1. 6th International Conference for Entrepreneurship Innovation and Regional
Development. Regional Economic Resilience through Innovation and
Enterprise.
"Social Interaction Spaces for Entrepreneurship at the Micro Urbanism level:
Basque City-Region Diagnostic Mapping Case study"
Dr. Igor Calzada, Ph.D.
Future of Cities Programme. InSIS & COMPAS. University of Oxford.
64 Banbury Road, Oxford,OX2 6PN (UK)
E-mail: igor.calzada@insis.ox.ac.uk
Ikerbasque, Basque Foundation for Science.
Alameda Urquijo 36,5. 48011 Bilbao (Spain)
Mondragon University.
Ibarra Zelaia, 2. 20560 Oñati, Spain.
Maite Sagasti
University of Deusto.
Avenida de las Universidades 24. 48007 Bilbao. Spain. E-mail:
maite.sagasti@deusto.es
Abstract:
City Regions (Dickinson, 1964) are the engines of development and the activators of
recovery in Europe. Entrepreneurship flourishes at micro urbanism levels in specific
urban spaces. City authorities, in partnership with local organizations and agents, are
well placed to define the most appropriate strategies to create a favorable environment
for the development of entrepreneurship. The aim of this paper is to analyze the effects
the physical and digital social interaction spaces for entrepreneurship have on the
creation of entrepreneurial and innovative activities and their impact on the regional
development.
After mapping the total amount of social interaction spaces for Entrepreneurship
located at the Basque City-Region/Euskal Hiria as a fieldwork research and following a
qualitative approach through in-depth interviews detailed information about this region’s
networks, its social capital, the creation of entrepreneurial and innovative activities and
their subsequent social and economic impact at micro level on the region has arisen.
The data obtained during the research shows and looks into the relevancy of the need
to implement new business and social models and suggests new managerial and
organizational structures that would optimize the use of the existing capital and
propose alternative funding models as required by the current context. This paper
proves the importance of the existence of these physical, digital and social interaction
spaces for entrepreneurship and their influence on the recovery at micro-urbanism
level in the Basque City-Region/Euskal Hiria.
Key words: Entrepreneurship, business and social model, micro urbanism, space for
interaction, regional development.
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2. "Social Interaction Spaces for Entrepreneurship at the Micro Urbanism level:
Basque City-Region Diagnostic Mapping Case Study"
1.- Introduction
Since the beginning of the 21st century we have been undergoing a generalised global
crisis which is impacting on various economic and financial structures, social capital
and the Welfare State in both developed and developing countries.
1.1 Demographic Crisis
Since the end of the last century there has been a state of demographic stagnation, as
well as an ageing population, something which raises questions and contradictions
regarding intergenerational solidarity, pension systems and the capability of regional
and national economies to maintain the mechanisms of the Welfare State.
This demographic crisis is also causing difficulties for create national social capital
stock and local social capital reserves as workers are being forced to move to cities,
regions or nodes which have a demand for qualified personnel. The training of human
capital will suffer when the individuals decide or are forced to deploy their resources in
places that are not their own. As a result of this, public administrations at European,
national and regional level are devising strategies and policies aimed at progressing
towards an economy of innovation and knowledge that is both sustainable and
inclusive [1]. This favours policies that prevent a brain drain and also serve to attract
research workers, entrepreneurs and innovators from other regions, thus promoting
cultural exchange and integration. Putnam & Goss (2003: 24-25), Calzada (2011:36).
1.2 Social Capital Crisis
The emergence of fluidity (both rapid and constant social and economic changes)
Bauman (2006, 2010), globalisation Castells (1997), the individualisation of lifestyles
Putnam (1996), forming part of large-scale national, international, virtual and social
networks Castells (1997), Echeverria (1994), Mitchell (2000), the lack of feeling of
belonging to your immediate space-environment, Putnam & Goss (2003), Calzada
(2011), has been accompanied by a weakening of social cohesion, Bauman (1996),
Guest & Wierzbicki (1999), Fukuyama (1999).
1.3 The Economic-Financial Crisis
National governments and supranational agencies and entities are finding it difficult to
provide solutions to the current situation.
The reigning economic model is undergoing a recession and is being subjected to a
restructuring. Authors like Kaletsky (2010) [2] speak of the emergence of a new model
of capitalism known as capitalism 4.0, which will replace the hegemonic one from the
period of 1980-2008. During this new period several contradictory phenomena will
occur; these will have to be taken into account. According to Kaletsky, this economic
model will coexist alongside other capitalist models for a time, such as the Chinese
one, in the form of a liberal capitalist or Keynesian model. Capitalism 4.0 is a less
ideological and more nuanced kind of capitalism in which there is a relationship
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3. between the logics and dynamics of markets and their regulation from the public
sphere.
On the other hand, authors such as Latouche (2003, 2006, 2009), Toibo (2008), Gorz
(2008), Harvey (2012), Calzada (2012) speak of total crisis in the capitalist model and
stress the urgent need to seek new economic and social models capable of
contributing towards the creation of an alternative society to market society, calling this
new paradigm post-development. According to Serge Latouche, “It will be necessary to
search for means of collective expansion in which material welfare is not privileged and
one that does not destroy the environment or the social fabric (…) it is a new culture
that has to be built a new culture” Latouche (2003:16).
2.- Social Interaction Spaces for Entrepreneurship
City-regions are characterised by having certain features as regards their production
structures, business fabric and socio-cultural organization, which are divided into
networks and maintain an interdependent relationship Lizarralde & Irizar (2005:286).
These networks share similar rules of conduct, values and codes, which promote
cooperation and collaboration in carrying out entrepreneurship and innovation
activities, Putnam (1995:67), De Souza Briggs (1997:112) Curbelo, Parrilli &
Alburquerque (2011).
Territories have different types of agents that favour the development of social,
economic and business relations. Interaction between all these agents leads to the
territory’s development, Putnam (1993) Larrea; Aranguren y Karlsen (2011),
Barandiaran & Korta (2011). The following agents stand out in the Basque City-Region:
•
•
Public Administration. They have the power to influence the region, thus
maximising entrepreneurial processes. In the case of the Basque City-Region,
public administration can have an influence on the regulatory framework and
promote government programmes so as to back entrepreneurship and social
innovation, which, in turn, will increase the number of entrepreneurial activities.
The action of public institutions in the Basque City-Region favours
entrepreneurship and is inspired by the relationship existing between
entrepreneurial activity, the creation of employment, innovation and local
development. In this City-Region there are various levels of public institutions
with programmes aimed at enhancing (social) innovation and entrepreneurship.
Public-Private Agents. Agents of a mixed or private form promoting and aiding
entrepreneurship and innovation can be found in the Basque City-Region.
These agents provide their services and support to entrepreneurs wishing to
develop their ideas; they conduct viability studies and look for or provide
funding for the development and setting in motion of the entrepreneurial project.
Among these developmental agents, the following can be identified: Chambers
of Commerce, Confederations of Employers, business incubators, private
initiatives, development agencies located in the central nodes and outlying
areas of the Basque City-Region. Some examples of these could be:
Innobasque, Foro de Emprededores Adegi, CEBEK-Emprende, Eutokia.
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4. •
•
Universities and research centres. These are of a mixed and private character
and promote and support entrepreneurship and innovation. These agents
provide entrepreneurs with their services and support for the development of
their projects, carry out feasibility studies, search for or provide funding for
development, and also provide training programmes for people in
entrepreneurship and innovation processes, as is the case of the Innovadis
project run by the University of Deusto and the Mondragon Team Academy, for
example.
Social Agents & Social Movements. Social agents and social movements are
capable of detecting problems and the need for change (15M movement,
degrowth movements, ethical banking, participatory budgeting, sustainable
mobility, environmental groups, neighbourhood associations, etc), thus
empowering civil society, which demands a partial or total change in the
economic and social systems. Analysis of these movements has meant that, on
occasions, a solution has been found to problems that governments and other
institutions have not been able to come up with. Mulgan (2006:150) states that
empathy and the ability to see and listen form the starting point for the creation
of innovative ventures. In addition, David Harvey (2012) points out the capacity
that collective action can have when it comes to generating realities that are
radically different from those we have known up to now.
In this turbulent situation, the city-regions, such as the Basque City-Region, are striving
to find solutions, activate economic recovery and strengthen social capital and social
cohesion through various strategies and projects which provide a growth process
aimed at enhancing the welfare of the local population, by employing the physical,
human, financial and social capital resources existing in the territory.
Communication, interaction and collaboration between agents is necessary for the
development of processes and projects creating physical and/or digital meeting and
interaction spaces, spaces which favour the exchange of ideas that will lead to the
creation of social entrepreneurship and innovation projects.
Joseph Schumpeter[3] (1962) coined the term “process of creative destruction” to refer
to innovation. According to Schumpeter, innovation was an essential feature of
capitalism, with the innovator as its key player. Creative destruction made it possible to
describe the innovation process that takes place in a market economy where new
products destroy traditional companies. Schumpeter describes the innovator (person)
as a vital energetic being, even in unfavourable circumstances. He is characterised by
his perseverance and ambition rather than his genius; the Schumpeterian entrepreneur
could be identified by having created an economic empire, a business dynasty.
The definition of a social innovator or entrepreneur defies the abovementioned
definition. Here we are talking about an individual or group of people who undertake
projects or create materials that favour the search for solutions to the problems and
needs of local communities. Their main aim is to create a society that is more equal,
fairer, sustainable and balanced, Mulgan (2006), Bornstein (2005), Nicholls (2006),
Harvey (2012).
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5. Social innovators can also succeed when they are capable of informing and convincing
the different social agents, administration, businesses and academics that the creation
of another fairer world is possible. The process of change is long and risky, but not
impossible, Mulgan (2006:149).
This process of change can be developed from top to bottom, that is, starting with the
local sphere and going as far as the global sphere. Enzio Manzini (2010) believes in
creating sustainable local communities and describes what he calls SLOC or the Small,
Local, Open, Connected scenario. According to Manzini, small can become influential
in global nodes, and local might break its isolation by being open to global, the influx of
people, ideas and information. In other words, according to Manzini, today small is no
longer small and local is no longer local, at least in everyday terms. What is small has
major implications for better or worse. Perhaps the greatest benefit is that global
networks make it possible to work highly efficiently at both local level and on a small
scale, since the acquisition of this dimension enables one to be far more adaptable to
the changing and risky situation we are experiencing nowadays.
Continuing with this global vision, social entrepreneurship actions are being conducted
in the Basque City-Region, with the following aims: the enhancement of social capital,
the recovery of customs, strengthening of the leading sector, strengthening of the
(local) social capital networks, promoting collaborative economies and responsible
consumer behaviour; actions that have a direct impact on society’s well-being.
Spaces for meeting and interaction are necessary for these processes to come
about[4]. Habermas (1984) and Viñoly (2003) define them as spaces that favour open
encounters and rational dialogue between different people and groups. Calzada (2011)
points out that these spaces should facilitate flexible, interactive and dynamic
processes which could become an appetising environment able to attract talent. On the
other hand, Jordi Borja defines these meeting and interaction spaces as occasions for
relating to others and identification, for making contact with other people, urban
enjoyment and, at times, communal expression, Borja (1998).
Salcedo[5] (2002) defines these spaces as a place for fostering citizenship and a social
meeting point; spaces for presentation of ideas, critical debate and interaction between
different members of the society.
These places could be defined as physical or digital, public or private places, located in
rural zones, suburbs or central nodes, which support interaction between different
people, social groups or movements that are interested in the same area of work or
intend to find a solution to a common problem.
These spaces promote:
•
•
•
•
The gathering of different public-private agents.
Interaction, communication, participation and exchange of ideas between
different people/groups.
Connectivity by generating social networks within and outside the Basque CityRegion or enhancing the already existing ones.
Joint working methods between public-private agents, social movements and
educational institutions that work on the development of ideas, projects and the
5

6. ntrepreneu
urship at th e Basque Cityh
MAP 1 Social Interaction Sp aces for En
Regio
on
6

7. creation of resources, and whose objective is that of improving the welfare of the
inhabitants in the region by supporting a change in the social and territorial model.
•
Promote the co-working practices among the different public and private
agents.
3.-Changes in the Management and Financing Model for Spaces for Social
Entrepreneurship and Innovation.
3.1. Changes in the management model for spaces for social innovation and
entrepreneurship.
Few organizations can afford to stand still in the structural crisis we are currently
experiencing. Therefore, both public and private institutions (companies, cooperatives,
research centres) are working on the transformation or generation of new
organisational and management models that allow them to adapt to new realities.
a) Cooperativism. We are witnessing public initiatives within the Basque City-Region
(social and business movements) that are seeking alternatives to the rather
dehumanising current economic system, as is the case with one of the largest and
most important cooperatives in the Basque City-Region and the Spanish state: the
Mondragon Cooperative. They are looking for formulae to apply to systems that will
promote communal development, based on cooperative capacity and selfmanagement of the person. The Mondragón cooperative has an integral vocation,
in other words, it is concerned about the person (worker) and the community
(business, local community). It could be said that it is an fundamental project that
does not start and end in the company itself but includes other spheres, like that of
finance (Caja Laboral savings bank), education (ikastolas [schools in which all
subjects are taught in the Basque language], Mondragón University), social
security, agriculture, etc
The Mondragón cooperative [6] is characterised by its social commitment. In the
year 2006 the group plotted out three points for reflection: a) work in historical
social commitment to education, university and small-scale community initiatives; b)
commitment to emerging social initiatives focused on two specific lines:
development of the use of Basque in companies and cooperation with other
cooperatives in developing countries; c) working in specific areas: housing, the
elderly, environment, ecology, integration of immigrants and family reconciliation.
Co-development. The spaces for innovation and entrepreneurship should have a
co-development model that helps to improve the organisational model of these
spaces, since this leads to relations between more than just one company and thus
fosters the creation of new products, technology and services, Chesbrough &
Schwartz (2007). The cooperative system among different companies helps reduce
costs in R+D+I, expand innovation output and open up new markets to sell
products in [7].
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8. b) Open innovation [8]. Open innovation can take place on several levels.
1.- Open innovation between the different company departments (intraorganisational). The entrepreneurial and innovative businesses must be able to
build joint decision-making processes. Decision making must be carried out
together and efficiently, steering clear of bureaucratic and hierarchical systems.
They should also be able to combine common responsibility with autonomy, thus
facilitating actions in favour of entrepreneurship and innovation, Bonet & Donato
(2011) Mulgan, Steinberg & Omar Salem (2005), Maxwell (2006).
2.- Inter-organisational Innovation. Businesses and governments must keep up-todate with what is going on in society as they will therefore be able to detect new
needs and introduce the changes needed to bring about change. Mulgan
(2007:22).
3.- Open innovation between the company and the consumer. There is a tendency
to regard meeting space users as passive members and as mere consumers of the
products and activities carried out there. The new organisational models should
take the users into account as they can provide ideas with added value, ideas on
how to improve a product/service proposed by the meeting space, information on
the needs they have and the institution has been able to cater for, and ideas for the
development and enhancement of the product, Jantz (2012); Rowley (2011); Bonet
and Donato (2011).
4.- Open innovation between public administration and society. Through this
system, the civil population has the chance to gain access to politics and express
their ideas, suggestions, complaints and assessments of the decisions made in the
different public institutions making up the region. In the case of the Basque CityRegion, an open innovation initiative called Irekia [9] has been set in motion by the
government.
c) Governance. Elinor Ostrom’s concept, local empowerment, is of key importance as
it describes the possibility of communities self-managing local resources as their
ability to autonomously define the rules of using and applying the common good.
According to Ostrom, the community is a complex ecosystem based on reciprocity
and confidence among its members. The operating rules made up are not
immovable but a framework for reference, since their application implies a dynamic
participative process that fosters the common interest of the various participating
agents. Elasticity is a necessary feature as it ensures the acquisition of new
knowledge and information given rise to by interaction and common interest.
d) Collaborative models between public-private institutions. It is important to create or
strengthen joint projects between cities, governments, companies and NGOs so as
to enhance and favour the capacity to formulate products that sustain the needs of
society. (Mulgan, 2006:148)
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9. 3.2 Changes in the Financial Models for Spaces for Social Entrepreneurship and
Innovation.
Entrepreneurs and innovators (bees) need technical, financial and legal support from
public institutions (agencies, governments), as well as private institutions (companies,
universities, banks) (trees), in order to carry out their entrepreneurial actions. (Mulgan
2006:135)
In recent years entrepreneurship and innovation projects in the Basque City-Region
have been financed through the following channels:
a) Public Capital. The regional and local governments have several budget allocations
for funding entrepreneurial and innovation processes as they are aware of their
great strategic value in supporting the development of the region and generating
employment and wealth. Some of the subsidies and aid that are available can be
seen in Table 1.
The various regional governments making up the Basque City-Region offer
business and social entrepreneurs subsidies so that they can carry out their
entrepreneurial task. This financial aid has decreased due to the economic crisis
we are currently going through, which is why it is necessary to search for
collaborations between public and private administrations to face up to this
situation. The aim is to ensure that the funding of social entrepreneurship and
innovation continues in the Basque City-Region.
b) Private capital. Investments made by private companies or institutions in R+D+I.
c) Risk capital management in the Basque Country. The provision of financial
resources through temporary participation in company capital. During the year 2011
the region had a budget capital of 690,000 Euros, distributed as follows: SPRI 70%,
KUTXABANK 20% and Mondragón Inversiones SPE S. Coop. 7%.
In addition to traditional funding systems, we should also mention other types of
alternative funding that have been created with the aim of financing entrepreneurial
projects and are steadily growing in strength.
d) Crowdfunding. This is an alternative system for funding social entrepreneurship and
innovation projects. Crowdfunding describes the collective effort of individual or
collectives who invest their money in support of projects of all kinds: investments in
renewable energy projects, financing infrastructures and technology (sensors for
measuring pollen and pollution levels, etc.) Transactions are made via internet and
serve to fund social entrepreneurship projects. In the case of the Basque CityRegion, this system is being used to fund small-scale projects through digital
platforms, such as Goteo Euskadi or Joint Projects, but in such countries as the
USA they are now financing public infrastructures or projects intended for
renewable energies.
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10. 4.- Conclusions
Few organisations can afford to stand still in the midst of the structural crisis we are
currently going through. Therefore, both public and private institutions (businesses,
cooperatives, research centres and universities), as well as civil society must work
together on the transformation, optimisation and generation of new models for
management and funding of human, social and financial capital. Collaboration
between public and private agents is going to be necessary if solutions to difficulties
are to be provided and new models of management, organization and funding found
and the encountering and interaction spaces can help to speed up the process. In the
case of the Basque City Region this interaction spaces are located on the main cities
and the smaller ones and that facilitates the communication and the interaction of the
different public (politicians, public organizations, agencies, social movements,..) and
private agents.
The entrepreneurship and innovation process that are appearing at the micro-regional
scale favour the economic reactivation of the city-regions, as well as an improvement in
social, environmental and cultural conditions in the region. In some cases the
innovation and entrepreneurship processes being produced within the city-regions are
distancing themselves from the growth and competiveness processes that have served
as models until now. And new models, one of whose main aims is that of building a
more sustainable and just society, are being set in motion.
These processes find themselves being promoted by the gathering and interaction of
the various city-region agents, which takes place in either physical or digital spaces
found in both the central nodes and outlying areas of the Basque City-Region. In most
cases, these are neutral spaces (open and without restrictions) that promote
connections and collaboration between different agents by creating networks
distributed all around the geography of the Basque region. These spaces support the
creation of collaborative, open work dynamics that promote innovation and
entrepreneurship.
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