institutions, as well as to develop a conceptual model that illustrates the interaction between institutions and socioe conomic development. The object of this particular study is economic, political and value institutions. The methods of the study are: logical and comparative analysis of the literature, synthesis and deduction. Institutions and economic developmentInstitutional economics stresses the crucial role of insti tutions in economic performance. It has been argued that such factors as innovation, economies of scale, education, or capital accumulation are not the causes of growth, but represent the growth itself, and that political and economic institutions are the fundamental cause of differences in economic development.At the end of the 20th century, economic thought has re turned to the analysis of the institutional environment. This shift has been influenced by the collapse of communism, the transition from socialism to capitalism in postsoviet Abstract. The purpose of the article is to survey the significant literature on the role of institutions -formal and informal constraints that affect investment in physical and human capital -in economic performance and propose a new, comprehensive definition and classification of institutions, as well as to develop a conceptual model to illustrate the interaction between institutions and socioeco nomic development. The literature shows that institutions played an important role in facilitating technological progress and leading the world into the modern economic regime. Moreover, quantitative research proves that institutions significantly impact socioeconomic performance around the globe.

Adoption of innovation plays a crucial role in the transformation of the countryside towards a knowledge economy. However, rural SMEs experience various obstacles that hinder the adoption of innovation. The aim of this paper is to identify the main challenges and opportunities for the introduction of innovation in rural SMEs. The evidence is drawn from relevant literature and stakeholder discussions covering six European countries (Bulgaria Czech Republic, Hungary, Italy, Latvia and Slovenia). The main challenges in adopting innovation in rural SMEs are shortcomings in the environment for innovation, inappropriate innovation policies and support measures, lack of knowledge and skills within companies, difficulties to hire a new skilled work force and low competitiveness compared to urban counterparts. Consequently, policy recommendations are proposed for promoting innovation in rural SMEs by focusing on cooperation and networking, information and training, innovation support programmes, marketing and sales promotion and availability of workforce. DOI: http://dx.doi.org/10.5755/j01.ppaa.18.1.23134

Abstract:Rural territories face significant challenges in a globalised world as the number of jobs in traditional rural sectors are decreasing. At the same time, information and communication technologies as well as the changes in professional duties allow the rural community to participate in the knowledge economy distantly. In order to evaluate the potential of telework 1335 inhabitants (0.07% of the population) were surveyed in Latvia. A detailed analysis was conducted in two rural municipalities (Balvi and Limbazi) that face different socio-economic challenges. The results of the survey show a high demand for telework in Latvia rather insensitive to the gender, age and the place of residence of the respondents. People in less populated areas are also interested in socialising and professional networking activities in smart work centres -special premises for teleworking.Keywords: telework, distant work, rural development, regional development Kopsavilkums: Mūsdienu globalizētajā pasaulē lauku teritorijas saskaras ar būtiskiem izaicinājumiem, jo darbavietu skaits tradicionālajās lauku nozarēs samazinās. Tai pašā laikā informācijas un komunikāciju tehnoloģijas, kā arī pārmaiņas darba saturā un organizācijā ļauj lauku kopienām piedalīties zināšanu ekonomikā attālināti. Lai novērtētu attālinātā darba potenciālu, tika aptaujāti 1335 jeb 0,07% Latvijas iedzīvotāju. Detalizēta aptaujas rezultātu analīze tika veikta divās lauku pašvaldībās (Balvos un Limbažos), kas saskaras ar atšķirīgiem sociālekonomiskajiem izaicinājumiem. Aptaujas rezultāti liecina, ka Latvijā ir augsts pieprasījums pēc teledarba iespējām, kas saglabājās līdzvērtīgs neatkarīgi no respondentu dzimuma, vecuma un dzīvesvietas. Cilvēki mazāk apdzīvotos reģionos ir arī ieinteresēti socializēšanās un profesionālas tīklošanās aktivitātēs attālinātā darba centrostelpās, kas veidotas teledarba veikšanai.

Key societal challenges are cross-sectoral and do not correspond to administrative structures. The policy coordination enables synergy or at least prevents overlapping and conflicts of sector policies, which is increasingly important due to growing complexity of many policy issues. The article analyses the notion of policy coordination and offers a classification of the types of policy coordination. It also evaluates the policy coordination in Latvia by analysing national legislation, policy papers and the opinion of public administration officials. Consequently, the article proposes solutions for increasing the policy coordination in Latvia.

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The competitiveness of rural SMEs is low due to economic inefficiency and the lack of innovations. The main challenges faced by rural SMEs are the limited scale, the distance form larger sales markets, R&D and business support institutions, and the lack of innovative spirit. The circular and bio-economies are shaping the rural SMEs towards the environmentally friendly and eco-efficient production, the minimization of the generation of waste and less use of natural resources. This potential of the adoption of new business models within rural SMEs is not fully observed.The aim of this research is to analyse the opportunities of rural SMEs in introducing the innovative business models driven by the circular economy. This research explores the innovative business models of rural SMEs that transform the environmental challenges in business opportunities and keep a balance with the growing consumption needs. The results of the research are of both theoretical and practical value, providing recommendations for facilitation of innovative business models within rural SMEs. The research methods: desk research, statistical analysis, a grounded theory approach, case study, primary data gathering through seven focus groups with more than 200 stakeholders from six European countries.

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