Transformative adaptation in times of polycrisis: insights from Milan's New Urban Economies

European cities are increasingly shaped by polycrisis, where economic instability, social inequality, environmental stress, and institutional fragmentation intersect and reinforce one another. In this context, growth- and competitiveness-driven urban strategies often deepen exclusionary dynamics, even when framed as sustainable or innovative. At the same time, cities have seen the rise of New Urban Economies (NUEs) that seek to re-embed economic activity within social, ecological, and democratic values. The article examines how NUEs respond to these contradictory conditions through the lens of transformative adaptation, understood as a situated and political process of negotiating tensions between economic viability and socio-ecological commitments. Drawing on a typology of coping, incremental, and transformative adaptation, it argues that adaptation unfolds as a continuum of overlapping and hybrid strategies rather than a linear pathway to transformation. Empirically, the study focuses on Milan, a global innovation hub marked by strong sustainability narratives alongside acute housing pressures, inequality, and environmental stress. Based on a mixed qualitative methodology, including a georeferenced mapping of 87 NUEs and 25 in-depth interviews, the analysis shows that adaptive strategies are differentially distributed and shaped by sectoral conditions, institutional environments, and organisational trajectories, with initiatives combining and navigating multiple adaptive logics rather than following predefined pathways. Overall, the article conceptualises adaptation as a process of strategic positioning within urban polycrisis, through which urban economic actors negotiate constraints, sustain value-oriented practices, and rework the boundaries of transformation. In doing so, it contributes to urban sociology and sustainability transitions by understanding urban economic innovation as contested, situated, and continually reworked rather than predetermined.