The Development Trajectory of Regional Dynamic Capabilities

Abstract

This study illustrates the trajectory of dynamic capability formation and accounts for specific changes in government innovation policy and regional economic development, with particular emphasis to the North West region of the United Kingdom during the period 2000 until 2010. The regional case is used to extend the dynamic capability concept, enriched by ideas drawn from Elinor Ostrom’s framework of collective action. Through the collective action lens, the study shows that innovation capability development works across two pendulums constantly swinging between the national and local levels, and the government and private sphere. The paper provides insights and policy recommendations regarding the role of local social and economic actors that could help accelerate the development of relevant dynamic capabilities within regional innovation ecosystems undergoing similar transitions.

Keywords: dynamic capability, regional innovation ecosystem, collective action, Elinor Ostrom

JEL Classification: R00, O1, O2, O3