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The pulp and paper industry has historically played a significant role in countries in the northern hemisphere (Biermann, 1996; Hylander, 2009; Laurila, 1998). However, the process of globalisation manifested among others by the rise of BRIC countries on the one hand and increasing environmental concerns on the other have combined to impose what may be termed as transformative pressure. This pressure is exacerbated by the fact that many pulp and paper plants are located in peripheral regions which find themselves in the midst of a development discourse on the necessity of creating mechanisms to promote regional innovation systems. The aim of this paper is to discuss and illustrate how local institutions enabled the transformation of a pulp plant in a peripheral region in Sweden into a biorefinery. The study suggests that agents from industry and local government were important and that their actions took place in an institutional framework containing key processes of change – knowledge formation, market formation, aspects of local legitimation leading to positive externalities.
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