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

Abstract

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.

Mapping Urban Networks through Inter-Firm Investment Linkages: The Case of Listed Companies in Jiangsu, China

“…However, limited by available relational data, existing empirical studies on inter-firm investment connections are quite few, mainly including Battiston's [27] analysis on inter-regional investment stocks across Europe and Ma's [28] analysis on inter-province investment connections of Chinese listed companies between 2002 and 2009. As Pan [19] argued, the key challenge to promoting studies on all types of inter-firm linkages, including inter-firm investment, is to find a feasible relational data set. Such a data set needs to not only reveal reliable inter-city linkages but also support comparative studies of firm networks across sectors.…”

“…Intra-firm, inter-firm and extra-firm are the three categories of firm networks [18]. Intra-firm and inter-firm are the two regarded as suitable to quantify inter-city linkages [19]. Intra-firm linkages come mainly from the vertically internal organizational structures and processes [20].…”

“…Intra-firm linkages come mainly from the vertically internal organizational structures and processes [20]. In contrast, inter-firm linkages include broad horizontal connections [19], regardless of whether the firms have organizational relationships or not. In other words, inter-firm linkages are broad enough to include intra-firm connections.…”

“…More importantly, the development of global production networks has brought extensive inter-firm connections within the same or across different industries [21]. Therefore, inter-firm linkages are bound to be a promising perspective for urban network study [19].Based on these investment connections between listed firms registered in Jiangsu and their domestic investees, this study's main goal is to reveal the changes of node hierarchy and urban networks from different industry perspectives and focuses on two key questions: 1. which cities are the centers of investment networks and what are their spatial distribution characteristics; 2. which cities get more investment favor compared with their economic scale and why? It is found that Shanghai, Beijing and Shenzhen are the constant centers outside Jiangsu Province in the investment networks across industries, while Nanjing and Suzhou are provincial centers.…”

“…More importantly, the development of global production networks has brought extensive inter-firm connections within the same or across different industries [21]. Therefore, inter-firm linkages are bound to be a promising perspective for urban network study [19].…”