Innovation in Sparse Environments: The Geographical Innovation Dilemma of The Swedish Food Industry

This article discusses how spatial organization can influence innovation capacity within the Swedish food industry. Although the sector is economically significant, it is characterized by relatively low levels of innovation and international competitiveness. The article argues that this pattern reflects not primarily weak innovative capabilities, but the geographical conditions under which the industry operates. To capture this, the paper develops the concept of a geographical innovation dilemma, referring to the tension between strong local embeddedness and limited access to external knowledge flows. Firms benefit from place-based knowledge and cumulative learning, yet their location in rural and peripheral regions may restrict access to research environments, innovation infrastructures, and broader networks associated with more transformative forms of innovation. By integrating insights from economic geography and innovation studies, the article proposes a conceptual framework for understanding innovation in geographically dispersed industries. It also highlights the need for place-sensitive innovation policies that account for the specific conditions of rural and peripheral contexts.