The Role of Business in the Innovation Ecosystem: The Case of Smart Cities as Business Models

The Role of Business in the Innovation Ecosystem: The Case of Smart Cities as Business Models

Manuela Gutiérrez-Leefmans (Universidad de las Américas Puebla, Mexico)
DOI: 10.4018/978-1-7998-2097-0.ch002
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Abstract

The rapid advance in the technology sector in the last decades has ignited smart city initiatives all over the world, which aim to provide solutions to current urban problems related to energy, waste management, traffic, and security, among others. However, although smart territories have been studied from different approaches, there seems to be a gap in the relationship between smart cities and businesses. Private entities have the knowledge, experience and in most cases, the resources to contribute to the synergy between governmental agencies and entrepreneurs. Three case studies from successful smart cities are presented together with an additional case study using original research in order to study the smart city under a business model framework, where each actor generates and captures value. Results indicate that private organizations play a key role in the innovation ecosystem, and they are crucial for collaboration with universities to encourage civil society participation in the smart city.
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Introduction

The advances in the information and communications technologies in the last decades, together with the globalization, urbanization, and the rapid growth in the population density in urban cities, demands that services and infrastructure be provided to meet the needs of city inhabitants (Rathore & Rho, 2016). Some authors have focused on the use of big data analytics (Al Nuaimi, Al Neyadi, Mohamed, & Al-Jaroodi, 2015) to provide solutions that enable better decision-making in certain territories, while others have focused on the security and crime (Catlett et al., 2019), privacy and protection (Li, Dai, Ming, & Qiu, 2016), governance (Meijer & Bolívar, 2015) and the citizen (Cardullo & Kitchin, 2019). However, although smart territories have been studied from different approaches, there seems to be a gap in the relationship between smart cities and businesses (Palma-Ruiz, Saiz-Álvarez, & Herrero-Crespo, 2019). The role of the business is a significant one, as private entities have the knowledge, experience, and in most cases, the resources to contribute to the synergy between governmental agencies and entrepreneurs to create smart territories that derive in social innovations.

The research here presented aims to answer the following question: How does the cooperation between actors in particular businesses, need to be articulated in order to generate value for all actors within an innovation ecosystem?

Business models can help to understand such articulation in the smart city context. Business models explain the logic and functioning of a business. A way of viewing an innovation ecosystem is to see it as a business and to understand the different agents, roles, and activities that make the model work. That is, generating value for users and capturing value for the company (Teece, 2010).

This chapter begins presenting a review of the most recent literature on smart cities and innovation ecosystems that leads to a review of business model literature. The purpose of this is to make the reader understand the relationship between innovation ecosystems and the business model concept, emphasizing the role of the business. Three case studies from successful smart cities based on smart city rankings and regional differences are presented with a brief discussion of their innovation ecosystems. An additional original case study using primary data is presented. Four main elements, which are common in business model literature, are taken to base the analysis of all case studies. The chapter ends with a proposal, discussion, and conclusions that point out policy implications.

Key Terms in this Chapter

Social Innovation: A product, service, paradigm, or position innovation with a social goal. It includes all those innovations that are addressed to a community by generating value for its inhabitants.

Value generation: Actions that increase the value of goods or services. An actor within an innovation ecosystem participates in it, as it can help to generate value for others.

Quadruple Helix: Innovation system model where not only the government, industry, and universities intervene, but the citizen himself is another crucial actor within the system.

Innovation System: System where the flow of ideas and communication between actors (usually the government, industry, and universities) are key to innovative products, services, or processes.

Business model: An architecture, formula, or system to generate value for the user of a product or service, and to capture value for the business owner (such as profit generation).

Smart Territory: City or region of a country where the use of ICT (information and communication technologies) enables a better quality of life for its citizens. Its goal is to increase efficiency by reducing waste and energy consumption, improve security, and ease governmental processes.

Innovation Ecosystem: Innovation system with a large number of actors and resources from different natures, which interrelates to generate innovation. It may go beyond a national innovation system.

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