In order to promote regional innovation and stronger social coherence the European Union has set goals to become the world’s most competitive, dynamic, and knowledge-based economy. These ambitious goals are supported by funds allocated to regional strategic networks (also called cluster initiatives). Usually, the management of regional strategic networks is left to the discretion of the project leaders. However, the industry agglomeration model which constitutes the foundation for regional development policies fails to consider the social context. It also overemphasizes the relevance of a linear approach towards innovation which is problematic, as this fails to consider the conditions for implementation in different contexts.

This thesis builds upon data from two case studies of regional strategic networks (Firsam at Söderhamn and FPX at Gävle) and serves to describe (1) how the management group of an RSN creates the prerequisite for an innovative milieu by analyzing the effects that social capital imposes on social interaction, and (2) how a policy initiated innovation process is supported by an RSN management group by analyzing resource interaction between the developing, producing and using settings.

As a conclusion it is stated that a manager of a regional strategic network should balance the bridging and bonding forces that social capital produces. Under some circumstances it might be advantageous to form tightly knit groups that can foster trust and cultural proximity. In other cases loosely knit groups might be preferable where novel information is exchanged between previously unconnected actors. Also, the innovation construct is applied in the thesis to denote the process where resources are combined in new ways within existing structures to offer new solutions in the market. The manager of a regional strategic network must consider not only the setting in which an invention is developed but also the settings where new solutions are converted into products and those where they are brought to use.

The performance of the investigated development initiatives indicates that merely funding regional strategic networks is insufficient to spur regional growth. It is not as easy as merely sowing seed for innovation; it must also fall on good soil.