Advanced Producer Service Firms Research Articles

Re-shaping global-ness by spending overseas: Analysis of emerging Chinese consumption abroad

In most urban network studies, advanced producer service firms and transportation carriers are regarded as the main agents building intercity connections. With rising global incomes and increasing mobility of people worldwide, however, flows consisting of ordinary consumers have become a new way for cities to be connected to the globe. Using transaction data from China UnionPay, this paper explores the spatial network pattern of emerging Chinese overseas consumption by tracing the origins, destinations, and volumes of spending flows. We find that a global network built on consumption flows originating from mainland China improves the global-ness of countries and regions that have historically been peripheral in the financial networks created by multinational firms or inter-port transportation. Given the soaring consumption capacity of urban Chinese residents and the re-orientation of urban policies in China, it is expected that Chinese consumption will keep re-shaping the global-ness of both Chinese cities and numerous destinations worldwide.

Location patterns of advanced producer service firms in Warsaw: A tale of agglomeration in the era of creativity

Advanced producer services (APS) are recognized as one of the pillars of contemporary metropolitan development. The main goal of the article is to show the relationship between the sectoral and spatial dimensions of metropolisation process by analysing the location patterns and factors of advanced producer services in Warsaw. In particular, the research focuses on location differences between specific APS industries, as well as the role of business districts in this diversification. The research conducted shows that ‘professional’ APS branches prefer city centre, as well as business districts in general, whereas ‘creative’ APS branches prefer to cluster in locations either surrounding the city centre - especially vibrant areas with high quality urban space – or peripheral, non-business districts with good car accessibility, that provide convenient access to clients. Surprisingly, cultural and entertainment amenities do not seem to have a significant impact in either case. We conclude that literature on creative economy that highlights the role of cultural and entertainment amenities has certain limitations in terms of explaining business location patterns and factors in the post-socialist context and therefore might not provide fully adequate practical recommendations for urban planning policies.

Unpacking the advanced producer services complex in world cities: Charting professional networks, localisation economies and markets

Limited empirical evidence in support of world-city formation has been the ‘dirty little secret’ of the eponymous research area. Since the late 1990s, inspired by Sassen’s account of The Global City, the field focused on advanced producer services (APS) firms as primary actors in world-city formation. While generating robust insights into the shifting geographies of world cities, empirical attention has mostly focused on mapping inter-urban world city networks formed by APS firms. Despite a rich literature on APS clusters, the degree to which specific intra-urban agglomerations and their inter-firm connections shape up has received little systematic attention. Based on a company survey in Brussels (Belgium), our study charts interactions between APS professionals to better understand the geographies, quality and intensity of their encounters. Our findings reveal that the Brussels-based APS cluster constitutes a hybrid of an industrial complex with stable formal ties and a social network based on informal exchange. Financial services assume a central position in what might be called ‘a para-financial services complex’, revealing close ties with legal services, accountancy and audit, and ICT. Geographically, we find that the APS complex depends on fine-grained localisation economies, which allow a small share of APS professionals to service both domestic and international clients. We conclude that APS actors in Brussels exhibit a strong domestic anchoring, indicative of the continued relevance of world cities as national financial centres amidst financial globalisation.

Metropolitan Geographies of Advanced Producer Services: Centrality and Concentration in Brussels

AbstractThe literature on global and world cities points towards a growing concentration of advanced producer services (APS) firms in a restricted number of cities, who execute strategic command and control functions over globalised capitalism. However, relatively little attention has been paid to how APS are located within such cities. We argue that APS locations within cities are related to two partly independent processes: localisation economies and centralisation dynamics, which result in patterns of concentration and centrality superimposed on socio‐historical constructions of urban space. Utilising data from a national company register, we analyse the local insertion of APS firms in the Brussels’ metropolitan area in light of these two processes. The outcome reveals that only some of Brussels’ APS firms are concentrated and central, which we suggest to be the most strategic and internationalised APS functions.

World City Networks Shaped by the Global Financing of Chinese Firms: A Study Based on Initial Public Offerings of Chinese Firms on the Hong Kong Stock Exchange, 1999-2017

Advanced producer service (APS) firms play key roles in the initial public offerings (IPOs) of firms in stock markets. Based on interfirm service relationships between APS firms and their clients in the IPOs of Chinese firms in the Hong Kong Stock Exchange (HKEx) in the period 1999–2017, this study explores how world city networks are shaped in the global financing activities of Chinese firms. The results show that very widely distributed cities are involved in the networks and that Hong Kong holds an overwhelmingly dominant position. In addition, London and the Cayman Islands have become key overseas nodes by providing significant services for Chinese firms, but most overseas cities mainly provide legal services. Furthermore, Beijing, Shanghai, and Shenzhen are in pioneering positions in developing connections with both world cities and offshore jurisdictions. Beijing has great advantages over all other Mainland China cities because it has become both the command center and a service provider. Compared to Hong Kong, Mainland China cities still hold very marginal positions as service providers. Global financing activities by firms from emerging economies such as China have the potential to reshape the world city networks and might have important impacts on the evolution of international and domestic financial center networks. The results indicate that this is a feasible way to explore the relationships between commanding centers and APS centers based on service linkages in the IPO process from the perspective of the world city network. This study also sheds light on the future quantitative analysis of global financial networks.

Should I Stay or Should I Go: Predicting Advanced Producer Services Firm Expansion and Contraction

The literature on firm location selection allows us to retrospectively explain why firms did locate in particular places. However, it remains challenging to prospectively predict where they will locate. In this article, we propose a simple conceptual model of firm location decisions, then operationalize it using the ordinal stochastic degree sequence model (oSDSM). We use this model to predict whether 104 advanced producer service firms will expand, contract, or maintain their presence in each of 525 cities, and find that these predictions are accurate in more than 86 percent of cases. We conclude with suggestions for further refinement of this model.

China's hybrid global city region pathway: Evidence from the Yangtze River Delta

As the number of global cities grows and the extent of their city region hinterlands expands it is increasingly important to understand connectivity of cities within global city regions to the core city as well as connectivity of both the core city and the entire city region to other cities in the world city network. By investigating multi-scalar network connectivity of Shanghai both to cities in its hinterland and the world city network from 2000 to 2013, this article concludes that Shanghai's status as a global city is based both on connections to cities within the region and connections of Shanghai municipality to other cities in the world city network. Based on measures of connectivity such as connectedness of advanced producer service firms, airport arrivals and departures, and container TEUs, since 2000 Shanghai has become one of the most connected cities in the world. However, Shanghai's global connectivity is not the same as its importance in the world economy. The market value of firms listed on the Shanghai stock exchange, foreign exchange turnover, and international transshipments from the Port of Shanghai are modest compared to other leading global cities. City network analysis within the Shanghai mega-city region provides a novel explanation for this apparent paradox. Shanghai's global connectivity is strongly influenced by its close connection with its hinterland, the Yangtze River Delta, and elsewhere in China. Shanghai's rapidly growing global connectivity is largely a result of the emergence of the Yangtze River Delta as a global city region. Shanghai, as the core city in the city region, is both a hub connecting flows of goods, capital, people, and information within the Yangtze River Delta region and a gateway through which other cities in the city region connect to the world city network. Scholars worldwide can apply the methods used in this article to illuminate the hybrid global city pathway.

The world city network: Evaluating top-down versus bottom-up approaches

The growth of the knowledge economy has led to new forms of business networks linking cities and towns across different spatial scales. Various attempts have been made to analyse these networks empirically using the interlocking network model of the Globalization and World Cities (GaWC) research network. Two approaches can be distinguished from a spatial perspective: a global ‘top-down’ approach that studies the world city network from the perspective of the largest advanced producer service firms, and a macro-regional ‘bottom-up’ approach that starts with the most important knowledge-intensive firms located within specific territorial boundaries. This paper compares and critically assesses the methodological implications and empirical outcomes of both approaches with reference to case studies of the German space economy. Both approaches pursue similar objectives: to investigate external relations of cities, both transnationally and on the national scale. Differences exist in the theoretical argumentation: the top-down approach is grounded in world city research; the bottom-up approach is anchored in debates in regional science and economic geography. In this paper, we argue for the need of scale-sensitive interpretations of connectivity patterns resulting from different approaches to the interlocking network model and conclude with some tentative recommendations for the methodological direction of future research in world city network studies.

Mapping urban networks through inter-firm service relationships: The case of China

Literature on how cities get connected through networks of firms has been increasing in recent years. In particular, advanced producer service (APS) firms are being widely used to build intra-firm linkages to establish urban networks. In contrast to studies applying intra-firm networks, this study proposes an alternative strategy to build urban networks based on inter-firm service provision relationships during the process of initial public offering (IPO) in which APS firms – including securities, law firms and accounting firms – provide professional services for firms aiming to be publicly listed. Based on service provision connections between APS firms and their clients, this study provides fresh insights on urban networks in China. The results show that Beijing, Shenzhen and Shanghai strategically hold dominant positions within Chinese urban networks and they are the lead command and financial centres within the country. Particularly, Beijing has overwhelmingly more influence over other cities. The urban networks are embedded in China’s unique institutional context where market and state power together have shaped these networks. Since the urban network is built up based on real economic linkages, the findings might have further implications for policy-making and could contribute to ongoing debates regarding financial centres in China. It implies that connections between firms based on real economic activities can be an effective way to construct urban networks in future research.

Work practice among advanced producer service firms – project work in space-time

This article is an explorative investigation of a sample of advanced producer service (APS) companies located in Stockholm (the capital and main urban centre of Sweden). The discussion is centred on aspects of work practice and how this is conditioned by space-time constraints. These space-time constraints refer to coupling, authority and capability constraints which are concepts framed in a time-geography approach. Although time-geography is primarily engaged in mapping presence and locations in time-space, its concepts of constraints embrace physical, social and cultural factors. The article presents an empirical in-depth study of project work and work practice among a selection of APS companies. A micro-approach to work practice has been pursued using a multi-method strategy and time-geography methodology including time diaries, interviews and a questionnaire. The experiences among the investigated companies of time-geography constraints make the constant negotiations for the practice of work among these organizations intelligible. To the extent these investigated companies may be considered representative of advanced services more generally, the presence of pressing constraints helps to explain the more general structure of this industry of high labour turnover and rapid company re-structuring processes.

Identification, structure and dynamic characteristics of the Beijing–Tianjin–Hebei mega-city region

This article establishes identification criteria and metrics, and delineates the Beijing–Tianjin–Hebei mega-city region (BTHMCR). Through an empirical analysis of socio- economic data and of functional relationships denoted by advanced producer services (APS) and commuting flows, we focus on the dynamic characteristics of APS firms and their relevance for polycentricity in BTHMCR and find that: (i) BTHMCR grew fast and became more spatially polycentric in the past decade; (ii) Beijing dominates the landscape of APSs and different APSs present different spatial patterns, with BTHMCR undergoing a process of functional polycentric division of labour and complementarity; (iii) Concentration and deconcentration processes co-exist simultaneously in BTHMCR; (iv) Internal and global network connections and thus functional connectivity have been improving in BTHMCR while Beijing absolutely dominates the connectivity. Policy implications grounded in this analysis are discussed.

On the global city map, but not in command? Probing Manila’s position in the world city network

The changing geography of service employment and the relocation of back-office service tasks to developing economies present a challenge to contemporary world city network research and methodology, as cost-driven offshoring may wrongly suggest a city’s increased importance in global city rankings. In particular, financial service firms, but also management consultancies, law firms, and other advanced producer service firms have offshored tasks abroad. These firms’ offices are attributed a vital role in the world city network literature and form the basis for world city rankings using the interlocking network model. Based on empirical research on advanced producer service firms in Metro Manila, the Philippines, this paper argues that the existence of linkages and the appearance ‘on the map’ of dominant economic flows does not automatically lead to an increased command and control position of Manila. Instead, the attraction of lower-end services leads to Manila’s dependent articulation into global service production networks. The findings challenge the key assumptions about ‘command functions’ and ‘strategic role’ of global cities that underpin the global city rankings. The paper critiques current conceptualisations of command and control in global urban network theory in the light of changing intra-firm divisions of labour in advanced producer service firms, and stresses the importance of qualitative research.

World Cities and the Uneven Geographies of Financialization: Unveiling Stratification and Hierarchy in the World City Archipelago

AbstractThis article critically evaluates the network‐centrism of much of contemporary world cities research and queries its capacity to unveil key accumulation processes under financialized globalization. Our object of inquiry is the world city archipelago (WCA), a material yet non‐contiguous space of world city ‘islands', which is (re)produced through the socio‐spatial practices of advanced producer services (APS) firms as they assist in constructing (financial) accumulation strategies for their clients. Scrutinizing the WCA with a singular focus on networks can veil dynamics that lead to internal stratification and hierarchy between world cities and their constitutive outside. Alternatively, these veiled dimensions are better grasped by territorial, scalar and place‐based abstractions. As an example, we unveil WCA space by studying the space of APS practices in three recent cases of Eurobond issuance. By comparing these three instances through an encompassing approach, a bounded geography of a financialized accumulation space is identified, which contains London and other world cities as a necessary space of dependence but also stretches out to various contingent spaces of engagement at the fringes of the WCA network: offshore jurisdictions and places of debt origination. We conclude by making the case for a heightened sensitivity in respect of core–periphery structures that exist between the WCA and its outside, but also within the WCA itself.

A világvárosok rangsorolása az irányító és ellenőrző funkciójuk alapján, és a formálódó új gazdasági erőközpontok

A világgazdaság vezető városainak azonosítása döntően két irányzat, a John Friedmann-féle világváros-hipotézis és a Saskia Sassen által jegyzett globálisváros- koncepció mentén történik. Jelentős különbség azonban a két irányzat között, hogy míg előbbi a világvárosok kijelölése szempontjából a hagyományos termelést végző multinacionális vállalatok székhelyválasztását tartja döntő fontosságúnak, addig utóbbi azokat a városokat tekinti globális városnak, amelyekben a pénzügyi szervezetek, illetve a posztindusztriális világcégek minél nagyobb mértékben koncentrálódnak. Mivel napjainkban inkább a globális város megközelítése nyert teret, a multinacionális vállalatok szerepe a vezető városok kijelölése szempontjából leértékelődött. Megfigyelhető azonban egy újonnan kibontakozó tendencia: bár a nemzetközi pénzpiacokat évtizedek óta változatlanul mindössze néhány globális város (New York, London, Tokió, Párizs) ellenőrzi, a feltörekvő gazdaságok vezető városai egyre hatalmasabb vállalatokkal képviseltetik magukat a világgazdaságban, és a piacszerzés érdekében egyre kiélezettebb versenyre kényszerítik a fejlett világból származó társaikat. A felszín alatt a hagyományos termelésorientált világgazdaság intenzíven változik, irányításában pedig jellemző földrajzi elmozdulások mutathatók ki.Az elemzés első felében a vezető gazdasági központokat rangsorolom irányító és ellenőrző funkciójuk alapján 2006-ben és 2014-ben, az elemzés második felében pedig a világgazdaság egyre erősödő regionális központjait mutatom be.

Are world cities also world immigrant cities? An international, cross-city analysis of global centrality and immigration

Systematic research on world cities neglects immigration, despite its significance to world city formation. In this article, we test a foundational, but untested, premise of world cities research: that global centrality in the world urban system is associated with larger, more diverse immigrant populations. Using an international sample of cities, we conduct multivariate regressions of Benton-Short et al.’s Urban Immigrant Index on the Globalization and World City Network measure of advanced producer service firm centrality and two other measures of global urban centrality, controlling for competing explanations of international migration. Our findings reveal that cities that are more central to the network of advanced producer service firms have larger, more diverse immigrant populations than less-central cities. World cities are thus not only key sites for corporate control of the world economy, but they are also central in international flows of immigrant labor, as Sassen hypothesized nearly 30 years ago.

Mapping producer services networks in mainland Chinese cities

We analyse the geographies of urban networks created by leading producer services (PS) firms in China. Because of the national regulation of the Chinese state-led economy and the location strategies of global advanced producer services (APS) firms, the geography of global APS in China as examined by the Globalization and World Cities Research Network (GaWC) cannot be studied as a subnetwork of GaWC’s global network, but needs an empirical study based on a wide range of leading PS in the Chinese market. We explore the spatial differentiation in the connectivity of Chinese cities based on the location strategies of 323 APS firms in 287 Chinese cities. Beijing, Shanghai, Guangzhou and Shenzhen emerge as the primary nodes. The spatial distribution of banking, securities, and insurance services networks appears to be more even than those of non-financial PS firms. Regional disparity exists in terms of polycentric urban development in coastal China, as well as in the centralisation model in central and western areas. We suggest that owing to the continued tight regulation of China’s state-led economy and the nature of the location strategies of ‘globalised’ PS firms, the urban networks created by Chinese PS firms are not only an extension of urban networks at a global scale but also an embodiment of economic activities at other scales.

Advanced Producer Service Firms as Strategic Networks, Global Cities as Strategic Places

Sassen’s identification of global cities as “strategic places” is explored through world city network analysis. This involves searching out advanced producer service (APS) firms that constitute “strategic networks,” from whose activities strategic places can be defined. Twenty-five out of 175 APS firms are found to be strategic, and from their office networks, 45 cities out of 526 are designated as strategic places. A measure of “strategicness” of cities is devised, and individual findings from this are discussed by drawing on existing literature about how APS firms use specific cities. A key finding shows that New York and London have different levels of strategicness, and this is related to the former’s innovation prowess and the latter’s role in global consumption of services. Other cases of strategicness discussed in terms of the balance between production and consumption of APSs are Beijing, Hong Kong, and Shanghai; Palo Alto; Mexico City; Johannesburg; and Dubai and Frankfurt.

Governing Global Urbanization: From Technics to Politics

Global Urbanization: The City in the Twenty-First Century. Edited by Eugenie L. Birch, Susan M. Wachter. Philadelphia: University of Pennsylvania Press, 2011. 377 pp., $75.00 hardcover (ISBN-13: 978-0-08122-4284-3). Cities & Sovereignty: Identity Politics in Urban Spaces. Edited by Diane E. Davis, Nora Libertum de Duren. Bloomington and Indianapolis: Indiana University Press, 2011. 272 pp., $27.95 paperback (ISBN 13: 978-0-253-22274-9). Cities are increasingly important sites in global affairs. Alongside recognition of watershed moments in the history of human populations and major political economic shifts, it is increasingly acknowledged that some of the most important global social, environmental, and security challenges must be worked out on the ground in cities. As global politics urbanize and urban politics globalize, a vast literature has sprung up to frame the most pressing challenges at the intersection of urban and global politics. Over the past three decades, this literature has been characterized primarily by inquiry into the disproportionate presence of globally influential organizations—advanced producer and financial services firms, global energy corporations, global NGOs—in a relatively small number of cities. In this literature, the influence of globalization has been of primary interest. Because of recent demographic shifts, this literature has been joined by an increasing focus on the ways in which urbanization places demands upon local development patterns and governance capabilities. Global Urbanization: The City in the Twenty-First Century and Cities & Sovereignty: Identity Politics in Urban Spaces both make significant contributions to this literature. Both of these books are edited volumes. While edited volumes sometimes risk incoherence, each of these succeeds by establishing a strong focus for the volume, organizing chapters so that each section of the book has its own coherence, and choosing authors who have similar theoretical commitments and methodological frameworks even though they have different disciplinary backgrounds. All of these features mean that these two books are in some ways more readable than many other edited volumes. Global Urbanization focuses on the intersection of population and urban development, giving special attention to the challenges of large-scale urbanization in cities of the Global South. The book is careful to treat problems of socially inclusive economic growth, environmental sustainability, and infrastructure resilience for a …

City-Dyad Analyses of China’s Integration into the World City Network

The business connections between Beijing, Hong Kong and Shanghai and other major world cities are investigated using the interlocking network model based upon the location strategies of advanced producer service firms. This approach emphasises non-hierarchical relations between cities. A key new finding is that city-dyad analysis enhances the prominence of these China cities compared with simple ranking by total global network connectivity. This suggests that Hong Kong, Shanghai and Beijing have developed more strategically important roles in the world city network than previously understood. Yet the geographies of these links are distinctive, with Shanghai shown to be better connected to the more important world cities such as London and New York than Beijing; and Beijing is found to be better connected to political world cities such as Washington and Brussels, and to other Pacific Asian cities, than Shanghai. The results are interpreted as suggestions for developing a new research programme.

Information-rich visualisation of dense geographical networks

Network information on geographical entities such as cities is frequently analysed numerically, but seldom visualised in an appealing form. Reasons for this include the absence of powerful software that is capable of handling large-scale networks and the layout of this information without extensive visual clutter. In addition, classic network drawing algorithms (e.g. Fruchterman–Reingold) are not optimised for the representation of geographically fixed nodes, and the standard repertoire of cartography is not suited to mapping complex network information. To tackle these issues, a method-mediating circular layout is presented that (1) roughly preserves the geographical information, (2) allows for the drawing of less cluttered relations between the geographical entities, and (3) offers the possibility of including more information on the underlying node and edge attributes when compared to conventional two-dimensional layouts. The data used to show the capacity of the circular layout were devised by the Globalisation and World City (GaWC) research network of 2010, and represents the office networks of globalised advanced producer services firms.