**2. Setting the overall policy framework for S3**

The Smart Specialisation Strategy (S3) is an essential component of the current Europe 2020 Strategy, seeking to bring Europe towards a smarter, more inclusive and sustainable growth [1]. In particular, S3 is a strategy for economic development that targets research and innova‐ tion and involves an incremental approach based on the development of a shared vision. It is built on place-based areas showing higher potential for growth and needs to be developed by involving multiple stakeholders with a strong commitment to prioritise in a knowledge-led perspective, not necessarily focusing on the high-tech sector, nor on sectors that are already strong [2].

living environments and well-being. How it is made, varies a lot. Nowadays, the European Commission is undertaking the huge effort of launching something that explicitly implies risktaking and therefore particularly needs and evidence-base for actions. The research role is to reflect on this challenge from a theoretical perspective that might possibly suggest paths and

This chapter stems from a broader research project financed by the European Commission and aimed at approaching the issue of strategy building, developing and implementation from the perspective of architects and planners, temporarily contaminating themselves with economic matters to try to bridge the gap between shape of the built environment and economic growth. The Smart Specialisation Strategy (S3) will be discussed through a spatial-oriented perspective, arguing that if *place* matters, then also *space* matters, with all the implications within a concept that incorporates environmental behavioural science, ecosystem and social values, cultural assets and identity. All these elements are absolutely essential in a *sustainability* perspective. Therefore, the overall discussion has in the background the *fil rouge* of demonstrating how sustainable development (environmental, social and economic) can be systematically embed‐

This chapter briefly explains what Smart Specialisation Strategy is and then discusses it in a critical perspective, by clarifying explicit and less evident theoretical legacy of this rationale, with the aim to support the construction of a robust logical framework suitable to produce further novel approaches. Because of the dynamic nature of the topic, even the theoretical section, rather than relying on a review of the literature, is nurtured by up to date interviews. The chapter includes a discussion of the research hypothesis through empirical data gathered in a US case study, Kendall Square. The major expected impact of this research is the oppor‐ tunity to support current implementation of S3 policies in Europe, both in competitive and in lagging behind regions. To reinforce the transferability of the provisional findings, the field work in the States has been preceded by some exploratory investigation in Europe, aimed at observing the current gaps to be filled on the basis of the gap analysis of extant S3. The current state of S3 in the Greater Manchester Area (Northern England) and in the Calabria Region (Southern Italy) has been analysed, both on desk and through a set of informal unstructured discovery interviews with key stakeholders, in order to find out weaknesses and potentials. This preliminary analysis showed that both in lagging behind regions and in competitive regions gaps in the current S3 still exist, and that a spatial-led approach could be supportive in filling them. Therefore, although at a preliminary stage, the conclusions in this chapter may be of interest for European planners, policy makers and stakeholders looking for effective

The Smart Specialisation Strategy (S3) is an essential component of the current Europe 2020 Strategy, seeking to bring Europe towards a smarter, more inclusive and sustainable growth [1]. In particular, S3 is a strategy for economic development that targets research and innova‐

ded in S3, in particular, in the urban built environment.

implementation of S3 in a spatially- oriented perspective.

**2. Setting the overall policy framework for S3**

solutions.

180 Sustainable Urbanization

S3 has been introduced in the late 2000s as the main result of the work conducted by the Research Commissioner Janez Potočnik's expert group, also known as the Knowledge for Growth (K4G) expert group, founded by the European Commissioner in March 2005 with the task to address the issue of embedding innovation for promoting growth within the European Member States, legacy from the Lisbon strategy. Not only the European Commission, but also other organisations such as the OECD are highly interested in this innovative approach [3] that has been recently systematised in the literature [4, 5]. A key concept underpinned in the Smart Specialisation is the importance of knowledge, not meant as a mere technicality, rather than as *embedded knowledge* among the actors of the economic ecosystem. Stemming from this position, the methodology for developing appropriate strategies rooted in embedded knowl‐ edge could not be anything different from an ascending, bottom-up approach, characterised by *discovery* and *risk-taking*, and finally, leading to something *unique*. As clarified by Foray et al.: "It should be understood at the outset that the idea of smart specialisation does not call for imposing specialisation through some form of top-down industrial policy that is directed in accord with a pre-conceived grand plan" [6]. It is suggested that, rather than relying on external consultants to develop an abstract strategy, policy makers should elicit a process of entrepre‐ neurial discovery, in order to find out what are the assets, even still hidden, that could be worth supporting. These latter could be niches of excellence, and the process of discovery in itself should act as an activator to unleash their potentials by making entrepreneurial actors "play leading roles in discovering promising areas of future specialisation, not least because the needed adaptations to local skills, materials, environmental conditions, and market access conditions are unlikely to be able to draw on codified, publicly shared knowledge, and instead will entail gathering localised information and the formation of social capital assets" [6].

Moving forward, the S3, also named Research and Innovation Strategies for Smart Speciali‐ sation (RIS3), is now "a key part of the proposed EU Cohesion Policy reform supporting thematic concentration and reinforcing strategic programming and performance orientation" [7].

By overcoming a one-size-fits-all approach, "the RIS3 requires an integrated and place-based approach to policy design and delivery. Policies must be tailored to the local context, ac‐ knowledging that there are different pathways for regional innovation and development" [7].

A key aspect of smart specialisation is the emphasis on the principle of prioritisation in a *vertical* logic—to favour some technologies, fields, population of firms—*non-neutral*. Foray and Goenaga suggest to summarise the principles of S3 as follows: (1) Granularity, that is, the level should not be too high; (2) Entrepreneurial discovery, with entrepreneurs -in the broadest sense—who discover, produce information and transform the activities; (3) Priorities will not be supported forever; (4) S3 is an inclusive strategy; (5) S3 has experimental nature and risk taking is needed [8].

The legal basis for incorporating the RIS3 within the current programmes is provided by the Regulation (EU) 1301/2013 of the European Parliament and of the Council of 17 December 2013. The implementation of RIS3 across the EU has to be ensured by managing authorities through dedicated and mandatory policy frameworks. EU Member States and regions are required to have S3 in place according to the RIS3 ex-ante *conditionality*, that is, a compulsory requirement that if not met in the agreed timeframe, prevents managing authorities from keeping on spending the given EU funds. Support in putting the RIS3 forward is offered by the European Commission particularly through a specific tool, the S3 Platform [9].

Influences on the construction of the conceptual framework of the S3 can be found in several theoretical positions and theories. On the basis of the industrial Italian experience, the concept of *industrial district* was developed in the 1980s by Becattini [10, 11], drawing from the Marshall agglomeration theory [12]. In particular, he considered the local community as a sort of social glue suitable to produce economic added value. In this approach, the seeds of the communi‐ tarian root of the concept of *embeddedness* were planted [13]. It will take about two decades for them to fully blossom.

With less emphasis on the social component of the proximity, and more attention for the scale advantages, in the 1990s, Porter developed the concept of *cluster*, defined as: "A geographically proximate group of interconnected companies, suppliers, service providers and associated institutions in a particular field linked by externalities of various types" [14]. As possible examples, Porter mentioned the financial services cluster in New York City, the cluster producing medical device developed in the Boston area, and the IT clusters existing in Texas (Austin) and in the Silicon Valley. The cluster rationale was deeply intertwined with the concept of competitiveness [15].

Building on this concept, recognising the importance of the cluster structure in the US economy, huge and systematic efforts have been done even at institutional level to pursue a reliable and shared knowledge on cluster dynamics, leading to the construction of a dedicated platform, such as the Cluster mapping platform: "The U.S. Cluster Mapping website is a national initiative that provides open data on regional clusters and economies to support U.S. business, innovation and policy, (where) users will find interactive, robust data and tools to understand clusters and regional business environments, improve institutions, and locate appropriate partners across the country" [16].

The relevance of clusters to the US economic success and the political awareness on the significance of this topic clearly emerge, while analysing the data contained in the platform. Clusters, far from being a theoretical concept, have become a conceptual framework to coordinate and even further activate all scales of *clusterizable* initiatives, encompassing national, regional and local stakeholders, entrepreneurs, companies, associations. In theory, the potential underpinned in the US platform is that the richness of details creates an out‐ standing opportunity not only for advancing in terms of knowledge, but also for supporting further networks and, finally, the *entrepreneurial discovery* that S3 is seeking to promote. In practice, the impact of the US platform on reinforcing clusters can be further exploited [17].

Following the work conducted by the Department for Competitiveness in Harvard, while on one side of the Atlantic the US Department of Commerce, Economic Development Adminis‐ tration was turning an academic platform into an official public initiative by funding the Clustermapping platform as a federal programme, on the other side of the Ocean also the European Commission decided to introduce an analogous platform, namely the Cluster European Observatory, whose architecture is similar to the US prototype [18]. In Europe, the dataset made available through the Cluster Observatory platform is coupled by another platform that targets companies and is specifically aimed at eliciting clusters reinforcement and further development, namely the ECCP (European Cluster Collaboration Platform) [19].

The legal basis for incorporating the RIS3 within the current programmes is provided by the Regulation (EU) 1301/2013 of the European Parliament and of the Council of 17 December 2013. The implementation of RIS3 across the EU has to be ensured by managing authorities through dedicated and mandatory policy frameworks. EU Member States and regions are required to have S3 in place according to the RIS3 ex-ante *conditionality*, that is, a compulsory requirement that if not met in the agreed timeframe, prevents managing authorities from keeping on spending the given EU funds. Support in putting the RIS3 forward is offered by the European

Influences on the construction of the conceptual framework of the S3 can be found in several theoretical positions and theories. On the basis of the industrial Italian experience, the concept of *industrial district* was developed in the 1980s by Becattini [10, 11], drawing from the Marshall agglomeration theory [12]. In particular, he considered the local community as a sort of social glue suitable to produce economic added value. In this approach, the seeds of the communi‐ tarian root of the concept of *embeddedness* were planted [13]. It will take about two decades for

With less emphasis on the social component of the proximity, and more attention for the scale advantages, in the 1990s, Porter developed the concept of *cluster*, defined as: "A geographically proximate group of interconnected companies, suppliers, service providers and associated institutions in a particular field linked by externalities of various types" [14]. As possible examples, Porter mentioned the financial services cluster in New York City, the cluster producing medical device developed in the Boston area, and the IT clusters existing in Texas (Austin) and in the Silicon Valley. The cluster rationale was deeply intertwined with the

Building on this concept, recognising the importance of the cluster structure in the US economy, huge and systematic efforts have been done even at institutional level to pursue a reliable and shared knowledge on cluster dynamics, leading to the construction of a dedicated platform, such as the Cluster mapping platform: "The U.S. Cluster Mapping website is a national initiative that provides open data on regional clusters and economies to support U.S. business, innovation and policy, (where) users will find interactive, robust data and tools to understand clusters and regional business environments, improve institutions, and locate

The relevance of clusters to the US economic success and the political awareness on the significance of this topic clearly emerge, while analysing the data contained in the platform. Clusters, far from being a theoretical concept, have become a conceptual framework to coordinate and even further activate all scales of *clusterizable* initiatives, encompassing national, regional and local stakeholders, entrepreneurs, companies, associations. In theory, the potential underpinned in the US platform is that the richness of details creates an out‐ standing opportunity not only for advancing in terms of knowledge, but also for supporting further networks and, finally, the *entrepreneurial discovery* that S3 is seeking to promote. In practice, the impact of the US platform on reinforcing clusters can be further exploited [17].

Commission particularly through a specific tool, the S3 Platform [9].

them to fully blossom.

182 Sustainable Urbanization

concept of competitiveness [15].

appropriate partners across the country" [16].

The common goal of the US and EU platforms is not only to build a structured knowledge on the cluster policy both in the States and in Europe, but also to create opportunities for making cluster work in a rationale embedding shared knowledge and entrepreneurial discovery as major triggers. This is a common trait that makes cluster policy useful to support successful S3 implementation, behind the simple network rationale.

The notion of *entrepreneurial discovery* was introduced by Haussmann and Rodrik [20] as a *selfdiscovery process* and is constantly recalled by Foray and Goenaga [21], which clearly mention the legacy of the New Industrial Economy approach in discussing the above mentioned five principles of S3. This core feature of S3 leads to another key concept at the forefront of current European strategies, that is, *social innovation*. A strong link exists between the S3 strategy, the cluster policy and the concept of social innovation as developed by the European Commission, a cross-cutting approach suitable to be implemented as trans-sectoral innovation. In the Guide to Social Innovation—commissioned by DG Regional and Urban Policy and completed with DG Employment, Social Affairs and Inclusion with inputs by various other Directorates General (such as, among others, DG Enterprise and Industry and DG Research)—social innovation is defined as: "the development and implementation of new ideas (products, services and models) to meet social needs and create new social relationships or collaborations. It represents new responses to pressing social demands, which affect the process of social interactions. It is aimed at improving human well-being. Social innovations are innovations that are social in both their ends and their means. They are innovations that are not only good for society but also enhance individuals' capacity to act" [22].

Social Innovation is deeply intertwined with socially- oriented and citizens- led urban regeneration and entails the granularity of the scale where it is more likely to happen through catalysts such as shared knowledge and innovation building. Cross-fertilisation between S3 and Social Innovation can be pursued at the strategy implementation stage. The Guide suggests that Social Innovation can be included in the Smart Specialisation Strategy and Plan and /or incorporated in Social Innovation Clusters/Park (Step 4 and Step 8) [22].

The concept of social innovation may be supportive when seeking to understand some features in S3, that still lack a clear spatial definition. In particular, if the concept of *granularity*, and in particular of *spatial proximity*, is precondition to achieve cross-fertilisation across ideas and expertise, as advocated by almost all the examples suggested as good practice in the guide, what it the *metric* of proximity? Is the proximity needed for enacting social innovation processes the same scale of proximity necessary to activate effective clusters or some specific kind of clusters, perhaps those that are more relying on innovation? Can we measure this proximity?

If cooperation is based on mutual trust, personal knowledge and social reputation, in some cases the scale of proximity requested for activating successful clusters overlaps with the scale of the proximity necessary to enable successful social activation processes. Cluster theory mainly rests on the opportunity for up-scaling economic mechanisms, thus creating advan‐ tages for the participating companies, and, in addition to it, also on shared knowledge and exchange of competences within a given network, while this latter is central in social innova‐ tion mechanisms and in S3. In facts, the geography of clusters overlaps with the labour markets, and—typically—cluster analysis and clusters data gathering are conducted at a regional scale. The innovation component, essential in the social innovation process and in S3, can be optional in clusters, ideally—but not *necessarily* innovative. These and other similarities and differences are systematically discussed in a recent report commissioned by the DG Research of the European Commission and produced by a group on independent experts chaired by Ketels. In particular, the most important differences between clusters and S3 follow: "S3 focuses on specific innovation-intensive sectors while clusters apply to a broader set of sectors in the economy. S3 aims to exploit emerging linkages between economic activities that can cut across traditional cluster boundaries…. The explicit goal of cluster policies is often to enhance the performance of existing clusters(…). Clusters are potential elements of a regional innovation eco-system, while S3 are wider policies aimed at transforming this eco-system. Clusters can come close to "smart specialisation domains" if they stimulate new types of knowledge spillovers with a high leverage effect on the growth path of the economy" [8].

Several attempts have been made in the cluster literature to find out a possible taxonomy; however, in knowledge-intensive clusters, the triple helix concept (referred to the relationship between universities, enterprises and government) is essential. As Porter has been highlighting since 1990, four intertwined factors concur to the creation of a competitive environment for companies, depicted in the form of a diamond. This combination works in two ways, since investing in public good, always seen as a typically public activity, becomes important for the private sector itself [23]. In an ecosystem approach, private *vs* public interests' boundaries finally blur. The same concept of producing social services as a matter of business is gaining growing interest in the private sector [24]. The multiple actors involved with different roles in supporting the economic growth depict the complexity of the entrepreneurial ecosystem, from which S3 should stem. As stated by Foray and Goenaga, those who are asked to promote S3 by discovering "the domains of R&D and innovation in which a region is likely to excel given its existing capabilities and productive assets", are "entrepreneurs in the broader sense (innovative firms, research leaders in higher education institutions, independent inventors and innovators)" [19]. As in S3, also in cluster policy the whole context matters.
