High-tech development for “left behind” places: lessons-learnt from the Ruhr cybersecurity ecosystem

Abstract

Unlike development strategies for prosperous regions and their prioritisation of high-tech sectors, alternative strategies for left behind places are suggested that shift to foundational economies, community-based social innovation and well-being. While we support this emphasis, we see a tendency to neglect the role of change agents engaged with research and teaching in high-tech domains for initiating new regional growth paths. This study shows how initial funding has promoted change agents and the emergence of today’s cybersecurity ecosystem in the old industrial region of the Ruhr. The ecosystem generates fast-growing high-tech start-ups and contributes to positive regional identification. Our paper suggests combining alternative development strategies and the support of change agency from high-tech domains to develop left behind places.

Introduction

New attention given to “left behind” places, such as lagging old industrial or rural regions, in policies and regional research has triggered a debate on their development (BMI, 2019; Evenhuis et al., 2021; MacKinnon et al., 2022; Martin et al., 2021). Researchers have criticised conventional growth-oriented economic thinking and its narrow policy prescriptions as being inadequate to develop left behind places and have called for alternative development strategies. MacKinnon et al. (2022) and others argue that development strategies should shift to the foundational economy (Hansen 2022; Russell et al., 2022) and community-based social innovation (Pires et al., 2020), rather than prioritising cutting-edge research and development (R&D), technological innovation and high-tech sectors. Furthermore, universities, including those in lagging regions, should become engaged institutions and shift their third mission towards the needs of local communities. In sum, specific place-based development policies are proposed that address well-being, quality of life, positive identification and belonging.

While sympathetic to the suggested shift towards alternative development approaches, this paper elaborates on the limitations associated with this shift if orthodoxly applied in strategies to develop lagging regions. We argue that it would be misleading if the emphasis on alternative development and well-being leads to the perception that high-tech promotion and related research are misplaced in lagging regions. By creating high-tech and high-growth companies, entrepreneurial ecosystems can drive the economic development of regions (Isenberg, 2011; Stam and van de Ven, 2021). Advocates of alternative development approaches tend not to deny the economic impact of vibrant ecosystems but question their promotability in lagging regions. Our paper builds on theory advances on the role of change agency in initiating new regional industry paths (Grillitsch and Sotarauta, 2020) and elaborates on the contribution of cutting-edge R&D in high-tech industries for developing lagging regions. Our cybersecurity case study from the Ruhr in Germany, a lagging region well known as Europe’s most populous former mining area, shows the impact of a random private donation for research in triggering economic development. Researchers became change agents and stimulated a dynamic high-tech entrepreneurial ecosystem.

Against this theoretical and empirical background, the paper aims to develop a sympathetic critique of alternative development approaches for left behind regions. In the following, we use the term “lagging” regions to refer to economically, socially and demographically underperforming regions. We use the term “left behind” region when in addition to the underperformance, negative emotions are of concern (that is, feelings among the population of being left behind) (Hannemann et al., 2023). High levels of discontent in the “places that don’t matter”, the desire for revenge and the consequent high percentage of votes for populists, have triggered the debate about alternative development approaches for left behind places (MacKinnon et al., 2022; Rodríguez-Pose, 2017). However, alternative development approaches were debated for lagging regions well before the term left behind was used.

The paper is organised as follows. The next section considers the main arguments of the alternative policy approaches for lagging regions. It then discusses change agency from high-tech domains in regional industrial path development. Based on this, a critical view on the potential implications of alternative development approaches for left behind regions is elaborated. The following section introduces the methods applied for conducting the case study, and elaborates on the genesis of the Ruhr’s cybersecurity ecosystem, the change agents and its regional impact. The discussion section critically appraises our empirical findings and advances recommendations for development policies. The final section concludes.

A sympathetic critique of alternative development approaches in light of regional change agency from high-tech domains

The history of European regional innovation (and cohesion) policy has witnessed various approaches, most prominently cluster policies (Trippl and Tödtling, 2008), regional innovation systems (Cooke, 1992) and smart specialisation strategies (Foray, 2014). However, these approaches failed to diminish inter-regional inequality, strengthen social cohesion or support environmental sustainability (Hansen, 2022; Tomaney and Pike, 2020). Therefore, the shift towards well-being (MacKinnon et al., 2022) and the strengthening of the regional identity of inhabitants and communities in left behind regions by focussing on foundational economies, engaged universities and social innovation is timely and appropriate. However, there are also potential disadvantages to such approaches to regional economic development. Building on the discussion of the three alternative development approaches and considerations of change agency, these disadvantages are discussed in the following.

Alternative development approaches: foundational economy, engaged universities, social and community-driven innovation

The foundational economy is defined by industries that supply citizens’ necessary consumption of essential goods and services, such as energy, healthcare and education (Coenen and Morgan, 2020; Foundational Economy Collective, 2018; Hansen, 2022; Heslop et al., 2019). These sectors matter for the development of lagging regions, because of their contribution to human well-being in the area and because they guarantee a minimum of economic activities everywhere, especially in lagging regions that lack competitive export-oriented industries (Engelen et al., 2017; Froud et al., 2020; Hansen, 2022; MacKinnon et al., 2022). Local inhabitants generate a constant demand, making foundational economies less prone to inter-regional competitiveness (Hansen, 2022). For example, the foundational economy accounts for around 40% of all jobs in the UK, Germany and Italy and has a higher share in regions where high-tech industries and knowledge-intensive services are less pronounced (Foundational Economy Collective, 2018).

Considering this economic importance, especially for lagging regions, it is understandable that the Foundational Economy Collective (2018) and others (MacKinnon et al. 2022) criticise the narrow focus of mainstream development approaches on marginal high-tech industries and knowledge-intensive service sectors. Instead, it is argued that regional development strategies should focus on promoting foundational sectors. Foundational sectors guarantee quality of life, maintain living standards and secure jobs. As such, supporting them can help tackle social inequality in lagging regions. In light of socio-ecological transitions and digitalisation, investing in foundational economies can even boost innovation potential, for example, in the smart adaptation of transport and energy infrastructures (Hansen, 2022).

Interest in studying engaged universities as actors in regional development is based on their impact on the regional economy through knowledge transfer, innovation and the generation of spin-offs. Research-driven universities (Lawton Smith and Bagchi-Sen, 2011), for example, Stanford University and MIT, have largely shaped their local economies and have been strong role models for regional development. However, entrepreneurship based on the commercialisation of technological innovations is just one of a range of activities interlinking universities with regional development (Breznitz and Feldman, 2012). Moreover, the Stanford–Silicon Valley model is rarely applicable to non-metropolitan (and lagging) regions (see also Breznitz, 2021; Kempton et al., 2021; Trippl et al., 2015).

Instead of prioritising research in high-tech disciplines, engaged universities in lagging regions are likely to align with regional needs through dedicated third mission activities. Third mission activities (Compagnucci and Spigarelli, 2020) include educational and training programmes suited to the workforce required by the local economy, and consultancy carried out by university staff advising local decision makers and supporting local businesses, civil society and public sector organisations (Kempton et al., 2021; Trippl et al., 2015). Engaged universities might even take over leadership as a regional player in a broad sense (Salomaa, 2019) and contribute to social, political, cultural and civic activities (Goddard et al., 2013). Strengthening universities’ engagement with civil society and social innovation is also a focus of studies on universities in quadruple (research, public, private and civil sector) helix constellations (Bayuno et al., 2020; Benneworth et al., 2020). Overall, engaged universities adapt knowledge generation to the needs of their environment and contextualise their activities. Instead of gaining knowledge primarily through scientific curiosity, knowledge generation responds to regional development (Gunasekara, 2006). In fact, the Silicon Valley model is partly reversed, because the regional surroundings shape the research activities of engaged universities.

Social and community-driven innovation is a development approach for lagging regions which emphasises bottom-up, participatory processes that include people-centred policies and innovation practices (Pires et al., 2020). This also involves the development of new indicators to define and measure determinants of innovation related to the regional and societal transformative impact (Terstriep et al., 2021). With its focus on social needs, social innovation refers to innovations that foster new and more inclusive relations between actors (Howaldt et al., 2015; Marques et al., 2018). Social innovation can be an instrument to empower people, strengthen their place identity and sense of belonging (Butzin and Terstriep, 2022), and stimulate self-help capacities, but can also “fill gaps caused by austerity politics” (Neumeier, 2017, 42).

Even though social innovations arise in all places, there is intense discussion about their potential to develop lagging regions (Christmann, 2020; Noack and Federwisch, 2020, MacKinnon et al., 2022; Tiran et al. 2022). Case studies of peripheral rural areas examine alternative farming (Gramm et al., 2020; Plank et al., 2020) or new forms of civic engagement (Butzin and Gärtner, 2017). Social innovation studies in urban areas focus on prominent examples like fab labs, urban gardening, car sharing or corporate housing that started their diffusion from (prosperous) metropolitan areas across the globe (Avelino et al., 2019). Social innovation is also debated as an instrument to develop neighbourhoods of decline (Moulaert and van den Broeck, 2018; Moulaert et al., 2011) and old-industrial regions (Butzin and Terstriep, 2022; Donaldson and Court, 2011; Gonzáles and Vigar, 2011; Tiran et al., 2022). Policymaking has already incorporated the transformative potential of social innovation for lagging regions: the OECD-series on local employment and economic development addressing disadvantaged places and groups (OECD, 2021) published a methodological framework for building local social innovation ecosystems.

How to initiate change? Change agency from high-tech domains and entrepreneurial ecosystems as catalysts

Alternative development approaches broaden the narrow understanding of economic growth for lagging regions, the importance of that cannot be underestimated. Supporting foundational economies in lagging regions potentially strengthens the quality of local provisions of goods and services, engaged universities question traditional methods of technology transfer and open up activities to local society, and social innovation aims to empower local communities to improve quality of life, which also enhances local identity.

However, the approaches underplay the importance of actors from high-tech domains who act as change agents for regional development and initiate entrepreneurship. Recent studies provide evidence on the change agency of scientists in lagging regions in initiating new development paths. Particularly important are their linkages to region-external knowledge sources and their ability to generate new knowledge (Grillitsch et al., 2022; Marques et al., 2019). Through technology-led research activities, such scientists build a basis for industrial diversification and entrepreneurship through acquiring research grants and anchoring additional tech-oriented research facilities. This potential can be explained as arising from combinations of knowledge (Strambach and Klement, 2012) existing in the region, alignments with knowledge from outside of the region (Nilsen et al., 2022), or the attraction of actors who relocate to the region and bring along their competencies and networks (Hassink et al., 2019).

Grillitsch and Sotarauta (2020) identify a trinity of change agency needed to initiate new growth paths. The first type of agency is innovative entrepreneurship, which is also the output and key agent of entrepreneurial ecosystems (Stam and van de Ven, 2021). Innovative entrepreneurship enables path-breaking discoveries and new specialisations in a Schumpeterian fashion. Institutional entrepreneurship, the second type of agency, enables institutional change as is necessary to realise the opportunities of the discoveries and innovations. Place-based leadership involves the orchestration of multiple actors to the benefit of individual actors and the region, and represents the third type of agency to Grillitsch and Sotarauta (2020, 707–708). Though agency can also be executed by organisations, Grillitsch and Sotarauta (2020) highlight the agency of individuals who become change agents and use opportunity spaces to drive regional structural change.

Through the serial production of innovative ventures with high-growth ambitions, entrepreneurial ecosystems contribute to economic and regional growth, in line with the Schumpeterian understanding of creative destruction (Isenberg, 2011). Mason and Brown (2014, 5) understand entrepreneurial ecosystems as a “set of interconnected entrepreneurial actors, entrepreneurial organisations, institutions and entrepreneurial processes which formally and informally coalesce to connect, mediate and govern the performance within the local entrepreneurial environment”. Specific institutional arrangements of formal institutions, culture and networks, as well as specific resources like talent, knowledge, finance, physical infrastructure and intermediaries, are needed in a region to create productive entrepreneurship (Stam and van de Ven, 2021).

Creating a new entrepreneurial ecosystem is difficult, however, because of the feedbacks from prior entrepreneurial activities that produce crucial ecosystem elements. This “downward causation” (Stam and van der Ven, 2021, 815) augments the institutions and resources required, that is, entrepreneurs form the local institutions they need to succeed (institutional entrepreneurship). For example, successful founders act as role models for new start-ups. This is why Isenberg (2011), in his applied approach to ecosystems, recommends “over-celebrating” successful start-ups, even if only one exists. So, getting an entrepreneurial ecosystem started and having the first start-up success story seems to be particularly difficult, especially in lagging regions with limited entrepreneurial activities and a lack of role models.

Critical appreciation of the three alternative development approaches

As argued above, change agents possess the ability to shape new development paths in lagging regions. Therefore, we argue that the discussion should not be narrowed to the three alternative development approaches, but should include the support of research-based change agents as a further approach. Our plea is motivated by the aforementioned conceptual considerations and this case study’s empirical evidence from the high-tech domain of cybersecurity on the role of change agents in generating a new (that is, unrelated) regional growth path and initiating an entrepreneurial ecosystem.

If applied with rigour, alternative development approaches might deter scientific change agents and regionally unrelated research from locating in lagging regions with potentially negative effects on the regions’ development. An overly narrow engagement of regional universities and research institutions potentially lowers the change agency of research-based innovative entrepreneurship to generate impulses for regional development (Kempton et al., 2021). Engaged universities can enforce homogeneity by prioritising regional demands in research and education at the cost of cutting-edge sciences and high-tech innovation. Furthermore, the perception that high-tech research is best located in prosperous regions might displace conventional innovation actors from lagging regions. Therefore, unintentionally, “over adaptation” to regional needs can be associated with the risk of further polarising regional development between core and non-core regions.

The emphasis on the foundational economy and the local needs of companies and society may shift focus to low-growth sectors and decrease economic diversity and new stimuli of knowledge combinations. If lagging regions concentrate on the foundational economy, their sectoral differences vanish and may only arise from differences in natural potentials. Moreover, the prioritisation of existing industries might not only limit institutional entrepreneurship, but also direct lagging regions towards low growth and old industrial sectors (because of which the regions are lagging).

Social innovation too, is place-sensitive, adjusted to local needs, and “sticky” due to the intense social interactions and practices at its core. Even though there is support for the scaling of social innovation from scientific-analytical and practical-development perspectives, the potential for growth in an economic sense has only been demonstrated in a few examples. Adapting social practices and copying new types of interaction are more prevalent in the diffusion of social innovations (Rabadjieva and Butzin, 2020), but these practices do not generate development effects at the original locus of innovation (Davies and Simon, 2013).

In contrast, new regional growth paths and high-tech entrepreneurial ecosystems tend to provide financial benefits to lagging regions as an export base creates additional local tax revenue (Zademach and Dudek, 2022). It complements the focus on regional demand expressed by the three alternative development approaches that might weaken the export bases in lagging regions and heighten the financial difficulties of the municipalities and local citizens. The foundational economy largely depends on public funds or is based on fees from local inhabitants. Therefore, prioritising alternative development over the development of export sectors tends to reinforce an unbalanced relationship between the needs of permanent regional public funding and regional tax revenue.

Case study methods

The case study of the cybersecurity ecosystem development in the Ruhr indicates how change agency has stimulated a new regional high-tech growth path in a lagging region. We collected the empirical data for the case study in the “InSicht.Ruhr” project, funded by the German Ministry of Research under the “WIR!” programme. “WIR!” funding aimed to initiate change through regional innovation, and only lagging regions were allowed to apply. The intended project outcome had a strong future orientation and focussed on shaping the development of the cybersecurity ecosystem until 2027. In contrast, the empirical material analysed in this case study is about the development of the past 20 years. In the authors’ view, the different perspectives allow an unbiased exploration of the ecosystem’s development, even though there was intensive collaboration between the ecosystem actors and the authors of this study during the InSicht.Ruhr project.

The cybersecurity ecosystem’s analysis followed a mixed-method approach. Semi-structured online interviews formed the core method, primarily to trace the ecosystem genesis. They were triangulated with descriptive analyses of secondary data to assess the current position and impact of the cybersecurity ecosystem on the Ruhr’s economy. The analytical focus is on the cities of Bochum, Essen and Gelsenkirchen as locations of the cybersecurity ecosystem. We interviewed 53 people representing 45 different organisations. In a few cases, there were either two interviewees or two persons from the same organisation were interviewed at different times. Table 1 shows the organisational background, the interviewed experts and the number of interviews.

The interview questions addressed three categories: (i) the evolution of the ecosystem and the relations between its elements, for example, research infrastructure, start-ups, incumbent firms, supporting infrastructure, etc. (ii) Important actors driving the development, their institutional background, role and achievements in order to analyse change agencies. (iii) The ecosystem’s role in the local economy and its performance in comparison to other locations. The interviews were conducted between October 2020 and May 2021 via Zoom. They lasted 1–1.5 h and were protocolled, including the transcription of key statements. The protocols were analysed according to three categories following Kuckartz’s (2012) structured qualitative content analysis. There is a bias in the interview material provoked by conducting interviews with the experts of the ecosystem. Such individuals might be uncritical of the ecosystem’s evolution and performance, as they have contributed to it to a considerable extent. We therefore conducted an additional interview with an internationally renowned scientist in cybersecurity located in another German cybersecurity region (Interview 30). During the interview we reflected on the position of the Ruhr’s cybersecurity ecosystem with the region-external perspective of the interview partner.

Furthermore, we analysed the cybersecurity ecosystem based on quantitative data to substantiate our understanding of its performance and regional impact. In sectoral terms, cybersecurity focuses on the security of connected ICT systems and infrastructures including their communication, applications, processes, data, information, knowledge and intelligence in state organisations, the private sector and households (Pohlmann, 2022). In order to capture employment numbers and enable the comparison with other German cybersecurity regions, we conducted a descriptive analysis of labour statistics. The estimation of employees in the cybersecurity industry is based on the German standard industry classification following Hryhorova and Legler’s (2019) and BMWI (2013) approach. The approach sums up seven ICT sectors relevant for cybersecurity with specific weight factors, allowing a numerical comparison of the economic sectors relevant to cybersecurity. For example, it includes weighted shares of C26.2—Manufacture of computers and peripheral equipment, J58.2—Software publishing, J62—Computer programming, consultancy and related activities and J63.1.1—Data processing, hosting and related activities. However, since cybersecurity is not allocated a specific economic sector in the standard industry classification, the approach tends to measure ICT more generally.

The computer science ranking was analysed to compare the region’s research output to three other German cybersecurity regions (Greater Bonn, Darmstadt and Munich) (see https://csrankings.org). The ranking lists universities and research institutions according to the number of papers presented at key conferences (which is the main scientific output in computer science). Lastly, a company database (Markus database of credit reform) was analysed to count the number of regional cybersecurity firms in the Ruhr alongside snowball sampling of further companies during the interviews.

Case study: cybersecurity in the Ruhr

Coal mining and steel production led to a rapid growth of the Ruhr population in the late 19th and early 20th centuries. With about 5.6 million inhabitants, the Ruhr was an important economic centre for the reconstruction of West Germany after World War II. At the peak in 1957, approximately 600,000 people were employed in hard coal mining alone (Dahlbeck et al., 2021). The complete phase-out of hard coal mining began in the early 1960s and was completed in 2018 (Dahlbeck et al., 2021; Hassink and Kiese, 2021). In reaction to this structural change and job losses, the region experienced several decades of structural change policies, stimulating positive signs of sector development, for example, healthcare in Bochum and Essen and IT in Dortmund. However, the regional population declined to 5.1 million (Regionalstatistik Ruhr, 2022). Today the Ruhr is still underperforming and new sector dynamics cannot compensate for total job losses in heavy industries. The regional unemployment rate of 9.6% remains considerably above the German average of 5.6% (Regionalstatistik Ruhr, 2022; Statistik der Bundesagentur für Arbeit, 2022). Furthermore, Gelsenkirchen and several other municipalities in the region are among the poorest cities in Germany (Dahlbeck et al., 2020). Social and economic indicators highlight the lagging of the region. They demonstrate the economic and social gap between the Ruhr and the German averages and indicate the limited success of generations of regional development programmes, which have failed to accomplish regional catching-up. MacKinnon et al.’s (2022) critique of mainstream regional development approaches is underlined when looking at development in the Ruhr.

Table 2 displays selected variables to clarify if our case study region can be considered as a left behind region. We focus on the three cities, Bochum, Essen and Gelsenkirchen, as the main locations of the cybersecurity ecosystem in the Ruhr. Variables for Gelsenkirchen indicate a left behind city as it is lagging in economic and social terms, for example, the unemployment rate was almost three times the German average in 2022. A low voter turnout and a high share of votes for a populist party in the 2021 national election indicate discontent and negative feelings of being left behind. Bochum and Essen are also lagging behind the national average in economic and social terms (for example, disposal income is negative) but do not show above-average signs of discontent. All three cities share a common heritage of defunct mining and used to host important collieries.

Despite the socially and economically disadvantaged regional context, the interview partners refer to the regional cybersecurity sector by using the term ecosystem (for example, interview 31). They describe it as highly dynamic and excellent in research, and composed of large companies and start-ups, several universities and research institutes devoted to cybersecurity, and relevant promotional and networking organisations. An interview partner even compared the Ruhr’s excellence to Silicon Valley: “Our cybersecurity research between Gelsenkirchen and Bochum is better than in Silicon Valley. We are just very bad at marketing” (Interview 12). Based on the analysis of Creditreform’s Markus database and interviews, we identified 80 cybersecurity companies, nine specialised research institutes and university departments, and five promoter, accelerator and network organisations.

The dynamics spurred by the research and company start-ups are reflected in the latest regional development (smart specialisation) strategy—the Ruhr S3 strategy—in which cybersecurity is in the title of one of the six sectoral specialisations (BMR, 2022). This is a remarkable change to previous regional development strategies in which cybersecurity was not explicitly mentioned (BMR, 2020). The other five strategic specialisations of the S3 strategy, for example, “green technologies, hydrogen and circular economies”, relate to longstanding regional development paths (in this case the mining industry), or belong to the foundational economy, like the specialisation on “health”.

The centre of the cybersecurity ecosystem is the city of Bochum with the Ruhr University Bochum, founded in 1962, and its Horst-Görtz-Institute (HGI) for Cybersecurity, founded in 2002. Along with a privately owned IT Security School founded in 2001, and the Max Planck Institute for Security and Privacy (MPI) founded in 2019, Bochum has three research and higher education organisations for professionals in cybersecurity. Further research and education take place at the University of Duisburg-Essen, the Westphalian University of Applied Sciences Gelsenkirchen, the Hamm-Lippstadt University of Applied Sciences and the Distance-Learning University of Hagen (all located in the Ruhr). The majority of the 80 identified companies are small companies with fewer than 50 employees. There are also three larger firms with more than 250 employees that have headquarters in the Ruhr (G Data and ESCRYPT/Bosch in Bochum and secunet in Essen).

Evolution of cybersecurity in the Ruhr

Despite early economic advances in computer science—especially in the city of Dortmund—it was the establishment of HGI in 2002 at Ruhr University Bochum that laid the foundation of today’s entrepreneurial ecosystem. The establishment of HGI was the result of a random meeting between the donor Horst Görtz (a successful business pioneer in cybersecurity who was not from the Ruhr) and the head of internationalisation of Ruhr University Bochum. The meeting and its implications illustrate the impact of the two agencies innovative entrepreneurship and institutional entrepreneurship. Görtz as an innovative entrepreneur was looking for a university to fulfil his vision of a holistic IT-Security unit but had no specific preference for Bochum or the Ruhr.¹ The envisioned unit was truly novel at the time and was to include an undergraduate course, cutting-edge research and an entrepreneurial orientation. The rector of Ruhr University Bochum, in this role a representative of institutional entrepreneurship, was very supportive, and the Faculty of Electrical Engineering was chosen to host the HGI, because it provided the best fit. At this time, Ruhr University Bochum had no department for computer science. The computer science department was only founded in 2021 due to the success of cybersecurity.

In the early 2000s, Görtz donated 20 million deutschmarks for endowed professorships, the foundation of a first start-up, the creation of a network organisation (the eurobits association) and the establishment of a cybersecurity building close to the university (run by the university and the city of Bochum). It was possible to attract three scientists who subsequently became very successful as HGI professors. All three are German but came from other regions. Two of them returned from abroad (USA and Austria) and one came from the city of Nürnberg to Bochum. A success factor in the early years was the high degree of freedom of research for the first scientists. This enabled them to develop their potential as change agents. One interview partner described the early phase as being characterised by organisational openness and generosity: “The faculty for electrical engineering provided a welcoming setting and even reallocated professorships to cybersecurity. It enabled us to keep successful young scientists. To keep great minds was a strong driver to build up the excellence. In academia, it is by no means common practice to get positions from other disciplines” (Interview 22). Research-wise, electrical engineering was only loosely related to cybersecurity. However, the institutional entrepreneurship, flexibility and generosity of the university and engineering faculty provided a fruitful ground for innovative entrepreneurship agency.

HGI’s cybersecurity undergraduate course was an exotic niche in Germany in the early 2000s and started with about 30 students. As the only undergraduate course at this time, it attracted a highly interested cohort of students, often from the Ruhr. The rising popularity of the course in the early 2000s helped the young HGI to claim additional professorships. Currently, HGI offers one bachelor and three master courses with about 250 incoming students annually (HGI website). Together with the internet security institute at the Westphalian University of Applied Sciences and private education centres, it contributes to the regional pool of professionals (talents). The density of education programmes and the high number of graduates are positive factors encouraging firms to stay or to establish branches in the Ruhr (Interview 14). Over time, HGI has become an institutional change agent as an anchor institution. It co-developed framework conditions in the ecosystem and promoted the founding of business accelerators and appropriate technology transfer. HGI generates one new start-up per year on average (the founders are usually PhD graduates), which is well above other German technology-oriented research institutes (Bundesverband deutsche Startups e.V., 2020). Furthermore, HGI acquired national funding to establish a first graduate college in 2012 (a second graduate college followed in 2019), and a cluster of excellence in 2017 (30 million euros for 7 years). There are two relevant start-up promoters which we consider as change agents: CUBE5, a cybersecurity incubator funded by the German Research Ministry and the ruhrHUB. The ruhrHUB supports entrepreneurship in the entire digital economy and is funded by the federal state of North Rhine Westphalia and the Ruhr municipalities.

Three generations of start-ups can be identified since 2002, summarising the innovative entrepreneurship type of agency in the entrepreneurial ecosystem. Three firms founded between 2005 and 2011, constitute the first generation. The first generation is characterised by strong connections to the HGI, as leading academics were involved in the start-ups. For example, the automotive security company ESCRYPT was co-founded by one of the first three professors, who later became one of the founding professors of the MPI. All three start-ups were later acquired by global players (Google, Rohde and Schwarz, Robert Bosch). Bosch’s acquisition of ESCRYPT underlines the local cybersecurity strengths. Not only has ESCRYPT remained in Bochum, indeed Bosch’s entire cybersecurity branch is now located there. Bosch is currently building a large headquarters in Bochum to ensure access to professionals (ESCRYPT, 2021). The second generation (eight start-ups) was founded between 2012 and 2016 and is characterised by diverse business models. Among them are the start-ups Physec, specialised in IoT-security, and ripstech (now belonging to sonar source), specialised in automated code security analyses. Here the founding of businesses took place following the completion of PhDs at HGI and involved the commercialisation of PhD results. Another example is the start-up XignSys, specialised in digital identification and user trust, which is a spin-off of the Westphalian University of Applied Sciences and part of a smaller cybersecurity location in the city of Gelsenkirchen. Eleven start-ups are identified in the third generation (founded between 2017 and 2021), with some start-ups still in their incubation phase. Some of their founders have regional academic affiliations and come from the HGI, the University of Duisburg-Essen and the Universities of Applied Sciences, while some were founded in the Ruhr because of accelerator programmes (especially CUBE5) or are spin-offs from the established first start-up generation.

Studying the genesis of the generations of start-ups reveals the striking downward causation, that is, the feedback of previous entrepreneurial activities into ecosystem elements (Stam and van de Ven, 2021), which can be traced back to the founding of the HGI. Most first- and second-generation start-ups are spin-offs from HGI or otherwise related to the institute. The early entrepreneurs are role models for the second and third generations of founders, some became serial founders and some act as business angels following the sale of their companies. One example is the second co-founder of the ESCRYPT company, who is now a managing partner of eCAPITAL, a fund that invests in deep tech and cybersecurity start-ups (eCAPITAL, 2021). The co-founder has a technical and business background, is a pioneer in cybersecurity, was involved in setting up secunet in the 1990s and knows the later HGI professor from a meeting in the USA, where he approached cybersecurity researchers in search of new business opportunities (Interview 12). This is why the HGI professor and first co-founder of ESCRYPT invited him to Bochum to manage the first start-up, which was sponsored by Görtz and initially did not perform well. Following the turnaround at this start-up and the founding and sale of ESCRYPT to Bosch, he became the managing partner of eCAPITAL and further invested as a business angel in several second-generation start-ups (Interview 22).

The municipalities Bochum, Essen and Gelsenkirchen and their business promotion agencies also contribute to the development of the ecosystem with general start-up support. Especially the city of Bochum supported cybersecurity and the HGI early on. Together with partners, the city runs the cybersecurity building sponsored by Görtz and another important technology centre at the campus of the University of Bochum, where several cybersecurity start-ups had their first office (the technology centre is not exclusively dedicated to cybersecurity) (Interview 22). However, it is only since around 2018 that the municipalities’ agency has become visible as all three cities began to communicate about the growth potential of cybersecurity and participate in and co-initiate development projects. One example is the sector promotion project coordinated by the eurobits association, which is co-funded by the European fund for regional development (eurobits, 2023). With dedicated sites for cybersecurity, all three cities now try to attract cybersecurity companies.

Current position and development impact of cybersecurity in the Ruhr

In addition to the Ruhr, the interviewees describe the Saarland, Bonn, Darmstadt and Munich as the most important cybersecurity regions in Germany (for example, Interviews 10 and 22). Like the Ruhr, the Saarland is also an economically lagging region according to the EU state aid areas, which are eligible for regional investment aid (Clausen, 2021). Bonn, Darmstadt and Munich, and their surroundings, are prosperous regions, with GDP per capita well above the European average.

Table 3 displays the key quantitative indicators of the regional comparison. Judged by the proportion of cybersecurity employees subject to social security relative to all employees of the region, the Ruhr shows approximately national average sectoral specialisation at 0.39% (Table 3). At 1.35%, Munich is much more specialised in cybersecurity. With 61% employment growth in cybersecurity in the Ruhr, development was below the national average of 72% from 2008 to 2020. The same holds true for the lagging Saarland with only 33% growth. The three prosperous regions show private sector specialisation in cybersecurity and average growth of cybersecurity employees.

The analysis of the reputational global computer science ranking confirms the Ruhr’s (Bochum’s) research excellence in cybersecurity, with HGI at place nine and MPI at place 29. Saarland (CISPA) at place two and Darmstadt (15th place) also host world-leading research facilities in cybersecurity. The cybersecurity regions Bonn and Munich fall behind substantially according to these rankings that measure success in basic research. According to the statistics of the Bundesverband deutsche Startups (2020), with 14 start-ups in 10 years, the Ruhr cybersecurity ecosystem performs comparatively well. It outperforms Darmstadt and Hessen, where Frankfurt is usually also a hotspot for start-ups, but falls behind the start-up hotspot Munich which had 35 firms.

To fully understand the ecosystem’s contribution to regional development, the impact of cybersecurity on regional identity needs to be considered, too. Cybersecurity actors identify strongly with the ecosystem, be they founders, employees, scientists, municipal employees or local politicians. They are proud of the research excellence and distinct start-up activities as a common achievement. One interview partner, CEO of a start-up, puts it as follows: “The competitive strength is the complete value chain in the region. We have research, very large companies, start-ups and accelerator programmes to promote business ideas. You won’t find that anywhere else. This is really the core of it all. We managed to have everything from education to M-DAX companies” (Interview 1). Interviewed senior employees of incumbent firms also proudly acknowledge the positive developments over the last twenty years: “Over the years, we managed to be well positioned with a strong research base that generates start-ups. We’ve had a very different starting base than the other cybersecurity regions. They had large players, such as the Telekom in Bonn, we started from scratch” (Interview 10). Some of the senior employees actively engage in the ecosystem development, for example, as members of network organisations. The recent project “eurobits women academy” was co-developed by the Head of Public Affairs of secunet and the project InSicht.Ruhr was strongly supported by a senior computer scientist from G Data.

For residents, this dynamic development is visible in the built environment. Cybersecurity activities cluster at several sites in the Ruhr. The centrally located 70-ha area Mark 51°7 in Bochum—a brownfield from the abandoned Opel car factory—is being developed as a cybersecurity campus. The new MPI, university labs and several cybersecurity companies like ESCRYPT/Bosch and start-ups like Physec will be located there (Bochum Perspektive, 2021). Mark 51°7 has received considerable attention from local media and residents, as Opel was an important employer in Bochum (Bochum Perspektive, 2021). Local pride is related to cutting-edge research, as indicated by the new tram line to Mark 51°7. One tram stop is called “Max-Planck-Institut”, even though the new building for the MPI is yet to be built there. The cybersecurity developments are also frequently discussed in regional newspapers, for example, the “Westdeutsche Allgemeine Zeitung—WAZ”, named the Ruhr as a “European hotspot in cybersecurity” (WAZ, 2022). Considering these observations, we argue dynamic ecosystem development, even within a niche, is important for the regional identity of inhabitants in old-industrial left behind places. This seems plausible, because the inhabitants’ identity has been shaped by (positive/negative) economic developments for decades (Abreu and Jones, 2021; MacKinnon et al., 2022).

Discussion

Our critical discussion of new and alternative development approaches for left behind places was motivated by the successful development of the cybersecurity ecosystem in the lagging old industrial region of the Ruhr. 22 start-ups were identified as having been founded between 2002 and 2020, among them several fast-growing companies like ESCRYPT and Physec; this demonstrates the verifiable output of the ecosystem. Ecosystem elements have been established, like business angels (financial), a network of entrepreneurs, scientists and business professionals, and related promoting infrastructure like accelerators and network organisations. Especially the specialised and in some cases globally excellent research organisations (knowledge), which continuously generate graduates (talents), tend to be important resources of the ecosystem that also attract branches of incumbent companies to the region (Interview 14).

Despite the lively entrepreneurial ecosystem, private sector activities in cybersecurity have limited effects on the Ruhr’s industrial structure from a quantitative point of view. Regarding the ca. 7000 persons employed in cybersecurity, we identified an average regional sector specialisation in the Ruhr and strong but below-average growth (see Table 3). Cybersecurity itself is still a niche market, though one that is growing rapidly (Bitkom, 2020; Hryhorova and Legler, 2019). In large part, this explains the limited effect of the ecosystem on the industry structure. The several thousand newly created jobs in cybersecurity barely compensate for the hundreds of thousands of jobs lost in coal mining and steel. However, the public sector employment of the universities and research institutions (for example, the MPI will host over 200 researchers when fully established) and the employees of the accelerators, network organisations and business promoters, cannot be captured with our statistical analysis. Nevertheless, they contribute substantially to the income and employment impact of the cybersecurity ecosystem on the region.

The outline of the genesis of the cybersecurity ecosystem identified the initial push and trigger for today’s ecosystem as coming from research, through the founding of HGI at a time when cybersecurity was a niche topic. Initial research funding was the reason why talented researchers and entrepreneurs (or both in one person) settled in, returned to or remained in a lagging region and subsequently became change agents. We identified the change agency of innovative entrepreneurship (entrepreneurial professors, first generation of founders) and institutional entrepreneurship (a willingness to initiate change in the case of the university, HGI’s development as an anchor player and the founding of supporting infrastructures) as early drivers of ecosystem development. Place-based leadership and orchestration attempts by municipal actors can only be identified after initial successes in developing the ecosystem. Attracting researchers and research-oriented entrepreneurs to lagging regions increases the likelihood that such change agents will stimulate new development. Furthermore, the Ruhr case indicates that cutting-edge science and high-tech sectors contribute to peoples’ positive identification with a lagging region.

Against this background, while applauding the new attention being paid to left behind places and the emphasis on quality of life and social development goals of alternative development approaches, we see a danger that cutting-edge (publicly funded) research and high-tech sectors are left behind. This would discard the considerable change agency potential of science for initiating new growth paths, as identified in the cybersecurity case study. Conceptually, focussing on the foundational economy, social innovation and regional needs tends to amplify homogeneous (economic) structures in lagging regions. Equally, new impulses for regional development may be minimised if universities “over-adapt” to their lagging region.

In the case of the Ruhr, ecosystem development depended heavily on public funding, be it for the permanent research positions, third-party-funded research projects, the start-ups’ support activities or the regional development projects. Although initiated by a private donation by Horst Görtz, interview partner 22 estimates that the HGI has to date consumed over 100 million euros of permanent public funding. Considering the tremendous costs of developing the cybersecurity ecosystem and the limited direct benefits for other Ruhr residents, alternative development approaches may rightly criticise the inefficiency of high-tech development strategies for left behind regions.

To counter this argument, first, only a very small percentage of the public money spent on the cybersecurity ecosystem is actually funded by the municipalities of the Ruhr, whose financial contribution is, for example, provided by their shares in state-funded regional development projects. Rather, the cybersecurity researchers raise funds in national and EU research competitions. These funds would otherwise be spent in other regions. Cutting-edge and high-tech R&D is costly, be it in prosperous or in left behind regions. Not leaving high-tech behind actually offers a chance to get a share of the huge budget available for frontier research and to direct this money into left behind regions.

Against this background, this cybersecurity case study provides qualitative evidence for the controversial debate on the effectiveness of research and innovation activities in lagging regions (Fritsch and Wyrwich, 2021b; Kriegesmann et al., 2019; Pinheiro et al., 2022; Rodríguez-Pose and Wilkie, 2019). The research investment created research excellence, innovation, several start-ups and a new sector in the Ruhr. With our research design, we cannot clearly answer whether this money would have had stronger effects in prosperous regions. As indicated, HGI tends to perform well in terms of start-ups compared to other German technology-oriented research institutes. However, cybersecurity as a new industry may just offer particularly many opportunities for the commercialisation of research results.

The assessment of the efficiency of high-tech development strategies in left behind regions must also consider the expenditures for alternative development approaches that depend on permanent public funding. Out of this funding, a substantial share needs to be financed by the municipalities, at least in the German case. Hence, sufficient local tax revenue is a supporting factor for the foundational economy and depends on private sector profits. Without denying the importance of the foundational economy for regional economies and quality of life, development strategies that focus solely on this economy have risks from a fiscal point of view. In Germany, for example, certain funding comes from national budgets, like cutting-edge research (for example, Max Planck institutes), but also funding for specific foundational activities like higher education institutes and hospitals. However, other activities of the foundational economy need to be financed primarily locally, like transportation, local culture and recreational facilities. Their extent and quality depend on permanent funding by municipalities and hence municipalities’ tax incomes. Trade tax generates the largest revenue of all local taxes in Germany (BBSR, 2020) and is only paid by commercial activities. Therefore, the spatial-fiscal linkages should be taken into account when evaluating development strategies for left behind places.

Conclusion

We identify three potentially negative effects of the alternative development policies for left behind regions. First, the emphasis on alternative development and well-being might lead to the perception that high-tech development and related research are misplaced in left behind regions and that high-tech industries cannot develop there (see for the debate Fritsch and Wyrwich, 2021a). This would be a mistake, as demonstrated by the cybersecurity case study from the former mining area of the Ruhr. Today, the Ruhr’s cybersecurity ecosystem hosts cutting-edge international research institutes, cybersecurity subsidies of incumbent companies and fast-growing high-tech start-ups.

Second, in line with Marques et al. (2019), the case study indicates that high-level research and development opportunities can attract change agents and develop new (unrelated) growth paths in left behind regions. This observation challenges the proclaimed regional focus of engaged universities. If engaged universities predominantly focus their research and teaching on the needs of the low-growth or even declining regional industry and of regional society, their ability to develop new impulses, technologies and sectors is reduced (Kempton et al., 2021).

Third, research institutes and high-tech companies of the Ruhr’s cybersecurity ecosystem contribute to positive regional identity, boost the regional image and partly compensate for the loss of identity that can accompany industrial decline (Abreu and Jones, 2021; Butzin and Terstriep, 2022; Tomaney et al., 2019). Hence, it cannot be argued that only alternative development approaches foster identification and belonging as positive effects for regional inhabitants.

Our paper suggests a combination of alternative development approaches and the support of change agency from high-tech domains to develop left behind regions. In this combination, the impulses from the alternative development debate should not be considered as a rejection of conventional innovation and high-tech-based approaches. Future research is needed to assess the frequency of successful change agents from science in left behind places.

Acknowledgements

We are grateful for the valuable comments of two reviewers and the editors of the special issue, which further improved the paper. We acknowledge the financial support of the Ministry of Education and Research and thank our interviewees. We also acknowledge the support of Tereza Hejnová and the entire InSicht.Ruhr team who contributed to this article with data, sector knowledge, inspiration and access to interview partners. We acknowledge the valuable comments on earlier versions of this article by Jessica Palka and Katharine Thomas as well as of the participants of the RSA e-festival 2022 session on “Adapting and (re)developing ‘left behind’ places”, and of the GCEG 2022 session on “Policies for ‘left behind’ places”.

This work was supported by a research grant from the German Federal Ministry of Education and Research [grant number: 03WIR5101A].

References

Footnotes