Geography of reputation: the city as locus of business opportunity

Abstract

This paper discusses the limits of current cluster theory and theorizes trans-local network externalities as an important cause for the urban agglomeration of knowledge services. A survey on management consulting firms in the metropolitan region of Frankfurt demonstrates that the benefit of co-location in the city lies in the access to reputation networks rather than in the exploitation of local value chain linkages. The city is a locus of opportunity because firms in the city have a higher share of distant clients and because distant clients are won more often through referrals. Cities are reputational nodes for trans-local business development.