In leading cities, companies gain access to knowledge and networks.
Organizations have often turned to well-established and very competitive global cities when looking to expand their markets. However, new research suggests that many corporations have been going to these cities for the wrong reasons and consequently have missed opportunities to build strategic advantages and organizational capability. In a January 2008 working paper titled Gaining Advantage through Global Learning Hubs, three researchers at the Zicklin School of Business at Baruch College, City University of New York argue that, with the high entry cost and competition inherent in moving into a major city, it is important to go in with the right plan and the right expectations. The authors — Robert Laud, distinguished lecturer of management, Andreas Grein, associate professor of marketing and international business and Lilach Nachum, professor of international business — advocate viewing affiliates in global cities as “global learning hubs” tied together in a network that builds strategic advantage by drawing on the interactions between global cities.
Prior research has shown that a commonly cited reason companies seek increased presence in global cities is to enter new markets to grow sales and diversify risk.