Abstract
Recent regional development research increasingly emphasises agency, yet the role of investors as active agents of territorial transformation remains underexplored. This paper introduces and develops the concept of patriotic capital, defined as the propensity of local capital owners to prioritise investment within their home region even when higher returns may be available elsewhere. Building on evolutionary economic geography, regional innovation systems approach and capital theory, the study conceptualises patriotic capital as a multi-dimensional form of agency operating through instrumental, strategic, and philanthropic motivations. The paper advances an analytical framework that examines how these motivations intersect and how investments generate conversions among economic, social, symbolic, and institutional forms of capital. Such capital combinations can produce embedded regional advantages, strengthen local innovation systems, and anchor firms structurally and socially within regional economies.
Introduction: Investors as agents in local and regional development
The concept of agency has gained considerable traction in regional development studies (Grillitsch and Sotarauta, 2020; Jolly et al., 2020). However, only a few studies have focused on the agents of micro-level change processes in regional development (Calignano and Nilsen, 2024). Regional economic development is often predicated on the availability and mobilisation of capital. Although conventional economic models emphasise rational investment decisions driven by factors such as resource availability and market accessibility, empirical evidence indicates that non-economic factors also play a significant role. This paper investigates the phenomenon of patriotic capital, defined as the propensity of local capital owners to prioritise investment within their own local or regional area even when more lucrative opportunities exist elsewhere (Grillitsch et al., 2022). Our reflections suggest that patriotic capital can function as a key enabling factor in local and regional development, sustaining investment despite shortages of traditional resources such as human and financial capital, as well as geographic disadvantages related to market access and supply chains. These observations challenge purely rational-choice models and highlight the importance of socio-spatial dimensions in investment decisions, particularly the influence of local loyalty and place-based identity on regional economic trajectories.
Despite extensive evidence of national-level patriotic influences on investment behaviour – particularly in the United States, where such tendencies are often associated with more conservative ideological positions (Allison, 2021) – regional and local forms of patriotic capital remain comparatively underexamined. Morse and Shive (2011) argue that investment decisions are shaped by socio-spatial characteristics that extend beyond aggregate expectations and conventional risk preferences, pointing to the existence of regionally embedded investor loyalty. They further emphasise the uneven spatial distribution of patriotic sentiment, raising the question of whether investment decisions may also function as a form of political action at the regional scale.
Theories in Evolutionary Economic Geography (EEG) and regional development scholarship have emphasised agency and the role of local and regional actors in shaping economic trajectories (Calignano and Nilsen, 2024; Jolly et al., 2025). This paper examines investors as agents of change through the analytical lens of patriotic capital. Many frameworks still treat capital as a passive, mobile resource, offering limited explanations for how peripheral regions sustain investment despite global market disadvantages. By conceptualising local and regional patriotic capital as a constructive mechanism fostering localised development dynamics, we argue that local investment represents not a market friction but a form of transformative agency that anchors wealth and supports endogenous development. Patriotic capital also provides a lens through which communal identity can help buffer regional futures from global market volatility, acting as a bridge between place-based identity and the structural stability of regional ecosystems.
Theoretical foundations: Capital and agency
Extensive research examines investments and risk capital in global innovation hotspots (Miller, 2022). The uneven spatial distribution of venture capital (VC) is typically explained from the supply side, emphasising the clustering of VC firms in established ‘VC hubs’ and their preference for geographically proximate investments (Colombo et al., 2019). As a result, venture capital remains scarce in less prosperous or peripheral regions, a gap often addressed through public VC initiatives (Vogelaar and Stam, 2021). Nevertheless, some capital owners prioritise regional investments despite potentially higher returns elsewhere. Grillitsch et al. (2022) apply the concept of patriotic capital to local and regional dynamics, highlighting that this form of capital extends beyond purely economic interpretations.
Capital beyond finance: Human, social, and cultural dimensions
Recent scholarship recognises that fiscal metrics alone cannot adequately explain complex socio-economic outcomes. This has led to a multidimensional expansion of capital theory encompassing individual, collective, and symbolic resources. Human capital, defined by Becker (1964) as the aggregate of an individual’s knowledge, skills, and experience, enhances both personal and systemic productivity. Education, training, and similar personal investments thus function as capital, generating returns over time comparable to investments in physical assets.
While human capital centres on the individual, social capital refers to resources embedded in relational networks. Putnam (2001) demonstrates that such networks are characterised by trust, reciprocity, and shared norms that enable coordinated action and mutual benefit. Complementing these forms is cultural capital, which describes as non-financial assets – including educational credentials and linguistic or aesthetic dispositions – that confer status and facilitate social mobility. Crucially, Bourdieu emphasises the convertibility of capital across these forms.
Within this expanded typology, patriotic capital can be conceptualised as a specific dimension of social or symbolic capital. Its value does not derive from immediate financial gain but from affective attachment and, at times, a sense of communal responsibility. This perspective offers a rational explanation for behaviour that conventional economic models might label ‘irrational’, such as favouring local reinvestment despite lower marginal returns. In such cases, actors optimise not solely for profit but for the preservation and prosperity of their community. Patriotic capital thus embodies agency (Grillitsch and Sotarauta, 2020): individuals make deliberate, value-driven investment choices rather than responding exclusively to market incentives.
Agency in regional development and investment decisions
Regional development studies, particularly the path development literature, have increasingly emphasised agency in its various forms (e.g. Bækkelund, 2021; Calignano and Nilsen, 2024; Gong et al., 2022; Grillitsch and Sotarauta, 2020; Uyarra and Flanagan, 2022), although the concept remains insufficiently specified. Scholars commonly distinguish between agency – the inherent capacity to act – and agents, the actors who exercise this capacity within specific spatial and temporal contexts (Doloreux et al., 2025; Jolly et al., 2020). This distinction highlights the need to move beyond abstract conceptualisations of agency and to examine more closely how different types of actors mobilise resources, interests, and institutional opportunities to shape regional development trajectories.
In regional development research, agency typically concerns how actors engage with and reshape historical economic, social, and institutional structures (Nilsen et al., 2022; Steen, 2016). This perspective underscores the ability of diverse agents to influence development trajectories, even under structural constraints. Investors can exercise considerable agency in steering regional development. By aligning their capital with local needs, they can play a decisive role in determining a territory’s long-term economic path.
A more nuanced understanding of endogenous processes shaping divergent development paths is still needed (Benner, 2023). One underexplored dimension concerns capital – especially access to risk capital – and its spatial distribution. Although regional development often depends on such resources, their flow is not geographically neutral but mediated by investors’ orientations and preferences.
The concept of home bias describes investors’ tendency to overweight domestic assets despite potential gains from international diversification (Morse and Shive, 2011; Obstfeld and Rogoff, 2000). This bias also appears at local scales, where investors favour firms in close geographic proximity (Rutterford et al., 2017). Ardalan (2019) identifies four main explanations: hedging domestic risk, investment barriers, information asymmetries, and behavioural biases. Yet none fully accounts for the phenomenon, which appears to arise from an interplay of rational and behavioural factors. Although Ardalan (2019) examines public equities, similar spatial preferences characterise venture capital. Venture investment literature consistently documents localised bias, linking founders and investors not only through financial interests but also through shared participation in regional innovation ecosystems.
In sum, patriotic capital provides an analytical lens for reassessing investor motivations. Rather than acting solely as profit-maximising market participants, investors and venture capitalists may exercise localised agency that privileges regional development alongside financial returns. Operating under a dual mandate – balancing economic viability with social and emotional dividends – they anchor capital within local ecosystems and thereby strengthen regional resilience and development.
Patriotic capital: Motivations and investment rationalities
We define patriotic capital as the propensity of local capital owners to invest within their own region even when alternative opportunities may promise higher financial returns. To develop a more nuanced understanding of this phenomenon, we distinguish three analytically separate yet interrelated motivations underpinning patriotic capital: instrumental, strategic, and philanthropic. Each highlights a distinct dimension of the concept and captures different rationalities guiding local investment decisions.
Instrumental motivations
Instrumental motivation refers to investments that function as a means to achieve specific operational or organisational objectives. In this sense, local investments are undertaken not solely out of altruism or identity-based attachment, but because they serve practical purposes aligned with a firm’s longer-term interests. For example, companies operating in peripheral regions may invest in developing local supplier networks, housing, or training systems that fall outside their immediate core business. By strengthening local support structures and ensuring geographical proximity to key functions, firms can reduce costs related to commuting, transport, and logistical vulnerability. Such investments may also lower operational risks and enhance stability by embedding essential capacities locally rather than relying on distant external actors.
Instrumental patriotic capital is thus closely linked to the logic of shared value, as it combines local development effects with company-specific benefits. However, unlike purely philanthropic motivations, instrumental investments are associated with some expectation of return, even if indirect, long-term, or risk-reducing rather than immediately profitable.
The debate on local content in peripheral or resource-rich regions (Nilsen, 2017; Ovadia, 2016; Tordo and Anouti, 2013) is closely connected to instrumental motivations. Local-content policies aim to ensure that investments generate benefits for local labour, suppliers, and businesses, particularly in sectors such as energy, mining, and infrastructure. While such policies are often regulatory, investors may voluntarily align with them – even in the absence of strict enforcement – because doing so strengthens regional systems on which their own operations depend. In this sense, instrumental motivations help explain why local investors or firms may prioritise regional engagement out of both loyalty and pragmatic self-interest. Although financial return remains relevant, these investments simultaneously enhance infrastructure, labour recruitment, and long-term operational resilience.
Strategic motivations
Strategic motivations refer to investments that advance broader organisational goals, including reputation-building, stakeholder management, and long-term market positioning. Local investments can improve a company’s public image and demonstrate commitment to corporate social responsibility (CSR), thereby generating goodwill among customers, governments, and local communities. For instance, firms in the Norwegian energy sector have invested in renewable energy projects and educational initiatives in underserved regions to strengthen their reputation as socially responsible actors (Ringholm, 2017). Similarly, investments aligned with environmental, social, and governance (ESG) criteria may help firms meet regulatory expectations and respond to stakeholder demands (Nilsen and Karlstad, 2016).
Investing in regions that align with government priorities – such as rural development or job creation – can also generate political goodwill, potentially leading to favourable policies, tax arrangements, or future contracts. This is particularly relevant in sectors where firms extract natural resources: reinvesting in local schools, healthcare facilities, or infrastructure can reduce resistance, foster trust, and secure smoother long-term operations. In such cases, regional investment strengthens both legitimacy and operational continuity.
Strategic motivations also encompass long-term competitive positioning. Firms may enter regions with limited immediate returns because they anticipate future growth, rising incomes, or expanding demand. Early investment can secure brand loyalty, establish partnerships, and create first-mover advantages before competitors arrive. Companies may also seek access to critical natural resources, raw materials, or specialised labour essential to their production systems. Investments in mining operations in peripheral areas to secure minerals such as lithium or cobalt illustrate how long-term strategic considerations can outweigh short-term profitability. Thus, even where immediate economic returns are modest, investments may serve broader strategic objectives that reinforce corporate competitiveness.
Philanthropic motivations
Philanthropic motivations represent a third dimension of patriotic capital and are characterised by limited or no expectation of direct economic return. These investments are driven primarily by emotional attachment, ethical commitments, or a sense of responsibility towards a particular region. In such cases, investors prioritise collective welfare, regional development, or national pride over financial optimisation.
Peripheral regions, often marked by geographic isolation, weaker economic structures, and limited access to services, present specific social challenges. Firms operating in these contexts may feel a moral obligation to contribute to local development, particularly where communities experience structural disadvantages. Philanthropic investments may include funding education, healthcare, cultural initiatives, or community infrastructure (e.g. schools, cultural activities, health facilities) to enhance the quality of life for local residents.
From a critical perspective, philanthropic engagement may also reflect alignment with corporate values centred on sustainability, inclusivity, and community well-being. Companies that publicly emphasise ESG commitments increasingly report on environmental footprints and social impacts, reinforcing the normative dimension of such investments. Furthermore, firms with supply chains rooted in peripheral regions – such as agriculture, aquaculture, mining, or manufacturing – may invest philanthropically to support communities integral to their operations, particularly when those communities face systemic challenges.
This dynamic can be interpreted through the ‘shared value’ approach (Menghwar and Daood, 2021), whereby firms address societal problems in ways that also reinforce long-term business sustainability. For example, investments in renewable energy in peripheral areas may simultaneously meet local energy needs and demonstrate environmental leadership.
Analytical framework: Converting and combining forms of patriotic capital
Patriotic capital becomes developmentally transformative when instrumental, strategic, and philanthropic motivations intersect. When multiple drivers operate simultaneously, investments generate layered capital effects that deepen firms’ embeddedness in regional systems, strengthen local capacities, and contribute to more resilient development trajectories.
At the intersection of strategic and philanthropic motivations, economic capital is simultaneously converted into symbolic legitimacy and reputational advantage, producing what may be termed civic branding. Firms that sponsor regional cultural initiatives, environmental restoration projects, or educational programmes enhance community well-being while strengthening corporate recognition, aligning symbolic capital accumulation with long-term strategic positioning.
Where instrumental and strategic motivations overlap, investments generate embedded advantage, transforming operational expenditures into both human capital and institutional influence. For example, a technology firm establishing joint research laboratories with regional universities secures access to skilled labour (instrumental) while positioning itself as a central actor within the regional innovation system (strategic), thereby accumulating both productive and relational capital.
The intersection of instrumental and philanthropic motivations produces mutual-benefit capital, in which investments simultaneously strengthen operational resilience and address societal challenges. A logistics company financing regional transport infrastructure improves community accessibility while increasing supply-chain reliability, converting financial investment into both social goodwill and operational efficiency.
When instrumental, strategic, and philanthropic motivations converge, investments function as anchor investments, generating simultaneous conversions into economic, social, symbolic, and political capital. Examples include firms establishing regional innovation campuses that integrate workforce development, community facilities, and operational hubs. Such investments embed firms structurally, socially, and institutionally within the region, reducing capital mobility and reinforcing long-term territorial commitment.
Viewed through a Bourdieusian lens of capital convertibility (Bourdieu, 2018), patriotic capital reveals that localised investment is not merely a behavioural bias but a structured process through which financial resources are transformed into durable place-based assets. Continued investment in peripheral regions can therefore be interpreted as the cumulative outcome of capital conversions that bind firms economically, socially, and symbolically to specific territories, allowing patriotic capital to function as a stabilising force in regional development trajectories (Figure 1). Motivations underpinning patriotic capital.
Conclusion
This paper has argued that local investment can be understood as a form of economic–political action in which investors pursue not only profit maximisation but also the preservation and development of regional communities. What conventional economic models often interpret as ‘irrational’ behaviour may instead represent a rational strategy aimed at long-term regional resilience. Recognising this form of localised loyalty is therefore essential for understanding how finance and agency jointly shape regional development trajectories. As an analytical concept, patriotic capital connects observable investment behaviour – such as home bias and local preference – with the deeper influence of place-based identity and territorial attachment.
The significance of patriotic capital lies in its capacity to compensate for structural regional disadvantages. As Grillitsch et al. (2022) suggest, local capital owners frequently prioritise investment in their home regions, and in peripheral areas such behaviour can be developmentally transformative. By anchoring resources spatially and counteracting the typical concentration of capital in global growth hubs, patriotic capital supports forms of endogenous development based on reinvestment, institutional embeddedness, and local commitment.
More broadly, patriotic capital highlights the importance of investors as active agents in regional transformation. Their decisions shape not only financial flows but also the accumulation and conversion of economic, social, and symbolic resources that sustain regional ecosystems over time. However, empirically identifying how different forms of capital are combined and converted within concrete investment processes remains methodologically challenging. Future research should therefore focus on developing more refined analytical and empirical tools capable of tracing the interactions among economic, social, symbolic, and institutional capitals, as well as examining how different motivational logics – instrumental, strategic, and philanthropic – intersect across sectors and regional contexts. Advancing this agenda will enable a more comprehensive understanding of the multi-layered forms of agency exercised by investors and a more precise assessment of how patriotic capital contributes to long-term regional resilience and development.
Footnotes
Acknowledgements
The authors would like to thank session participants 7th Global Conference on Economic Geography at Clark University, Worcester, USA and 19th Regional Innovation Policies Conference, Venice School of Management for valuable input and stimulating discussions.
Funding
The authors disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: This research has been internally funded.
Declaration of conflicting interests
The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.