Agency, regional development and local context: Micro-level evidence from an old industrial region

In this paper we answer the call for a micro-level perspective on regional economic change, in peripheral regions in particular. Using an in-depth and comparative case study approach, we investigate how agency shapes regional development paths, and how agency is in turn shaped by local context. The performance of a single labor market often hides the very different strategies taken by decision-makers in different municipalities.

Our case is not uncommon in Sweden or elsewhere: A peripheral region that is dependent on employment in the manufacturing sector dominated by large firms that are have their headquarters elsewhere. This dependency leaves such old industrial regions vulnerable to shocks. The labor market region of Olofström-Karlshamn experienced a period of exceptional economic decline between 2007 and 2010, prompted by restructuring in the automotive industry. In December 2008, around 1000 jobs disappeared overnight, throwing a municipality of 15000 people into crisis, and further rippling through the region. In the small municipality of Olofström, this shock prompted several collaborative initiatives to regain jobs lost, to lower the dependency on Volvo Cars, and to diversify the economy. By 2017, the 1000 jobs lost had been regained and what used to function as a loyal supplier base to Volvo and the rest of the automotive industry, is now actively coordinated as a regional cluster where firms collaborate and where effort is put into diversifying their customer base and market. In the neighboring municipality of Karlshamn, where Volvo was also the largest private sector employer, the crisis did not trigger major initiatives. Whereas Olofström appears to have changed industrial path organizationally (more cluster like), industrially (more diversified), and institutionally (collaborative), Karlshamn had been changing more gradually, less unified over a much longer period.

In this paper, we use original, micro-level material from 23 interviews and supporting documents to provide a much needed micro-level perspective on regional economic change, foregrounding the role of agency in shaping regional development paths. It also sheds light on the role of non-firm actors in path creation, that otherwise receives little attention. The contribution of this paper is two-fold. First, we identify the motivations, resources and networks that prompt individuals, or groups of individuals, to take different kinds of initiatives. These forms of agency cumulatively change the organization and culture of the industrial path of the region. Second, we use our comparative cases to show that a single trigger can unleash change agency in one local context, but not nearly to the same effect in another, despite sharing the same regional structural conditions. Change agency is therefore highly dependent on the presence of specific enabling and constraining factors in the local context.