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The concept of Smart Specialisation Strategies (S3) that is spread by the European Commission and academics (Foray et al., 2009 and 2011; McCann and Ortega-Argiles, 2013) has mainly focused at the regional level and little attention has been paid to the role of cities within them. Cities play a role in these strategies and their policy dynamics might adjust towards these new policy paths. The role of cities in regional RIS3 is an understudied field. This paper aims to understand the challenges on policy-making for smart specialization in cities and sheds light to the following research question: how to address smart specialization in cities framed by regional RIS3? The paper is inspired in an action-research project where both authors are involved together with the members of the city town hall in Bilbao (Spain). Two main challenges were launched by politicians when we (researchers) got into the project. On the one hand, a new era on policy-making was necessary in order to facilitate an economic transformation and specialization in the city. Accordingly, the action research process should facilitate a policy-learning process. On the other hand, the regional government had defined the regional Research and Innovation Strategy for S3 (RIS3), where Bilbao's priorities were not included according to the mayor's office in the town hall. Therefore, the integration of a multilevel perspective in the regional strategy was another main challenge in the action research process.
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