems can be used as a tool to promote institutional dynamism. As well as regularly incorporating monitoring and evaluation outcomes into high-level statements. Quick and small experimentation followed by monitoring and evaluation can help inform scale-up potential for new initiatives.

In terms of network building and facilitating knowledge exchange, RIS are essential because they are fostering cross-cantonal links. Still, the RIS impact across different types of areas within the perimeter can be uneven. Several reports state that SMEs and entrepreneurs in regional centres benefit more from the provided support than the more remote regions and mountainous areas (Egli, 2020[16]; SECO, 2020[12]). The reasoning behind this is that innovation in the peripheral regions functions differently than in the regional centres or the larger agglomerations and that the support currently provided does not sufficiently take geographic specificities into account.

Consequently, better evidence is needed to help RIS evaluate and understand if their activities and programmes match and benefit the different needs existing within the perimeter. Developing a precise understanding of need as well as the current uptake of networking events, coaching opportunities and workspaces usage can help to identify mismatches, define future programming priorities, enhance synergies with other offerings and limit ineffectiveness or cost. Given the important share of expenditure on networking and coaching services, it is important to take steps to collect data to monitor the effectiveness of the programmes offered specifically for rural entrepreneurs. Some guidelines for good practices are available in Box 3.7.

At the time of this investigation, the effectiveness of RIS in reaching rural SMEs with their networking and coaching activities is difficult to assess with hard evidence. In 2018, an evaluation of the RIS Framework found that RIS do not hold data on the effectiveness of their interventions on the enterprises in rural regions or on the number of enterprises that were indeed located in rural areas and benefit from their programme (B,S,S Volkswirtschaftliche Beratung AG, 2018[8]). Following evaluations were introduced; now RIS carefully evaluate what they are doing based on an efficiency model and follow up with each SME in which they indicate the degree of satisfaction, as well as the percentage achieved within the NRP perimeter. Still, results are not shared systematically and reduced importance is given to geographical components. Especially, within the NRP perimeter, the goals do not specify different kinds of rural geographies or the level to be achieved at each scale. This also means that there is no analysis done to understand satisfaction differences between rural and non–rural SMEs or whether companies largely come from more regional centres than remote rural places. Consequently, there is also no additional funding to develop specific tools to address specific needs of rurality.

In line with the NRP, which specifically targets rural areas, RIS and SECO could help build more reactiveness and inclusiveness in monitoring and evaluation practices for rural innovation in Switzerland. Each RIS should systematically collect, structure and analyse data about the businesses benefitting from innovation support based on geography. In line with earlier assessments, impact measurements should be improved to assess the value added by the RIS to rural areas and rural SMEs, and to further strengthen geographic data collection. This can be done by setting up a more coherent system for monitoring and evaluation as well as encouraging data sharing on leading practices:

  • Consider reinforcing good practices in regular monitoring and evaluation of initiatives within the NRP’s mandate. For this, a central strategic unit of RIS in SECO could be set up that works in collaboration with the Federal Statistical Office (FSO) and regional offices based on access to shared data. These need to consider the unique needs of rural regions and underserved populations. Results on good practices should be shared with RIS as part of the regular co-ordination meetings.

  • Consider piloting a unified customer relationship management (CRM) system, which would track individuals’ access to different services across and between cantons and RIS and could provide the following information:

    • Account for the location (municipality/canton/RIS) of the companies, or the persons, who participate in coaching, information and networking events.

    • Account for the number of companies and location of companies referred by the RIS to other innovation promotion agencies (Innosuisse, etc.).

    • Account for the number and location of companies that are referred to coaches/funding agencies in other cantons of the RIS, as well as the number and location of companies referred to coaches/promotion in other RIS.

    • Account for the number and location of companies that used the individual cantonal antennas (points of entry) and the number of these that have then used: i) a service at the corresponding RIS; and ii) a service at another RIS or innovation promotion agency and the location of these services (B,S,S Volkswirtschaftliche Beratung AG, 2018[8]).

  • Advance data sharing and open data practices, between RIS, cantons and the FSO. Include, if necessary, precautionary measures such as aggregation and confidentiality controls that can help provide information while still respecting privacy regulations.

  • Consider monitoring trends in non-RIS areas to seek complementarities with RIS programmes.

Despite significant improvements in terms of local contact points and the development of a “no wrong door” policy, SMEs in rural Switzerland face barriers to entry when trying to receive innovation support. In order to address gaps in the accessibility and clarity of services, many RIS have appointed local or regional representation to improve their presence and communication with cantons and sub-regions. Moreover, attempts have been made to reduce the number of service providers and clarify the roles of the different providers within the RIS and outside (Regio Basiliensis, n.d.[25]; 2019[54]; B,S,S Volkswirtschaftliche Beratung AG, 2018[8]). Still, barriers to entering the RIS innovation support seem high for rural SMEs.

Multiple entry barriers can be notified. First, businesses might lack knowledge about the support available and are not targeted with the right communication. Second, points of contact are not locally present or too difficult to access. Especially in rural regions, where the population is less dense, having personal contacts and establishing trust through a continuous exchange is essential. Talking regularly to local people can significantly improve awareness of services and tie them to other networks. Third, if the number of interfaces, offers and actors becomes too great, this can create hesitancy and can make picking the right one a barrier.

As an example of the existing complexity of the RIS system, Figure 3.5. depicts the offers provided within RIS Basel-Jura and the stakeholders involved. Several reports and evaluations observe that there are too many actors involved in innovation support in Switzerland and that roles need to be clarified and presence in rural regions improved (B,S,S Volkswirtschaftliche Beratung AG, 2018[8]; Regio Basiliensis, n.d.[25]; 2019[54]).

From the federal side, Innosuisse and the RIS are the central elements of innovation support and the innovation ecosystem. As a federal agency, the Swiss Innovation Agency, Innosuisse (formerly the Commission for Technology and Innovation), is very proficient at addressing the needs of the science- and technology-based innovators. Successfully linking regional and national innovation support is important to deliver on rural innovation. Companies with lower absorptive capacities, innovating without R&D or being involved in other forms of innovation (e.g. organisational innovation) are not a target of federal policy. In other words, within the “innovation triangle” of knowledge creation-diffusion-absorption, the federal policy addresses the first two elements: knowledge creation and diffusion (OECD, 2011[9]). At the regional level, RIS have successfully taken the role to address more knowledge absorption and diffusion bottlenecks targeting smaller companies innovating in a learning-by-doing and learning-by-interacting mode. It can thus be said that the OECD’s recommendation from 2011 on a clearer division of multi-level innovation that delineates innovation promotion based on the innovation triangle has been largely achieved and implemented.

A successive step to further improve the existing innovation ecosystem is to ensure the different federal and regional innovation support systems integrate more smoothly. In particular for rural areas with their economic structures that depend more on exploiting natural resources, such integration needs to widen the scope for further sectoral (innovation) policies, in food and agriculture for example (see also Chapter 4). Regarding the integration of RIS and Innosuisse, co-ordination at the strategic level is ensured through regular meetings and local level integration is lagging. A 2018 evaluation of all RIS mentions that co-ordination still needs to improve with regards to implementation (B,S,S Volkswirtschaftliche Beratung AG, 2018[8]). It becomes especially clear that there is a need to better align the RIS coaching activities and the Innosuisse mentors. Both operate at the regional and local levels offering direct support, yet differentiation can be difficult for companies trying to find the right fit. It is often unclear that RIS offer more general business support while technological innovation is covered by Innosuisse. Furthermore, links to Innosuisse are often facilitated through universities or universities of applied sciences. Regions that do not have these are therefore strategically disadvantaged in providing access to national innovation support.

Research has shown that co-operation largely works thanks to personal connections and professional links or if RIS coaches and Innosuisse mentors hold both positions at the same time. Further, better integrating processes for companies to flow along the support chains offered by both actors are mentioned. This means that RIS can still improve in putting SMEs and entrepreneurs that have reached a certain level of maturity in touch with Innosuisse support and mentors. Similarly, the other way around, those that are not yet ready for Innosuisse support need to be guided towards the RIS effectively (B,S,S Volkswirtschaftliche Beratung AG, 2018[8]). This is particularly relevant for rural SMEs that are often smaller and less likely to know their way around different innovation support actors and might not have been in touch with either actor yet.

In systems where a multitude of services are provided, the simplification and ease of access for users can be a challenge, in particular for countries in which there is a tailored approach to providing government services. In some countries, simplification of the provision of entrepreneurial services is complemented by physical presence with online services that allow easy navigation of business services according to particular needs. This can reduce complexity and help direct people to the “right” offer in their geographic location without having to actually relocate. In Scotland, UK, for instance, the main regional development agencies, Scottish Enterprise, Highlands and Islands Enterprise and the newest, South of Scotland Enterprise, work with Business Gateway and 32 local authority councils to deliver support to SMEs through a shared national website (https://findbusinesssupport.gov.scot/). The aim of the initiative is to help SMEs find business support wherever they may be in a single location. Behind this website is a business support partnership through which all of the agencies meet and share information to avoid confusion and duplication. In addition, the Enterprise agencies and Business Gateway share a CRM system for all businesses engaging in the public sector, to give an overview of previous and current engagement. Further examples of simplification of the provision of services are available in Box 3.8.

While the “no door” policy is a first step to simplification, in order to facilitate the provision of business services in rural areas RIS and Innosuisse need to:

  • Complement physical entry points with a digital online one-stop-shop to reduce the complexity of the existing system, making support accessible from anywhere and allowing to integrate programmes and measures.

  • Designate an outreach person that contacts rural SMEs directly and speaks to them to inform them about offers.

  • Develop targeted communication and branding strategies and make sure information is shared in rural areas and through channels in the region, such as entrepreneurs who already live in remote places. This can also include developing specific entry events that inform about the offers of RIS.

  • Improve integration of Innosuisse and RIS services by creating shared support roles where the same people take on RIS counselling and Innosuisse mentoring. This way processes for companies to flow along the support chains are offered by both regional and federal actors.

Rural-urban linkages exist across several dimensions including demographic, environmental and economic aspects (OECD, 2013[60]). Demographic linkages include commuters and migration patterns. This can include young people moving from rural to urban areas for educational or career opportunities, or urban retirees moving to rural areas to enjoy a slower pace of life, a greater sense of community and proximity to nature. Environmental linkages can include shared assets, such as water and amenities for public enjoyment, such as natural beauty spots. Economic linkages include a wide variety of relationships, including trade and supply chain links between firms across the rural-urban continuum, investments and relationships around R&I that support the development and commercialisation of new products and services.

Linkages tend to be stronger in rural areas that are close to cities. Switzerland has five functional urban areas (FUAs) in which 55% of its population resides, yet only 40% of the population lives in its urban cores, the rest residing in commuting zones. The Swiss commuting zones are characterised by lower-density settlements with respect to the main urban centres. However, firms and workers in these areas benefit from good access to markets, services and agglomeration of talent present in the urban core, benefits often referred to as “borrowed” agglomeration effects. Rural areas close to cities often enjoy environmental amenities and lower land and housing costs than cities, making them both attractive places to live and in which businesses can invest. Overall, the commuting zones in Switzerland grew faster than the cores during the last decade (Veneri, 2018[61]). This also suggests the increased importance of interlinkages.

Entrepreneurs who actively develop rural-urban links and tap into urban clusters are needed to develop vital, competitive rural economies. Geographic proximity matters for innovation and agglomeration or clustering can permit locally concentrated labour markets, specialisation in production and the attraction of specialised buyers and sellers (OECD, 2015[62]). Research on rural innovation has shown that rural entrepreneurs utilise non-local knowledge for more radical innovations and they strategically engage in rural-urban linkages to leverage knowledge outside of their location. This includes urban innovation networks, suppliers or higher education institutions (Mayer, Habersetzer and Meili, 2016[18]). Overall rural-urban links are beneficial to entrepreneurs in three ways:

“Rural-urban links help entrepreneurs create a sensibility for the core market demands and trends.

Rural-urban linkages help entrepreneurs strategically utilise them to valuate rural assets that have traditionally been perceived as backwards, disadvantages, burdensome, etc.

They can be used to combine rural and urban sources of knowledge for innovation, which, in turn, puts a competitive edge on rural businesses.” (Mayer, Habersetzer and Meili, 2016[18])

In light of such learnings, the importance of an open, competitive environment and of innovation systems that are conducive to knowledge flows have increased. This includes cross-border and rural-urban collaboration in innovation, fostering collaborative efforts in which businesses interact and exchange knowledge and information with other partners as part of broader innovation systems. While the shift towards an “open innovation” paradigm, facilitated by the digital transition, has made business innovation more accessible to SMEs, the businesses, especially rural ones, still often find it difficult to identify and connect to appropriate knowledge partners and networks at the local, national and global levels (Cusmano, Koreen and Pissareva, 2018[63]). If countries are already experiencing spatial disparities, there is a danger that rural economies drift further apart if their enterprises are not helped to sufficiently connect and link to agglomeration economies or wider national and global markets.

National co-ordination mechanisms for innovation promotion are built from the bottom up in Switzerland. They are strongly targeted to the sectors determined to be high value-added. Regions (cantons) co-ordinate across themselves in initiatives to support economic development, based on proximity and cultural (language) closeness. While the structure is organic and has merits in how well it adapts to local contexts, it does also mean that cantonal economies have a harder time adapting to change or opportunities outside of their neighbouring regions and less access to the full potential of Swiss resources.

Silos between agencies that perform critical work to develop the framework conditions for rural innovation create gaps in public service provision. Agencies relevant for innovation in rural areas include SECO’s RIS, the Federal Office for Agriculture, Innosuisse and the education and labour market agencies. While the entire innovation ecosystem is not under the institutional responsibility of one sole agency, bridging the gaps between agencies and policies is a crucial step toward improving prospects for innovation in rural regions.

From a territorial perspective, two policies are dealing with rural-urban links in the broader sense. These are the agglomeration policy (AggloPol) and the policy for rural and mountain areas (P-LRB or PERM). Both policies are cross-cutting policies that work across a range of sectoral policies including aspects such as transport, energy and finance and try to bring a geographical component to them. The two policies are linked and share part of the goals and measures. In that context, the NRP is also considered a sectoral policy and overlaps in geographical terms with both policies (see also Figure 3.7). The agglomeration policy, for instance, covers a heterogeneous spectrum of urban areas ranging from the five main urban centres to other “agglomerations”, which include towns in predominantly rural regions covered by NRP (OECD, 2011[9]).

Due to the short geographic distances between Swiss rural and urban areas, policy linkages are crucial. Yet, two different policies exist as tensions have sometimes plagued the relationship between more urban and more rural places and their representatives, as the two often compete for attracting credits and public funding. The split between the agglomeration policy and the policy for rural and mountainous areas, however, does too little to reduce institutional and policy fragmentation, in order to better support existing inter-dependencies among territories. Improved co-ordination between the agglomeration policy and the policy for rural and mountain areas can have a beneficial effect on sectoral policies that function as an enabler to rural innovation. Currently, the Federal Network on Coherent Urban-Rural Spatial Development is facilitating the co-ordination between the policy areas on the federal level. Evaluation reports have stated that existing co-operation mechanisms are insufficiently used and that sectoral policies and topics for rural and mountainous areas are dominating. While, agglomeration programmes provide a large amount of funding to urban areas, there is no equivalent for rural areas. This inhibits making use of synergies between policies and possibly better integrating rural and urban linkages. Research has also stated that there is a need to better define which issues co-operation between the policies could bring added value to and how clarifying roles between the existing bodies can make processes efficient (Schweizerische Eidgenossenschaft, 2019[64]).

In the context of rural-urban linkages for innovation, the Federal Network on Coherent Urban-Rural Spatial Development could provide added value in further investigating the topic of innovation. For instance, it could investigate and identify which sectoral policies could further strengthen rural-urban linkages and consequently benefit innovation. Furthermore, alignment and more effective co-ordination of the NRP and sectoral policies could also help increase the impact of the NRP, while not necessarily requiring additional funding. Some solutions for this are further explored in Chapter 4, with recommendations for different levels of co-operation between the Agri-Food Knowledge and Innovation System (AKIS) and the RIS.

Regionally, rural-urban coverage of innovation support is ensured through funding and programme conditionality that is agreed upon in ordinances to the NRP. The RIS has the purpose of providing support to regions with less access to resources than those of major urban centres. Their activities also seek to connect entrepreneurs with universities and other knowledge partners in urban centres to benefit innovation in rural areas as well. To address this, regional agencies are allowed to jointly apply for innovation funds for new initiatives through collaborations with metropolitan areas, with the condition that at least 50% of the expenditure on programmes (point of entry and coaching) must be done in non-metropolitan areas. These areas are defined by the NRP perimeter (Figure 3.4). In practical terms, this means that in large cities such as Basel and Geneva, RIS services can only happen because of co-operation with more rural cantons through the RIS. Furthermore, some cantons (Aargau, Solothurn and Zurich) are not part of any NRP-RIS but have their own programmes. Little can be said about how far they contribute to establishing rural-urban links and cater to more rural entrepreneurs.

In 2011, the territorial review of Switzerland (OECD, 2011[9]) stated, that NRP would gain coherence if it covered all regions. It argued that extending the NRP’s territorial coverage can reduce economic fragmentation and support polycentric development. Furthermore, it was said that the focus on rural, mountainous and border areas could be broadened to the whole Swiss territory, in order to better take into account existing or potential linkages across regions, especially in terms of urban-rural linkages (OECD, 2011[9]). To this date, the discussion on the enlargement of the perimeter could not be agreed upon, notably because mountainous cantons fear a decrease in assistance for structurally weak regions. Therefore, the above-mentioned 50% funding compromise was created. According to many stakeholders, this compromise does not hinder building linkages between rural and urban areas but continues to ensure financial support primarily targeting less urbanised regions. Yet, some demand a further limitation to the NRP perimeter, to ensure more money is spent on the least urban areas. Formalising this type of compromise further could help ensure stability and provide assurance for all actors involved.

To enhance rural-urban partnerships for rural innovation in Switzerland and reduce institutional and policy fragmentation. The role of the Federal Network on Coherent Urban-Rural Spatial Development as a facilitator could the strengthened. Specifically, the network should assess ongoing co-ordination needs between the agglomeration policy and the policy for rural and mountainous areas. Furthermore, it should also be used to identify synergies for sectoral policies (transport, education, energy, etc.) that have the power to improve innovation in rural areas through much-needed rural-urban links. Therefore, the network should discuss the role of innovation in all sectoral policies and improve alignment and synergies between the NRP and other sectoral policies by focusing on rural-urban links.

Informal co-ordination mechanisms are important to build networks in rural regions. Nevertheless, informal co-ordination mechanisms do not always have the capacity, nor the right information to address the challenges that impact rural regions.

Switzerland has initiatives to build connections between universities and industrial partners. They are established to help generate new innovations, diffuse pre-existing innovations across territories and support the development of SMEs. These successful triple-helix initiatives in Switzerland are mostly university-industry partnerships, which tend to be university-led and focused on high-tech innovation. Rural regions without higher education institutions or high-tech industries are disadvantaged in this setup. Initiatives for innovation co-operation driven by demand from entrepreneurs and the private sector in rural areas can bring more locally driven opportunities to rural regions.

However, often these initiatives occur in denser areas, are driven by the research arm of the partnership and are focused on high-tech innovation. In some cases, antenna campuses of universities have been successful at building projects with local partners, but in areas where no universities are located, there are lower opportunities for innovation through this mechanism. In sparsely populated areas, antennas or university consortia with local research centres have been important for innovation, economic development, education and training in regions without universities (OECD, 2017[65]). Switzerland can benefit from the following action point:

  • Promote new initiatives and programmes to better link entrepreneurs to researchers in rural regions.

  • Encourage the development of the demand for university linkages among entrepreneurs, such that all research initiatives are not only led by the university teams.

  • Establish innovation initiatives that better promote co-operation between entrepreneurs in rural areas and cities. This can be done through regional development strategies, smart specialisation or university-industry linkages that consult with local entrepreneurs to determine the scope, activity and initiative supporting innovation in rural areas. Examples of such initiatives can be found in Boxes 3.10 and 3.11.

  • Re-enforce existing initiatives to establish university consortia or research institutions with antennas in rural areas tied to the local economic opportunities.

One of the key challenges for rural regions is shortages in skills, and in particular digital skills. In a 2021 survey of regional government officials in OECD countries, skills shortages were one of the top barriers to innovation in rural regions (OECD, 2020[71]). Often this is an outcome of demographic change due to an ageing population and inter-regional migration patterns that often result in a “brain drain” (OECD, 2021[72]; 2020[13]). Often rural areas suffer from a loss of new talent that may either migrate because of work or training opportunities elsewhere. Yet, a relatively high-skilled population is important for innovation and start-ups need a skilled workforce to bring innovations to the market. While R&D investments are often thought of as critical for innovation for some regions, investments in human capital, education and training can encourage innovation focused on the well-being of rural regions to the forefront (OECD, forthcoming[31]). In Switzerland, this issue goes outside of the scope of the RIS mandate but is nevertheless a critical barrier for cantonal and regional authorities.

Among active labour market policy expenditures, the Swiss federal and cantonal governments primarily spend public funds to support reskilling across territories. According to a report from 2010, the largest spending on skilling for the labour force is on supported employment and rehabilitation, training, temporary employment in the public sector and intermittent pay (Duell et al., 2010[73]). Recent statistics on expenditure on initiatives for training and entrepreneurship through the public employment services indicate that training initiatives are the major source of government expenditure in 2018 targeted at reskilling and encouraging more start-up activities (Figure 3.8). In Switzerland, active labour market policies delivered through the public employment services are focused only on training, at 0.16% of GDP.4 Cantonal and regional governments also deliver programmes to support regional development based on local needs and, as such, the offer for programmes to support labour market skilling is larger than just those provided by the public employment services.

Currently, Switzerland has regional and cantonal employment councils but it is unclear whether they are able to meet the needs of rural regions. More bold actions such as setting up an inter-agency co-ordination body at the centre of government that addresses skills and other cross-cutting issues, such as the one in the US described in Box 3.12, may be worth considering. For the most part, individuals are responsible for seeking retraining courses. Upskilling is often an initiative by the employee or contingent on the willingness of the employer. In other OECD countries, such as France, support for continuous training and upskilling is individualised and is provided as a benefit to workers rather than an offer through employers (Perez and Vourc’h, 2020[75]). Such an arrangement removes requirements to be employed or to direct skills towards current employment needs for gaining access to skills training. In its most recent version, the individual training accounts also allow for training certification across all fields. While some local employers provide ample opportunities for upskilling, it is not clear that individuals would always have the same preferences as employers for training needs. Furthermore, services focusing on upskilling workers through cantonal initiatives or the public employment system could further benefit from a regional perspective. This includes initiatives that target providing support for new entrants in the labour market (such as apprentices), start-up entrepreneurship training, continuous training and lifelong learning (Fazekas and Field, 2013[76]) as well as programmes that target regional integration of migrants into the labour market (Liebig, Kohls and Krause, 2012[77]; OECD, forthcoming[78]). In particular, training in formal management practices is important for innovation, in particular in small businesses. Similarly, the effective adoption of automation and digitalisation requires strong managerial skills in SMEs. In this regard, evidence suggests that targeted programmes that combine ICT solutions with management training and advisory services can be especially effective for innovation (Cusmano, Koreen and Pissareva, 2018[63]).


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← 1. For more information, see https://www.oecd.org/regional/regional-policy/thenewruralparadigmpoliciesandgovernance.htm

← 2. Anecdotally, this has been associated to a rise in exchange rates that crowded out R&D jobs in 2017. Early analysis with the 2019 updates in the R&D survey seems to suggest that R&D jobs increased from 2017 to 2019, but no knowledge of the distribution of jobs over territories or sectors is currently known.

← 3.  See Pa.Iv 20.433, https://www.parlament.ch/en/ratsbetrieb/suche-curia-vista/geschaeft?AffairId=20200433.

← 4. Additional expenditure on active labour market policies and related programmes are administered by cantonal agencies, rather than specifically through public employment services.

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