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There are differences between the regions, small enterprise (SE) are generally more common in sparsely populated areas. Rural people and communities in Sweden are engaged in and depend upon a wide range of economic activities - from manufacturing to mining, from recreational services to agriculture and everything in between. The number of micro-enterprises (up to nine employees), and in particular the number of self-employed people (sole proprietors), is considerably higher in rural areas than in urban areas in Sweden (Table 1).
Table 1. Difference in small business structure between rural areas and urban areas (Rural Development Agency, 2007)
Sector | Rural area Urban area |
Self-employed | 65% | 48% |
Micro enterprises | 94% | 85% |
Traditionally, many people at the northern coast of Sweden live on the forest industry directly or indirectly, which could ultimately be threatened by closures and high unemployment. One reason for setting up businesses in rural areas is to contribute to community development and increase opportunities for themselves and others that live on in the region (Sandberg, 2003a, 2003b). Development can only be achieved through the local community's ability to maintain and create wealth and improve living standards and reduce dependence on outside suppliers. The base of local development is the diversity of small business, investing and long-term care for their local communities. Swedish municipalities and different authorities have recognised the need to invest in rural areas and develop new sources of income. Companies are confronted with rapidly changing market situations, new technologies, and almost worldwide markets.
Local development is dependent on community planning and infrastructure. Small enterprises that play an important role in developing sustainable employment and economic growth in rural areas must be addressed (Friis-Hansen & Egelyng, 2007; Wahlberg & Sandberg, 2005).
While the importance of innovative SEs for economic successful in rural regions remained an open question, how exactly ought this goal to be reached? Rural people are observing, adapting, experimenting and innovating as part of their daily work and in response to changing economic and social situations. Local innovators have played a crucial role in the evolution of knowledge and practice. Dynamic local communities are characterized by an interaction between innovators and users or adaptors of technologies through a series of learning cycles (Sandberg, 2003b; Sandberg, Wahlberg, & Pan, 2009).
Cosh and Wood (1998) and Öhman and Sandberg (2009) have investigated and summarised following factors as important to scale, objectives and constrains of innovation in SEs that have a high relevance in present study: