Smartness, City Efficiency, and Entrepreneurship Milieu

Smartness, City Efficiency, and Entrepreneurship Milieu

Luigi Mundula (University of Cagliari, Italy) and Sabrina Auci (University of Palermo, Italy)
DOI: 10.4018/978-1-5225-1978-2.ch009
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Abstract

The definition of smart city and its measurement are not shared. Different characteristics define a city as smart, which is strictly linked to urban efficiency and to entrepreneurship spirit in a multifaceted way as well as to citizens' well-being. On the basis of the comparison between city and entrepreneur behaviour and on the definition of Giffinger et al. (2007) of smart city, this chapter verifies the efficiency of a sample of European cities using a stochastic frontier approach. Departing from this analysis, the chapter develops the relative smartness definition based on the efficient use of its own resources and related to the different context. Moreover, as a city becomes close to the optimal value, the frontier will shift upward because of the more attractiveness and a new adjustment mechanism should be followed to become efficient again (virtuous cycle). Then, the concept of smartness becomes dynamic. This definition, taking into account city's performance, is able to sustain the entrepreneurship milieu of a city.
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City Smartness, Efficiency, And Entrepreneurship Milieu

The smartness notion is strictly related to territory, efficiency and innovation promoted by an entrepreneurship milieu. At urban level, the smart city concept, firstly related to energy saving and efficiency use issues, has been developed to include different aspects such as quality of life, environment, transport net, telecommunication facilities and so on.

Over the past 40 years, innovation and territory have been connected in different ways. Among the main theories, the industrial district of the Third Italy (Bagnasco, 1977), the industrial clusters (Porter, 1990), the science and technology parks (400 cases in Europe alone) and the so-called technopolis can be recalled. Innovation is mainly generated by three factors:

Key Terms in this Chapter

Growth: The rising, in quantitative terms, of an economy; denotes the capacity of an economy of increasing the production of goods and services from one period of time to another. Economic growth is usually measured by the percentage variation of gross domestic product (GDP).

Well-Being: A satisfactory condition of existence i.e. good living conditions such as good health, happiness, prosperity, good work conditions, less pollution, less social inequality, spreading of wealth, and so on.

City Efficiency: The ability of a city of maximizing its own output (well-being) given a set of inputs or minimizing the use of its own resources (inputs) to obtain a given output.

Milieu: A word of French origin, meaning “context” or “environment”, which is used, in particular, to stress social and cultural aspects featuring a context; for example, it can be used to indicate social and cultural context in which a person lives or a firm performs and from which a person or a firm can be influenced.

Stochastic Frontier Approach: Several econometric approaches designed to provide estimates of technical inefficiency introduced as a second component of the error term in addition to the noise component.

ICT: Information and communication technology that includes any communication devices or applications necessary for the transmission system, reception and processing of information in digital form.

Production Function: The mathematical relationship between the quantity of output that a firm can produce and the bundle of inputs (as capital, land, labour) used to produce the output itself.

Technical Inefficiency: A producer is technically inefficient if is not able to minimize a bundle of inputs of a production, given an output level or if is not able to maximize an output level given a bundle of inputs.

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