The geography of innovation in times of crisis: a comparison of rural and urban RDI patterns during COVID-19

There is an evident research gap in the literature on the geography of innovation: very little is known about the innovation activities of rural enterprises in times of crisis. The topic is addressed here by analysing space-time differences in the receipt of research, development and innovation (RDI) funding by Finnish firms before and during the COVID-19 pandemic as a major economic shock. Using firm- and municipal-level panel regression analyses, the main goal was to identify key differences and temporal changes in RDI funding patterns across different region types. The empirical results show that firms located in urban regions have been generally more successful in applying for competitive public RDI funding than firms located in rural regions, but that rural firms have caught up to their urban counterparts during the COVID-19 pandemic. This narrowing of the rural-urban RDI funding gap (1) shows that easy and flexible access to RDI funding during the COVID-19 pandemic appears to be especially attractive for small rural enterprises, (2) points to the strategic flexibility of small rural enterprises in times of crisis, and (3) indicates that the innovation capacity of these firms/regions is more resilient to economic shocks than typically thought.