Absorptive capacity, complexity and regional renewal: a developmental psychology perspective

ABSTRACT Regional renewal calls for system-level agency. However, at a micro-level, such agency calls for actors to confront paradoxical choices in development. Paradox, though, is a form of cognitive complexity that can trigger fight, flight, freeze or embrace responses. Based on developmental psychology, we outline when and why actors may or may not have the absorptive capacity for the paradoxical complexity involved in system-level agency. Focusing specifically on the absorptive capacity for complexity, developmental psychology thus complements agentic, behavioural explanations of renewal by exposing the cognitive factors which may impede system-level agency.


INTRODUCTION
There is a growing body of work linking structural and agentic drivers of regional renewal.On the structural side, whether we look at regional renewal diversification strategies (Grillitsch & Asheim, 2018), Schot and Steinmueller's (2018) three frames of innovation policy or the entrepreneurial discovery process of Smart Specialisation (Kristensen et al., 2022) a common pattern is that development is a process of increasing complexity 1 over time.Similarly on the agentic side, regional development is occurring in multi-vision, multi-actor and multi-power contexts (Sotarauta & Suvinen, 2019).
Researchers identify that different new path-creation processes and stages call for different types of collective agency which vary in complexity (Huggins & Thompson, 2022).For instance, Baekkelund (2021) differentiates transformative change agency versus reproductive agency, while Isaksen and Jakobsen (2017) observe increasing complexity across levels ranging from individual to firm to system-level agency.Of these, transformative change and system-level agency seem particularly crucial nowadays (Bergek et al., 2008;Binz et al., 2016;Gherhes et al., 2022;Musiolik et al., 2018).Indeed, in their recent analysis of the contrasting development trajectories between regions, Blazek and Kveton concluded that 'path development is strongly related to (shared) leadership and to the visions, ambitions, and capabilities of actors.We argue that it is the intensity and nature of system-level agency that makes a substantial difference' (Blazek & Kveton, 2022, p. 14).
Yet, some actors seem to embrace transformative and systems agency, while others not.Such types of agency call for actors to be willing to work with higher degrees of complexity.At a micro-level, this raises the interesting question of what determines an actor's ability to embrace complexity or not?Answers to such a question will help us further understand the agentic-based, micro-level factors differentiating regions which renew and those that stall and lock-in.
Whether or not a region develops may thus be a function of an actor's absorptive capacity of such complexity (ACC) (Cohen & Levinthal, 1990).Studying the relatedness of knowledge between potentially collaborating actors, Cohen and Levinthal defined absorptive capacity as the ability to recognise the value of new information, assimilate it and apply it to commercial ends (Cohen & Levinthal, 1990, p. 128).Beyond knowledge relatedness, I advance the concept of ACC to specifically conceptualise the ability of actors to be open to, work with and leverage increasing knowledge complexity.This more complex knowledge can take the form of a deeper understanding and awareness of the interconnectedness of actors and structures in a region, how they cohere or not as a system, the whole region as a level of analysis for transformation, and also how self-interest can be aligned with collective systemic goals and complex policy contexts.
For those with low ACC, increasing complexity may trigger fight or flight responses keeping actors and structures stalled in their development.For example, this can be seen in empirical studies highlighting how regional leaders can escalate commitment to stalled agendas when instead what is needed is a shift to a more complex paradox logic (Newey & Coenen, 2022).The latter overcomes one-sidedness in development and outlook, avoiding polarisation and gridlock.Those high in ACC will be more open to and capable of working with increasing complexity, reflected in greater tolerance of paradoxes in development and system-level agency.
The idea that complexity is a trigger for cognitive reactions and corresponding behavioural modifications is grounded in decades of research in adult developmental psychology.Based on the foundational work of Piaget (1954), Loevinger (1976) and Graves (1970), a key premise of developmental psychology is that the ability of individuals to process complexity develops in predictable stages (Cook-Greuter, 2004;Graves, 2005;Kegan, 1982Kegan, , 1998;;Manners & Durkin, 2001;McCauley et al., 2006).Developmental psychology thus gives us a way to model how actors develop ACC in stages.
A key purpose of this paper then is to expose regional development scholars to the field of developmental psychology and its unique ability to address issues relating to how actors develop an ability to absorb and work with increasing levels of complexity.The focus is on both ACC and its impact on regional strategy choices as well as the process underpinning how actors develop different amounts of ACC.This latter focus tells us much about how to actually develop regional leaders fit for purposes such as system-building and regional renewal.
Developmental psychology proceeds from very different assumptions about human psychology than personality-based explanations.The latter portrays behavioural characteristics as more or less hard-wired whereas developmental psychology concerns itself with the social construction of meaning that actors give to themselves and the world around them.The latter then exposes the underlying assumptions actor's hold about issues involved in regional development; assumptions which enable and/or constrain renewal.This is important for the overall development of the field of regional renewal because as our knowledge of the structural factors necessary for system change increase rapidly, our knowledge of factors on the agentic side need to keep pace.Otherwise, we end up with the imbalance of knowing a lot about 'what' needs to change and far less about 'how' such change can occur.
The remainder of the paper is structured as follows.The next section looks at further examples of patterns of increasing complexity in regional development.I then introduce constructive-developmental theory, a key lens in developmental psychology, detailing the theory of how actors develop ACC in stages.I then show how these theoretical insights can give unique insight into particular issues in regional renewal.The argument then turns to expounding why regional development needs more leaders at post-conventional stages of ACC.The theory development is then brought together into a coherent theoretical framework revealing the links between paradoxes in regional renewal, stages and amounts of ACC and how these are likely to result in either lock-in or transformative renewal.The paper closes with a summation of arguments for why regional development scholars can benefit from the unique insights of developmental psychology as well as turning to the more practical question of how ACC can be deliberately developed in regional leaders.

REGIONAL DEVELOPMENT AND THE EVOLUTION OF COMPLEXITY
Studies are consistently showing that regional development and related fields such as innovation policy are becoming increasingly complex.Gibney, Copeland and Murie state that the leadership challenge has become 'a complex affair as it involves a host of agencies, firms, individuals and communities that are operating interdependently at the local, national and global scale' (Gibney et al., 2009, p. 8).Grillitsch and Sotarauta argue that 'In regional development, the capability to orient complex multi-actor processes in an indirect manner is the key for successful efforts to influence the emergence of new paths' (Grillitsch & Sotarauta, 2020, p. 712).
This correlates also with the trend to the increasing complexity of innovation policies such as has occurred in the evolution from broad and one-dimensional to more mixed and sometimes contradictory innovation and development policies at the same time (Laasonen et al., 2020).Speaking about the trend to mixes of contemporary innovation policies impacting on a region, Magro and Wilson also note that 'policies with different characteristics and from different administrative levels are continually interacting with one another in complex policy systems' (Magro & Wilson, 2013, p. 1647).In turn, this makes policy evaluation in terms of cause-effect relationships very difficult.
The growing literature on system-building also paints a picture of a staged process of increasing complexity (Bergek et al., 2008;Binz et al., 2016;Gherhes et al., 2022;Kukk et al., 2015;Musiolik et al., 2018).According to Musiolik et al., 'system building is about key individuals who control the necessary resources (concentrated agency) to solve critical problems and carefully steer the evolution of interconnected parts of a large technical system' (Musiolik et al., 2018, p. 2).Gherhes et al. (2022) study of the artificial intelligence innovation system in Montreal reveals a pattern of two phasespre-formative and formative.Networks of agency grew more complex across these phases from being uncoordinated in the pre-formative phase followed by more deliberate and intense systembuilding efforts in the formative phase.The ability to manage complexity is thus a correlate of fostering regional development.From an agentic perspective this becomes an issue of the absorptive capacity of complexity (ACC), a topic long researched by constructive-developmental theory in developmental psychology.

CONSTRUCTIVE-DEVELOPMENTAL THEORY
Numerous researchers have observed how an actor's ACC develops in stages (e.g., Cook-Greuter, 2004;Kegan, 1982Kegan, , 1998;;Loevinger, 1976;McCauley et al., 2006;Piaget, 1954;Torbert, 2004).Based on the foundational work of Piaget (1954) and Loevinger (1976) and within developmental psychology, 'constructivedevelopmental' theory is particularly concerned with people's constructions about the meaning of their experiences and how these meanings develop in complexity over time (McCauley et al., 2006).'Constructive' refers to how people construct their meanings of the world while 'developmental' reflects that these constructions develop in discrete stages of increasing complexity across the lifespan.This constructionist view focuses on the world as mediated by meaning and to the agentic role of human consciousness in constructing that world.As McCauley et al., state in their critical review, 'For Piaget, development was not a gradual accumulation of new knowledge, but a process of moving through qualitatively distinct stages of growth, a process that transforms knowledge itself' (p.635).

Stages of ACC
In their original formulation, Cohen and Levinthal (1990) stressed the relatedness of knowledge as determinative of absorptive capacity.Constructive-developmental theory adds new insights by revealing a more differentiated account of the cognitive structures which shape how actors perceive, make sense of, permit or exclude knowledge from awareness.These structures directly affect how actors do or do not perceive the value of new information, be able to assimilate it and apply it to goals.
Table 1 displays some of the key tenets of constructive-developmental theory.An important and central tenet for our purposes here is that constructive-development theory posits that an actor's ACC develops in stages.Each stage works like an operating system through which an actor perceives, understands and interprets the world.These operating systems have overt beliefs like a worldview but also more unconscious covert rules of logic for how the world is understood (Cook-Greuter, 2004).Stages then comprise not only what actors think but how they think.The rules of logic act as enablers and/or constrainers for the processing of complexity, determining what is included and excluded from view.But as environmental complexity increases beyond the ACC of an existing stage, growth is then called for.
Stages become adopted as the culturally determined mindset needed to enact solutions to existential problems (Beck & Cowan, 2006).For instance, the conventional expert stage (Figure 1) proved highly effective in the industrial revolution where a mindset was needed which capitalised on values of efficiency, innovation, specialisation and routinisation in order to address the problem of resource efficiency across larger social networks (e.g., towns, cities, nations).But once these existential problems seem to have an effective solution then new problems arise requiring new answers and a new mindset (Graves, 1970(Graves, , 2005)).Despite the benefits of the previous paradigm, things are left out of it and these things accumulate to be destructive.What was unconscious now needs incorporating in an expanded consciousness.And so as the conventional expert mindset spread so too did the social networks of interdependence requiring deeper appreciation for systems-level thinking.Also we learnt that we needed to connect economic and natural systems, as problems were generated from mass production and consumption.Importantly though, people develop at different rates and so more developed stages appreciate the need to allow the different stages to coexist and also enable the progression of people to their next frontier when ready (Beck & Cowan, 2006).
Figure 1 displays three of the most common stages of ACC found in population data.There are more stages than what is shown (and refer to the many sources for this: Cook-Greuter, 2004, 2013;Graves, 2005;Rooke & Torbert, 2005).I highlight these three because they represent the most prevalent (Cook-Greuter, 2004).What is to be observed across the stages is a pattern of: (1) increasing scope of systems held in awareness (from functions to wider organisations to external and internal systems); (2) complexity strategies (from reduction to partial accommodation to full embrace); and (3) nature of relationship (from competition to collaboration to synthesising diversity).
Both the expert and achiever stages are part of what is referred to as the 'conventional paradigm' (Cook-Greuter, 2004).By 'conventional' is here meant that the actor prioritises adaptation to the external world, its social and economic conventions.Success is defined in terms of what the socio-cultural-economic system needs and values.Research shows, however, that  (Graves, 1970(Graves, , 2005)).Transitioning from conventional to post-conventional stages is regarded as a giant transformative leap in terms of both worldview but also the rules of logic for how the world is understood (Vincent et al., 2015).Post-conventional leaders stabilise a paradox view of reality, comfortably holding the tension between opposites as opposed to choosing one side over another.What is also transformative at post-conventional stages, at least in the initial stages, is a shift from conventional values and measures of success to an emphasis on individuationa process of carving out one's uniqueness vis-à-vis collective consciousness (Cook-Greuter, 2013;Kegan et al., 2016).

Stages, rules of logic and ACC
As mentioned, stages of ACC are differentiated by different covert rules of logic for processing knowledge complexity.Some simplify and reduce complexity and experience greater levels of discomfort with increases in complexity.Further, they rely on particular types of logic in order to process different types of knowledge complexity (cf.Ford & Ford, 1994).Formal logic deals with complexity by breaking things into their parts, focusing and specialising.Actors then, for example, make a conscious choice for related diversification as it simplifies the complex task.So, across a region, each actor may reduce its complexity by using similar formal logic, easing the cognitive burden so as to convince as to what is the best path forward.The advantages of formal logic are focus and specialisation.But, as more complexity is brought to consciousness one encounters the ubiquitousness of the conflict of opposites, such as the paradoxes encountered in regional development.Regional development involves all sorts of paradoxes including economic development versus placemaking, economic diversification versus social integration, high-versus low-tech employment and housing, old versus new industries, concentration versus diversification, core versus peripheral regions, transformative versus reproductive agency, related versus unrelated variety, and specialised versus diverse clusters.
As stated by Lewis: Grounded in the philosophies of Aristotle, Descartes, and Newton, formal logic requires parsing phenomena into ever smaller and more disparate pieces.Yet, formal logic is based on either/or thinking, incapable of comprehending the intricacies of paradox (Ford & Ford, 1994).(Lewis, 2000, p. 763) Paradox logic recognises wholes and the interdependence of things that are held together by counter-balancing opposites.Paradoxes are two opposing things that need each other to coexist (Hargrave & Van de Ven, 2017;Johnson, 2014aJohnson, , 2014b;;Lewis, 2000;Smith & Lewis, 2011).Hence, from a paradox perspective, related and unrelated diversification are both needed at the same time, and despite their tensions, in order to sustain a region.
What emerges here then is that ACC is based on cognitive structures in the minds of actors including a conscious worldview and unconscious rules for processing complexity.These conscious and unconscious structures are amenable to change and development thus affecting how much ACC an actor deploys and also how they formulate and support different regional strategies.Some stages possess greater ACC than others leading to differences in systems awareness and therefore regional development strategy formulation and implementation.As a constructed phenomenon that develops in stages, ACC is thus capable of deliberate development, posing important implications for leader development.

HOW THE STAGE OF ACC FILTERS REGIONAL DEVELOPMENT STRATEGIES
To illustrate how stage of ACC acts as a filter, Figure 2 now displays how the different stages of ACC are likely to view regional renewal diversification strategies, as the latter are expounded by Grillitsch and Asheim (2018).Its aim is to highlight how stage of ACC can moderate the interpretation, adoption and implementation of regional diversification strategies.That is, each stage interprets the various diversification strategies in a different way.These differences can then explain the variations in reactions, adoptions and implementations.Regional development strategy here meets developmental psychology.
In Grillitsch and Asheim's (2018) scheme there are three broad categories of industrial path developmentupgrading, diversification and emergent.Upgrading makes changes to renewal paths in existing industries.Diversification paths entail using knowledge and resources from existing industries for applications in new industries.Emergent paths are new industries that form that are unrelated to existing industries.Each type of diversification strategy combined with the level of system differentiation (across actors, network and institutions), involves an increasing cognitive demand for processing complexity.These increasing demands can trigger defence mechanisms which aim to reduce, simplify or embrace complexity.
An important implication arising is that stage of ACC becomes a filter through which actors interpret various regional development frameworks, tools and policies.This can explain, for instance, experiences with smart specialisation.Grillitsch and Asheim (2018) describe smart specialisation as where 'countries should identify strategic sectorsor "domains"of existing and/or potential competitive advantage, where they can specialise and create capabilities in a diversified (different) way compared to other countries and regions' (p.1639).However, Grillitsch and Asheim observe that, contrary to intention, some actors interpret smart specialisation narrowly in terms of traditional, linear research and development (R&D) only.Stage of ACC would predict that this would most likely be perpetrated by leaders at a conventional expert stage.These leaders process complexity by reducing it into parts and choosing/specialising in some of those parts.Hence, as Figure 1 shows, conventional experts manage systems complexity by restricting their focus to the functional level, such as R&D.
An important implication then is that successful implementation of regional development policy requires matching its complexity with the appropriate stage(s) of leader ACC.Policies, tools and frameworks are thus only as good as the consciousness using them, thus highlighting the critical role of developmental psychology in regional development innovations and advances.
Similarly, the three framings of innovation policy (1.0, 2.0, 3.0) of Schot and Steinmueller (2018) each involved different levels of complexity and so an appropriate stage of ACC to properly execute it.Turning again to Table 2 and Figure 2, it becomes evident that the three frames match conventional expert, conventional achiever and post-conventional respectively.The first frame had a tight R&D focus matching the functional expertise focus of the conventional expert to drive optimisation.With globalisation, the second frame emphasised knowledge creation and collaboration across wider social systems, hence national systems of innovation to help address the risk of being left behind in the growth era of the first framing.This wider systems lens and collaboration focus aligns with the profile of conventional achiever leaders who are more social systems embracing and social-justice-oriented than the functionally focused experts.Finally, the transformative nature of the third frame to meet existential crises and sustainable development goals call for both social and personal transformation as past systems and mindsets are deeply questioned and overturned.This more fundamental change at the level of systems assumptions, both social and personal, is the hallmark of the paradox-embracing, inclusive post-conventional leader (Vincent et al., 2015).Lance R. Newey

REGIONAL STUDIES
This matching indicates how both the innovation policy field and adult developmental psychology have observed similar evolutionary changes.The former in relation to the increasing complexity of innovation policy as innovation systems have evolved and the latter as the complexity of the ACC of leaders have undergone evolution and transformation to effectively lead more sophisticated innovation systems.Framings of innovation policy and stage of ACC thus coevolve, highlighting their interdependence.

WHY REGIONAL DEVELOPMENT NEEDS POST-CONVENTIONAL LEADERS
Many contemporary regional development strategies and policies are of a level of complexity that requires a postconventional stage of ACC.Yet, most leaders remain at conventional expert and achiever levels.This section now further dissects why the conventional stages of ACC can impede the interpretation, adoption and implementation of more complex regional development strategies.It further highlights why the post-conventional stage is a required matching.
Researchers observe a 'quantum leap' jump in complexity from conventional to post-conventional stages (Cook-Greuter, 2004;Graves, 1970;2005;Vincent et al., 2015).This is a highly transformative experience undergone by the individual that is more than an expansion in intellectual learning.Rather, such a leap is accompanied by significant disruptive experiences, whether personal or professional, marked by increased perception of the interconnectedness and interdependence of all things.This interdependence perspective (understand wholes and parts) contrasts with the independence of things (dissect the parts) which shape the conventional perception of the world.
An important point made is that current existential challenges confronting regional leaders are of a level of interdependent complexity requiring post-conventional ACC yet most leaders are still at conventional stages.In other words, conventional leaders are falling back on toolkits that served them well in past challenges but which no longer are fit for purpose for present-day complexity.Here I highlight three key organising principles lying within the conventional cognitive schemata which have become stumbling blocks and causes of lock-in.These three principles uncovered by constructive-developmental researchers are: (1) using problem solving logic when paradox logic is required, (2) fixed personal boundaries marking self and other and (3) lack of attention to vertical development.Our attention now turns to each in turn.

Problem-solving versus paradoxical logic
Research identifies that one of the things which distinguish post-conventional stages for being better able to work through system-level agency and promote renewal is that they have undergone a fundamental transformation in their cognition away from just either/or logic to also include paradox logic (Cook-Greuter, 2013;Newey & Coenen, 2022).Paradoxes are a 'persistent contradiction between interdependent elements' (Schad et al., 2016, p. 10).In an effort to reduce complexity, the conventional stages of ACC will prefer to apply an either/or logic to these tensions.By contrast, post-conventionals, in an effort to embrace complexity, will see them as unresolvable paradoxes which require working with both sides of the polarity.This is complexity-embracing and so builds higher ACC.
To see the difference between problem-solving and paradox logic it is helpful to draw on the distinction between what Heifetz et al. (2004) call technical versus adaptive problems.Adaptive problems are not well defined, have no known solution, and many different stakeholders are involved each with different perspectives.This is as opposed to technical problems where problems are well defined, technical solutions are known and can be imposed by a single organisation.
Consider for example the frequent discussion around related versus unrelated diversification.Technical problems here include which industries to invest in, how to develop new industries, how to attract investment and develop entrepreneurs.But at another level, the actual relationship between related and unrelated diversification is not a technical problem to be solved but an adaptive paradox.It is an adaptive paradox because both sides pull in opposite directions but this very tension is necessary for regional sustainability.Leaders at conventional stages are likely to frame the choice as should we do related or unrelated diversification, thus trying to dissolve the tension.But, in contrast, post-conventionals recognise the tension never goes away and so ask how do we do both related and unrelated diversification at the same time?Distinguishing adaptive paradoxes from technical problemsolving aspects reveals how an overemphasis on one side to the neglect of its opposite value results in harmful consequences to regional sustainability.Table 2 contrasts problem-solving with paradoxical logic.Problem-solving logic tends to be underpinned by either/or logic in the selection of optimal or satisficing solutions.An assumption here is that the issue can be solved and fixed by utilising appropriate formulas, evidence and reasoning.Conflict between competing either/or choices can be framed as trade-offs.This problem-solving approach has underpinned our tremendous scientific and technological progress associated with the industrial era.
The aim is not to 'optimise' a solution, metric or outcome but rather the skilful, ongoing balancing act of dancing between opposite poles to create a dynamic equilibrium.Paradoxes, or polarities, are not to be fixed or solved; the opposite poles are meant to coexist as their coexistence is meant to counter-balance each other thus protecting against the excessive investment in one to the neglect of its interdependent opposite.The paradox view thus places value on the very tension itself between opposite poles, value which is then lost when poles are separated.Paradox thus draws attention to circumstances when the problem is problem-solving logic itself.Problems still need to be solved within counter-balancing tensions but the tensions themselves do not go away like 'solved problems'.By way of further example, the emerging literature on system-building also reveals that all along the process of innovation system-building are paradoxical choices which can be forks in the road either towards systembuilding or fragmentation (Hannant et al., 2021).Basic research is needed in system pre-formative stages shifting to more applied research in more deliberate formative phases of system-building (Gherhes et al., 2022).The relationship between basic and applied research is a paradox and not an either/or choice.Diversity and experimentation need to be balanced with consistency and coherence if acceleration is to ensue.Technological enthusiasm needs to be balanced with wider ethical and social responsibility concerns, such as has occurred in the development of the artificial intelligence ecosystem in Montreal where normative networks offer a voice to guide ethical practice (Gherhes et al., 2022).Further, there is a tension between going slow with system-building so as to bring everyone along but also moving quick to accomplish things and motivate and legitimate the effort.Regional systems involve both urban and regional development.In any of these paradoxes, and in the hands of conventional stage leaders, low ACC can tip the system towards fragmentation instead of cohesion (Newey & Coenen, 2022).
Principle: Post-conventional leaders have higher ACC because they include paradox logic in their regional renewal.Paradox logic embraces complexity by holding the tension between opposing choices and avoiding one-sidedness.

Self-boundaries
A central concept in constructive-developmental theory is that of ego development.The ego includes the story-telling part of the brain, which interprets our experience, giving it meaning.Included within this story-telling function is one's concept of self-identity.The process of mentally creating a self-identity at the same time imposes boundaries on what the self is deemed to be.This strand of constructive-developmental theory has studied how the self-boundaries become more and more expansive across different stages of ACC.Manners and Durkin state: In a sample of 112 adults ranging in age from 20 to 50 years, it was found that high ego development was accompanied by significantly greater identification of variability in the phenomenal experience of the self and in contextual variation, as well as greater valuing of variability.(Manners & Durkin, 2001, p. 151) Self-identity then is not a fixed, taken-for-granted, homogenously defined entity.Rather, it is also seen as something which grows in complexity across the stages.How one sees 'self' then becomes a key constraint or enabler for ACC.
The issue of self-boundaries, whether fixed or fluid, matters in regional development because it affects how one approaches the interdependence required of a region undergoing renewal.Of conventional stages Cook-Greuter says that they: 'have a linear view of reality: they define objects (variables) as being separate and having closed boundaries' (Cook-Greuter, 2013, p. 29).But such views of the self as independent incline to an us versus them mentality and an absolutism in the rightness of their views, such as can occur in lock-in.A key implication of this is that conventional stages of ACC may be more inclined to polarisation as they defend these self-boundaries.Post-conventional stages, by contrast, have more fluid self-boundaries that extend beyond the physical self to understand themselves as a system interdependent on and non-separate from other social systems.
The centrality of paradox to the post-conventional consciousness as a key developmental point of difference to the conventional mindset carries profound implications for how the self is understood.To see this, first note that many of the paradoxes in place-based leadershipestablished versus new industries, core versus periphery, specialised versus diverse clusters, migrant versus indigenous populationsset up a potential antagonism between a 'self' and 'other'.To conventional consciousness, the 674 Lance R. Newey

REGIONAL STUDIES
boundaries of the self are marked by the physical skin and the self is viewed as independent from other entities.By contrast, post-conventional consciousness views the self as both independent and interdependent at the same timea paradox.They are able to hold the tension between these apparently contradictory views and find it comfortable to do so.The paradoxical elements form a duality in that they are 'oppositional to one another yet … also synergistic' (Smith & Lewis, 2011, p. 386); they thus simultaneously support and oppose one another (Schad & Bansal, 2018).
In any equation involving the self, post-conventional consciousness will take both independence and interdependence into account.This builds ACC by being a richer systems view.Conventional consciousness though will struggle with such a tension and seek to dissolve the contradiction, thus lowering ACC.'Of course the self is me with my physical skin boundaries', may be the view and conventional consciousness will struggle to see things otherwise, reflecting the fundamental difference between these stages of ACC.How the self is defined then carries import for how conflict is handled by the different stages of ACC.
Another paradox underlying much regional development challenges is that of self versus collective.This paradox plays out over extended spatial scaleslocal, regional, national and also divides like old versus new industrial areas, lock-in networks and lock-out networks.In each case, the 'self' is the initial vantage point and the 'collective' is the larger entity of which it is a part.Are we for our firm or the larger region of which we are a part?Are we local or global?These are examples of the self-collective paradox.Kristensen et al. (2022) account of RIS3 adoption in Stockholm displays the tension perceived by local actors who are already doing well but are being asked to combine into a larger regional strategy.Failure to recognise incentives for doing so maintains the status quo.This is particularly the case if there are perceived institutional, capability, mobilisation and shared vision 'traps' (Sotarauta, 2018), which are likely to arise if the regional development officials are at conventional stages and thus likely less able to articulate, design and implement incentives towards a larger collective vision.
By contrast, post-conventional consciousness invokes its belief in the self as interdependent and so would see themselves as comfortably paradoxicalboth firm and regional and local and global at the same time.This more fluid conception of 'self' is captured by Huggins and Thompson's (2022) idea of 'fused egos' and the shift away from just self-interest to also see that self-interest is also tied to collective interest.These authors state 'Clearly, a lack of collective intentionality due to power tensions, such as between the state and civil society, hinders new path development, which is apparent not only across nations as a whole but within particular regions' (p. 7).
The 'self' is therefore a micro-level driver of polarisation and lock-in.The inability to take a paradox perspective to self-collective tensions results in much polarising conflict.This is seen in the 'split reality' dynamic observed by Nemes and Tomay (2022) in their study of the effects of tourism gentrification on villages in Hungary.Rural tourism can result in quite different tourist and living realities between migrant urban entrepreneurs and local indigenous peoples.Migrant entrepreneurs can participate deeply in the tourism economy but not in civic life leading to discordant visions for the sustainability of a place.The same place can be desired for tranquillity by some while visitors seek adventure.In the language of paradox, these places become arenas for 'holding the tension of opposites' 'aimed at implementing a conscious and coherent strategy for creating a sustainable balance between tourism and living realities' (p.8).Yet, without this and dominated by conventional consciousness and its fixed self-boundaries, each side instead pursues independent self-interest prolonging destructive struggle.
Principle: Post-conventional leaders will have higher ACC because they have fluid self-boundaries.Fluid self-boundaries embrace complexity by valuing interdependence and holding the tension of the self-collective paradox.

Vertical development
Paradox logic and fluid self-boundaries are fundamentally different ways of seeing.That is, fundamental revision has occurred to underlying cognitive paradigms.Not all leaders cross this bridge, thus limiting their ACC.Crossing the bridge involves engagement in and commitment to a process of vertical development (Cook-Greuter, 2004).Vertical development is an approach to leadership development which recognises that an actor's ability to embrace complexity develops in stages.Leading practitioners of vertical development state that: The field of vertical leadership development (VLD) focuses on the semi-predictable patterns of transformations in the ways people think and act in increasingly more complex and integrated ways (action logics) and is well-suited to interpreting, encouraging and measuring this new reality of strategic transformation.(Palus et al., 2020) Figure 3 displays key terms in this process.A key distinction is that between vertical development and horizontal development (Cook-Greuter, 2004).This distinction is important to regional development leadership because most leaders are trained in horizontal development, which is an expansion in their technical knowledge and skill sets in particular domains.Horizontal development occurs when we learn the knowledge underpinning a field and practice the practical skills.Vertical development is a more transformative change to the epistemological assumptions on which horizontal development is based.Petrie (2014) uses the analogy that horizontal development is like pouring more water into a cup while vertical development is changing to a bigger container altogether.Changes to epistemological assumptions include paradox, systems thinking as well as the ability to even become aware of vertical development as a layer of experience.
Both paradox and fluid self-boundaries are not independent incidents.They occur simultaneously because when paradox becomes a prevailing epistemological assumption in one's worldview then this also applies to the self.For example, imagine the experience when one's self-identity shifts to being a paradoxboth independent and interdependent at the same time.This transformative experience, outside of any technical know-how, describes what can be experienced in vertical development.Bridging regional development with developmental psychology brings these micro-level phenomena into view for the benefit of enriching how we develop the regional leaders necessary for system-level agency.Petrie (2015) advises that vertical development can be aided in practice through (1) heat experienceswhich disrupt usual patterns and provoke search for new answers, (2) colliding perspectivesdeliberate exposure to different, more diverse worldviews which transform usual assumptions, and (3) elevated sensemakingintegrating diverse views into larger cognitive mental models.Harvard researchers Kegan et al. (2016) also outline their Deliberately Developmental Organization™ framework outlining case studies of organisations which have embedded vertical development.Embedding vertical development into the culture of an organisation and/or regional leadership requires belief in and commitment to individual development.
[An] organization can sign on to the principle in spirit, value it as a nice to have, and even make investments to promote more of itbut this is very different from asking, 'From the ground up, have we designed our organization so that it supports the growth of its members … ?' (Kegan et al., 2016, p. 88) As shown in Figure 3 then, horizontal development is an expansion in domain-specific knowledge and skills but it may not be accompanied by any concomitant change in how the world is perceived and interpreted.The worldview and cognitive rules have not changed and so the newly acquired knowledge and skills is still situated within a particular stage of consciousness.Vertical development is about a transformation of consciousness and so becomes an important correlate for achieving societal transformation.
Vertical development can also be the difference between transactional and transformational leadership.The latter is more associated with system-level agency and calls for 'mobilizing, directing, coordinating and facilitating interorganizational development strategies and practices across many institutional and organizational boundaries' (Sotarauta & Suvinen, 2019, p. 1749).Transactive modes of management are driven by conventional consciousness which focuses narrowly on the task and  Lance R. Newey

REGIONAL STUDIES
project.Therefore, desires for transformational leadership and systemic change in such things as green growth for example (Sotarauta & Suvinen, 2019) call for a type of consciousness which includes those operating from a transactive posture but who can, at the same time, pursue more transformative aims.Sotarauta and Suvinen call this generative leadership, where 'place leadership takes generative modes of action to produce indirectly transformational effects' (p.1763).Such 'post-conventional' leadership is marked by an ability to hold the tension of the opposites of transactive and transformational styles without jeopardising one for the other.Holding this tension includes but also elevates the different stages of ACC which necessarily present in multi-vision, multi-actor, multi-power contexts.
Principle: Post-conventional leaders will have higher ACC because they consciously engage in vertical not just horizontal development.Vertical development embraces more complexity because it is able to work with different stages of ACC in a population and also bring a more complex systems view to bear on the problems at hand.
Paradox, fluid self-boundaries and vertical development all add up to a distinguishing ability of post-conventional leaders to hold a 'dialogic space' between polarised sides, another feature of higher ACC.In the language of vertical development, a dialogic space is an uncertain ground of liminality betwixt and between the old and the new requiring conscious presence to hold the tenson of the opposite pulls.This holding allows for the emergence of a transcendent third which is a new, unforeseen solution sufficient to break polarisation and chart new momentum forward.As noted by Grillitsch and Sotarauta genuine place-based leaders 'work to find third solutions that reach beyond individual ambitions, intentions and interests' (Grillitsch & Sotarauta, 2020, p. 713).So, rather than taking either side, the notion of the transcendent third requires actors to first bring opposites together and then work out how to unify them aimed at a transcendent third.
Principle: Post-conventional leaders will have higher ACC which enables them to hold a dialogic space between polarised stakeholders and allow for transcendent renewal solutions.

STAGE OF CONSCIOUSNESS, COMPLEXITY, LOCK-IN AND RENEWAL
Figure 4 now brings together our discussion about the differences between conventional and post-conventional consciousness to further crystallise the implications of constructive-developmental psychology for regional renewal.Our starting point is the recognition that much discussion in regional development concerns various paradoxical tensions that leaders face.The way these tensions are perceived, interpreted and dealt with determines paths of either lock-in or renewal.Figure 4 illustrates our contention that the path to lock-in is more likely to evolve from features of the conventional stages of ACC.The conventional mindset prospered by strategies to reduce complexity through dissection and specialisation.The preference for the rational decision-making model treats the regional renewal paradoxes as 'technical problems to be solved' where there is a search for the one best solution.The self is also perceived as having fixed physical skin boundaries and so threats to this self-triggers self-protection through walls of defence.What is familiar and what has worked in the past become comfort zones leading to a bias towards proximate search for solutions instead of the more uncertain distant paths.The conventional mindset is a constellation of all these factors leading to a decision-making path that is likely to favour one side of regional renewal paradoxes over another.The side chosen is that which preserves the usual self.Some renewal is possible within this trajectory but it is unlikely to be transformational and is vulnerable at any time to a reversion to polarisation and lock-in.
By contrast, the post-conventional mindset, driven by operating principles which have learnt to embrace not reduce complexity, is more likely to avoid lock-in and foster transformative regional renewal.This is because the orientation to embracing complexity is underpinned by a different set of operating principles for making sense of the world.Key to this is the recognition of paradoxes as being a different beast to technical problems.Technical problem solving is still needed but post-conventionals have learnt to discriminate between technical and adaptive problems and to use paradoxical logic for addressing the latter.Post-conventionals thus are more likely to deliberately seek to leverage value on both sides of regional renewal paradoxical tensions.Moreover, this is aided by a more fluid sense of self which is no longer just equated with independent physical skin boundaries.Instead, reflecting their embrace of paradox, post-conventionals see self as both independent and interdependent at the same time.Defensive protections of a limited self and its belongings is less likely as the idea of an independent self holds less sway.The post-conventional mindset is thus more likely to embrace both sides of regional renewal paradoxical tensions and thereby foster transformative regional renewal.

IMPLICATIONS
Why should regional development scholars pay any attention to micro-level developmental psychology?Because we have entered an era where system-agency is critical and this requires a certain level of ACC of our leaders.Developmental psychology exposes how we can vertically develop our leaders in stages of increasing ACC.But more importantly, developmental psychology exposes the critical need for post-conventional stage leaders who have undergone significant personal transformation in the development of their ACC to be based on paradox logic.The latter is not something merely to be taught conceptually in a classroom but becomes the new way of perceiving and working with reality after there is a loss of faith in lower levels of ACC based on conventional logic.
Developmental psychology draws attention to the need for vertical development mechanisms in regional leader development programmes not just horizontal.Vertical development includes training in distinguishing between adaptive and technical problems, systems awareness and paradox logic.Holding the tension of opposites is an awkward, difficult space requiring psychological strength and endurance if ACC is to develop to levels necessary for system building and agency.
Our developmental psychology perspective offers a much needed correction to the tendency within regional renewal studies to regard agency as a distributed phenomenon only, under-valuing the role of the individual level.This raises the question: under which circumstances does the individual leader level retain significance in regional renewal?Paradigms are useful to organise effort but then, when circumstances change, become a collectively shared bias.Leaders are caught in the grip of this bias and way of thinking, finding it difficult how to entertain more radical perspectives when needed.The circuit breaker is when individual leaders invest in their own vertical development and open to post-conventional transformative changes.Once the new consciousness stabilises, these leaders are able to return to collective fora and begin the process of the judicious inclusion of the new frames.Here individual transformation and societal transformation work together.Individual and distributed (shared) agency are not seen then as either/or choices, reflective of Conventional consciousness, but instead are seen as interdependent in the ongoing stabilisation and changing of leader paradigms.How can regional leaders deliberately engage in vertical development?Based on a review of intervention studies, Manners et al. argue that vertical development can be learned by constructing experiences that are 'structurally disequilibrating, personally salient, emotionally engaging, and interpersonal' (Manners et al., 2004, p. 19).Similarly, Petrie (2015) suggests that stage-changes can be activated by creating developmental experiences such as heat experiences (disrupting habitual ways of seeing), colliding perspectives (exposure to diversity of views) and elevated sensemaking (integrating diverse perspectives into meaningful wholes).In their study of 15 large organisations, Jones et al. (2020) found that quality time, deep levels of long-term engagement, building of a developmental culture across the organisation, business alignment and a willingness to be vulnerable with others were key to deliberate vertical development practices.
The shift from focused thinking of Conventional stages to the paradox logic of post-conventional stages can be a difficult transition for many.Now they are being asked to be open to an opposite that they have routinely shunned, consciously or unconsciously.But the transition is possible when good support is provided.This support entails (1) making leaders aware of vertical development and its decades of extensive empirical validation, (2) demystifying the experience by recasting it as an investment in their own development and the transcending of gridlock and stagnation, (3) showing that development is a lifelong process of surpassing one paradigm, entering a liminal space of being torn, before eventually progressing to a stabilised new view, and (4) offering encouragement and explanation throughout the liminal period to help motivate the effort required to persist despite opposition, both internal and external.
Our developmental psychology focus extends the current bias to big five personality-based explanations of regional renewal dynamics (Huggins & Thompson, 2019;Obschonka et al., 2018 ).A developmental psychology lens takes us deeper inside the cognitive schema of actors and the cognitive rules they use to deal with complexity.Our work also complements Huggins andThompson's (2021, 2022) behavioural theory of regional development by exposing the underlying cognitive barriers and enablers to whether complex networks ensue for new path creation.
A potentially interesting line of enquiry though is the relationship between the big five personality traits and engagement with vertical development.For instance, those high on extraversion may be more averse to engaging in the inward turn of vertical development.That is, consistent with their outer focus, they may be more prone to seeking structural regional renewal solutions.Extraverts may therefore resist matters of inner psychology.By contrast, introverts and those high on neuroticism may be more disposed to seeking agentic-based solutions and engage more readily with vertical development.Big five personality traits may therefore have interesting patterns in terms of disposition towards vertical development.Knowing this helps to devise tactics for enhancing uptake of vertical development across diverse types of regional leaders and their corresponding personality biases.
A limitation in practice of embedding vertical development into the culture of leadership practice is the degree of personal commitment.As found by Jones et al., in their research: The challenge of finding practitioners who have a mastery of all three of these thingsvertical theory, ability to translate and apply that theory, and experience with their own developmentis a pervasive impediment to bringing theories of vertical development into organisational leadership development in a sustainable and effective way.(Jones et al., 2020, p. 11) 8. CONCLUSIONS Regional development and renewal are fundamentally change processes these changes are growing more complex.Agentic factors like personality can affect whether regions renew or stall.A key contribution of developmental psychology to current agentic explanations is the specific focus on the absorptive capacity of complexity (ACC) as determinative of whether actors can embrace more complex change or not.Based on decades of empirical evidence, developmental psychology posits that such ACC develops in stages and these stages determine how information is perceived, interpreted, and acted upon but also what is resisted.Such a view sees individual ACC as amenable to change in a process known as vertical development.Making change in the outside world then must also be accompanied by supporting vertical development of actors' consciousness which can create a leading frontier of actors with a more complex vision for change but also better understand how to take a population on the change journey with them.Developmental psychology thus sheds light on when and why resistance may arise as well as outlining a stage-based approach to communicating with diverse stakeholders in a population at different stages of ACC.What becomes also important is that contemporary increases in the complexity of regional development strategies and policies such as system-level agency require a supply of leaders at post-conventional stages of ACC in order to successfully implement system-level transformations.

Figure 2 .
Figure 2. Likely reactions to regional diversification per stage of absorptive capacity complexity (ACC). 672

Figure
Figure Relationship between regional development paradoxes, stages of absorptive capacity complexity (ACC), lock-in and renewal.
. Stages operate automatically in the background of the actor's mind .Stages are ways of dealing with complexity .Stages are correlated with environmental complexity and existential problems .Stages have three substages: birth, stabilisation and decline .Stages cannot be skipped ahead but can be regressed back to .Vertical development occurs as the subject of one stage becomes the object of the nextthe unconscious is made conscious .Successful change requires working with all stages in a region 670 Lance R. Newey development does not stop here but in fact new frontiers await