Giving Compass' Take:

• Researchers found a more comprehensive method to measure innovation and found that it isn't just in big cities, but studies indicate innovation is present in rural areas as well. 

• How can this research help inform donors about future investment opportunities? How can this help drive progress in place-based philanthropy?

• Learn what rural America can teach us about civil society. 

The “hidden” innovation of rural areas brings economic benefits to businesses and communities, according to researchers, whose findings will help decision makers think in new ways about innovation and how they can support it.

The study in Research Policy is based on well-documented evidence that businesses acquire innovation-promoting information through interactions with other businesses outside of their own industry. These can be both their suppliers and other firms to which they sell products.

“We know that inter-industry exchanges foster cross-fertilization of ideas, or knowledge spillovers, which in turn seeds innovation,” says Goetz. “We wanted to explore these interactions more closely in order to better understand where the opportunities for innovation are greatest, including in rural and urbanized areas that are remote from cities.”

To examine industry transactions, Goetz and his coauthor, Yicheol Han, a former postdoctoral scholar at the NERCRD and now at the Korea Rural Economic Institute, used data from the national Input-Output (I/O) table.

Focusing specifically on 381 intermediate industries, they applied a mathematical formula to measure the diversity of each industry’s transactions with their customers and suppliers, both in terms of the number of different industries they interacted with, and how evenly their interactions were distributed across other industries.

This formula generated a “latent innovation index,” which assigns a score to each US county based on the degree to which opportunities for latent innovation exist.

Read the full article about innovation in rural areas by Kristen Devlin at Futurity.