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Smart cities ranking: An effective instrument for the positioning of the cities

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ACE 12
 
 

SMART CITIES RANKING: AN EFFECTIVE

INSTRUMENT FOR THE POSITIONING OF
CITIES?

RUDOLF GIFFINGER AND HAINDLMAIER GUDRUN

ACE: Architecture, City and Environment = Arquitectura, Ciudad y

Entorno [en línea]. 2010, Año IV, núm. 12 Febrero. P. 7-25

ISSN: 1886-4805

Website access: http://www-cpsv.upc.es/ace/Articles_n10/Articles_pdf/ACE_12_SA_10.pdf

Access UPCommons: http://hdl.handle.net/2099/8550

 
SMART CITIES RANKING: AN EFFECTIVE INSTRUMENT FOR THE
POSITIONING OF CITIES?

GIFFINGER, Rudolf1
GUDRUN, Haindlmaier2

Paper first received: 7-9-2009 Final form: 25-1-2010

Key words: city ranking, competitiveness, strategic efforts.

Abstract

Due to different reasons cities are increasingly challenged to improve their competitiveness.
Different strategic efforts are discussed in planning sciences, new approaches and instruments
are elaborated and applied, steering the positioning of cities in a competitive urban world. As
one specific consequence city rankings have experienced a remarkable boom. However, there
is some evidence that public attention of city rankings is mainly concentrated simply on the
ranks themselves totally neglecting its meaning as an instrument for strategic planning.
In order to elaborate this potential meaning of rankings the paper gives an overview of different
types and introduces an own approach called ‘Smart City ranking’. Based on this ranking
approach and corresponding experiences of different cities reacting on its dissemination in the
second part the paper shows how this approach can be used as an effective instrument
detecting strengths and weaknesses and improving a city’s competitiveness through relevant
strategic efforts.

1. Introduction and background

Because of radical economic and technological changes cities are facing growing competition
for investors, tourists, qualified labour or international events over the last decades (Begg
1999). Therefore, cities are challenged to introduce more strategic instruments in order to
concentrate relevant organizational capacities and to identify most relevant strategic projects
steering urban and metropolitan development in an effective and competitive way (Jessop et al.
2000; Maier, 2000).

As one of several consequences city rankings have experienced a remarkable boom: On the
one hand the comparison of cities can support investors in their choice of location, on the other
hand it can be an important guide for the cities to judge their strengths and weaknesses and to
define their goals and strategies for future development and better positioning in the urban
system. However, there is some evidence that the discussion of city rankings is mainly

1
Rudolf Giffinger: Centre of Regional Science, Vienna University of Technology. Vienna, Austria. Contact e-mail:
[email protected]
2
Gudrun Haindlmaier: Centre of Regional Science, Vienna University of Technology. Vienna, Austria. Contact e-mail:
[email protected]

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concentrated on the final ranks totally neglecting (1) the methods and indicators used (see
Schönert 2003) resp. (2) its purpose and effectiveness for strategic planning aiming at the
improvement of the position to be gained.

In front of this development, this paper concentrates first on the question what the basic
characteristics of national and international city rankings are. Correspondingly, a selected
number of city rankings are analyzed in order to identify different types of such rankings.
Thereby, the number and features of the indicators used in these rankings as well as their
methods of sequencing is described systematically. Based on this typology the potential
benefits and limits of rankings are worked out.

In a next step an own ranking approach (“European Smart Cities”)3 is described in order to
show how a ranking approach can not only provide a city’s ranking number but also its manifold
characteristics as a base for strategic discussion. The hierarchical and flexible features of the
Smart City approach are worked out; impacts of the validity of data sources are discussed
critically. Nevertheless, we can show that the complexity of the ranking approach (hierarchical,
the sample of indicators and cities) constitute the base for a comprehensive assessment of
strengths and weaknesses which was acknowledged in specific reactions of several cities after
the dissemination of first results.

In the last part of the paper, we concentrate on the question what competitiveness means and
in which ways the Smart City approach may be used as an instrument for enhancing a city’s
territorial capital in the context of its competitiveness. Accordingly, different urban strategies for
steering its territorial capital through corresponding processes of learning which are based on
the Smart City results are shown. Answering these questions the paper concludes in
recommendations for making city rankings a more significant and effective instrument for
steering economic, social and spatial processes in cities.

2. Characteristics of rankings

As a consequence of strong economic and technological changes over the last decades cities
and regions are facing growing competition for high ranked economic activities (see Begg
1999). On the urban level, cities aim at improving their competitiveness and their position in the
European or national urban system. Since the European Integration process has diminished
differences in economic, social and environmental standards4, cities have converged in their
basic conditions for competition, which is increasingly scaled down from the national level to the
level of cities and regions (see Storper 1995). This trend enhances the importance of specific
local characteristics, which provide comparative advantages competing for increasingly
footloose and mobile global enterprises, investors, tourists and capital. Facing this
development, urban competitiveness and corresponding strategic approaches with specific
goals and modified instruments have become important efforts of urban politics (Giffinger et al.
2003).

3
This ranking was elaborated and published by an international consortium headed by the University of Technology
Vienna (Giffinger et al. 2007).
4
In particular the adoption of EU standards and norms in the accession countries has accelerated this trend (see
Pichler-Milanovic 2005).

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One of these instruments is the ranking approach which primarily get attention through politics
and mass media. However, ranking approaches have already a long tradition and different
forms of ranking approaches have been developed. Thus, we start with a definition of ranking
approaches in order to concentrate on a specific group within a wide and heterogeneous
spectrum of them. Based on this definition, a typology of ranking approaches is elaborated and,
finally, the explanatory and comparative power of such approaches is described.

2.1 Typology of rankings

In principle, the concept of comparing cities by using certain criteria is a well known point of
view in urban research ranging from the very first calculation of a rank size rule, to the theory of
Christaller on the centrality of places and, currently, to the ongoing discussion on global cities.
These concepts focus on an overall classification of cities (more recently based on network-
oriented criteria), but in the con-tent of this paper, the term “ranking” is used in a more precise
way, as one is confronted with a very broad spectrum and conceptual confusion when
examining the state-of-the-art on city rankings: many different terms like “city ranking”,
“comparison of cities“, “benchmarking“, ”city-scan“ etc. can be found. Therefore, constitutive
elements of a city ranking – as the term is used in this paper – are that at least two cities are
included, the structuring of cities are in an ascending/descending order resp. arranged in a
hierarchy and the use of a combination of at least two indicators for building up the
order/hierarchy.

As indicated before, not much research has been conducted on the methodology of rankings
and their importance for different actors or their impact on certain issues of city planning.
However, Fertner et al. (2007) define three distinguishing aspects by which city rankings can be
compared and classified:
• Objective: The objective of the ranking is not only specified by its aim and its target
audience but also by its spatial scope and the desired factors and indicators behind the
ranking.
• Methodology: Methodology does not only include the way of data collection and
processing but in a first step also the limitation of cities examined in the ranking.
• Dissemination: The way how the results are evaluated, interpreted and presented is
crucial for the impact of the ranking.

Based on these considerations, this paper deals with two specific research questions on the
types of rankings: how can one differentiate types of rankings systematically? What are the key
issues to distinguish several city rankings? To answer these questions, a multiple
correspondence analysis has been applied on 20 different city rankings published between
2000 and 2009. These rankings have been analyzed along several dimensions. (see Fig. 1)

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 Table 1. Dimensions for analysis and creation of typology of city rankings5
Dimension Analyzed indicator (examples)
Authorship and Author(s) and sponsor(s)
publication Type of publishing
Time scale of used data
Data base Published source of data and/or raw data available
Method of calculation of overall-ranking
Number of indicators
Use of indicators Method of calculation
Use of standardized values
Size of city sample
Spatial dimension
Selection criteria for cities
Overall-ranking; Results for selected topics and cities
Elaborateness of results
Results available for free/liable to pay costs

Source: Own elaboration.

By means of these dimensions, 5 types of city rankings can be identified by applying a multiple
correspondence analysis6:

1) Commissioned economy/consulting-oriented rankings with missing transparency and

documentation comprise quite many cities (scope: worldwide) without declaration of
sample selection. These rankings apply a moderate number of indicators (median = 32)
for calculation without documenting the indicators themselves nor the used data base,
nor the method of calculation itself. The detailed results of the ranking are only partially
available.

2) Commissioned rankings with insufficient transparency created by expert panels or other

private research institutes work on varied spatial dimension and include many cities
(median = 75) without making the city sample selection procedure really apparent. The
used data base is not clearly documented either, although some of the original data is
published within the quite detailed results (overall ranking, results on sub-rankings,
etc.). A list of indicators (median = 43) is published, but the rankings do rarely provide
information on the calculation method. Sponsors of these rankings are financial
institutions, magazines or real estate agencies.

3) Rankings compiled by magazines or NGO’s without sponsoring are usually created for
one specific country or a whole continent by taking into account a comparatively low
number of cities (median = 25). The selection of the city sample is conducted by
population size and the calculation of the overall-ranking is done by average values.
There is no consideration of missing values within the used data base, but the data

5
Furthermore, some additional dimensions have been collected, such as date of publishing, types of indicators,
objectives of rankings etc. These dimensions have not been considered for compiling the typology of rankings.
6
Model: N = 20 / Cronbachs Alpha (average value) = 0,944. Multiple correspondence analysis arranges objects or data
measurements according to their similarity/dissimilarity along certain dimensions (see Blasius 2001).

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 base is made transparent for each indicator. The documentation of the method used for
the ranking is fair; however, the results are available in a very detailed way.

4) Well-documented and methodically advanced rankings conducted by universities or

economic research institutes with sponsors in different areas (financial institutions,
magazines, real estate agencies etc.) mainly focus on one country or one continent.
The selection criteria for the city sample are either population size or a combination of
different characteristics. All parts of the ranking are made transparent (entire list of
indicators available, description of calculation method etc.) and the method used for
calculation of the ranking is usually more advanced than those used within the other
types of rankings described above (e.g. use of standardized values, consideration of
missing values etc.). The data base is documented for each indicator and original data
is published to some extent. The elaborateness of results is pretty well, too, focusing
more on the overall-ranking and on methodological details than on the description of
single cities or on thematic “Top10-Evaluation”.

5) Special cases (outliers; 2 rankings) cannot be allocated to one of the four above
described types of city rankings.

The table given below shows the most important characteristics of the four different types of city
rankings. Type 5 comprises only two outliers and is not discussed below:

Table 2. Characteristics of typology

Type 1 Type 2 Type 3 Type 4

Number of rankings 3 3 4 8
Transparency of ranking
very bad bad good very good
calculation
Documentation of data base very bad bad very good very good

Number of indicators7 32 43 51 29
country / country /
Spatial dimension worldwide varying
continent continent
Number of cities8 60 75 25 54
Transparency of city-sample
very bad bad very good very good
selection
Elaborateness of results9 2,17 2,67 2,75 2,62

Source: Own elaboration.

7
Median.
8
Median.
9
Average index value (“elaborateness-index” of ranging from 1 (results only documented by overall-ranking) to 4
(results documented by overall-ranking, sub-rankings, results on selected cities and results on thematic “Top10-
evaluation”).

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2.2 Benefits and limits of city rankings
Based on that typology we can further on deal with the question, whether and how the results of
rankings can be applied in strategic policy advice for cities. Linked to the findings presented in
table 2, one can point out the following explanatory and comparative power of city-rankings for
steering urban competitive development:

Benefits and potentials

Obviously, rankings attract attention in general and call attention to issues of regional science in
particular. In addition to that, the release of a new ranking often stimulates a broad discussion
on regional development strategies, as Schönert has shown within a study for 20 German cities
(Schönert 2003). More generally considered, one can state that theatricality and
production/stating of (mass-media oriented) policy gain more and more importance (not only
caused by media, but also supported by the self-promotion of cites and promotion of policies by
politicians themselves; see Meyer/ Schicha/Brosda 2001). Therefore, rankings can be applied to
issues of city marketing or other relevant policy areas (rankings as “flagships”) – especially
rankings of type 1 (as mentioned before) seem to be tied up to this idea, as these rankings
specifically target (mass) media and often work on a consulting-oriented basis.

Further potential capacity of rankings follows from the fact that they are a competitive
instrument and that positive characteristics are made public outside the city itself with the help
of city rankings (Fertner et al. 2007). Cities are enabled to find their position within the ongoing
urban competition and to focus their profile. Furthermore, city rankings may initiate learning
effects as regional actors are forced to make their decisions transparent and comprehensible,
but, however, this transparency is only guaranteed with rankings of type 4 (to a lesser extent
also within type 3).

Finally, rankings focusing on a clearly defined issue provide more applicable results than
rankings providing ‘just’ an overall list. For example, rankings of type 3 (mainly conducted by
NGOs without sponsoring) have a very clear focus, which is reflected by a high elaborateness-
score. Likewise, also rankings of type 2 show up with a certain focus represented by the
particular expert panels creating the ranking (expert panels are composed according to the
intention of the city ranking).

Limits and risks

The first part of limits of city rankings can be subsumed as the problems of “beauty contest“ and
“recursive self-affirmation“ (Schönert 2003): the discussion on ranking results very often focuses
on final ranks and, consequentially, complex interrelations and causalities are unattended or
neglected. Public attention is mainly focused on the final ranking without considering the
methodological aspects behind the ratings, which can be observed in the conception of many
rankings. Except for the rankings of type 4 (and so a smaller extent also type 3), the
methodology of the respective ranking is only considered within a little notice or as footnote.
The combination of a very selective public perception of rankings results and the selective city
sampling within rankings enforces a confirmation of existing stereotypes and clichés. Moreover,
this problem of boosting stereotypes is probably worsened if the method of city sample selection
is not made transparent (as done in rankings of type 1 und type 2).

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Considered from a more strategic point of view, city rankings may threaten long-term
development strategies as rankings strengthen competition between cities, which may have
negative consequences like deregulation, structural and spatial problems, risk for socially
acceptable city development etc. Furthermore, the non-reflected handling of ranking results is
counterproductive for balanced city development strategies as rankings are excessively
acclaimed by the “winners” and ignored by the “losers” (Fertner et al. 2007). Moreover, cities
(mainly badly ranked cities) oppose comparisons with others (“benchmarking“) in general
(Schönert 2003) and, in addition to that, rankings tend to follow a “generalistic” approach, as
many financiers ask for clear results which can easily be communicated in public and so most
rankings aim at finding the “best” or “most attractive” city in general terms totally ignoring the
fact that different activities need different conditions. This non-deliberate point of view is
encouraged mainly by rankings of type 1 and type 2, or, the other way round, produces rankings
of these two types rather than more (methodologically) advanced city rankings.

3. European Smart Cities – Ranking: basic features, forms of results and

experiences

The European Smart Cities - Ranking approach was developed according to the following
objectives:
(1) transparent ranking of a selected group of cities
(2) elaboration and illustration of specific characteristics and profiles of every city
(3) the encouraging of benchmarking between selected cities
(4) identification of strengths and weaknesses for strategic discussion and policy advice.

This ranking approach has been published in 2007 (Giffinger, et al., 2007) and explicitly deals
with medium sized cities in Europe, taking into account their perspectives and challenges of
development. Basically, medium-sized cities, which have to cope with competition of the larger
metropolises on corresponding issues, appear to be less well equipped in terms of critical mass,
resources and organizing capacity. Even though the vast majority of the urban population lives
in such cities, the main focus of urban research concentrated up-to-now on ‘global’ metropolises
neglecting the importance and specific challenges of medium sized cities in the European
context. Due to these specific objectives and basic considerations the Smart City approach
finally shows the characteristics of type 4 of the above described typology, showing up with a
quite high number of included cities, a transparent method of calculation and detailed results, as
described in the following.

3.1 Characteristics of the Ranking approach

In order to implement this approach ”smart city” was defined – based on round table discussion
and literature research – as follows: “A Smart City is a city well performing in six characteristics,
built on the ‘smart’ combination of endowments and activities of self-decisive, independent and
aware citizens.” (http://www.smart-cities.eu/model.html; found on 18th of June, 2008). However,
the term ‘smart city’ is not used in a holistic way but in most examples one emphasizes specific
characteristics of different fields of urban development and even the awareness and
participation of a city’s inhabitants regarding special issues of urban development. Accordingly,

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‘smart’ implies the implicit or explicit ambition and intention to improve its performance regarding
urban development in the specific characteristics.

According to literature and a round-table-discussion, six ‘smart’ characteristics had been

identified which are likely to be relevant: economy, people, governance, mobility, environment
and living. These six characteristics were regarded as the relevant group characterizing a smart
city. They can be broken down into 31 relevant factors (see list of factors in figure 2) which
reflect the most important aspects of every smart characteristic. Finally, every factor of a smart
characteristic has been defined empirically through a group of corresponding indicators. In total,
74 indicators were defined and used for operationalizing and aggregating the relevant factors (in
total 31 factors for the ranking procedure as shown in figure 1).

Figure 1. Description of Smart City

Source: Own elaboration.

To give an example: ‘Smart people’ as characteristic is defined through the 7 factors mentioned
below in figure 2; for instance, the factor ‘affinity to lifelong learning’ is then operationalized
through the indicators ‘Book loans per resident’, ‘Participation in life-long-learning in %’ and
‘Participation in language courses’.

Figure 2. List of characteristics and factors

SMART ECONOMY (Competitiveness) SMART PEOPLE (Social and Human

Capital)

ƒ Innovative spirit ƒ Level of qualification

ƒ Entrepreneurship ƒ Affinity to lifelong learning
ƒ Economic image & trademarks ƒ Social and ethnic plurality
ƒ Productivity ƒ Flexibility
ƒ Flexibility of labour market ƒ Creativity
ƒ International embeddedness ƒ Cosmopolitanism/Open-mindedness
ƒ Ability to transform ƒ Participation in public life

SMART GOVERNANCE (Participation) SMART MOBILITY (Transport and ICT)

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 ƒ Participation in decision-making ƒ Local accessibility
ƒ Public and social services ƒ (Inter-)national accessibility
ƒ Transparent governance ƒ Availability of ICT-infrastructure
ƒ Political strategies & perspectives ƒ Sustainable, innovative and safe
transport systems

SMART ENVIRONMENT (Natural SMART LIVING (Quality of life)

resources)

ƒ Lack of pollutionof natural conditions ƒ Cultural facilities

ƒ Pollution ƒ Health conditions
ƒ Environmental protection ƒ Individual safety
ƒ Sustainable resource management ƒ Housing quality
ƒ Education facilities
ƒ Touristic
ƒ Social cohesion

Source: Own elaboration.

All 74 indicators which are finally used in the ranking obtained from the following data sources:
Urban Audit (local, core), ESPON 1.4.3 project (FUA level), ESPON 1.2.1 project (NUTS 3),
Eurostat database (NUTS 3, NUTS 2 or NUTS 0), various Eurobarometer special surveys and a
study (Ministère de la culture, 2005) on creative industries (NUTS 0). Of course, the majority of
all indicators (65%) are defined at the local level. Others which are derived from data on the
national or NUTS 2 level are included because they provide additional information not only
about the endowment of cities but also about the perception and assessment of specific
developments.

In a second step questions regarding the selection criteria of cities as well as the aggregation
procedure were dealt with from a methodological point of view: In order to make the ranking
approach more transparent, the definition of the city sample is essential. In comparison to other
ranking approaches the Smart-City approach considers only medium sized cities in Europe. As
there is no clear and common definition of medium sized cities, we defined four criteria for
selection:
• Potential members are all functional urban areas in Europe (FUA): these are about
1.600 entities in Europe according to the findings in the ESPON 1.1.1 study including all
27 EU-member states as well as Norway and Switzerland. (Nordregio, 2004)
• Within this group 584 core-cities with a population between 100.000 and 500.000
inhabitants were selected because they represend medium-sized cities and non-capital
cities for most countries. The only exception is Ljubljana in Slovenia.
• Within this group only such 364 cities were selected which had at least one university
which indicates a precondition for knowledge based and smart urban development:
• Finally, the last selection criterion of the remaining cities was a catchment area of less
than 1.5 million inhabitants assuming that such 256 cities were not part of a
metropolitan agglomeration.

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So, 256 medium sized cities remain for a potentially ranked group. Due to accessibility and
quality of data this number is reduced to 70 cities. Besides, a small number of these cities are
considered although they have a slightly larger catchment area. Of course, any reduction or
addition of a city in the ranking approach will affect the results in a marginal way. However, the
definition of this group of 70 cities finally guarantees that they provide valid and comparable
information. The city sample (and the grouped ranking of cities as the most aggregated result) is
shown in figure 3.

The aggregation procedure for defining the Smart-City ranking is the following: The above
described indicators are defined in different ways and, thus, they show completely different
levels of values and different ranges which are not allowed to be merged in any form. Therefore,
these indicators are standardized through a z-transformation resulting in a distribution with an
average value ‘0’ and a standard deviation of ‘1’. Through this transformation indicators are now
comparable and appropriate for any aggregation procedure. Assuming the interchangeability of
indicators defining a factor all (not missing) values are added up to the aggregated value for
every factor resp. for every characteristic and in total for every city itself. As some cities show
missing data which does not allow calculating the (standardized) indicator value, we finally do
not use the sum of all values but the average value of the aggregated values divided through
the case-specific number of values. Finally, assuming that there is no difference in the
importance of distinct fields of smart urban development, all indicators, factors and
characteristics remain non-weighted in the aggregation procedure.

Figure 3. City sample and group rating (Source: Giffinger et al. 2007)
The darker the color the better the rating

Source: Own elaboration.

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However, two aspects of using the above mentioned data sources in our approach should be
mentioned critically:
• First, the Urban Audit data provide information about a wide range of different and
important fields of urban development and living quality. Despite the efforts of this
initiative in collecting valid and reliable data on the European level one should be aware
of the basic problem of their comparability. This aspect of comparability is the more
important and problematic the more social and economic issues (i.e., health care
system) on the national level differ across European member states. Consequently,
same or similar definitions of variables probably do not describe the same and
comparable issues.
• Second, the use of data sources which offer information at the level of national states
(Eurobarometer), have a strong restrictive impact on the analytical power of the Smart
City approach: Due to this fact, groups of cities which belong to one of the member
states show same indicator values – independent of a city’s individual situation.
However, comparability is at least possible between (groups of) cities between member
states.

3.2 Different forms of results

Based on these definitions and methods smart cities are ranked according to their average
value across all indicators. Usually, this information on the rank of a city is highly recognized
and discussed in public media. Whereas the rank itself does not provide specific and valuable
information for policy advice, the geographic distribution of ranked cities seems to be very
interesting under the perspective of comparable smart cities on the interregional, national and
European level. For an overview of the cities and their grouped ranking see fig. 3

Besides the ranking results empirically detailed findings are produced and illustrated via tables,
graphs and maps. According to the aggregation procedure every city shows a value for its
smartness. In addition, for every city the profile regarding the six characteristics is displayed and
indicates a relative heterogeneity in the city-specific bundles of characteristics at a first glance.

Of course, ranking approaches and their findings will have more public attention the more
dissemination of relevant results is encouraged. As relevant empirical results which are
disseminated through a corresponding homepage (http://www.smart-cities.eu/) we provide most
relevant information about:
• the whole sample in order to show the position of distinct cities within the group or
relative to other cities (benchmarking)
• selected single cities in order to illustrate its specific profile of characteristics and
corresponding factors.

Figure 4 shows the final ranking with cities of position 1 to 10. Of course, the homepage not
only provides the total ranking but also the specific ranking in one of the six characteristics in an
interactive way.

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 Figure 4. Smart Cities ranking results

Source: Own elaboration.

Finally, figure 5 shows the profile of a city’s aggregated smart characteristics in total as well as
the profile of every characteristic defined by its smart factors (i.e, factors of smart economy).

Figure 5. Profiles of a Smart City

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Source: Own elaboration.

In particular, figure 5 resp. the profiles of characteristics and factors already show the
descriptive power and strategic potential which the approach provides. These forms of findings
raise on the one hand the possibility for benchmarking with other cities. On the other hand, such
findings could be analyzed in more detail on the level of 74 indicators. For instance, the
negative value (compared to the average value of all European smart cities) of ‘international
embeddedness’ It is possible to discuss in its three dimensions according to the constituting
indicators ‘companies with headquarter in the city quoted on national stock market’, ‘air
transport of passengers’ and ‘air transport of freight’.

3.3 Impacts of dissemination

Results have been disseminated through two activities: (1) a press conference was organized at
the international fair EXPO REAL in Munich, Germany, in 2007; (2) an own site in the internet
was issued (http://www.smart-cities.eu/) which is still online.

The press conference provoked attention and provided the dissemination of the results by
international press. Newspapers in different European countries (Germany, Finland,
Luxembourg, Slovenia and Austria) reported about the Smart City ranking results. At least same
importance for dissemination had the presentation of the webpage during the press conference.
This webpage provides more information about the approach and the model, the ranking of all
cities in total resp. due to distinct characteristics and, finally, allows the benchmarking for
distinct cities illustrating corresponding results.

As expected these forms of dissemination provoked positive reactions basically confirming our
results mostly under the aspect of benchmarking. Besides, some cities reported and discussed
the ranking on city-specific websites and took the detailed information for discussion of recent
urban issues. Even not so well ranked cities made a statement on that results and agreed with
their ranking due to the detailed and transparent approach.

More important: some cities decided to take up this findings for official policy issues; for
instance Turku (see: http://www.utu.fi/en/research/researchs_turku/turku_was_ranked_high_in_
the_ranking_of_european_middle-sized_cities.html; seen 19.8.2008); and, some cities decided
to become object of the ranking although they had not been selected according to our criteria
resp. they want to be partner in a more exclusive network of smart cities which could provide
more detailed information in order to bring forward their city development strategy.

Finally, some cities (in Austria, South England or in Central European states) asked for a
specific policy advice and proposals on strategic efforts based on the Smart City approach. In
order to do such recommendations one has to answer the question what significance rankings
may have for the strengthening of urban competitiveness in a learning process.

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4. Rankings in the context of urban competitiveness

Rankings are increasingly applied and used for a simple but in public discussion very effective
benchmarking and branding of cities. The observed reactions of stakeholders in most cases do
not have a profound and sustainable effect on cities which are object of this ranking –
independently of their rank and success. However, according to our experiences there are
specific possibilities to use the results of ranking approaches in a more effective way for the
improvement of a city’s competitive situation, but first one has to clarify what does urban
competitiveness mean and how competitiveness is determined through its territorial capital.

4.1 Territorial capital as the base for urban competitiveness

In a more complex perspective, competitiveness considers urban development not only in

economic terms but also in terms of living quality and socio-spatial cohesion on the urban-
regional level (Begg, 1999, Giffinger, et al., 2003). This means that a city which is competitive
against others is able to increase its economic performance and wealth whereas other social
and environmental factors of urban quality will not be endangered through economic
development. Accordingly, urban development (economic and demographic growth) is regarded
as the outcome of a comprehensive understanding of competitiveness influenced by a variety of
relevant factors in the economic social, demographic, environmental and cultural sphere.

The explanation of competitiveness is subject of academic discussion for many years. (i.e.,
Parkinson, 2003; or Begg, 1999). Since some years there is an increasing discussion on the
relevance of territorial capital as the base for urban competitiveness. According to OECD (2001,
p.13) it “refers to the stock of assets which form the basis for endogenous development in each
city and region, as well as to the institutions, modes of decision-making and professional skills
to make best use of those assets.” In a clear analytical perspective Camagni (2007: 4ff)
elaborated a simple taxonomy of components of territorial capital defined by two dimensions:
one dimension represents the materiality; the other dimension represents the degree of rivalry.
Every dimension is divided into three categories of materiality resp. rivalry providing in
combination a matrix of nine elements. Based on these elements, the matrix finally
distinguishes between tangible, mixed and intangible goods and private goods, club goods
(impure public goods) and public goods which in sum define the territorial capital. Discussing
these nine different elements and their importance for urban and regional development
Camagni identifies the ‘traditional square’ and the ‘innovative cross’ of corresponding goods.

This ‘innovative cross’ in particular indicates that networks and regional governance approaches
in form of networks of private, semi-public and public partners as well as relational capital in
form of the cooperative capacity in an urban agglomeration are crucial in importance. They are
the driving forces to activate endogenous potentials through corresponding initiatives. Explicitly,
they aim at the enhancement of existing territorial capital in form of specific intangible assets.
This means from a strategic point of view that the creation of assets – in particular of intangible
assets - becomes the most important driving force of urban-regional competitiveness because
they provide absolute and relative advantages of territories.

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From a cognitive perspective, learning processes will have a decisive impact on the
enhancement of territorial capital over time: The more such initiatives are based on experiences
and learning processes, the more precise should be the identification of endogenous potentials
as well as the assessment of strengths and weaknesses. Therefore, learning processes will
provide the knowledge base for strategic efforts aiming at the improvement of relevant
advantages for certain economic activities which make every city more competitive. Thus,
territorial capital will be enhanced in an efficient way only if cooperative initiatives are the
outcome of such learning processes regarding the existing strengths and weaknesses of a
given urban situation. Consequently, over time a process of accumulation or depreciation may
take place the more corresponding cooperative initiatives will strengthen or weaken the
competitiveness of the metropolis in a decisive way.

4.2 Ranking approach as instrument enhancing territorial capital

As cities face growing competition and fast changing conditions of urban development, the
enhancement of territorial capital through learning processes becomes important. Thus,
learning processes should be an integrative part of any strategic planning approach.

In this context the question raises how the Smart City approach can be used as an instrument
for a learning process which makes strategic planning efforts more effective in strengthening a
city’s competitiveness. Two examples are examined:

First, lesson drawing approaches concentrate on the understanding of conditions under which
policies operate in lending political systems and on creating proper conditions in borrowing
political systems (Page, 2000). Applying this approach raises different questions: One important
question is from where experiences can and should be transferred (Robertson, 1991; Robertson
and Waltham, 1992). Local governmental levels are likely to look to nearby local governments,
assuming that they have most in common with neighbors. In this sense, subjective identification
and political values are important in directing the search. Ideological compatibility, similarities in
resources, psychological or cultural proximity, the availability of evidence and interdependence
are other factors to be considered (Rose, 2001) when selecting cities from which a lesson can
effectively be drawn.

Second, evidence based approaches need a detailed description and analysis of the relevant
fields of urban development. In order to elaborate a comprehensive and effective strategy an
assessment of strengths and weaknesses is one of the preconditions meeting recent challenges
of a city’s competitiveness. The Smart City approach allows such an analysis in a rather
differentiated way on the levels of 6 characteristics, 31 factors and 74 specific indicators.
Especially on the more disaggregated levels, empirical analysis can focus (1) on strengths and
weaknesses of any city in comparison to average values of all cities on the European level, (2)
on strengths and weaknesses of any city in comparison to any other city of the sample as well
as (3) on interrelated issues based on a functional understanding of urban development. So, the
Smart City approach provides sufficient evidence for discussing the smartness (i.e., well
performing) of a city and produces comprehensive evidence in order to identify important
challenges for new strategic efforts. For example, figure 6 shows the profiles of characteristics
of a selected group of Central European cities with special focus on Austrian (and nearby)
cities. Very obvious, the profiles show many differences between the 6 characteristics, although

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the final ranks do not necessarily differ very much, e.g. Plzen (ranked 42) and Trento (ranked
45) seem to be quite similar when looking at their final rank solely. But, in detail, Plzen shows
quite a good performance in “Smart Living” and “Smart Mobility” in combination with a rather low
rating on “Smart Governance”, “Smart People”, “Smart Environment” and “Smart Economy”;
while Trento has a quite good activity in “Smart Economy” as well as in “Smart Environment”
and – contrary to Plzen – a need for improvement within the areas of “Smart Mobility”, “Smart
People” and “Smart Living”.

Figure 6. Characteristics of selected European cities

Source: Own elaboration.

Another example for a detailed analysis within the Smart City approach can be demonstrated by
comparing Innsbruck (ranked 12) and Graz (ranked 13), two Austrian cities: both show a similar
rank and also quite similar characteristics (e.g. both are doing well in “Smart Living” and “Smart
Governance”; not so well in “Smart Environment” and “Smart People”), but on closer
examination Innsbruck shows up with a much broader spectrum within its city profile, while the
characteristics of Graz are arranged much closer to the average values of European Smart
Cities (see figure 6). Furthermore, cities can be simply benchmarked according to their profiles
(see showcase in figure 7), by the comparing their specific conditions (e.g. Eindhoven performs
definitively better in “Smart Economy” than Salzburg, while Salzburg shows superior values in
“Smart Living”) and even more differences can be analyzed at the detailed level of factors and
indicators.

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 Figure 7. Comparison of city profiles

Source: Own elaboration.

Summing it up, the Smart City approach supports the exploratory benchmarking between any
cities of the whole sample. This feature easily allows identifying specific cities which are very
similar in its profile or which indicate good practices for learning due to their smartness in the
one or other characteristic. However, the exploratory power or even its comparative power is
increased when the profiles are based on factors instead of aggregated characteristics.

5. Perspectives of smart ranking as an instrument enhancing territorial

capital

Obviously, the positioning of a city within the urban system is the result of a complex interplay of
economic, geographic and socio-cultural conditions, which are partly locally determined. But at
the same time, a city’s position is strongly influenced by its strategic efforts as a specific aspect
of urban governance. In our opinion the comparison and ranking of cities can be one important
instrument in order to identify a city’s comparative advantages and to enhance its territorial
capital.

Due to the purpose of this paper the definition of the term ”ranking“ is quite restricted (as
discussed in chapter 2.1), but for certain issues a more broad understanding of “city ranking”
could be useful, for example to distinguish all kinds of ranking methods for cities according to
the following dimensions:
• explorative vs. evaluative
• network-based vs. hierarchy-based
• target-group oriented (or specified on one single topic) vs. overall rankings
However, the analysis of different rankings according to their methodology and qualities as an
instrument for comparing cities showed that rankings can be differentiated along certain
dimensions resulting in their specific ability for application. On the one hand, there are rankings
operating on a very broad spectrum of a great number of cities by mainly addressing the media
and targeting on the image or the specific premises of cities for certain target groups.
Unfortunately, these rankings show up with a very badly documented methodology and
nontransparent results. On the other hand, rankings with well documented and quite elaborated
calculation methods tend to address a rather small scientific community more than satisfying the
demand by the public for easy (and uncritical) handling of rankings results. Concluding, the

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ranking of cities can support investors in their choice of location on the one hand, but it can also
be an important guide for future city development on the other. As rankings reveal particular
strengths and weaknesses of the cities, policy makers are enabled to set specific actions to
work on certain problems and to implement measures for sustainable development when
considering the results of a high-quality ranking or benchmarking (as shown in the typology of
rankings, only a smaller number of rankings show up with an elaborated and transparent
methodology). In addition to that, positive results in a widely published and approved city-
ranking can also be used as a central part of a city’s marketing strategy: a top-rank in a highly
reputed city-ranking definitely helps to improve the international image of a city (see Schönert
2003, Fertner et al 2007). Thus, city-rankings obviously can provide an important empirical base
for disclosing comparative advantages and sharpening specific profiles and consequently for
defining goals and strategies for future development. Besides, medium-sized cities have to cope
with competition from the larger metropolises on corresponding issues, but appear less
equipped in terms of critical mass, resources and often also institutional and organizing
capacity. Hence, medium-sized cities may experience disadvantages because of a lack of size.
Nevertheless, medium-sized cities may offer specific assets not available in larger cities.

However, which specific recommendations should be considered when applying a ranking

approach as basic instrument to improve strategic efforts of medium-sized cities?
A comprehensive ranking approach - like the Smart City ranking - allows not only the ranking of
cities but the detection of its profile with Its strengths and weaknesses. The attractiveness and
utility of such an approach will increase the more clear/similar are the criteria for the selection of
cities and the more valid and reliable are corresponding indicators. Thus, a small and
homogenous group of cities provide a better knowledge base for benchmarking and functional
assessments. Convincingly, ranking approaches which fulfill characteristics of type 3 and 4
support the discussion on strategic efforts easily and in a productive way. As our experiences
show, the dissemination of the Smart City results provoked public attention and a specific
discussion on analytical issues and strategic efforts. Because of the relative large number of
cities and the use of public data sources, the comparability and validity of some indicators is
problematic but its modification depends on more accurate information from data sources at the
European level.

Finally, what is the benefit of a ranking approach – like the Smart Cities - Approach – as a
strategic instrument for enhancing the territorial capital of cities and setting up strategic
policies?
After analyzing the advantages and disadvantages of the Smart Cities - Ranking approach for to
enhance the territorial capital of cities, one can state that the advantages of this rankings
procedure are the easy way for benchmarking and detecting strengths and weaknesses. The
Smart Cities-Ranking analyses a wide range of factors which itself are defined by
comprehensive bundles of indicators. Furthermore, besides the simple ranking, the hierarchical
approach allows the identification of profiles on different levels in a comprehensive way which
are very valuable in evidence based strategies. Anyhow, it remains a quantitative approach
concentrating on issues which are measurable. At the same time this approach provides very
specific and important information regarding the question of ‘good practice’. It is easy to identify
cities with interesting and specific profiles which may turn out to be ‘good practice’ examples.

To sum up, we made different experiences elaborating this approach and using it for individual
discussion of several cities. Its usability for the elaboration of strategic efforts and policy advice
is given but has to be enhanced through further research and revision. However, the

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perspective that URBAN AUDIT provides new and recent data offers new opportunities for its
inclusion into the Smart Cities approach providing then the possibility to compare specific
characteristics and factors of urban development in a direct way on an ongoing basis or in a
comparative way across other cities and across time.

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