Definitions of the Smart City

This chapter addresses the definition of Smart Cities. As the approach is in an emerging status of (scientific) attention, the application of the term Smart City is inconsistent (Lombardi et al., 2012; Tranos and Gertner, 2012). In other words, it is (still) a ‘fuzzy concept’ [Caragliu et al., (2011), p.67]. Hollands (2008, p.303) points out that there is no omnipresently accepted definition, identifying a ‘lack of definitorial precision’. Cities currently do their best to exploit this deficit by self-defining themselves as a Smart City (Caragliu et al., 2011; Hollands, 2008; Tranos and Gertner, 2012). Our attempt will be to achieve a consistent definition by taking the most relevant definitions into consideration, which are listed in Table 1.

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Table 1 Definitions of a Smart City Authors Smart City Hall

(2000, p.1) “The vision of ‘Smart Cities’ is the urban center of the future, made safe, secure environmentally green and efficient because all structure – whether for power, water, transportation, etc. are designed constructed, and maintained making use of advanced, integrated materials, sensors, electronics, and networks which are interfaced with computerized systems […].”

Komninos

(2006, p.6) “Territories with high capacity for learning and innovation, which is built in the creativity of their population, their institutions of knowledge creation, and their digital infrastructure for communication and knowledge management.”

Giffinger et al.

(2007, p.11) “Smart City is a city well performing in a forward-looking way in these six characteristics (a smart economy; smart mobility; a smart environment; smart people; smart living; and, finally, smart governance), built on the ‘smart’

combination of endowments and activities of self-decisive, independent and aware citizens.”

Hollands

(2008, p.308) “[…] utilization of networked infrastructure to improve economic and political efficiency and enable social, cultural and urban development.”

Caragliu et al.

(2011, p.70) “We believe a city to be smart when investments in human and social capital and traditional (transport) and modern (ICT) communication infrastructure fuel sustainable economic growth and a high quality of life, with a wise management of natural resources, through participatory governance.”

Lombardi et al.

(2012, p.138) “Smart Cities in terms of their dual roles as generators of intellectual capital, creators of wealth and regulators of standards (university, industry, civil society and government), as well as supporting the social learning and knowledge-transfer abilities that are needed to meet the requirements of their regional innovation systems.”

Bakici et al.

(2013, p.136) “Briefly, a Smart City should be able to actively generate smart ideas in an open environment through fostering clusters or open data or developing proper living labs while directly involving citizens in the co-creation process of products or services.”

For this study, we suggest a combination of the most applied definitions in the recent literature: “A Smart City is an agglomerated area affected by a high concentration of learning and innovation as a result of creative citizens and institutions as well as the implementation of a digital infrastructure with the overall objective of achieving economic growth and a high quality of life, while keeping in mind the scarcity of natural resources” (Caragliu et al., 2011; Giffinger et al., 2007; Hollands, 2008; Komninos, 2006).

3 Synthesis

The high variety and heterogeneity of approaches and their definitions of a Smart City makes it necessary to create a homogenous basic understanding.

In his article ‘Will the real Smart city please stand up?’, Hollands (2008, p.307) criticised the ‘self-congratulatory’ label of a Smart City, analysing various characteristics as an approach towards a more concrete concept (Allwinkle and Cruickshank, 2011).

Figure 1 shows the six characteristics at a glance.

The Smart City as an opportunity for entrepreneurship 215 Figure 1 The six characteristics of a Smart City

Further specifications of these characteristics have been made by different researchers.

They include:

1 The availability and quality of ICT infrastructure and usage is considered to be the most basic characteristic (Bakici et al., 2013; Caragliu et al., 2011; Hollands, 2008;

Komninos, 2002; Thite, 2011; Tranos and Gertner, 2012). A Smart City necessarily has to have “a rich environment of broadband networks that support digital

applications” [Schaffers et al., (2011), p.435]. In a Smart City, ICT should be inserted to increase the government’s and economy’s efficiency as well as to

contribute to social, cultural and urban growth (Caragliu et al., 2011; Hollands, 2008;

Komninos, 2006). ICT infrastructure comprises mobile and landline phones, and internet services (with inter- and intra-city digital networks) (Tranos and Gertner, 2012) and helps to provide services for business (e-commerce), governments (e-governance), lifestyle, housing and leisure (Caragliu et al., 2011). Additionally, ICT infrastructure such as smart grids and smart meters are associated with a Smart City. A smart grid is a power and distribution system for sustainable energy, being ‘smart’ in terms of reliability and eco-friendliness as it supplies citizens with services as well as efficient energy management applications while combining advantages in comparison to existing grids. It is intelligent, efficient, accommodating, reliable, and secure, all while reducing global warming and featuring automatic system maintenance with a consumer focus that aims at energy usage customised towards individual needs. Smart meters will be integrated into smart grids for monitoring the energy consumption of private households and businesses. The data will then be channelled into the information network and smart grid platform (Chen, 2010; Shafiullah et al., 2013). Information is also guided from sensors in the cities into a communal data centre. Necessary adjustments or changes a city may require are inferred from the evaluation of data. Sensors are distributed throughout the cities, and their data evaluation and management is performed by universities (Chan et al., 2008). This new form of digitalisation optimises traffic, rubbish disposal, and regional marketing activities (Lombardi et al., 2012) thanks to this data stream evaluation. Traffic is controlled with the help of a navigation system

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– alternative routes are calculated and thus ensure a free flow of traffic. Getting the local population to participate via their mobile applications (e.g., by reporting road damage, overflowing rubbish bins, and broken lights) leads to considerable cost savings for the city. The availability of data can therefore be achieved with different applications resulting from the ICT infrastructure within a Smart City. Cloud services within city-based clouds also contribute to an increasing data availability (Schaffers et al., 2011). “Stable sturdy infrastructures, from optical fibre networks covering the city acting as a backbone to the installation of sensors, are the key for the development of intelligent solutions for cities” [Bakici et al., (2013), p.140].

There are two primary information sources within an ICT infrastructure and usage:

Information flows coming from sensors, elements, and open data (information provided by the public sector) within the city; and information flows from the city’s inhabitants in the form of social media or crowd sourcing (Bakici et al., 2013).

So high ICT availability and quality points out the leading idea of a Smart City to generate development, growth and prosperity (Caragliu et al., 2011).

2 Business-led urban development is emphasised as a Smart City characteristic (Hollands, 2008). A slight transformation in the urban governance from a managerial to an entrepreneurial focus can be observed, particularly in Western cities (Harvey, 1989; Quilley, 2000). The influence of corporations in various sizes is rising steadily (Gottdiener, 2001; Klein, 2000; Monbiot, 2000), and this observation can be applied to Smart Cities. After all, there is a decisive need for businesses in a Smart City:

Public investments are often too marginal to be effective for a cost-intensive smart urban growth. Companies representing private capital markets are needed to supply the city with a sufficient amount of money. These companies comprise small- and medium-sized enterprises (SMEs) as well as large corporations. To attract them, the local government has to provide advantageous conditions for businesses (Hollands, 2008). Even though the dependence of the local government on the private sector as well as public-private partnerships can be affected by barriers and disputes, the high influence of business within a Smart City in terms of cooperation is often positively emphasised (Harvey, 2000).

The need for constant private capital should make the Smart City attractive for new businesses and what they mean for a smart economy. This is based on the idea of a Smart City offering an innovative spirit, which is particularly important for entrepreneurship (Tranos and Gertner, 2012), making a Smart City an entrepreneurial city which provides new business opportunities (Jessop and Sum, 2000). The above-mentioned transparent access to data results in many

“entrepreneurial activities and a constant flow of new firm creation” [Lombardi et al., (2012), p.148]. These cities “are increasingly functioning as seedbeds for creativeness, innovation [and] entrepreneurship” [Kourtit et al., (2012), p.230].

These first two characteristics are essential for a city in order to be regarded as smart (Tranos and Gertner, 2012).

3 The social inclusion of urban residents in public services via e-governance is essential for a Smart City. Governmental services should be provided to all urban residents, citizens, businesses and employees via ICT (Caragliu et al., 2011;

Hollands, 2008). This can be achieved with the integration of ICT in municipal

The Smart City as an opportunity for entrepreneurship 217 services, resulting in improved government efficiency that includes citizens in public services, and makes a government’s open data accessible (Bakici et al., 2013).

Thanks to the work of Hollands (2008) Southhampton can be considered the first

‘real’ Smart City in how it created a portal for smart card applications to be applied in public transport, recreation and leisure activities. This smart card software is a prominent example of giving the citizens access to public as well as a few private services. Here, services can be added as well as removed, depending on the user’s individual choices (Allwinkle and Cruickshank, 2011). Looking at this example, it becomes clear that the usefulness of an application or e-service is important in achieving a high social inclusion (Schaffers et al., 2011).

4 The role of high-tech and creative industries contributing to urban growth is pointed out as another characteristic of a Smart City (Hollands, 2008). The focus of this point is on human and social dimensions rather than on the ‘hard infrastructure’ of

business-led urban development. In particular, the ‘soft infrastructure’ in terms of knowledge networks and the presence of a creative class (in the form of a highly skilled workforce in creative industries) accounts immensely for sustainable economic and urban growth (Florida, 2002; Winters, 2011). Thus, a Smart City needs to attract creative and highly skilled human resources in order to be able to achieve this goal (Nijkamp, 2008).

The smart community is closely connected to this rather human dimension of a Smart City (Eger, 2009; Hollands, 2008). ICT enables people to exchange information rapidly and form closer relationships independent of time and

geographical distance (Eger, 2009). “[…]Cities offer important socio-economic and cultural advantages that are far higher than any other settlement pattern” [Kourtit et al., (2012), p.231]. The availability of a highly skilled labour force is high, particularly in a Smart City, and knowledge spillovers are likely to occur. And the geographical agglomeration of knowledge activities increases knowledge transfer and spillover effects (Kourtit et al., 2012). This aspect is increasingly important for the transfer of tacit knowledge. Codified knowledge such as stock prices can easily be transferred from one person or location to another. Tacit knowledge is often bound to one person, and the codification is complex. Here, its spread only occurs via the personal contact of the knowledge providers (Bolisani and Scarso, 2000).

“Tacit knowledge is transferred through observation, interactive participation, and practice” [Kourtit et al., (2012), p.232]. Put more simply, high availability in a Smart City is highly valued. Additionally, the productivity of knowledge workers rises in these kinds of concentrated environments (Florida, 2002).

5 Hollands (2008) identifies the role of social and relational capital as another important Smart City element. The community within a Smart City has to learn, adapt and constantly innovate (Coe et al., 2001). Citizens, economies and governments have to be able to use ICT in order to achieve a benefit from its implementation. Whenever social and relational capital is ignored by a city, social polarisation (leading to economic polarisation) can be a negative outcome (Caragliu et al., 2011). Florida (2002) understands these cities as learning regions in which individual and collaborative learning processes take place within networks. These learning processes contribute to urban development because the information exchange of actors within a Smart City is high (Kourtit et al., 2012).

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6 The last characteristic of a Smart City involves social and environmental sustainability. The economic and urban growth of a Smart City needs to properly take the scarcity of resources into account. With their high concentration of citizens, the use of resources and production of waste is immensely high in Smart Cities (Gleeson and Low, 2000). The cautious and renewable use of natural resources limits the dimension of both urban and economic growth (Caragliu et al., 2011). In

addition, new business opportunities for modern transport technologies emerge with a focus on increasing the efficiency of urban traffic and the mobility of an urban population (Lombardi et al., 2012). Whatever the case may be, the need for sustainable solutions is high. Innovations like smart grids, smart software or smart traffic systems contribute to the environmental sustainability in a Smart City (Nathan, 2013; Sen et al., 2012; Shafiullah et al., 2013; Sivaram et al., 2013). In order to achieve this goal of sustainability, it is necessary that local governments

“undertake initiatives and strategies that create the physical-digital environment of Smart Cities, actualising useful applications and e-services” [Schaffers et al., (2011), p.435].

Leaving the ‘hard infrastructure’ of ICT as a main requirement aside for a moment (Schaffers et al., 2011), all of the formulated characteristics effectuate business-led urban development. “A strong pro-business/entrepreneurial state ethos” [Hollands, (2008), p.309] is a main concern of a Smart City in addition to its new technologies. Cities

“develop competitive advantage based on their ability to mobilise the best people, resources and capabilities required to turn innovations into new business ideas and commercial products” [Thite, (2011), p.624]. Studies have proven that technology and innovations allow communities to have an especially high impact on economic and urban growth (Stolarick and Florida, 2006; Wojan et al., 2007).

As a consequence, local governments and corporative actors have focused on the implementation of the idea of a Smart City – especially in European countries (Thite, 2011). The European Union releases an annual ranking of cities based on six different fields of research: smart economy, smart mobility, smart governance, smart environment, smart living, and smart people (Smart Cities, 2013). These dimensions are related to traditional regional and neoclassical approaches to urban growth (Lombardi et al., 2012).

They also represent the main characteristics referred to above: economic growth, transport and ICT economics, governmental services, natural resources, quality of life, and human capital (Giffinger et al., 2007; Lombardi et al., 2012). Since there is no consistent understanding of a Smart City, manifold terms exist for its classification (Lombardi et al., 2012). An alternative formulation is offered by four policy prototypes of a city: connected city (ICT usage and mobility), entrepreneurial city (economic growth), liveable city (careful use of scarce resources), and pioneer city (social capital) (Nijkamp and Kourtik, 2011). The terms safe, secure, environmental and efficient are also used in connection with a Smart City (Bakici et al., 2013; Caragliu et al., 2011; Giffinger et al., 2007; Komninos, 2006).

Once the digital revolution created the necessary circumstances for the implementation of a Smart City, the literature concerning this topic began to develop (Bakici et al., 2013). Because sustainable economic growth resulting in urban growth is the main indicator for a city as being smart, the question on how to achieve this growth has been analysed in various ways. Studies focusing on the analysis of the presence of highly skilled human resources (Shapiro, 2005; Thite, 2011; Winters, 2011),

The Smart City as an opportunity for entrepreneurship 219 transportation systems (Xiong et al., 2012), ICT infrastructure (Chen, 2010; Hancke et al., 2013; Nathan, 2013; Pirisi et al., 2012; Sarfi et al., 2011; Shafiullah et al., 2013;

Sivaram et al., 2013; Zhu et al., 2013), and applications and services (Calderoni et al., 2012; Schaffers et al., 2012; Vilajosana et al., 2013; Walravens, 2012) have been published. Case studies for European Smart Cities in general (Caragliu et al., 2011) as well as on Barcelona (Bakici et al., 2013), Helsinki (Hielkema and Hongisto, 2013) and Seoul, San Francisco and Amsterdam (Lee and Hancock, 2012) have been conducted. In spite of this, the field of entrepreneurship as a main contributor to the economic growth of a Smart City has been left largely uncovered. Researchers favourably note how Smart Cities attract companies and entrepreneurs (Bakici et al., 2013). Sauer (2012) evaluates the question of smart entrepreneurs and how they concern community innovations as an outcome of Smart Cities in general. Still, the thesis of Smart Cities offering attractive circumstances for new businesses still awaits empirical proof. What the literature names as the most important circumstances and motivations for entrepreneurs in a Smart City will be analysed in the following.