Innovation in Cultural and Creative Industries as a Factor for Sustainable Regional Development in Latvia

Abstract Research purpose. Cultural and creative industries (CCIs) have long been recognised as important drivers of economic growth, social cohesion, and innovation in sustainable regional development. However, their full potential is still not fully exploited, especially outside large cities. This study examines the development and innovation potential of CCI companies in Latvian regions, taking into account their role in sustainable regional development. The aim of the study is to identify the challenges and obstacles for CCI companies in implementing innovations and their impact on sustainable regional development in Latvia. Unlike most existing studies focusing either on national strategies or sectoral analyses, this study provides the first regional comparison of CCI innovation practices in all five planning regions of Latvia, combining policy analysis with qualitative evidence from companies. Design / Methodology / Approach. The study used a qualitative research approach, conducting semi-structured interviews with representatives of CCI companies in all five planning regions of Latvia. In addition to the interviews, an analysis of planning documents at the planning region level was conducted to assess the importance of CCI defined in them. Thematic analysis was used as a data processing method, identifying challenges and obstacles that CCI companies face in implementing innovations and their role in sustainable regional development. The study also showed that the importance of CCIs in sustainable regional development varies across different planning regions of Latvia, which is related to the greater focus of such companies on creating cultural rather than economic value. Findings. The study confirms that CCI companies make a significant contribution to sustainable regional development, promoting innovation and economic diversification and strengthening cultural identity. However, their growth is hampered by limited financial resources, fragmented policy support, and challenges related to digitalisation. An important discovery is that innovative CCIs in Latvia often arise due to limited resources, resulting in adaptive organisational and communication practices that differ from traditional R&D-driven innovation models. Originality / Value / Practical implications. The originality of this study lies in its integrated methodology, which combines analysis of regional policy papers with direct business views to detect systemic discrepancies between strategically determined and practically necessary support for CCIs. As well as documenting barriers, it shows how informal, practice-based innovation contributes to regional identity and resilience. Highlighting this understudied dynamic in a small EU member state, the study provides new evidence for international debate that CCIs can serve as both a creator of cultural assets and an innovation partner for sustainable regional development.