Corporations and the Urban Advanced Business Service Sector

Abstract

This article analyzes interurban variation in one advanced service, management consulting, across large U.S. cities in 1963. Human ecologists assume advanced services fulfill a coordinative function in the metropolitan system. Consistent with this view, we found that: (1) metropolitan population size and distance to neighboring metropolitan areas were positively associated with a city's consulting activity, (2) the number of other large cities with which a city shared its metropolitan area was inversely related to consulting levels, and (3) the number of corporations headquartered in a city was positively associated with consulting activity. Organizational theorists assume advanced services fulfill coordinative needs in the corporate system. Thus, we also found that: (4) the characteristics of firms headquartered in a city (i.e., their age, market complexity, structure, mode of control, and elite contacts) shaped the imnpact that their numbers had on urban consulting. In the conclusion, we consider the relationship between human ecology and the organizational approach. This article has two objectives: to analyze interurban variation in one type of advanced business service, management consulting, and to extend the human ecological view of the city system. Business services constitute an increasingly important segment of the U.S. economy, generating 7% of all intermediate outputs by 1970 (Stanback 1979). High-skilled person-specialized functions that help plan investments and control the manufacture and distribution of goods comprise the most important business services. These advanced services, which include management consulting, advertising, and a few other activities, account *Earlier versions of this article were presented at the Sunbelt VI: Annual Social Network Conference, Santa Barbara (1986), and at the Annual Meetings of the American Sociological Association, New York (1986). Robert Silvers and Estella Hopenhayn collected some of the data used in our analyses. We are gratefulfor the comments of two anonymous reviewers. We also appreciate the helpful criticisms and advice supplied by Sharon Zuckin, Peter Reiss, Jerald Herting, Bill Bielby, and Jim Baron. Special thanks to Linda and Brucefor the rain gear. Direct correspondence to Donald Palmer, Graduate School of Management, University of California,