How Smart City Initiatives Economically Affect Small and Medium-Sized Enterprises (SMEs): Innovation Capacity and Competitiveness – A Comparative Study of Japan and the UK

This paper will look at the impact of smart city projects on the competitiveness and economic performance of small to medium enterprise (SMEs) in the United Kingdom and Japan. The selection of a qualitative comparative research design to be used was based on the systematic analysis of the academic literature, national policy papers and institutional reports. The results indicate that the Japanese long-term, highly centralized type of governance helps in facilitating systemic coordination, structural integration, whereas the UK model that is decentralized, market-driven encourages flexibility, fast experimentation, and data-driven innovation. Nevertheless, having differences, both models unveil that smart city programs can only be translated into the competitiveness of SMEs in case of coherent policies, digital literacy, and collaborative ecosystems. The research has implications on policymakers who want to reconcile technology change with an inclusive economic development in the urban settings.