Ongoing

Catalysing rural innovation

How can the UK’s innovation support landscape better meet the needs of rural businesses?

Jeremy Phillipson

Director

Jeremy Phillipson

Director

Overview

In order to understand how the UK’s innovation support landscape can better meet the needs of rural businesses, this research explores four key areas:

  1. Current thinking around how innovation and entrepreneurial ecosystems affect business innovation in rural areas
  2. What innovation stakeholders and decision-makers think leads to effective rural innovation support
  3. The data on what rural innovation looks like, and what the opportunities and barriers to innovating are in rural places
  4. What rural businesses feel enables them to innovate currently, and what would help them to innovate in future.

In 2025-2026, NICRE collected and analysed quantitative and qualitative data to explore these topics, producing recommendations for policy, research and innovation support practice.

With thanks to the Economic and Social Research Council and Innovation & Research Caucus for funding this work and to the project sponsors at UK Research & Innovation (UKRI) for their input into the research.

Read the reports

Together, the four reports linked below provide a comprehensive perspective on how business innovation can be encouraged in rural areas and the implications for innovation support capabilities.

The research identifies overarching strategic issues for consideration by innovation support providers and wider stakeholders, relating to the framing of innovation and innovation support, gaps in data and knowledge, structural weaknesses within the innovation ecosystem, and the need for adaptation in innovation support service design and delivery. It highlights the ways in which support providers could adopt more tailored, flexible, accessible approaches to help rural firms to get the support they need at any stage of their business. 

Overall, strengthening rural innovation requires a combined effort, addressing systemic constraints, while also improving access to networks, finance, skills, and markets. Addressing these constraints will be essential if rural areas are to fulfil all of their potential to contribute to the UK’s economic growth objectives.

Read the reports to find out more.

1. State of the Art Review 2. Perspectives on the innovation ecosystem and recommendations 3. Unpacking innovation activities in rural firms: Evidence from national datasets 4. Rural businesses' understanding of innovation: Drivers, barriers and collaboration

Key findings

With fewer barriers to innovation, rural businesses could be contributing more to economic growth

Rural businesses, which represent over a fifth of businesses, are an important source of entrepreneurialism and innovation. Many of the sectors that are major rural employers are also key potential areas of innovation and growth relevant to sectors of global significance, including the IS-8 (eight growth-driving sectors) identified in the UK’s most recent industrial strategy.

Rural firms are as likely to innovate as urban ones

Rural businesses are adaptable and resourceful innovators. Their innovation patterns tend to be collaborative, responsive to emerging needs, and embedded in networks and communities. Rural innovators, therefore, are often best placed to help tackle societal and environmental challenges.

Rural firms are as likely to innovate as urban firms, with comparable rates of product, process and organisational innovation and similar levels of innovation investment. They are more likely than urban firms to be motivated to innovate in order to reduce their costs or environmental impacts.

But rural businesses face many constraints

Rural firms face greater difficulty converting innovation into commercial success, with notably lower rates of new-to-market innovation, weaker conversion of innovation into sales, and more limited use of formal innovation protection mechanisms.

Overcoming ecosystem and structural constraints, rather than firm-level deficits, is critical for improved outcomes from rural innovation. Rural innovators face challenges with accessing information and collaborating with partners. Notably, weaknesses in access to market information, finance, the cost of finance, lack of qualified personnel, and less well developed external networks and institutional intermediaries appear to hinder innovation.

Recommendations in brief

The reports contain several recommendations for policymakers, innovation support providers and actors in the innovation and research landscape. For example, tailored funding programmes for rural places could be co-designed and clearly communicated with the help of local trusted partners, to maximise uptake and value for money. Expanding university engagement, partnerships, and knowledge exchange in rural places is another key opportunity area, as well as building capacity for rurally-based intermediaries and innovation animators to spark local connections. Data and evidence on rural businesses and their innovation patterns could enable funders to better target key opportunity areas.

Read the reports to find out more

This project was funded by the Economic and Social Research Council and Innovation & Research Caucus. We are grateful to the project sponsors at UK Research & Innovation (UKRI) for their input into the research.

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