IDEAS home Printed from https://ideas.repec.org/p/wiw/wiwrsa/ersa04p49.html
   My bibliography  Save this paper

The Clustering of Financial Services in London

Author

Listed:
  • Gary A. S. Cook
  • Naresh R. Pandit
  • Jonathan V. Beaverstock
  • Peter J. Taylor
  • Kathy Pain

Abstract

This paper reports a one-year study which investigated the clustering of financial services activity in London. A questionnaire asking about the advantages and disadvantages of a London location was sent to a stratified sample of 1,500 firms and institutions. In addition, thirty-nine on-site interviews with firms, professional institutions, government bodies and other related agencies were conducted. The study finds that banking, including investment banking, forms the clusterÂ’s hub with most other companies depending on relationships with this sub-sector. Generally, the cluster confers many advantages to its incumbents including enhanced reputation, the ability to tap into large, specialized labor pool and customer proximity. The localized nature of relationships between skilled labor, customers and suppliers is a critical factor which helps firms achieve innovative solutions, develop new markets and attain more efficient ways to deliver services and products. Particularly important are the personal relationships which are enhanced by the on-going face-to-face contact that is possible in a compact geographical space. Many of the clusterÂ’s advantages are dynamic in that they become stronger as agglomeration increases. The study also finds important disadvantages in the cluster which threaten its future growth and prosperity. These include the poor quality and reliability of transport, particularly the state of the London Underground and links to airports, increasing levels of regulation and government policy that is not co-ordinated with the whole of the cluster in mind. Key words: Industrial clustering, agglomeration, financial services.

Suggested Citation

  • Gary A. S. Cook & Naresh R. Pandit & Jonathan V. Beaverstock & Peter J. Taylor & Kathy Pain, 2004. "The Clustering of Financial Services in London," ERSA conference papers ersa04p49, European Regional Science Association.
    • Handle: RePEc:wiw:wiwrsa:ersa04p49
    as

    Download full text from publisher

    File URL: https://www-sre.wu.ac.at/ersa/ersaconfs/ersa04/PDF/49.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Audretsch, David B & Feldman, Maryann P, 1996. "R&D Spillovers and the Geography of Innovation and Production," American Economic Review, American Economic Association, vol. 86(3), pages 630-640, June.
    2. Baptista, Rui & Swann, Peter, 1998. "Do firms in clusters innovate more?," Research Policy, Elsevier, vol. 27(5), pages 525-540, September.
    3. Ian R. Gordon & Philip McCann, 2000. "Industrial Clusters: Complexes, Agglomeration and/or Social Networks?," Urban Studies, Urban Studies Journal Limited, vol. 37(3), pages 513-532, March.
    4. Swann, G. M. Peter & Prevezer, Martha & Stout, David (ed.), 1998. "The Dynamics of Industrial Clustering: International Comparisons in Computing and Biotechnology," OUP Catalogue, Oxford University Press, number 9780198289593.
    5. Henderson, J. Vernon, 1986. "Efficiency of resource usage and city size," Journal of Urban Economics, Elsevier, vol. 19(1), pages 47-70, January.
    6. Maskell, Peter & Malmberg, Anders, 1999. "Localised Learning and Industrial Competitiveness," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 23(2), pages 167-185, March.
    7. Birgitte Andersen & Jeremy Howells & Richard Hull & Ian Miles & Joanne Roberts (ed.), 2000. "Knowledge and Innovation in the New Service Economy," Books, Edward Elgar Publishing, number 2285.
    8. Ann Markusen, 1996. "Sticky Places in Slippery Space: A Typology of Industrial Districts," Economic Geography, Taylor & Francis Journals, vol. 72(3), pages 293-313, July.
    9. Naresh Pandit & Gary Cook & G. M. P. Swann, 2002. "A Comparison of Clustering Dynamics in the British Broadcasting and Financial Services Industries," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 9(2), pages 195-224.
    10. Cook, Gary A. S. & Pandit, Naresh R. & Swann, G. M. Peter, 2001. "The dynamics of industrial clustering in British broadcasting," Information Economics and Policy, Elsevier, vol. 13(3), pages 351-375, September.
    11. Roberta Capello, 1999. "Spatial Transfer of Knowledge in High Technology Milieux: Learning Versus Collective Learning Processes," Regional Studies, Taylor & Francis Journals, vol. 33(4), pages 353-365.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Berger, Helge & Ehrmann, Michael & Fratzscher, Marcel, 2006. "Forecasting ECB monetary policy: accuracy is (still) a matter of geography," Discussion Papers 2006/11, Free University Berlin, School of Business & Economics.
    2. Berger, Helge & Ehrmann, Michael & Fratzscher, Marcel, 2006. "Geography or skills: What explains Fed watchers’ forecast accuracy of US monetary policy?," Working Paper Series 695, European Central Bank.
    3. Brian T. McCann & Timothy B. Folta, 2009. "Demand‐ and Supply‐Side Agglomerations: Distinguishing between Fundamentally Different Manifestations of Geographic Concentration," Journal of Management Studies, Wiley Blackwell, vol. 46(3), pages 362-392, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gary A.S. Cook & Naresh R. Pandit, 2012. "Clustering and the Location of Multinational Enterprises: An Exploration of Financial Services in London," Chapters, in: Charlie Karlsson & Börje Johansson & Roger R. Stough (ed.), The Regional Economics of Knowledge and Talent, chapter 11, Edward Elgar Publishing.
    2. Filip De Beule & Ilke Van Beveren, 2008. "Product innovation and renewal: foreign firms and clusters in Belgium," LICOS Discussion Papers 22709, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    3. Elisa Giuliani & Martin Bell, 2004. "When Micro Shapes the Meso: Learning Networks in a Chilean Wine Cluster," SPRU Working Paper Series 115, SPRU - Science Policy Research Unit, University of Sussex Business School.
    4. repec:rri:wpaper:200605 is not listed on IDEAS
    5. Mirko Titze & Matthias Brachert & Alexander Kubis, 2014. "Actors and Interactions—Identifying the Role of Industrial Clusters for Regional Production and Knowledge Generation Activities," Growth and Change, Wiley Blackwell, vol. 45(2), pages 163-190, June.
    6. Gary A.S. Cook & Hans Lööf & Naresh R. Pandit & Börje Johansson, 2012. "The influence of clustering on MNE location and innovation in Great Britain," Chapters, in: Charlie Karlsson & Börje Johansson & Roger R. Stough (ed.), Entrepreneurship, Social Capital and Governance, chapter 3, pages 53-82, Edward Elgar Publishing.
    7. Giuliani, Elisa & Bell, Martin, 2005. "The micro-determinants of meso-level learning and innovation: evidence from a Chilean wine cluster," Research Policy, Elsevier, vol. 34(1), pages 47-68, February.
    8. Gashawbeza Bekele & Randall Jackson, 2006. "Theoretical Perspectives on Industry Clusters," Working Papers Working Paper 2006-05, Regional Research Institute, West Virginia University.
    9. Hector Rocha, 2004. "Entrepreneurship and Development: The Role of Clusters," Small Business Economics, Springer, vol. 23(5), pages 363-400, October.
    10. Sara Cruz & Aurora Teixeira, 2010. "The Evolution of the Cluster Literature: Shedding Light on the Regional Studies-Regional Science Debate," Regional Studies, Taylor & Francis Journals, vol. 44(9), pages 1263-1288.
    11. Argentino Pessoa, 2014. "Agglomeration and regional growth policy: externalities versus comparative advantages," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 53(1), pages 1-27, August.
    12. Matthias Firgo & Peter Mayerhofer, 2015. "Wissens-Spillovers und regionale Entwicklung - welche strukturpolitische Ausrichtung optimiert des Wachstum?," Working Paper Reihe der AK Wien - Materialien zu Wirtschaft und Gesellschaft 144, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik.
    13. Andrés Rodríguez-Pose & Fabrice Comptour, 2010. "Do clusters generate greater innovation and growth? An analysis of European regions," Working Papers 2010-15, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
    14. Sándor Juhász, 2021. "Spinoffs and tie formation in cluster knowledge networks," Small Business Economics, Springer, vol. 56(4), pages 1385-1404, April.
    15. Shivaram V. Devarakonda & Brian T. McCann & Jeffrey J. Reuer, 2018. "Marshallian Forces and Governance Externalities: Location Effects on Contractual Safeguards in Research and Development Alliances," Organization Science, INFORMS, vol. 29(6), pages 1112-1129, December.
    16. Gary A S Cook & Naresh R Pandit & Jonathan V Beaverstock & Peter J Taylor & Kathy Pain, 2007. "The Role of Location in Knowledge Creation and Diffusion: Evidence of Centripetal and Centrifugal Forces in the City of London Financial Services Agglomeration," Environment and Planning A, , vol. 39(6), pages 1325-1345, June.
    17. Sam Tavassoli, 2011. "A Comparative Investigation of Firms' Innovative behaviors During Different Stages of the Cluster Life-Cycle (Cover study for PhD dissertation)," ERSA conference papers ersa10p1045, European Regional Science Association.
    18. Gerben Van Der Panne & Wilfred Dolfsma, 2003. "The odd role of proximity in knowledge relations: high‐tech in the Netherlands," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 94(4), pages 453-462, September.
    19. Yeung, Henry Wai-chung & Liu, Weidong & Dicken, Peter, 2006. "Transnational corporations and network effects of a local manufacturing cluster in mobile telecommunications equipment in China," World Development, Elsevier, vol. 34(3), pages 520-540, March.
    20. Youwei Tan & Zhihui Gu & Yu Chen & Jiayun Li, 2022. "Industry Linkage and Spatial Co-Evolution Characteristics of Industrial Clusters Based on Natural Semantics—Taking the Electronic Information Industry Cluster in the Pearl River Delta as an Example," Sustainability, MDPI, vol. 14(21), pages 1-14, October.
    21. Kevin P. Heanue, 2008. "Measuring Industrial Agglomeration in a Rural Industry: The Case of Irish Furniture Manufacturing," Working Papers 0830, Rural Economy and Development Programme,Teagasc.

    More about this item

    Keywords

    industrial clustering; agglomeration; financial services.;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa04p49. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gunther Maier (email available below). General contact details of provider: http://www.ersa.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.