Cross-border knowledge transfer and innovation in the European neighbourhood : Tourism cooperation at the Finnish-Russian border

1 Cross-border knowledge transfer and innovation in the European1 neighbourhood: Tourism cooperation at the Finnish-Russian border2 Teemu Makkonen* 4 * Corresponding author5 University of Tampere, Institute for Advanced Social Research, Ratapihankatu 55, Tampere, FI-33014, Finland, [email protected] University of Southern Denmark, Department of Business and Economics, Alsion 2, Sønderborg, DK-6400, Denmark, [email protected] Allan M. Williams8 University of Surrey, School of Hospitality and Tourism Management, AP Building, Guildford, GU2 7XH, UK, [email protected] Adi Weidenfeld10 Coventry University, Business School, Priory St., Coventry, CV1 5FB, UK, [email protected] Virpi Kaisto12 University of Eastern Finland, Karelian Institute, Yliopistokatu 2, Joensuu, FI-80101, Finland, [email protected] 14 Acknowledgements15 We are thankful for the interviewees for their time and effort as well as to the colleagues at the Institute for Advanced16 Social Research and to the anonymous reviewers for their constructive comments on improving the paper.17 18 Funding19 This work was supported by the Marie Curie Actions (Intra-European Fellowship for career development) within the20 Seventh Framework Programme (FP7) of the EU under Grant PIEF-GA-2013-624930.21 22 Abstract: Knowledge transfer and innovation cooperation between the EU and its neighbours has remained23 weakly developed. To promote this cooperation, the EU has set up initiatives for the European neighbourhood.24 The issue has, however, received very limited scholarly attention in the field of tourism. This research gap is25 addressed here via interview data collected from participants in tourism related EU-funded projects in the26 Finnish-Russian cross-border region. These underline the importance of EU-funding in facilitating knowledge27 transfer and innovation between Finland and Russia. While language issues, and differences in business culture28 and administrative/legislative systems between the two countries, constitute barriers for practical cross-border29 cooperation, it is cross-border differences in culture and technological capabilities that drive cross-border30 knowledge transfer and innovation in the cross-border region. The paper concludes with policy31 recommendations for promoting future cross-border cooperation in innovation and tourism.32 33 Keywords: cross-border region; European neighbourhood; Finland; innovation; knowledge transfer; Russia;34 tourism35 36 37 This is the post print version of the article, which has been published in Tourism Management. 2018, 68, 140-151. https://doi.org/10.1016/j.tourman.2018.03.008. 2 Highlights:1 •Cross-border funding is of paramount importance for innovation related goals2 •Language and legislative issues are barriers for practical cross-border cooperation3 •Differences in culture and technology facilitate cross-border knowledge transfer4 5 Introduction6 The European Union (EU) has clear goals of becoming the world’s leading tourism destination via,7 for example, promoting sustainable tourism, developing innovation in the tourism sector and cross-8 border tourism initiatives. It has been recognised that cross-border tourism can potentially address9 issues of peripherality, and enable transnational synergies, leading to promotionaland profile-10 enhancing gains for the tourism sector of the EU as a whole (European Commission, 2010).11 Therefore, the EU has produced best practice guidance for tourism innovation (CSES, 2013) and has12 funded the development of sustainable transnational tourism products through several programmes13 and initiatives (European Commission, 2016a). At the same time, the EU has been committed to14 promoting sustainable socio-economic and socio-cultural development of non-EU regions in order to15 advance its cohesion and cooperation goals in relation to its neighbours (European Commission,16 2012). This cross-border cooperation (CBC) has recently (2007–2013) been funded through the17 “European Neighbourhood and Partnership Instrument” (ENPI) – subsequently replaced (2014–18 2020) by the “European Neighbourhood Instrument” (ENI) – including support for tourism19 innovation projects (European Commission, 2016b).20 21 One of the EU’s most important borders is with Russia. Russian border regions have implemented22 programmes, with similar goals to those in the EU, to promote regional social and economic23 development, to be realised in part via the tourism sector (Saveliev, 2013). Additionally, Russia’s24 central government has taken a close interest in funding CBC programmes and projects in order to be25 seen to act as an equal partner to the EU. Thus, while Russian policies for border regions are not26 framed by structural and cohesion funding policies similar to those in the EU, there is mutual27 understanding that overcoming economic weaknesses in cross-border regions (CBRs) can harmonise28 the interests of Russia and the EU (Valuev, 2002). It also seems that the importance placed on CBC29 has not been affected by the current tense political climate between the EU and Russia (Fritsch et al.,30 2015). For example, CBC programmes have not been included in the contemporary31 sanctions/countersanctions list of either the EU or Russia.32 3 1 The importance that the EU has attached to tourism-related CBC at its external borders is evident in2 around 17% of EU-financed CBC projects, in the programme period 2007–2013, being related to3 tourism according to the KEEP -database1. Similarly, CBC in innovation has been deemed pivotal to4 the economic development of CBRs (Trippl, 2010; Makkonen & Rohde, 2016). It is surprising5 therefore that little academic attention has been given to the topic, except some case studies in the6 Hungary-Slovakia-Romania-Ukraine (Kosinszki & Măran, 2013) and in the Finnish-Russian7 (Németh et al., 2014; Petrova & Kolesnikov, 2014) CBRs. However, these studies have mostly8 concentrated on describing or listing existing tourism-focused ENPI CBC projects, rather than9 analysing their significance for cross-border knowledge transfer and innovation. The same research10 lacuna applies to other borders besides the external borders of the EU: whereas the existing literature11 on cross-border tourism has generally concentrated on development, marketing and governance12 issues in cross-border destinations (Ioannides et al., 2006; Prokkola, 2010, 2011; Blasco et al., 2014;13 Stoffelen et al., 2017), the empirical literature on cross-border knowledge transfer and innovation14 within the tourism sector remains limited (Weidenfeld, 2013). This is a significant omission, given15 the current challenge of facilitating collaboration across the Finnish-Russian border (Heusala &16 Koistinen, 2016). Therefore, this study aims to provide a deeper understanding of the factors that17 facilitate or act as barriers to cross-border knowledge transfer and innovation in general, and in the18 context of EU external borders in particular. By means of interviewing 24 participants of tourism19 related ENPI funded project at the Finnish-Russian CBR, the paper will identify the role of the20 Finnish-Russian ENPI CBC projects in facilitating cross-border knowledge transfer and innovation21 in tourism. Based on these analyses, policy recommendations are suggested in order to promote22 successful CBC.23 24 Literature review25 Knowledge transfer, innovation and tourism26 Knowledge flows are an important element in the performance, competitiveness and innovativeness27 of tourism organisations (Shaw & Williams, 2009; Weidenfeld et al., 2010). These knowledge flows28 can basically be divided into two categories based on the actors’ stance on sharing knowledge;29 knowledge can flow either intentionally through (managed) “knowledge transfer” or unintentionally30 through “knowledge spillovers”. In this paper, we are interested in intentional knowledge sharing31 4 mechanisms potentially leading to cross-border tourism innovation and therefore mostly focus on the1 concept of knowledge transfer.2 3 Knowledge transfer is closely linked to the concept of innovation. There are many different4 conceptual understandings of innovation, but it has been commonly defined as a new or an improved5 product or process that is successfully implemented in an organisation or introduced into the market6 (Lorenz, 2010). Innovations have been labelled according to their novelty value as being either7 radically new products, services or processes, or incremental (continuous) improvements to existing8 ones (Garcia & Calantone, 2002). A further distinction can be made between the development of9 innovations (new-to-the-world), and the diffusion or adaptation of innovations (new-to-the-country;10 new-to-the-region; new-to-the-firm) (Edquist et al., 2009). The innovativeness of CBC projects is11 commonly related to knowledge transfer characterised by innovation diffusion, whereby existing12 technologies, products, services and best practices are transmitted from one side of the border to the13 other (Liuhto, 2011;Knippschild & Vock, 2017). Therefore, even though there is no theoretical basis14 to exclude CBC innovations from being radical and new-to-the-world (Lundquist & Tripp, 2013), in15 reality – and particularly in the EU’s cross-border programmes – these commonly resemble the16 (diffusion of) best practices (Knippschild & Vock, 2017) associated more with new-to-the-country or17 new-to-the-region (incremental) improvements. Successful innovations and best practices do of18 course need to be fine-tuned to local conditions: what works in one regional setting might not work19 when transferred to and implemented in another (Tödtling & Trippl, 2005). Innovations (and20 innovation policies) do not maintain their shape intact as they move between places but change21 according their specific contexts (Peck & Theodore, 2015).22 23 Similarly, innovations in the tourism sector are strongly linked to other sectors, i.e. tourism firms (and24 other tourism organisations) tend to adapt and implement innovations produced elsewhere25 (Weidenfeld et al., 2010; Makkonen & Hokkanen, 2013): linkages within the tourism sector are likely26 to result in incremental process innovations, whereas those between tourism and non-tourism sectors27 are more likely to create new knowledge and lead to (radical) product innovations (Weidenfeld,28 Forthcoming). However, there is still an element of co-production of the innovation even if only in29 the process of adjustment during implementation in the tourism sector. Nevertheless, radical new-to-30 the-world innovations produced purely, or even largely, within the tourism industry are rare (Mayer,31 2009; Brooker & Joppe, 2014). Consequently, analyses of tourism innovation have mostly focussed32 5 on incremental and imitated improvements (Souto, 2015). For example, Hjalager (2015) has1 summarised an extensive list of innovations – many of which have been originally developed in other2 industries or did not specifically target tourism – that, when adapted within the sector, have3 consequently transformed the tourism industry.4 5 The role and impact of cross-border cooperation programmes in tourism6 As noted earlier, only a limited number of studies discuss tourism-related CBC projects at the7 European neighbourhood level2, that is, the external borders of the EU. Furthermore, the relationships8 between intra-border regions to their neighbouring extra-(non-EU) border regions remain largely9 ignored, particularly in the context of knowledge transfer and innovation. Thus, while several cross-10 border tourism projects have been funded by the ENPI CBC programme and its predecessors, to the11 best of the authors’ knowledge there has been no actual analysis of their impacts on knowledge12 transfer and innovation. However, according to the existing evidence from EU-financed CBC13 programmes in its internal borders, tourism has become an integral part of the general strategies for14 promoting CBC. For example, Nilsson et al. (2010), Rajčáková and Švecová (2013) and Vaishar et15 al. (2013) have shown that the role of cross-border tourism as an important contributor to the regional16 economies (increasing local income and creating employment opportunities) is widely recognised.17 This has provided the basis for justifying funding and investments on cross-border tourism projects18 to support the social-cultural and economic development of CBRs.19 20 However, in practice the EU’s funding programmes (such as INTERREG) have generally been21 considered more akin to additional financial methods to support cross-border networks between22 tourism firms and other related actors than as constituting ground-breaking new forms of CBC. This23 has led to questioning of whether the EU’s funding programmes, perceived as top-down initiatives,24 can play a significant role in stimulating cross-border knowledge transfer and innovation. The25 onerous administrative burden attached to EU programmes, and the fact that they commonly offer26 only short-term funding, have acted as major constraints that reduce the motivation of organisations27 to apply for EU support in the first place, and as additional barriers to funded projects having a28 sustainable long-term impact. For example, Blatter (1997) and Gualini (2003) have commented that29 bureaucratic structures create obstacles for practical and innovative CBC, whereas Prokkola (2007;30 2008) considers that the intensity of cross-border interactions in EU-funded tourism projects has been31 relatively low and, after the funding has ended, short-lived. Thus, the implementation of local cross-32 6 border tourism projects is no guarantee for positive destination-wide regional development (Stoffelen1 & Vanneste, 2017).2 3 Notwithstanding these reservations concerning CBC across internal borders, such as the established4 cooperation between EU member states like Finland and Sweden (Prokkola, 2007; 2008), there is5 practically no empirical evidence on whether these notions also apply to the external EU borders,6 where the conditions for CBC are very different from those on the internal EU borders. Yet, EU-7 financed programmes at the external borders can be regarded as being potentially more important,8 since these provide good incentives for CBC (Studzieniecki et al., 2016) in a context where most9 actors are more likely to be in the early stages of learning how to cooperate across the border.10 11 Borders as barriers and facilitators12 Permeability of borders13 State borders may act as barriers to human, economic, cultural and social exchanges and movements,14 even though, in the context of the EU, European integration has eroded some of the functions15 traditionally performed by borders between national states. Specifically, internal EU borders have16 changed from being separating boundaries into being (more) integrated CBRs: that is, they have17 become areas of cross-border exchange and interaction (Comelli et al., 2007). The greater bridging18 role of internal EU borders has highlighted the barrier functions of the external borders that have been19 reinforced by substantial socio-economic disparities across the external border of the EU.20 Consequently, flows or mobilities (goods, people, knowledge, etc.) across the internal borders of the21 EU are generally higher and less volatile than across the external ones (O’Dowd, 2002a).22 23 Contemporary border studies approach borders through “bordering” dynamics (Brambilla, 2015). It24 is an ongoing process of construction, deconstruction and reconstruction of borders through, for25 example, socio-political discourse, decision-making and practices. At times, the effects of a border26 can be reduced (de-bordering) or reinforced (re-bordering) (Durand & Perrin, 2017). CBC, for27 instance, can be considered de-bordering, and sanctions or reintroduction of border controls represent28 re-bordering. Recently, the role of borders has been reinforced even within some of the internal29 borders of the EU, due to the refugee challenge and its impact on the reintroduction of border controls.30 31 7 In the context of knowledge transfer and innovation these bordering dynamics have an influence on1 the permeability of borders. High permeability of borders is considered to enhance knowledge2 transfer and innovation, whereas low permeability impairs these (Weidenfeld, 2013). Permeability of3 borders refers not only to the physical borderline and to the possibilities of crossing it, but to the type4 of the border. Martinez (1994) distinguishes between four types: 1) alienated (almost no cross-border5 interchange), 2) coexistent (slightly open borders allowing limited interaction), 3) interdependent6 (increased interaction and economic interdependence) and finally 4) integrated (essentially7 unrestricted, stable and permanent movement of people and goods, and functionally merged8 economies). The permeability of border is not fixed (Mol & Law, 2005): over time it can change from9 more to less integrated or vice versa.10 11 Cross-border regional innovation systems12 Weidenfeld (2013) introduced the concept of cross-border regional innovation systems CBRIS13 (Trippl, 2010; Lundquist & Trippl, 2013) to the tourism literature and has raised interesting issues14 about contemporary tourism related CBC. These include debates on the influence of cross-border15 similarities/differences – in terms of, for example, legislation, culture, habits, norms and16 technological capabilities – on cross-border knowledge transfer and innovation (Weidenfeld, 2013;17 Weidenfeld et al., 2016). A number of factors are seen to constitute barriers to CBC or to function as18 facilitators of cross-border knowledge transfer and innovation.19 20 Firstly, technological capabilities and human capital are at the core of successful knowledge transfer21 mechanisms: without the ability of local tourism firms and organisations to acquire, assimilate,22 transform and exploit external knowledge – commonly termed “absorptive capacity” – international23 knowledge transfer will not result in local innovation or competitive advantage (Thomas & Wood,24 2014; 2015). Absorptive capacity (embodied in the technological capabilities and human capital of25 regions/firms), or the lack thereof, can thus constitute a facilitating factor or a major barrier for cross-26 border knowledge transfer and innovation.27 28 Secondly, social capital facilitates cooperation. As Paldam (2000) states, trust is an essential part of29 the concept of “social capital”, commonly defined as individuals’ ability to work voluntarily together;30 trust emerges from shared values and routines (Anheier & Kendall, 2002). As such, people, who trust31 each other, work together more easily, and the effects are cumulative because, by working together,32 8 they build trust. Therefore, trust influences the choice of innovation partners (Zach & Hill, 2017) and1 underpins the development of most forms of cooperation (Paldam, 2000). In Russia, different from2 most Western counties, there is strong reliance on trust at the individual level because of lack of trust3 at the system level, that is, trust in institutions based on past experiences (Schrader, 2004).4 5 Thirdly, borders may stimulate tourism innovations via the introduction of new products or services6 to the neighbouring border region, thereby increasing the appeal of the CBR to tourists (Weidenfeld,7 Forthcoming). Cross-border similarities facilitate this potential for knowledge transfer and8 (incremental) innovation. However, the greater the differences between neighbouring border regions,9 the greater the potential for learning and (radical) innovation (Williams & Shaw, 2011; Weidenfeld,10 2013). These notions resonate with the concept of “related variety” (Content & Frenken, 2016), which11 in tourism refers to shared technological competences and similar educational backgrounds that can12 stimulate knowledge transfer between different economic sectors and, thus, enable re-composition of13 existing technologies (Weidenfeld, Forthcoming). The literature on related variety, in the context of14 CBRISs, stresses that too much similarity across the opposing sides of the border results in situations15 where there is relatively little potential for mutual learning. Contrarily, if the competencies are too16 different there are constrained possibilities for building synergies across the border (Trippl, 2010;17 Lundquist & Trippl, 2013; Makkonen & Rohde, 2016). Both situations reduce mutual interest in18 cross-border knowledge transfer. Therefore, some differences in competencies, culture, working19 methods, sectors, etc. act as an enriching and facilitating factor for CBC in the Finnish-Russian CBR,20 as in other CBRs.21 22 Based on the previous discussion, it would seem that initially many of the EU’s external borders, such23 as the Finnish-Russian CBR, are at a disadvantage (technological gap; low permeability; low24 similarity) in terms of their prospects for cross-border innovations, but have definite potential in25 developing these (due to cross-border differences). Indeed, earlier studies have shown that, while the26 EU has gradually been integrating in terms of its internal science, technology and innovation27 cooperation (Scherngell & Lata, 2013; Makkonen & Mitze, 2016), the situation is quite different28 when it comes to collaboration with its neighbours (Autant-Bernard et al., 2017). An important factor29 influencing this is access to EU funding; Makkonen and Mitze (2016), for example, have shown how30 the new member states of the EU have been able to boost rapidly their cross-border scientific31 collaboration with the established EU members after joining the EU, and have gained access to32 9 improved research funding. Contrarily, when it comes to knowledge transfer, a recent study by1 Autant-Bernard et al. (2017), for example, has shown that knowledge diffusion between the EU and2 its neighbours has remained weakly developed. This applies also for the situation between Finland3 and Russia, where “genuine innovation activity aiming at jointly creating new products and services4 is still in its infant stage”, and cooperation is dominated by rather unilateral flows of (high-tech)5 products and knowledge from Finland to Russia (Liuhto, 2011: p.164).6 7 Study design: Case study region, data and methods8 The dissolution of the Soviet Union and Finland’s accession to the EU have led Finnish decision-9 makers to endorse Finland’s image as the “bridge” between Russia and the EU. This image has been10 supported by an evident and measurable increase in cross-border tourism and volumes of cross-border11 cargo and passenger traffic (Stepanova, 2014). These increases have been, at least partially, facilitated12 by EU-funded CBC programmes (Fritsch & Eskelinen, 2011). As a result, tourism has become a13 significant sector for local economies in the Finnish-Russian CBR since the collapse of the Soviet14 Union. During the Soviet period, the Finnish-Russian border remained relatively closed and tourism15 was mainly constituted of organised groups travelling to large cities (Stepanova, 2014). The number16 of travellers crossing the border has gradually increased, peaking in 2013 with over 12.9 million, and17 then declining (due to the macro-political climate and the weakening of the Ruble) to around 9.118 million in 2017 (Figure 1). In Finland, Russian travellers form the largest group of foreign visitors in19 the whole country and are considered the most important target group for Finnish tourism marketing20 (Visit Finland, 2015). Similarly, Finnish tourists are among the most frequent incoming tourists in21 Russia as a whole and, of course, are the most numerous group in immediately neighbouring regions,22 such as the Republic of Karelia (Stepanova, 2014). The largest part of the Finnish and Russian23 travellers are day visitors that live relatively close to the border and who travel to near-by regions for24 shopping and leisure purposes (Visit Finland, 2016). There have been both public and private25 investments in border regions to serve the visitors and, in the Finnish-Russian border regions, tourism26 is considered a key industry in how the regional economy adjusts to structural changes (Pohjois-27 Karjalan Maakuntaliitto, 2010). Finnish-Russian ENPI CBC programme documents emphasise the28 need to develop tourism infrastructure, products and services, joint marketing, and the preconditions29 for tourism entrepreneurship in the CBR. At the same time, the documents recognise innovations as30 a means to promote economic development in the programme areas (Karelia ENPI CBC, 2008;31 Kolarctic ENPI CBC, 2008; South-East Finland–Russia ENPI CBC, 2008).32 16 the wider precise impacts on the local economy of a single, cross-border tourism project or1 innovation. However, they generally believed that their projects provide “platforms” for further2 developments and that the innovations have also made at least a small positive contribution to the3 overall growth of (cross-border) tourist flows in the region. Cumulatively, they consider that these4 have provided a substantial competitive advantage for the local tourism sector.5 6 Borders as opportunities and barriers to knowledge transfer7 Facilitators of cross-border knowledge transfer8 The lead partners and project managers were highlighted as key figures in the projects. Their project9 management capability was acknowledged to be essential for good performance and in facilitating10 cross-border knowledge transfer. Existing cross-border contacts were commonly mentioned as an11 underlying condition for building trust, which was seen to be the most important factor for successful12 CBC and knowledge transfer. Having personal contacts was considered to be more important than13 cooperation between organisations, since trust between individuals is not affected by movement of14 these individuals between organisations. Furthermore, organisational cooperation was viewed as15 being more formal and less effective than that, which is based on personal contacts:16 17 “Without personal contacts, well it is really hard to advance things solely on organisational18 level. There has to be personal contacts in the background first; it is easier…on an organisational19 level the cooperation is much more formal and involves bureaucracy” (Finnish partner)20 21 “Organisations can say all sort of things, but if they do not have an individual who actually22 wants to do it properly, it will not get done properly” (Finnish partner)23 24 Differences in culture, the sectors they were involved in, technological capabilities, educational25 backgrounds or competencies between the project participants seem to facilitate cross-border26 knowledge transfer. Similar competencies can ease the practical side of cross-border interactions.27 However, according to most of the interviewees, the differences in culture, technological capabilities28 and competencies (i.e. related variety) actually created learning opportunities and facilitated cross-29 border knowledge transfer in the projects:30 31 “Differences? They are not a barrier they are an opportunity!” (Finnish partner)32 17 1 The projects were particularly successful in unidirectional transmission of new service concepts,2 technologies and best practices from the Finnish side to the Russian one – due to the difference in3 technological capabilities across the border – whereas the Finnish partners benefitted from new4 knowledge on conducting business and dealing with administrative issues in Russia and networking.5 Thus, while there seems to be a technological gap within the tourism sector across the border, the6 Russian actors have sufficient absorptive capacity to learn from their neighbours.7 8 Barriers to cross-border knowledge transfer9 The Russian partners were relatively satisfied overall with the cross-border knowledge transfer10 processes within their projects. In contrast, the Finnish partners were somewhat more sceptical11 concerning the success of cross-border knowledge transfer, and identified some key issues that they12 considered to constitute barriers. Language issues were considered to be among the main obstacles to13 cross-border knowledge transfer particularly by the Finnish interviewees. The Finns emphasised that14 it is important to have personnel employed in the project, preferably as managers, who have15 knowledge of the Russian language and culture since English was insufficient to communicate and16 since it facilitated cross-border knowledge transfer with the Russian project partners and other17 stakeholders such as entrepreneurs and regional administration.18 19 The business cultures on the Finnish and Russian sides of the border were described as very different;20 Finnish firms tend to plan further ahead, whereas Russian firms are more spontaneous and are not21 accustomed to long-term planning. Another frequently mentioned difference was the Finnish way of22 doing things in advance, whereas Russians are more inclined, in the words of one Russian23 interviewee, to do “everything on the last day”. According to most of the interviewees, these issues24 can lead to problems of expectations and dissatisfaction and can potentially act as barrier to cross-25 border knowledge transfer. This highlights the importance of cultural sensitivity and understanding,26 of which the following excerpt is a representative example:27 28 “Knowledge about and respect for other’s culture is the key issue here. You cannot operate29 properly with others if you do not understand how they are doing things and why” (Finnish30 partner)31 32 18 The Russian legislative and administrative system was described by many interviewees, both Finns1 and Russians, as being more bureaucratic than the Finnish system. For example, there are significant2 differences between Finnish (more in line with the EU rules and the rules of the ENPI programme)3 and Russian accounting rules, which led to practical problems related to auditing. Again, the above-4 mentioned lack of funding opportunities and private investments for the tourism industry was seen to5 be a major obstacle for the promotion of cross-border tourism and knowledge transfer within the6 sector. In contrast, visa requirements and practical issues concerning the crossing of the border were7 almost unanimously excluded from the list of barriers to cross-border knowledge transfer: only a few8 interviewees had experienced difficulties with the custom offices. Generally, the rules and9 practicalities of crossing the border constitute “business as usual” for most of the interviewees, who10 live and work in the border region, and, thus, permeability in terms of crossing of the physical border11 does not seem to be an issue. Therefore, the more problematic differences in the Finnish-Russian12 border seem to manifest in the form of institutional contrasts, such as in business culture and13 legislation.14 15 Developing the EU’s cross-border cooperation initiatives16 Overall, the interviewees were satisfied with the procedures and processes (application, support and17 reporting) related to the ENPI funding, but also had suggestions for how policy could help maximise18 the impact of future projects. Firstly, there were issues concerning the sustainability of the project19 results and innovation: there is a need to clarify who should maintain and update the innovations20 emanating from the projects. This applies in particular to the sustainability of the innovations after21 the life cycle of the projects had ended. The problem is amplified since there were only a handful of22 firms (which are at the heart of the commercialisation of innovations) that were involved as (equal)23 partners within the interviewed projects. As such, the interviewees wished for stronger local support,24 since some of the problems faced by the projects could be overcome with support from local decision-25 makers:26 27 “Often some innovation is developed in a project, but in order for it to continue, there should28 be support from the local level, for example, in terms of how it will be further financed”29 (Russian partner)30 31 19 Secondly, there were complaints that the planning phases of the programme had taken too long. This1 has been repeated in the case of the ENI programme, which could have started as early as 2014, but2 at the time of conducting the interviews (between August and December 2016) there was still3 considerable uncertainty concerning when the application phase would finally open4. This4 undermines the sustainability of cross-border innovation cooperation, since for many organisations5 the lack of funding is a major constraint hindering their possibilities for participating in such6 collaboration. Relatedly, some of the interviewees hoped that in future the decisions concerning the7 programme priorities (or themes) would be made in a less top-down fashion than previously:8 9 “Somebody has planned the programme and it includes certain priorities. And it does not10 always match with the most acute problems that we should be solving…They come from above”11 (Russian partner)12 13 It was stressed that the emphasis on funding for CBC projects should be on social and human14 cooperation rather than expensive infrastructure projects: it was contended that the money spent on a15 single infrastructure project would be sufficient to fund several collaborative projects involving softer16 aspects of CBC, and that these would have a more durable impact on Finnish-Russian cross-border17 innovation cooperation. Many participants also stated that the procedures for evaluating project18 impacts should have a more flexible timeframe, since the outcomes of innovations only become fully19 evident in the long-run.20 21 Discussion and conclusions22 This paper set out to evaluate the role of EU-funded CBC programmes in terms of their potential23 facilitation of cross-border knowledge transfer and innovation. The empirical material was collected24 from semi-structured in-depth interviews with participants from the Finnish-Russian ENPI CBC25 programme, who were engaged in tourism related projects. Altogether 24 interviews (with 12 Finnish26 and 12 Russian partners) were conducted. The main results can be summarised as follows:27 28 Firstly, since local and national funding sources commonly favour domestic over international29 cooperation, the role of cross-border focused ENPI funding was considered to be of paramount30 importance in achieving the innovation related goals of the projects: the inclusion of a wide range of31 expertise from both sides of the border leads to better-quality outcomes. The innovations were mostly32 20 diffused from the Finnish to the Russian side of the border, where they represented new-to-the-region1 improvements which had required adjustment to the local context. This is in line with the literature2 on best-practice approaches in CBC (Knippschild & Vock, 2017).3 4 Secondly, the crossing of the physical border as one aspect of the permeability of the border5 (Weidenfeld, 2013), or the lack of absorptive capacity (Thomas & Wood, 2015), were not considered6 to hamper CBC. When it comes to barriers for cross-border knowledge transfer, the most commonly7 identified issues, in line with theoretical discussions of CBRISs (Lundquist & Trippl, 2013), consisted8 of differences in language competencies, business culture and legislative and administrative systems,9 and the lack of funding opportunities and private investments for tourism. In contrast, personal trust10 based relationships (Schrader, 2004) and – in line with the literature on related variety (Content &11 Frenken, 2016) – cross-border differences in culture, the sectors involved, technological capabilities,12 educational backgrounds and competencies, were considered the most important factors facilitating13 cross-border knowledge transfer. As indicated by the CBRIS literature, the actors involved in CBC14 projects need to be similar enough to be able to cooperate across border, but not too similar in their15 professional expertise and behaviour, since this would constrain learning opportunities (Lundquist &16 Trippl, 2013). This also applied in the case of the Finnish-Russian CBR: the dissimilarities between17 neighbouring border regional actors create practical barriers for successful CBC, but the differences18 – particularly technological and cultural – between the actors were actually the very essence that19 drives the cooperation for cross-border knowledge transfer and innovation across the Finnish-Russian20 border. Therefore, the CBRIS framework, and the related discussion on related variety, provided a21 useful analytical framework for investigating facilitating and hindering factors of CBC within the22 tourism sector.23 24 Thirdly, the results point to the following practical policy suggestions for developing the EU’s CBC25 initiatives and enhancing cross-border knowledge transfer and innovation:26 •The specific arrangements for the sustainability of the project results and innovation should27 be agreed upon at the start of the project28 •Stronger local support from decision-makers is needed to ensure the sustainability of the29 innovations at the end of the project life-cycle30 21 •To promote innovation, funding should prioritise softer aspects of CBC, such as improving1 social interactions between people from different cultures (see also Weidenfeld et al., 2016),2 rather than infrastructure projects3 •The impact evaluation of the projects should be (more) flexible and include the (potential)4 long-term benefits of innovation, such as sustainable impact outcomes, and long-term5 economic implications.6 7 The suggestions made by the interviewees clearly reflect wider concerns about the feasibility of EU-8 funded project-based CBC. This poses the question of whether a (re-)turn to a less project-driven9 bilaterally-governed cooperation – based on local needs rather than on EU policies – could be a more10 viable future approach, as some scholars and practitioners in the Finnish-Russian border region have11 suggested (Scott, 2013). Evaluation reports of the Finnish-Russian ENPI CBC programmes recognise12 that projects implemented at the Finnish-Russian border face similar problems to those reported at13 the EU’s internal borders (Kahila et al., 2016; Oxford Research, 2016; TK-Eval, 2016). The ENPI -14 funded tourism projects had encountered some of these obstacles, namely short-lived CBC periods15 and bureaucracy, but not the problem of low interest in participating in CBC, and the consequent low16 impact of CBC. On the contrary, unlike the experiences of cross-border tourism projects in internal17 EU border regions (Prokkola, 2007; 2008), the interviewees generally considered that Finnish-18 Russian ENPI funded tourism projects were impactful. Therefore, the partners had either continued19 this cooperation or were actively seeking further collaboration: despite the current political climate20 there is, as stated by an interviewed Russian partner, “a strong will to collaborate on both sides of the21 border”.22 23 Finally, we acknowledge that the EU’s external border regions are heterogenous, having diverging24 characteristics and development patterns (Topaloglou et al., 2005; Feliu et al., 2013) and, therefore,25 adapting practices from one (border) region to another is not problem free (Tödtling & Trippl, 2005).26 However, despite differences between border regions, the EU’s external border regions do also share27 common features, for example, in terms of their (poor) economic performance and (weak) knowledge28 transfer links (Petrakos & Topaloglou, 2008; Autant-Bernard et al., 2017). Therefore, even if it is not29 possible to generalise the research results gained in one external border region to all the others, the30 experiences and lessons learnt in the Finnish-Russian CBR can be reflected upon and provide insights31 for understanding the relationships between other border regions in the EU external border context.32 22 However, the identified incentives to collaborate in cross-border knowledge transfer and innovation,1 compared to the barriers encountered, require further studies, to improve our understanding of the2 optimal conditions to encourage cross-border innovations in general and across the internal and3 external EU borders in particular.4 5 Notes6 1) The Keep -database (http://www.keep.eu/keep/) is a source for information on projects and partners of CBC and 7 territorial cooperation programmes such as INTERREG and ENPI. The database is maintained by the8 INTERACT programme (http://www.interact-eu.net/) and co-financed by the European Regional Development9 Fund.10 2) Consisting of: Algeria, Armenia, Azerbaijan, Belarus, Egypt, Georgia, Israel, Jordan, Lebanon, Libya, Moldova,11 Morocco, Palestine, Syria, Tunisia and Ukraine. Since Russia desires to act as an equal partner to the EU, it takes12 part in CBC activities under the European Neighbourhood Policy, but as such is not a part of it (European13 Commission, 2016c).14 3) Socio-economic disparities between the EU and non-EU countries have created highly asymmetric borders15 rendering CBC in the external borders of the EU more challenging than along the internal ones (O’Dowd,16 2002b): the cross-border disparity (in terms of GDP per capita) between Finland and Russia is wider than in any17 other border region along the East/West divide in Europe (Alanen & Eskelinen, 2000; Eskelinen & Kotilainen,18 2005).19 4) The first calls for proposals of the new ENI programme period (2014–2020) in the three Finnish-Russian20 programme areas were subsequently opened on January 2017.21 22 References23 Alanen, A., & Eskelinen, H. (2000). Economic gap at the Finnish-Russian border. 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