Abstract
ABSTRACT Smart city policy is often characterised as a problem of technology procurement. Cities are encouraged to implement sensors, platforms and analytics to become ‘smart’. However, several such initiatives result in fragmented systems, vendor dependency and symbolic innovation rather than sustained public value. This study argues that smart cities should be understood primarily as projects of institutional reform rather than as programmes of technology procurement. Drawing on state capacity theory, the study develops a conceptual framework that defines smartness through the following four institutional dimensions: governance, capacity, rules and incentives and administrative culture, with technology regarded as an embedded instrument rather than a defining driver. The framework is applied to two contrasting cases: Songdo, South Korea, and Tallinn, Estonia. Songdo exemplifies a technology‐saturated but institution‐light model, where intelligence is embedded in infrastructure while governance remains fragmented and externally shaped. Tallinn exhibits a governance‐first pathway in which digital systems are integrated into public institutions, supported by clear authority, internal capacity and adaptive rules. The comparison shows that technology strengthens existing institutional conditions rather than compensating for their absence. The findings demonstrate that fragmentation, pilotism and lock‐in are structural outcomes of weak governance capacity. Smartness emerges when public institutions can coordinate, learn and exercise authority over sociotechnical systems.