Geographical small town research has often conceptualised small towns as externally determined entities. In this perspective, small towns appear as ‘black boxes’ whose development is dependent on external forces or inputs. That is to say that small town development is interpreted as a result from external linkages, specific location factors (such as the distance to large urban areas or the positioning in the central place system) or the availability of natural resources. While acknowledging the significance of external forces we argue that these analyses should be complemented by approaches that focus on the internal structures and networks of small towns. The papers presented in this volume thus focus on the local scale, i.e. on an analysis of local networks as self-produced local assets. Key concepts used are social capital, urban governance and the notion of small towns as localities. For practical purposes, we define small towns as urban places with a population of less than 20,000 inhabitants. Two rural small towns were examined in each study area (East-Germany, Latvia, Lithuania and Poland). Despite of their structural deficits, the small towns analysed in our study are significant concentrations of work places, social infrastructure and administrative centres. The empirical results show that the residents have a high degree of emotional attachment, a general satisfaction with small town life and a strong integration in networks of friends and family. The emotional attachment and local identification might form an important asset for local planning approaches based on ‘place making’. Social ties in the form of family and informal friendship networks are the most important reason for place attachment. According to our results, it can be assumed that social capital is built predominantly within the kinship and the circle of friends and acquaintances. Therefore social capital in the small towns is of rather ‘high density’ and ‘bonding’ character leading to a strong cohesion of the small town population.