As a response to the grand societal challenges reflected in the United Nations Sustainable Development Goals (SDGs), the transition towards sustainability has gained momentum in recent years, as has the debate on mission-orientation in innovation policy. Harnessing the positive transformation potential for innovation, is about collaboratively exploring complex and uncertain pathways, especially when the goal is sustainable local economic development. Nevertheless, the demand for participatory approaches posed by the re-emergence of mission-orientated innovation policy, and the conditions for their successful implementation at the local level, particularly in the framework of economic development, are poorly understood and not yet in the focus of the current debate. This article conceptualises participation as a new mode of governance for sustainable local economic development, and links it to mission-orientation in innovation policy. We differentiate forms, degree of involvement and target groups, as well as highlight the underlying rationales and modes of interactions. Based on action-research carried out over three years in the city of Bottrop, Germany, we conceptualise an ideal-typical practice of participatory governance. Our findings show that firms are willing to participate in sustainable local economic development, only if they can internalise at least part of the value-added.
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