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

Abstract

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.

• advanced producer services
• global cities
• London
• New York
• strategic places
• world city network

Acknowledgments

Four referees provided very thorough and thoughtful analyses resulting in a much-improved text for which we thank them. The usual disclaimers apply.

Notes

It is in principle possible to generate two different networks based on the data measuring the presence of firms in cities: a firm-to-firm network and a city-to-city network (Neal ; Liu and Derudder, ). As our interest is primarily in identifying well-connected cities through firms’ location strategies, our focus here—as in most world city network analyses—is on the city networks.

It should be noted that although this methodology includes arbitrary threshold decisions for defining strategic firms and strategic places, these were not the only ones tested in the research. The key point is that the different choices had very little effect on subsequent analysis. In other words, the results we present below are quite robust, with minor differences having no relevance to the conclusions drawn.

The fact that Toronto, the only Canadian city to be included in our 46 strategic places, is ranked bottom in Table 5 does clearly suggest that NAFTA has tended to work for the benefit of APS firms in leading U.S. cities at the expense of their Canadian and Mexican counterparts.

For recent examples of two of our “strategic firms,” see “New Johannesburg Office: A Gateway to Africa for Canadian Mining Companies’ at http://emailcc.com/rv/ff000884c0cfb0734ec2b80e1d49beb856820713 (accessed September 1, 2012), and see “Bain & Company expands Financial Services practice in South Africa’ where it is announced that “We are growing our team of financial specialists at a time of global challenges and unique opportunities for South Africa’s leading players” at http://www.bain.com/about/press/press-releases/bain-and-company-expands-financial-services-practice-in-south-africa.aspx (accessed September 1, 2012).