| Summary: | The agrifood industry contributes to sustaining the population and the economic growth in rural areas of Spain. Innovation in the agrifood sector has therefore become a necessity as a means of improving the competitiveness of companies and the territory, thus promoting sustainable rural development in areas currently characterised by social issues such as depopulation. Meeting this need requires the generation of specific knowledge on innovation in the rural agrifood industry to strategically steer the business management of innovation. This study aims to contribute to further improving the competitiveness of the agrifood industry through the interrelation of critical innovation factors in small and medium-sized agrifood enterprises, thus shedding light on the innovation environment of differentiated local products in depopulated rural regions. The qualitative Interpretive Structural Modelling (ISM) methodology was used with the participation of entrepreneurs and experts from the sector. The ISM was applied to a case study in <i>Alcarria Conquense</i>, a Spanish region that embodies the current problems of many rural territories. The results show four factors (cooperation, managerial skills, absorptive capacity, and market orientation) are binding variables with a high power of influence and dependence, and a fifth factor, funding, is the most dependent on the others. The work contributes to the literature by revealing the needs and opportunities for a potential strategic planning of rural development that can positively influence the problems of the region through innovation management in this industry.
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