Addressing Public Policy Implementation Challenges in Lagging Regions Through the Analytical Lens of Smart Specialisation

Smart Specialisation Strategy (S3) research has contributed to better understanding of that policy framework’s conceptual underpinnings but some European regions still find it difficult to turn S3 theory into policy implementation. A key element of the implementation challenge concerns the enabling or constraining role of local institutions on regional development strategies and, more specifically, the entrepreneurial discovery process (EDP). Such a challenge appears to be particularly acute (and empirically unexplored) in lagging regions, characterised by weaker knowledge bases and innovation capacities. It is often in less advanced settings where weaker institutions are found. This paper addresses these gaps by investigating S3 implementation in lagging regions focusing on the dynamic interdependence between the regional institutional environment and EDP. It evidences how particular features of the regional institutional environment hinder EDP, as well as how institutional change could enable S3 implementation in two Greek regions. Our results reveal mutual interdependence between inadequate institutions and weak administrative and entrepreneurial capacities, creating adverse pre-conditions for S3 implementation. They also suggest that change requires the replacement of existing features of the institutional environment or creation of new ones, rather than gradual institutional adaptation or transformation.