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Exploring the benefits of smart city strategies : Evidence from 213 Belgian municipalities
Bounazef, Djida; Crutzen, Nathalie; Belaid, Fateh
2019Smart and Sutainable cities: Smart Buildings in smart cities
 

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Abstract :
[en] 1. Statement of the research problem This article aims to investigate a crucial question, which has raised in the last years in both policy and the economic literature; that is, the various economic benefits of Smart-Cities. There is a remarkable agreement among economists about the role of Smart Cities in shaping socioeconomic and environmental aspects at global scale (Albino et al., 2015; Ismagilova, 2019). Currently, despite the growing emphasis on positive correlation between Smart-Cities development and socioeconomic outcomes, our understanding about the underlying causes of this relationship and the revenues streams generated by the Smart-Cities remains thin. This conjecture constitutes the foundation of our study, which aims to shed light on the revenues streams and the various benefits of Smart-Cities based upon 18 domains of the international standard ISO 37120: 2014 in Walloon cities. Facing a variety of challenges, cities tend to develop several smart systems on their territory to foster sustainability, technological transition and quality of life. The smart city approach is identified as a comprehensive commitment to innovate, inspire and push cities generating a positive economic and social transitions. Ideologies such the smart territory, the smart region or nation even the Smart Europe are more and more used by governments. The development of the smart city niche in Europe engenders several economic opportunities for giants and private companies. It also increases entrepreneurial willingness and the number of startups proposing smart city solutions adapted to local realities. But, what is the case of public authorities? The development of top-down smart city projects necessitates heavy financial, human and organizational resources. Public authorities are then exploring possibilities to train their civil servants, to develop public-private partnerships and to involve strategic actors to ensure a successful sustainable and smart transitions. However, the smart city approach is always in an emerging process with only long-term potential benefits for cities. With the support of federal and regional governments, many Belgian cities are developing local initiatives in line with a smart city approach. An emerging dynamic started with pioneer big cities in 2006, and several cities followed the trend since 2014. Five years after the development of the first initiatives, do smart city implemented projects generate noticeable benefits for cities? And if so, what are the different revenue streams? In line with the city planning, public authorities are supposed to develop projects generating a specific form of benefit. The literature of smart cities highlight generally the necessity to reach intangible benefits such as sustainability or quality of life, and not necessarily financial benefits. The profitable side of smart cities is progressively explored by analyzing forms of business models developed by public authorities. However, the effective benefits remain vague. The paper refers to the value proposition business model developed by Ballon (2009) to highlight the main benefits and value elements attended by cities. This model is strengthened by different researches on financial sustainability and business models. Based on the nature of the smart city project, cities can reach different forms of benefits. As example, educative system projects generate intangible benefits, whereas, energy optimization projects generate a cost reduction for the city. The paper aggregates potential benefits into three forms: (i) financial outcome and economic growth; (ii) cost reduction and financial optimization; and (iii) intangible benefits (sustainability, inclusiveness, social cohesion, security, quality of life, etc.).. The remainder of this article is orginized as follows. Section 2 contains our research hypothesis, as well as a description of the data, and the methodology developed to answer them. Section 3 summarizes and discuss the main empirical results, and Section 4 provides conclusions and the related policy implications of this study. 2. Contributions This paper contributes existing literature on the financial aspect of the Smart City in the following important ways. First, it underlines the smart city themes affecting positively and negatively on different forms of benefits that cities aim to reach. As a practical contribution, the findings can help cities to select the right strategic smart city projects if they target a specific form of benefit. In addition, this research stimulated not only to enrich the scant empirical studies investigating the revenue streams of Smart-Cities, but also intends to shed light on a several answered questions concerning this important topic. Accordingly, for example, it is interesting to explore why some categories did not generate any form of benefits? Thus, do cities define realistic and relevant indicators measuring the ROI of such projects? Do they really understand the adequate benefits as well as the time required for reaching them? What are the main factors affecting negatively on the ROI of such projects? And finally, are public authorities aware about all benefits that they can generate by developing an effective smart city approach to reinforce their strategic projects? Conceptual framework and research methodology The research is carried out in the French-speaking region of Belgium (Wallonia). The research focuses on Walloon cities due to the increasing importance of developing the regional governmental program labelled “Smart Région – Digital Wallonia” developed to foster regional and local smart city dynamics. Wallonia (Belgium) is composed of 262 cities, 58 of them participated to this research. The sample is significantly representative of Walloon cities in terms of geography (all Walloon provinces are represented) and nature (rural and urban regions). An online survey has been addressed to all mayors and general directors of Walloon cities. Different communication channels have been used to push them to participate to this research (commercial databases, network, private and public partners, etc.). The data collection lasted three months (from October 2017 to January 2018). The majority of respondents are general directors (34%). This is followed by heads of departments and civil servants in charge of smart city projects (smart city managers, project managers, IT managers). Respondents were asked to select the smart city domain that they are currently developing. Only projects that respondents consider to be at an advanced stage of implementation have been retained for this research. Then, they were asked to select on the form of benefits that they notice as a positive consequence of implementing smart city projects. To make the link between the smart city domains and the forms of benefits, a matrix of correlations and 4 multiple regressions are developed (one for each form of benefit). The 18 smart city domains are defined as independent variables in the model (X). The multiple regressions explore the impact of Xs’ variation on the response (Y). The three forms of revenues are defined as responses and dependent variables in the model (Y). Another variable is integrated as a response (Y): No significant benefit to highlight if some domains did not finally engender any benefit for cities. Each variable defined as Y is explored with a multiple regression model to underline significant coefficients allowing to increase the value of Y. All statistical experiments have been realized on Statistica software. 3. Findings Walloon cities are currently implementing at an advanced stage several smart city domains. They are all aware about the positive contribution of the development of a smart city approach on their territory. This approach is perceived differently according to the challenges that they have to face. According to this, they integrate different strategies and focus on different themes to improve. Descriptive statistics highlight that their main priorities are: Smart lighting (59%), energy optimization (52%), governance and citizen participation (50%), digitalization, telecommunications and innovation (41%) and mobility (40%). However, cities are struggling to identify the noticeable benefits and ROI of these projects. The descriptive statistics identify that cities notice: no significant benefits (31%), intangible benefits (31%), cost reduction and financial optimization (29%), financial outcome and economic growth (9%). The matrix of correlations highlight significant correlations observed at p < 0.05. The forms of benefits generated by smart city projects depend on the strategic themes developed by cities. Firstly, financial outcome and economic growth are positively and significantly correlated to the development of digitalization, security, precarious habitat management and water management. Secondly, cost reduction and financial investment are observed in cities implementing projects on smart lighting and security. Thirdly, intangible benefits seem to be generated by projects related to security, urban planning and waste management. Lastly, findings show that five years after developing smart city projects, the development of smart governance through promoting new governance systems and citizen participation do not generate any significant benefit for cities. The four multiple regressions highlight significant coefficients impacting on benefits generated by smart city projects. The first model shows that financial outcome and an economic growth are highly promoted by the development of projects on telecommunications, digitalization and innovation. However, waste management is a significant coefficient impacting negatively on this nature of benefit. The second model identifies three significant coefficients. Cities reduce their costs through setting up smart lighting projects. Contrariwise, projects attending the improvement of healthcare services and risk management impact negatively the willingness of cities to generate a cost reduction. The third model underlines a significant positive impact of security and criminality projects on the development of intangible benefits (quality of life and citizen security). The last multiple regression model points out that urban planning projects implemented by public authorities do not actually generate any noticeable benefit.
Disciplines :
Strategy & innovation
Author, co-author :
Bounazef, Djida ;  Université de Liège - ULiège > HEC Liège : UER > Diagnostic et contrôle de l'entreprise
Crutzen, Nathalie  ;  Université de Liège - ULiège > HEC Liège : UER > Sustainable Strategy
Belaid, Fateh
Language :
English
Title :
Exploring the benefits of smart city strategies : Evidence from 213 Belgian municipalities
Publication date :
12 July 2019
Event name :
Smart and Sutainable cities: Smart Buildings in smart cities
Event organizer :
Université Catholique de Lille
Event place :
Lille, France
Event date :
12 July 2019
By request :
Yes
Audience :
International
Available on ORBi :
since 20 September 2019

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