Recent research attributes rural industrialisation to the enhanced competitive performance of rural small and medium-sized enterprises (SMEs). Central to much of this work has been a desire to acknowledge empirical diversity in business behaviour and performance between different rural spaces. Drawing on the tenets of critical realism the authors develop a conceptual framework which permits the diversity of behaviour exhibited by rural SMEs to be more fully recognised and understood. This highlights the role of generic ‘structural’ influences on the performance of rural enterprises, yet emphasises the need to investigate the precise ‘local’ conditions through which these mechanisms are mediated and experienced. In this way, the form of competitive behaviour exhibited by rural SMEs is posited as an outcome of the interplay of structural influences (or mechanisms) and the unique circumstances (or contingent conditions) prevailing at the level of the individual enterprise.