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Chapter 4 – Globalization, Entrepreneurial Cities, and the Social Economyi - page 6 / 12





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which, qua network, is not contained within any given national territory) and harder to compensate for the economic crisis of other cities which are excluded from this network.

The entrepreneurial city has been discussed in many different ways. My own approach is influenced by Schumpeter, an emblematic thinker for contemporary capitalism, who defined entrepreneurship as the creation of opportunities for surplus profit through 'new combinations' or innovation (Schumpeter 1934; see below); and by Harvey, an arguably more controversial thinker on post-modern capitalism, who has presented some influential ideas on the shift from urban managerialism and urban entrepreneurialism (1989). Their work can be refined by linking it to the useful distinction between strong and weak competition. Strong competition involves potentially positive-sum attempts to improve a locality's overall (structural) competitiveness through innovation; and it usually involves the social embedding of economic activity. Conversely, weak competition involves essentially zero-sum attempts to secure re-allocation of existing resources at the expense of other localities. In this regard, weak competition tends to be socially disembedding (Cox 1995). Combining these arguments, one can usefully distinguish between entrepreneurship oriented towards strong competition and that oriented towards weak competition.

Despite the increasingly common rhetoric of entrepreneurialism, there are few cities which are genuinely oriented to strong competition. For few cities are systematically oriented to securing sustainable dynamic competitive advantages via continuing economic, political, and social innovations that are intended to enhance productivity and other conditions of structural and systemic competitiveness. And even those that do have such an orientation tend to fail for various reasons to ensure continued capital accumulation. Weaker forms of competition are usually more concerned with modifications in formal and substantive regulatory, facilitative, or supportive measuresviii aimed at capturing mobile investment (a deregulatory race to the bottom) as well as simple image-building measures with the same purpose (boosterism). Cities engaged in such weak entrepreneurialism are even more likely to fail in the longer term since such activities can easily be copied.

Following Schumpeter's account of entrepreneurship and Harvey's work on urban entrepreneurialism, I suggest that the principal fields in which a city can become entrepreneurial are:

the introduction of new types of urban place or space for living, working, producing, servicing, consuming, etc.. Examples include multicultural cities, cities organized around integrated transport and sustainable development, and cross-border regional hubs or gateways.

new methods of space or place production to create location-specific advantages for producing goods/services or other urban activities. Examples include new physical, social, and cybernetic infrastructures, promoting agglomeration economies, technopoles, regulatory undercutting, re-skilling.

opening new markets -- whether by place-marketing specific cities in new areas and/or modifying the spatial division of consumption through enhancing the quality of life for residents, commuters, or visitors (e.g., culture, entertainment, spectacles, new cityscapes, gay quarters, gentrification);

finding new sources of supply to enhance competitive advantages. Examples include new sources or patterns of immigration, changing the cultural mix of cities, finding new sources of funding from the central state (or, in the EU, European funds), or reskilling the workforce.

refiguring or redefining the urban hierarchy and/or altering the place of a given city within it. Examples include the development of a world or global city position, regional gateways, cross-border regions, and 'virtual regions' based on interregional cooperation among non-contiguous spaces.

In each regard we can see that urban entrepreneurialism contains the element of uncertainty that many see as the very essence of entrepreneurial activity. Indeed, as Storper notes in a discussion of the 'reflexive city', the nature of uncertainty and risk have been changing as market forces and the extra-economic environment for economic actors become more turbulent, more influenced by the strategic calculation of other actors, and more open to influence on a wide range of spatial scales. This puts a premium on forms of urban organization which enable economic actors to share risks and to cope with uncertainty through dense social and institutional networks (Storper 1997; cf. Veltz 1996).

Whether in regard to firms or cities, there is a typical economic dynamic to entrepreneurial activities. Although a successful innovation will initially generate surplus profits (or 'rents'), these tend to decline and eventually disappear as the innovation is either adopted (or superceded) as 'best practice' by other competitors and/or as less efficient competitors (are forced to) leave the market. Unless an effective (practical or legal) monopoly position can be established, this will tend to return profits to normal levels. Moreover, once an innovation is generalized, the cost of production and the search for new markets begins to matter, changing the balance of competitive advantages. Whilst this emphasis on costs leads to the competing away of initial advantages, it also prepares the ground for the next wave of innovation

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