CITIES NETWORKS THROUGH MULTINATIONALS FIRMS
NETWORKS: A MULTI-LEVEL GRAPH APPROACH.
15TH European Colloquium on Theoretical and Quantitative Geography
September 7-11, 2007, Montreux, Switzerland
Charles BOHAN Δ , Bérengère GAUTIER ¥, Céline ROZENBLATΨ , David AUBER x, Pierre-Yves KOENIG ө
Δ CEFRES - Prague (Czech Republic)
¥ UMR ESPACE – Montpellier (France)
Ψ IGUL - University of Lausanne (Switzerland)
X LABRI – Bordeaux (France)
ө LIRMM – Montpellier (France)
ABSTRACT
In this paper we purpose a multi-level approach of cities network development through
multinationals firm networks. We emphasize the complex global / local relationships through an
original methodology developed with SPANGEO group research support. The use of
specialized software as TULIP helps us to create graphs constituted of mass data basis.
Nowadays, we are able to propose an original vision of the relation structured by multinational
firm networks in the global cities network. We will use this study in parallel within two economic
sectors and in two geographical areas: the agro-alimentary sector in Europe and in the south of
the Mediterranean (Gautier, 2005) and the motor industry sector in Europe and Central and
Eastern Europe (Bohan, 2005).
On a first step, we will highlight the governance mode of each firm with their subsidiaries
network. On this first individual network we will collect measures for each firm allowing us to
compare individual firm networks and their strategies.
Starting with this first individual network, in a second step, we build a cities network based on
the affiliation network. This step allows us to highlight their territorial strategy and to put each
city in the context of global strategies of each firm.
Finally, we will compare our results for each firm with a collective cities network formed by the
whole of our studied firms according to their economic sector. With this kind of graph, we can
see and compare several sectorial networks localized in many cities of the world. From a new
clustering plug-in, the inner and outer cities network scale is readable. This stage will enable us
to include the way the firm links its network at the intra-urban and inter-urban level, underlining
the properties of cities’ inter and intra connections in the firms networks.
KEYWORDS
Multinationals firms networks, Cities network, Territorial development, Multi-level approach.
INTRODUCTION
To ensure the perenniality of the firms, the strategies of localization must guarantee their competitiveness. The
phenomenon of internationalization and acceleration of the exchanges due to the development of NICT impose
an increased flexibility for firms (Castells, 2001; Veltz, 2000; Rozenblat, 2004). In response to these new
requirements, the relational efficiency between the units which compose the firm is posed like an essential
element of their competitiveness (Veltz, 2000; Doz, Santos and Williamson, 2001).
The search for economies of scale of the firms leads to a strong concentration of the foreign activities within the
cities which, thanks to their capacity to generate economies of agglomeration, offer the services necessary to a
good coordination of the enterprise in its network (Veltz, 2000; Doz, Santos and Williamson, 2001). The
economies of location are formed on two geographical scales which are articulated between them: an intra-urban
scale by economies of agglomeration and an inter-urban scale thanks to the externalities offered by the networks
(Veltz, 2000; Doz, Santos and Williamson, 2001) named economies of networks by Rozenblat (2004).
It is demonstrated that the choices of location of the multinational firms are more and more carried out between
the cities themselves (Veltz, 2001). We will use this study in parallel within two economic sectors and in two
geographical areas: the agro-alimentary sector in Europe and in the south of the Mediterranean (Gautier, 2005)
and the motor industry sector in Europe and Central and Eastern Europe (Bohan, 2005). How are the firms
organized? What are their spatial strategies? Which are the attractive factors of the cities to position them in
specific place in the firms’ networks?
1. Individual firm network analysis
As a first step, we realize original graphs of individual multinational firm networks, which are directed and
hierarchical, from the ORBIS data basis completed with information relayed in firm management reports.
These graphs allow to observe the power repartition between the multinational firm units (Headquarters, affiliates,
relayed affiliates). Here, the nodes (units) represent the companies forming each group and the edges represent
the orientation of hierarchical subsidiaries between them (each affiliation is weighted by the percentage of
owners).
In computing language, we obtain directed acyclic graphs (DAG). These DAG allow an optimal visualization
accessible in two ways: hierarchical representation (figure 1) and Gem frick (figure 2), here associated with the
betweeness centrality metric.
Figure 1: The Fiat s.p.a individual network
Figure 2: The Fiat s.p.a individual network (2005)
with company names labels (hierarchical)
with company localization labels (Gem frick)
These kinds of graphs inform us about the spatial coverage of each studied firm and also about its
multinationalization degree (Mucchielli, 1998). Many combinations are possible to enrich these graphs
(Rozenblat, 2004, p.62 to 66). Here, we try to find new ways to conceive diverse firm network vizualizations
showing the organizational structures and individual firm management.
Many metrics available in the software, allow us to enlighten particular aspects of networks as betweeness
centrality who reveal the nodes concentration of shortest ways (Figure 1 and 2), Degree that shows the number of
connections (headquarters or subsidiaries connections) or also Strahler that is able to select the governing
network (Auber and al. 2003, 2004, 2005).
2. Analysis of each firm network aggregated by cities
Following this first perspective, we create new firm networks aggregated by cities, or more simply, a city network
of an individual firm. This new form of graph reveals the cities governance for each firm on the contrary of the
companies’ governance. By this graphical approach, the nodes represent the cities and the edges inform us about
the multi-level power relations between these cities, so that they represent their inter-urban relations (figure 3). In
this condition several affiliates of one group can be localized in one city. So, on each node of our initial network
(figure 3), each city becomes a displayed cluster composed of an intra-city firm network (figure 4).
Figure 3: The Fiat s.p.a cities network: inter urban relations
Figure 4: The Fiat s.p.a intra urban relations
in Turin
This project allows urban framework visualization of an individual firm network. The inter-urban relations of a
company ensure an exogenous regard of the cities hierarchy (figure 3) joined with the endogenous regard of the
inner-cities relations (figure 4). We distinguish relayed or intermediary cities but we can also make out the cities
specializations into the group value chain indicating the precise activity codes of each unit of the group (NACE
codes).
3. Analysis of sector-based networks aggregated by cities
This process can be applicable to sector-based networks. In fact, it’s possible to agglomerate several firms in the
same graph and then to obtain the cities network of the firms issued of one particular sector (Motor industry or
agro-alimentary sector here). We will be able to distinguish the common cities in their affiliates or Headquarters
plant choices and where the several concurrent companies networks join, by separating networks of each group
(company) by colors. This kind of graph can inform us about the firm plant choices and about their location
choices according to economies of agglomeration, or to economies of networks composed by hierarchy of cities’
power and by international work division between cities. We will be able to distinguish the functional
specializations of each city (industry type, finance, management, etc.) and replace it within all the cities network of
each sector.
CONCLUSION
A competition is thus established between cities for their world integration (Lever and Turok, 1999). To
understand the networks integration processes, it is necessary to include these reticular processes both for the
firms and the cities levels (Veltz, 2001). Our proposal to show multinational firm networks at this two levels, offers
an original way to define the particular role of cities in the firm multinationalization process and clear up the
importance of multinationals firm networks in cities globalization.
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AUTHORS INFORMATION
Charles Bohan
Bérengère Gautier
Céline ROZENBLAT
Pierre-Yves KOENIG
[email protected]
[email protected]
[email protected]
[email protected]
CEFRES-Prague
UMR ESPACE- Montpellier
IGUL-Un. of Lausanne
LIRMM-Montpellier
Czech Republic
France
Switzerland
France