Geography Producer Services
by
Richard Shearmur
  • LAST REVIEWED: 06 May 2015
  • LAST MODIFIED: 26 February 2013
  • DOI: 10.1093/obo/9780199874002-0070

Introduction

Prior to the 1970s, some producer services—those primarily selling services to business and government rather than to households—were being dismissed as not important because they were considered nonproductive and parasitical; those that were not being dismissed were considered to be a minor item in some farsighted views of how Western society was evolving. In the crisis-laden context of the 1970s and early 1980s, however, researchers began focusing on new economic activities with growth potential—producer services, in particular. This partly reflected the desire to identify solutions to the crisis but also partly reflected the changing nature of production processes. Why did producer services become important? From an economic system in which large, vertically integrated firms dominated markets, a new system was emerging under which companies tended to focus on their core competencies and to outsource functions such as legal and accounting work. Thus, producer services—understood initially as intermediate services delivered to final producers of goods—became clearly identifiable economic activities and have been among the fastest-growing economic sectors from the 1970s to the early 21st century. Outsourcing was not the only factor leading to producer services growth; demand for these services was also increasing rapidly. The collection, manipulation, and strategic use of information increased in importance during the 1980s and 1990s. All sectors, not just goods producers, began to be recognized as users of producer services. Hence, since the mid-1990s, a shift has occurred in the vocabulary; producer services have increasingly been referred to as “knowledge-intensive business services” (KIBS). Another key development in the beginning of the 21st century has been the mass diffusion and ubiquity of telecommunication technologies, which led to a new type of service: telemediated services. Telemediated services are service functions (that is, activities that take place within a sector or a firm) that can be delivered across telecommunications networks and that can therefore be outsourced and relocated. Producer services firms have seized the opportunity to outsource and subcontract some of their own functions, just as manufacturers have been doing since the 1970s. The very categories of high-order producer services or knowledge-intensive business services are being reconsidered. The end services still exist, but such services are no longer necessarily produced in one place, or even by one company. The vendor of the service is at the end of a value chain that can stretch across many locations and that coordinates many service functions, some of which are standardized and routine, others of which are complex and customized. The geography of high-order producer services then becomes the geography of networks of functions and flows across these networks. These differ in one important respect from similar networks in the manufacturing sector: many service functions can be delivered electronically, thus obviating the time and transport dimensions. However, other problems, such as cultural differences, effectiveness of communication, and real-time coordination, are more pressing across service value chains than across the manufacturing sector.

General Overviews

The nature of producer services cannot be fully understood without considering wider changes that have occurred in the economy since the 1970s. Bell 1973 was among the first studies to describe the rising importance of information, knowledge, and high-order service functions in the economy. However, not all analysts agreed, and the arguments in Cohen and Zysman 1987—that the capacity to produce goods remains important to national economies—still resonate in the early 21st century. O’Farrell, et al. 1993 discusses the extent to which the rise in demand for business services relates to the changing structure of manufacturing firms. Moriset and Malecki 2009, for its part, provides a discussion of the impact that the rise in telecommunications is having on the organization and geography of economic activity, as well as on services in particular.

  • Bell, Daniel. The Coming of Post-industrial Society: A Venture in Social Forecasting. New York: Basic Books, 1973.

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    When writing this seminal book in 1973, Bell was among the first to predict the increasing importance of services and information in the economy and the concomitant decline of goods-producing industries. Republished as a special anniversary edition in 1999.

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  • Cohen, Stephen S., and John Zysman. Manufacturing Matters: The Myth of the Post-industrial Economy. New York: Basic Books, 1987.

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    A counterargument to Bell 1973, in which the authors argue that manufacturing will remain important for Western economies and that efforts should be made to preserve manufacturing functions.

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  • Moriset, Bruno, and Edward J. Malecki. “Organization versus Space: The Paradoxical Geographies of the Digital Economy.” Geography Compass 3.1 (2009): 256–274.

    DOI: 10.1111/j.1749-8198.2008.00203.xSave Citation »Export Citation »E-mail Citation »

    A discussion of the impact that the Internet and other telecommunication technologies are having on the geography of economic activity. Although pitched at a general level, one of the examples used in this paper is that of telecommunication-mediated services. The article also discusses the changes brought about in the Christallerian urban hierarchy, a hierarchy in which high-order producer services occupy the most central place. Available online for purchase or by subscription.

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    • O’Farrell, P. N., L. A. R. Moffat, and D. M. W. N. Hitchens. “Manufacturing Demand for Business Services in a Core and Peripheral Region: Does Flexible Production Imply Vertical Disintegration of Business Services?” Regional Studies 27.5 (1993): 385–400.

      DOI: 10.1080/00343409312331347645Save Citation »Export Citation »E-mail Citation »

      A discussion of the various factors that may have led to the increasing demand for producer services. The authors’ empirical analysis shows that, for their particular case, increasing demand, rather than outsourcing, is a major contributor. Available online for purchase or by subscription.

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      Journals and Other Resources

      As of the early 21st century, no academic journals or resources are available that deal specifically with producer services. The resources included in this section, therefore, tend to be generalist but have been selected because they regularly cover topics that pertain to the geography of producer services. The Service Industries Journal, which is associated with the European Association for Research on Services (RESER), regularly publishes articles that focus on producer services and their geography. The Journal of Operations Management deals with all aspects of supply-chain management in all economic sectors and includes articles on professional and producer services, their outsourcing activities, and supply-chain management in these sectors. Journals pertaining to regional science, urban studies, and geography—in particular, Growth and Change, Urban Studies, Urban Geography, and the Professional Geographer—have also regularly published articles that discuss the geography of producer services. The Globalization and World Cities Research Network is a key resource for information and research on global networks of producer services and their connection with global urban hierarchies.

      Producer Services in Context

      A producer service is any service whose output is destined principally for use by other businesses. Thus, producer services are not necessarily knowledge intensive or information rich, but they may include services such as security, industrial cleaning, and temporary employment agencies (Daniels 1985). Producer services usually exclude finance, real estate, and insurance industries (which have a strong retail component and where the function is usually one of intermediation rather than advice or service delivery). This brief definition begs the question of the fundamental nature of services and also highlights some equivocation; producer services are not necessarily knowledge intensive, although knowledge-intensive business services (KIBS) (the term that is increasingly being used) is more restrictive. Indeed, the term “high-order producer services” was used in the late 1980s and beyond to distinguish those services that were of strategic importance to business management from those that provided necessary but nonstrategic functions. A number of books cover the issue of definition. In many respects, the earlier Daniels 1985 and Gershuny and Miles 1983 grapple with basic definitional issues, whereas later books, such as Bryson, et al. 2002, attempt to identify how the world of production has changed with the rise of such services and how these services are evolving. Illeris 1996 can be read as an update of Daniels 1985, while also providing a discussion of the nature of producer services. Wood 1991, while discussing the factors behind the rise of producer services and the role that changing economic processes are playing, also analyzes what implications this has on the geography of the region. Daniels and Harrington 2007 extends producer services research to the Asia-Pacific region, from which an increasing number of studies are emanating. Daniels 2012 sets out current questions and charts a way forward for research on producer services.

      • Bryson, John R., Peter W. Daniels, and Barney Warf. Service Worlds: People, Organisations, Technologies. London: Routledge, 2002.

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        The authors take as a starting point the existence of what they call a “service world,” examining how changes in technology, organization, and consumption are modifying the way in which services are produced and delivered. In particular, they emphasize the rise of networks and the role of globalization, and they devote a chapter to the rise and role of producer services.

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      • Daniels, Peter W. Service Industries: A Geographical Appraisal. London: Methuen, 1985.

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        This book remains a useful entry point to the study of services, in general, and to the processes and dynamics underlying their geographic location. Producer services are treated as a particular type of service and are thus put into a wider context. The first chapter consists of a thorough discussion of the nature of services.

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      • Daniels, Peter W. “Service Industries at a Crossroads: Some Fragile Assumptions and Future Challenges.” In Special Issue: RESER Conference, Gothenburg, Sweden: The Resilience of the Global Service Economy. Edited by Patrik Ström. Service Industries Journal 32.4 (2012): 619–639.

        DOI: 10.1080/02642069.2011.596536Save Citation »Export Citation »E-mail Citation »

        This paper raises the fundamental question of whether services should still be considered as a different type of activity from manufacturing. In the early 21st century, the difference between a high-tech manufacturer and a producer of technical services is less than that between a high-tech manufacturer and a manufacturer involved in standardized low-tech production. Both of the former have recourse to highly complex knowledge, and knowledge-intensive services are deeply embedded in both. Available online for purchase or by subscription.

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        • Daniels, Peter W., and James W. Harrington, eds. Services and Economic Development in the Asia-Pacific. Aldershot, UK: Ashgate, 2007.

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          Attention to producer services is increasingly evident beyond North America and Europe. This edited volume is an introduction to research on services in the Asia-Pacific. The first part includes chapters on the geography of these services; the second and third parts focus on regulation and services within value chains.

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        • Gershuny, Jonathan, and Ian Miles. The New Service Economy: The Transformation of Employment in Industrial Societies. London: Pinter, 1983.

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          Written by nongeographers, this book documents the transformations that led to the rising interest in services—in particular, producer services. The empirical information is, of course, dated, but this book is a classic for understanding the rise of the service economy.

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        • Illeris, Sven. The Service Economy: A Geographical Approach. Chichester, UK: Wiley, 1996.

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          Like Daniels 1985, this volume deals with the definition of services, then takes a closer look at their geography from a theoretical and empirical perspective. It considers this geography at varying scales: intrametropolitan, regional, and global.

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        • Wood, Peter A. “Flexible Accumulation and the Rise of Business Services.” Transactions of the Institute of British Geographers n.s. 16.2 (1991): 160–172.

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          This paper explicitly makes the connection among the rise of flexible production, the role of business services in this flexibility, and the spatial transformations that the increasing role of services is creating. Wood points to the geographic polarizing tendencies that these trends imply. Available online by subscription.

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          Geography

          The rise in interest in producer services is attributable to fundamental changes in how the economy functions. Given that economic activities take place in certain locations and not in others—and given that different types of activities tend to locate in different places and use space differently—changes in economic structure necessarily lead to changes in the geography of economic activity. It is important, here, to distinguish between the location of economic activity and the way in which an activity mobilizes space. It can be difficult to locate an activity precisely; often, an activity is considered to occur at the place where employees or workers are found. However, workers, particularly those in high-order producer services, are mobile, and a given service product often emanates from a distributed network of offices, service providers, and mobile consultants. Nevertheless, each of the actors involved is, at a given point in time, located in one place and not in another. Coffey 2000 provides an overview of the various factors that explain and influence the geography of producer services.

          • Coffey, William J. “The Geographies of Producer Services.” Urban Geography 21.2 (2000): 170–183.

            DOI: 10.2747/0272-3638.21.2.170Save Citation »Export Citation »E-mail Citation »

            A brief progress report that describes the various ways in which producer services geography can be considered. The focus of this article is on work that was produced in the mid- to late 1990s. In doing so, it provides a solid basis from which to begin exploring the geography of producer services in the early 21st century. Available online for purchase or by subscription.

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            Regional Geography

            Geographers have been interested in the location of producer services for a variety of reasons. From a theoretical perspective, high-order producer services are seen as having wide market areas and are therefore markers of “central places.” In the 1980s, given the wave of deindustrialization that had major impacts on manufacturing regions, “footloose” services were considered a possible solution to regional decline, as discussed in Marshall 1982 and Bailly, et al. 1987. Since the late 1990s, the idea that producer services would reignite stagnant economies has faded, but studies have begun to distinguish among different types of producer services and different functions within these services. Harrington, et al. 1991 provides a review of the work performed in the 1980s on interregional trade in services, and Moulaert and Gallouj 1993 further emphasizes the role played by trade in services, by arguing that their location in large urban agglomerations is partly attributable to the high connectivity of these places, which the authors distinguish from internal agglomeration effects. Despite the strong tendency of producer services to locate at the top of the urban hierarchy (Coffey and Shearmur 1997, Shearmur and Doloreux 2008), some evidence shows that certain producer services choose to locate in smaller cities or rural areas (Beyers and Lindahl 1996, Shearmur and Doloreux 2008). Although much of the work on the regional dimensions of producer services location emanates from Europe and North America, scholars are beginning to explore the factors that explain the location and growth of producer services in Chinese cities (Yang, et al. 2009).

            • Bailly, Antoine S., Denis Maillat, and William J. Coffey. “Service Activities and Regional Development: Some European Examples.” In Special Issue: Producer Services. Edited by Peter Daniels. Environment & Planning A 19.5 (1987): 653–668.

              DOI: 10.1068/a190653Save Citation »Export Citation »E-mail Citation »

              Like Marshall 1982, this article focuses on the possibility that producer services could be used to revitalize certain regional economies. Crucially, it recognizes that the geographic distribution of services is closely connected to the urban hierarchy; thus, the capacity of these services to regenerate regional economies is limited. Available online by subscription.

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              • Beyers, William B., and David P. Lindahl. “Lone Eagles and High Fliers in Rural Producer Services.” Rural Development Perspectives 11.3 (1996): 2–10.

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                A look at the way in which producer services develop in rural areas. Such services are often started by consultants in midcareer, already well connected within their networks. Most choose to locate within an hour of a small airport that connects to a major hub. New communications technologies are seen to be a major enabler for this type of location decision.

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                • Coffey, William J., and Richard G. Shearmur. “The Growth and Location of High Order Services in the Canadian Urban System, 1971–1991.” Professional Geographer 49.4 (1997): 404–418.

                  DOI: 10.1111/0033-0124.00087Save Citation »Export Citation »E-mail Citation »

                  An examination of the evolving geography of producer services across the Canadian urban system between 1971 and 1991. Some diffusion of producer services is noted during this period as structural change rippled out from major metropolitan areas, but producer services overall remain highly concentrated in Canada’s largest cities. Available online for purchase or by subscription.

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                  • Harrington, James W., Alan D. MacPherson, and John R. Lombard. “Interregional Trade in Producer Services: Review and Synthesis.” Growth and Change 22.4 (1991): 75–94.

                    DOI: 10.1111/j.1468-2257.1991.tb00563.xSave Citation »Export Citation »E-mail Citation »

                    An overview of the debates about regional development and services as it stood in the early 1990s. Available online for purchase or by subscription.

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                    • Marshall, J. N. “Linkages between Manufacturing Industry and Business Services.” Environment & Planning A 14.11 (1982): 1523–1540.

                      DOI: 10.1068/a141523Save Citation »Export Citation »E-mail Citation »

                      An early empirical analysis of the connection between business services and manufacturing, with a specific focus on whether these different economic activities require colocation and, therefore, whether business services will be able to revitalize declining manufacturing regions. Available online by subscription.

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                      • Moulaert, Frank, and Camal Gallouj. “The Locational Geography of Advanced Producer Service Firms: The Limits of Economies of Agglomeration.” Service Industries Journal 13.2 (1993): 91–106.

                        DOI: 10.1080/02642069300000032Save Citation »Export Citation »E-mail Citation »

                        The authors argue that the location of producer services in major agglomerations is only partly attributable to positive externalities. Urban areas have other properties, such as their relative location within networks, which should be distinguished from agglomeration dynamics. This distinction remains relevant, particularly in light of the literature on regional innovation systems and clusters that can overstate the role of endogenous regional dynamics. Available online for purchase or by subscription.

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                        • Shearmur, Richard, and David Doloreux. “Urban Hierarchy or Local Buzz? High-Order Producer Service and (or) Knowledge-Intensive Business Service Location in Canada, 1991–2001.” Professional Geographer 60.3 (2008): 333–355.

                          DOI: 10.1080/00330120801985661Save Citation »Export Citation »E-mail Citation »

                          An examination of the evolving geography of producer services across the Canadian urban system between 1991 and 2001, and an analysis of location factors. A reverse trend to that observed in the 1970s and 1980s is reported. High-order producer services are increasing their concentration in major metropolitan areas; they access their clients—across the nation or across the globe—from these central places. Available online for purchase or by subscription.

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                          • Yang, Fiona F., George C. S. Lin, and Hongmian Gong. “Economic Globalization and the Growth of Consulting Services in Guangzhou, China.” Asian Geographer 26.1–2 (2009): 49–65.

                            DOI: 10.1080/10225706.2009.9684143Save Citation »Export Citation »E-mail Citation »

                            A study that seeks to understand the growth of consulting services in Guangzhou. The authors find that it is a result of globalization and of the concomitant increase in demand for such services, but also of economic reforms in China. Available online for purchase or by subscription.

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                            Local and Regional Innovation Systems

                            The location of high-order producer services across regions and the connection between flexible production and services have become subjects of interest by geographers who have begun to study the connection between innovation and knowledge-intensive business services (KIBS). A significant body of work, discussed in Tödtling, et al. 2009, posits that innovation is the key driver of economic growth and that innovation emanates from companies that are embedded in innovation systems. An innovation system is a set of institutions and economic actors that, by exchanging information, are collaborating and working together to create new products, processes, and procedures (Cooke and Leydesdorff 2006). The role of KIBS in these systems has been a subject of considerable recent research (Muller and Doloreux 2009), as has the geographic extent of innovation systems and, by extension, the possible requirement for KIBS and other actors within innovation systems to be colocated in the same territory. MacPherson 1997 and MacPherson 2008 begin to question the extent to which manufacturing firms need to be colocated with service providers involved in the innovation process. Doloreux, et al. 2010 presents a series of case studies and overview chapters that explore the various ways in which KIBS are connected (or not) to territorial innovation systems.

                            • Cooke, Philip, and Loet Leydesdorff. “Regional Development in the Knowledge-Based Economy: The Construction of Advantage.” In Technology Transfer in European Regions: Introduction to the Special Issue. Edited by Loet Leydesdorff, Philip Cooke, and Mikel Olazaran. Journal of Technology Transfer 31.1 (2006): 5–15.

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                              Cooke, one of the main exponents of the idea of regional innovation systems, and Leydesdorff discuss the role of knowledge in regional economies and the way in which a local advantage can be constructed by developing a local knowledge base, including local consultancies and service providers. This article introduces a journal volume on the subject of regional development and the knowledge-based economy. Available online for purchase or by subscription.

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                              • Doloreux, David, Mark S. Freel, and Richard G. Shearmur, eds. Knowledge-Intensive Business Services: Geography and Innovation. Farnham, UK: Ashgate, 2010.

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                                The chapters in this edited volume consider the connection among KIBS, geography, and innovation at a variety of scales, ranging from international, national, regional, interestablishment, and personal. A key thread running through many of the chapters is that KIBS act across distance; even if they are sometimes integrated into small local economies, they act as bridges to outside information and knowledge.

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                              • MacPherson, Alan. “The Role of Producer Service Outsourcing in the Innovation Performance of New York State Manufacturing Firms.” Annals of the Association of American Geographers 87.1 (1997): 52–71.

                                DOI: 10.1111/0004-5608.00041Save Citation »Export Citation »E-mail Citation »

                                MacPherson conducted a twelve-year study examining the way in which manufacturers used KIBS in their innovation processes. This is the first of two papers that reported on this study (see MacPherson 2008). Available online for purchase or by subscription.

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                                • MacPherson, Alan. “Producer Service Linkages and Industrial Innovation: Results of a Twelve-Year Tracking Study of New York State Manufacturers.” Growth and Change 39.1 (2008): 1–23.

                                  DOI: 10.1111/j.1468-2257.2007.00403.xSave Citation »Export Citation »E-mail Citation »

                                  Whereas in the early 1990s, proximity to the city of New York increased KIBS use and innovation, this result no longer holds in the early years of the 21st century. High-speed Internet and cheap telecommunications now permit clients to identify potential KIBS providers online and to conduct many day-to-day interactions at a distance. Intermittent face-to-face contact remains important. This paper and MacPherson 1997 relate to Moriset and Malecki 2009 (cited under General Overviews), which discusses the ways in which the Internet and easier communications are modifying the distribution of economic activities across space. Available online for purchase or by subscription.

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                                  • Muller, Emmanuel, and David Doloreux. “What We Should Know About Knowledge-Intensive Business Services.” Technology in Society 31.1 (2009): 64–72.

                                    DOI: 10.1016/j.techsoc.2008.10.001Save Citation »Export Citation »E-mail Citation »

                                    An overview of the current issues and debates surrounding the role of KIBS in innovation systems. In particular, it has a section devoted to the role of proximity between KIBS providers and their clients and the possible role that the exchange of tacit information may play in limiting the distance across which KIBS can participate in innovation-related knowledge exchange. Available online for purchase or by subscription.

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                                    • Tödtling, Franz, Patrick Lehner, and Alexander Kaufmann. “Do Different Types of Innovation Rely on Specific Kinds of Knowledge Interactions?” Technovation 29.1 (2009): 59–71.

                                      DOI: 10.1016/j.technovation.2008.05.002Save Citation »Export Citation »E-mail Citation »

                                      A discussion of the idea that firm-level innovation relies on external interactions, including business service inputs. The effect of the innovator’s location is considered, but there appears to be no disadvantage, in terms of access to external sources of knowledge (including business services), associated with rurality. Available online for purchase or by subscription.

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                                      Intrametropolitan Geography

                                      Geographers have examined the location of producer cities within metropolitan areas. At this scale, the principal concern is one of urban form and of the strength of the central business district (CBD) relative to the suburbs (Noyelle and Stanback 1983). Indeed, as metropolitan areas have grown and have become increasingly polynuclear, a key question has been whether the CBD would retain its exclusive hold on high-order services or whether suburban downtowns that would include high-order services would emerge. The intrametropolitan location of high-order services depends on the specific high-order service being analyzed and also depends on the city. However, there is a tendency for lower-order (or back-office) functions, as well as technology-driven (as opposed to professional- and market-driven) services, to disperse away from the CBD, whereas the highest-order and contact-dependent functions tend to remain central. Although detailed studies of the intrametropolitan geography of producer services share some common observations, they also reveal that each city and each service sector are unique. Harrington and Campbell 1997, Gong and Wheeler 2002, Shearmur and Alvergne 2002, and Han and Qin 2009 are good examples of this; each discusses the general trends but also its city’s specificities. Shearmur and Alvergne 2002 provides a framework for approaching and interpreting the intrametropolitan geography of producer services.

                                      • Gong, Hongmian, and James O. Wheeler. “The Location and Suburbanization of Business and Professional Services in the Atlanta Area.” Growth and Change 33.3 (2002): 341–369.

                                        DOI: 10.1111/1468-2257.00194Save Citation »Export Citation »E-mail Citation »

                                        This study of Atlanta examines some of the factors that are associated with the suburbanization of producer services. Highway access, proximity to workers (generally female) willing to work flexible hours, and well-educated professionals are among the factors that are driving this suburbanization. Available online for purchase or by subscription.

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                                        • Han, Sun Sheng, and Bo Qin. “The Spatial Distribution of Producer Services in Shanghai.” Urban Studies 46.4 (2009): 877–896.

                                          DOI: 10.1177/0042098009102133Save Citation »Export Citation »E-mail Citation »

                                          An exploration of the location of producer services in a non-Western (Chinese) city. Such papers remain relatively rare. The authors observe that producer services in Shanghai are highly concentrated in a central area and in a few other clusters but that they also display high levels of dispersal. These patterns are explained by a mixture of market forces, state planning, and historical legacy. Available online for purchase or by subscription.

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                                          • Harrington, James W., Jr., and Harrison S. Campbell Jr. “The Suburbanization of Producer Service Employment.” Growth and Change 28.3 (1997): 335–359.

                                            DOI: 10.1111/j.1468-2257.1997.tb00983.xSave Citation »Export Citation »E-mail Citation »

                                            A study of the suburbanization of producer services in Washington, DC, which reveals differences among producer services subsectors and also the influence of the federal government. As such, it highlights that, despite the existence of a general trend toward suburbanization, this trend is subject to context-specific factors and is not the same for all producer services. Available online for purchase or by subscription.

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                                            • Noyelle, Thierry J., and Thomas M. Stanback Jr. The Economic Transformation of American Cities. Totowa, NJ: Rowman & Allanheld, 1983.

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                                              Well before Joel Garreau’s book Edge City (New York: Anchor, 1988), in which he coined the term “edge cities,” Noyelle and Stanback had documented not only the development of the service sector of the economy of US cities but also the increasing development of suburban downtowns. These differed crucially from suburban employment centers in that they reproduced downtown functions; in particular, high-order producer service functions.

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                                            • Shearmur, Richard, and Christel Alvergne. “Intrametropolitan Patterns of High-Order Business Service Location: A Comparative Study of Seventeen Sectors in Ile-de-France.” Urban Studies 39.7 (2002): 1143–1163.

                                              DOI: 10.1080/00420980220135536Save Citation »Export Citation »E-mail Citation »

                                              Many studies of the intrametropolitan geography of services have been performed on US cities. This article examines the situation in Paris for a wide array of different types of producer services. Some remain highly centralized, others locate in a ring around the CBD, and others still display a combination of strong central presence with strong dispersal across the metropolitan region. A categorization of these different patterns is proposed. Available online for purchase or by subscription.

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                                              World Cities and Globalization

                                              High-order producer services—which can serve as inputs into the strategic management decisions of the private and public sectors—are perceived as command functions. They provide influential, high-paying, and prestigious jobs occupied by a few highly paid workers, referred to as “symbolic analysts,” the emerging social class at the apex of the knowledge economy described in Reich 1991. As such, high-order producer services are good indicators, when considered at a global scale, of the relative economic power wielded by different cities. The influential Sassen 2001 describes the emergence of key cities that are worldwide command and control centers—cities dominated by the presence of powerful service industries. Sassen also describes the dark side of this power—the social and income polarization that occurs within these cities—as a numerous routine-service class (also described in Reich 1991) that is required to service the symbolic analysts. Massey 2007 explores this darker side of world cities by looking in detail at London. The connection between world cities and high-order services has been explored and documented by a large number of books and papers by the Globalization and World Cities Research Network at Loughborough University (East Midlands, UK). An important indicator, developed and used successfully by researchers there (see Beaverstock, et al. 2000), measures the interlocking networks of headquarters and branch offices of major producer service corporations. Taylor 2004 uses this type of indicator to position each city within these networks and also uses indicators of global service connectivity and world-city hierarchies (which differ depending on the type of service). In many ways, this work extends that of regional geographers, who have studied national service hierarchies in which the highest-order services locate in the largest and economically dominant cities, to a global scale. However, the change in scale brings about qualitatively different consequences because economic governance and redistribution systems are national, whereas the service-driven urban hierarchies and wealth concentration described by the authors cited in this section are global. The qualitative differences between serving international, as opposed to national, markets from a central city can often be best assessed by detailed case studies that examine the organizational, cultural, and economic dimensions of producer services globalization. Roberts 2006, for instance, examines various issues that accompany the globalization of management consultancy, whereas Warf 2001 examines the globalization of US law firms.

                                              • Beaverstock, Jonathan V., Richard G. Smith, and Peter J. Taylor. “World-City Network: A New Metageography?” Annals of the Association of American Geographers 90.1 (2000): 123–134.

                                                DOI: 10.1111/0004-5608.00188Save Citation »Export Citation »E-mail Citation »

                                                This article presents a method for studying world cities. The method relies on mapping the office network of major high-order producer firms, from which the degree and nature of each city’s connectivity to all others can be analyzed. Although this approach tells us much about world-city networks, it also provides key insights into how major producer service firms globalize. Available online for purchase or by subscription.

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                                                • Globalization and World Cities Research Network.

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                                                  Provides access to numerous research bulletins, many of which examine the global geography of various types of service firms, the mobility of workers within this field, and the impact that these are having on major cities and global urban hierarchies.

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                                                  • Massey, Doreen B. World City. Cambridge, UK: Polity, 2007.

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                                                    This book is not about globalized high-order producer services; rather, it examines the flip side of world cities, the human and social consequences of the concentration in certain cities (using London as a case in point) of a wealthy elite associated with high-order global service functions.

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                                                  • Reich, Robert B. The Work of Nations: Preparing Ourselves for 21st-Century Capitalism. New York: Knopf, 1991.

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                                                    The new economy as described by Reich rests on a few highly paid workers (whom he calls “symbolic analysts”) evolving in knowledge-intensive services and many low-paid routine-service workers. Within routine services, Reich distinguishes between in-person services, which can occur only if the service provider has contact with the client, and other routine services (such as replying to telephone inquiries), which can occur anywhere.

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                                                  • Roberts, Joanne. “Internationalization of Management Consultancy Services: Conceptual Issues Concerning the Cross-Border Delivery of Knowledge Intensive Services.” In Knowledge-Based Services, Internationalization and Regional Development. Edited by James W. Harrington and Peter W. Daniels, 101–124. Aldershot, UK: Ashgate, 2006.

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                                                    This paper, although not explicitly geographic, looks at a specific sector and analyzes what it means to internationalize, as well as what the implications are for the firm. It serves as an important reminder that internationalization and the transmission of knowledge across geographic, cultural, and regulatory boundaries are complex, are not always successful, and are often a response to strategic imperatives.

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                                                  • Sassen, Saskia. The Global City: New York, London, Tokyo. 2d ed. Princeton, NJ: Princeton University Press, 2001.

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                                                    Sassen emphasizes that certain cities (as opposed to nations, as suggested in Reich 1991) witness high concentrations of symbolic analysts. High-order producer services are a key way in which to operationalize this concept. Sassen pays particular attention to the polarization and dislocation that can be caused by the rapid development of high-order producer services within a city.

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                                                  • Taylor, Peter J. World City Network: A Global Urban Analysis. London: Routledge, 2004.

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                                                    An example of the analytical power provided by the analysis of producer services networks. Taylor shows that certain cities are at the apex of most producer services networks—cities such as New York, London, and Tokyo—but that many cities have a more localized international service hinterland. The importance of language and culture in carving out these hinterlands is suggested.

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                                                  • Warf, Barney. “Global Dimensions of U.S. Legal Services.” Professional Geographer 53.3 (2001): 398–406.

                                                    DOI: 10.1111/0033-0124.00293Save Citation »Export Citation »E-mail Citation »

                                                    An analysis of the globalization of US law firms. Global expansion often takes place in order to accompany clients and is built on cultural affinity with them, but much remains to be learned about the process. The specificity of local laws and regulations and the dominance of local firms in local markets limit and shape the geography of globalization. Available online for purchase or by subscription.

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                                                    Outsourcing and Offshoring

                                                    The outsourcing of service jobs has been discussed previously in the context of the rising service economy. The offshoring of manufacturing jobs was driven by lower wages and more-lax environmental and social protections in developing countries, coupled with these countries’ rising technological capacities (Dicken 2010). By the early 21st century, it had become evident that service jobs, even certain producer services jobs, were not immune to being offshored (Daniels and Lever 1996). Two evolutions had made this feasible. First, high-order producer services production had become increasingly modularized (Metters 2008); thus, back-office clerical jobs had been physically separated from client-related or development functions. Second, the rise of the Internet, cheap telecommunications, and rapid international travel made it feasible for electronically deliverable services to be located anywhere in the world. Such services involved not only call centers and clerical functions but also increasingly high-order functions (Nieto and Rodríguez 2011). However, offshoring, which at the turn of the 21st century was considered a major threat to jobs in Western economies, has since become somewhat less of a concern (Metters 2008). Although the offshoring and subcontracting of certain producer services tasks still take place, problems associated with cultural differences, coordination, and quality have made many firms rethink their strategy (Metters and Verma 2008). Thus, offshoring is still seen as a strategic option for some functions, but only if it brings about real benefits to the production of services; simply saving on costs is no longer the principal motivation, even though it remains an important consideration (Lewin and Peeters 2006). The offshoring literature, although drawn principally from management studies, is relevant to geographers because it addresses one of the most current issues relating to producer services and space. Many of the management concepts introduced in this literature—the classification of service functions (as opposed to sectors), the relevance of culture in service relations, and the management and ownership factors that constrain offshoring—are highly relevant to the study of the geography of knowledge-intensive business services (KIBS) at other spatial scales. In addition to offshoring, this literature also discusses outsourcing—one of the factors behind the rapid growth of producer services since the 1970s. By providing insight into the intrafirm strategic decision making about outsourcing and offshoring and by linking this to location decisions (albeit at the international scale, see Ørberg Jensen and Pedersen 2011), this work has broad relevance to the study of producer services, from a geographic perspective.

                                                    • Daniels, Peter W., and William F. Lever, eds. The Global Economy in Transition. Harlow, UK: Addison Wesley Longman, 1996.

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                                                      This edited volume contains chapters covering a variety of aspects of globalization, with an emphasis on service sectors. In particular, Marie Howland provides an early discussion of offshoring as it pertains to data entry and banking services (pp. 310–327). She points out that the former function, already decentralized within Western countries, is in competition with suburban and peripheral locations, whereas the latter is in competition with central urban areas.

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                                                    • Dicken, Peter. Global Shift: Mapping the Changing Contours of the World Economy. 6th ed. London: SAGE, 2010.

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                                                      A comprehensive overview of the way in which corporations and production systems now span the globe yet remain localized and geographically grounded. The chapter “‘Making the World Go Round’”: Advanced Business Services—Especially Finance (pp. 367–398) deals with advanced producer services; the emphasis is on finance, a sector not covered by the definition of high-order producer services used in this article. However, many of the points made in this chapter are also valid for KIBS.

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                                                    • Lewin, Arie Y., and Carine Peeters. “Offshoring Work: Business Hype or the Onset of Fundamental Transformation?” Long Range Planning 39.3 (2006): 221–239.

                                                      DOI: 10.1016/j.lrp.2006.07.009Save Citation »Export Citation »E-mail Citation »

                                                      An overview of trends in offshoring since the 1970s. The authors point out that the cost-cutting motivation is a short-term solution because it can easily be imitated by competitors and because wages in destination countries are increasing. They argue that offshoring is evolving into the global identification and management of human capital and that companies in developing countries may grow into competitors. Available online for purchase or by subscription.

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                                                      • Metters, Rich. “A Typology of Offshoring and Outsourcing in Electronically Transmitted Services.” In Special Issue: Offshoring of Service and Knowledge Work. Journal of Operations Management 26.2 (2008): 198–211.

                                                        DOI: 10.1016/j.jom.2007.02.004Save Citation »Export Citation »E-mail Citation »

                                                        This article is a good entry point into the literature and debates surrounding the offshoring of high-order producer services functions. It relativizes the hype about massive job transfers away from Western nations and provides a conceptual framework for thinking about different functions within service firms. It explicitly connects the decisions about whether to outsource and to offshore, yet it also clearly distinguishes the two. Available online for purchase or by subscription.

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                                                        • Metters, Richard, and Rohit Verma. “History of Offshoring Knowledge Services.” In Special Issue: Offshoring of Service and Knowledge Work. Journal of Operations Management 26.2 (2008): 141–147.

                                                          DOI: 10.1016/j.jom.2007.02.012Save Citation »Export Citation »E-mail Citation »

                                                          An overview of the history and trends in knowledge-service offshoring, with a discussion of the cultural factors—often connected with colonial histories—involved in the choice of location. Available online for purchase or by subscription.

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                                                          • Nieto, María Jesús, and Alicia Rodríguez. “Offshoring of R&D: Looking Abroad to Improve Innovation Performance.” Journal of International Business Studies 42.3 (2011): 345–361.

                                                            DOI: 10.1057/jibs.2010.59Save Citation »Export Citation »E-mail Citation »

                                                            KIBS firms are not the only companies that are offshoring some of their lower-order service functions. Companies across the economy are offshoring, and sometimes this involves high-order service processes such as research and development. Available online for purchase or by subscription.

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                                                            • Ørberg Jensen, Peter D., and Torben Pedersen. “The Economic Geography of Offshoring: The Fit between Activities and Local Context.” In Special Issue: Multinational Enterprises and Local Contexts. Journal of Management Studies 48.2 (2011): 352–372.

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                                                              An empirical investigation of the location choices of various offshored activities. The comparison of KIBS with other sectors is revealing, as is the close look at actual destinations of offshoring. The study shows that offshoring is not necessarily toward low-cost locations; the choice of location may depend on the availability of qualified workers or the access to other geographically specific factors that are found in Western countries. Available online for purchase or by subscription.

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                                                              • Stringfellow, Anne, Mary B. Teagarden, and Winter Nie. “Invisible Costs in Offshoring Services Work.” In Special Issue: Offshoring of Service and Knowledge Work. Journal of Operations Management 26.2 (2008): 164–179.

                                                                DOI: 10.1016/j.jom.2007.02.009Save Citation »Export Citation »E-mail Citation »

                                                                An analysis of the problems encountered when services are offshored, principally those associated with communication and cultural distances. The authors point out that over half of service-offshoring arrangements end in failure. They introduce the idea of interaction distance and also classify service processes according to their complexity; by crossing these two concepts, they suggest the type of destination toward which different kinds of service functions can be offshored. Available online for purchase or by subscription.

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                                                                Distance and the Internet

                                                                The Internet and telecommunications are a theme that runs through many of the sources cited in this article; these services are mentioned in most of the papers that deal with offshoring. MacPherson 2008 (cited under Local and Regional Innovation Systems) and Shearmur and Doloreux 2008 (cited under Regional Geography) see the Internet and telecommunications as key ways for knowledge-intensive business services (KIBS) to access clients (and for clients to access KIBS) from remote locations. Many of the authors cited under Innovation in Services implicitly refer to the Internet and telecommunications when they discuss links that extend beyond the local systems, and the concentration of power discussed in World Cities and Globalization, together with the coordination of global service networks, is based on these technologies. Moriset and Malecki 2009 (cited under General Overviews) provides a detailed discussion of the geographic consequences of the rise of the Internet and its effect on urban hierarchies and on the unbundling of value chains. Although not specific to KIBS, the processes the authors describe are those that are driving the spatial reorganization of KIBS, which many sources cited in this article examine from a particular perspective. Telecommunication-mediated services is one the two examples they use to illustrate their argument (the other example being that of the aircraft industry).

                                                                Innovation in Services

                                                                The possible contribution of KIBS to local and regional innovation systems has been discussed in Local and Regional Innovation Systems. Most studies in that field explicitly or implicitly posit that the innovators are goods-producing companies. However, since the early 21st century, scholars in innovation studies have begun to look at service firms—particularly KIBS—as innovators in their own right. The debate, as Gallouj and Savona 2009 summarizes, centers on the extent to which innovation in service firms is similar to that in manufacturing firms—that is, whether it is entirely different (and therefore requires new theorization) or whether it has some similarities and some differences. From a geographer’s perspective, this has raised the question of possible environmental determinants of KIBS innovation. Doloreux and Shearmur 2012 and Shearmur 2012 explore this, although much remains to be done in this field; these works focus on one region, but similar studies need to be replicated elsewhere. Koch and Stahlecker 2006, although not dealing with innovation per se, explores the extent to which KIBS start-ups draw on their local environment.

                                                                • Doloreux, David, and Richard Shearmur. “Collaboration, Information and the Geography of Innovation in Knowledge Intensive Business Services.” Journal of Economic Geography 12.1 (2012): 79–105.

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                                                                  Few studies of the geography of KIBS innovation are available, partly due to the paucity of data. This article looks at the geographic distribution of KIBS innovation in Quebec. The propensity to innovate tends to vary with distance from major metropolitan areas, but the connection is complex; innovation sometimes rises and sometimes falls with distance, depending on the sector and the type of innovation. Available online for purchase or by subscription.

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                                                                  • Gallouj, Faïz, and Maria Savona. “Innovation in Services: A Review of the Debate and a Research Agenda.” Journal of Evolutionary Economics 19.2 (2009): 149–172.

                                                                    DOI: 10.1007/s00191-008-0126-4Save Citation »Export Citation »E-mail Citation »

                                                                    An overview article that summarizes the issues at stake regarding the study of innovation in services. It also provides a good discussion of the nature of services. In particular, it outlines a functional approach to services that distinguishes service activity (e.g., answering telephones) from service sector (e.g., the insurance industry, telemarketing industry, etc.). Available online for purchase or by subscription.

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                                                                    • Koch, Andreas, and Thomas Stahlecker. “Regional Innovation Systems and the Foundation of Knowledge Intensive Business Services: A Comparative Study in Bremen, Munich, and Stuttgart, Germany.” European Planning Studies 14.2 (2006): 123–146.

                                                                      DOI: 10.1080/09654310500417830Save Citation »Export Citation »E-mail Citation »

                                                                      Three in-depth case studies were used to examine the environmental factors that lead to KIBS start-ups. The article focuses on ways in which KIBS draw on local innovation systems during the start-up process. Although focusing on start-ups rather than innovation, the authors look closely at the ways in which KIBS draw on their immediate surroundings in order to develop their business plans. Available online for purchase or by subscription.

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                                                                      • Shearmur, Richard. “The Geography of Intrametropolitan KIBS Innovation: Distinguishing Agglomeration Economies from Innovation Dynamics.” Urban Studies 49.11 (2012): 2331–2356.

                                                                        DOI: 10.1177/0042098011431281Save Citation »Export Citation »E-mail Citation »

                                                                        Few studies have examined the connection between intrametropolitan clustering and KIBS innovation. This article shows that KIBS firms in Montreal tend to be more innovative when they locate in clusters and when they locate in isolated parts of the metropolitan area. Available online for purchase or by subscription.

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                                                                        Gender

                                                                        The question of gender cuts across all disciplines and all economic sectors. It also, arguably, cuts across all the categories highlighted in this article. However, it is useful to isolate gender, if only to enable readers to identify its possible implications in studies that do not explicitly mention it. Gender has arisen as a geographic issue as producer services have been able to spatially disaggregate their various activities at different scales. Nelson 1986 and England 1993 highlight the gendering of service functions in producer services and point out that lower-prestige, so-called female jobs (often secretarial or clerical) tend to be located in suburban areas, whereas higher-prestige “male” jobs tend to be located in the central business district. Both authors suggest that a possible driver of service-sector suburbanization was access to cheap pools of female labor. McDowell 1997 and McDowell 2001 consist of detailed case studies in London’s financial sector, showing how both male and female identities and occupational profiles are constructed in central and back-office locations. Although the financial sector is not, strictly speaking, a producer service, this work is directly relevant to the gendering of high-order producer services functions and occupations. This has become an issue on the global scale. Back-office functions, which were suburbanized in the 1980s and 1990s, are increasingly offshored (see Outsourcing and Offshoring), and the offshored work is gendered. For instance, Howcroft and Richardson 2008 shows that higher-status offshored computer programming tends to be male dominated, whereas lower-status offshored clerical work tends to be female dominated. Breathnach 2002 shows how lower-status female jobs have been offshored to Ireland.

                                                                        • Breathnach, Proinnsias. “Information Technology, Gender Segmentation and the Relocation of Back Office Employment: The Growth of the Teleservices Sector in Ireland.” Information, Communication & Society 5.3 (2002): 320–335.

                                                                          DOI: 10.1080/13691180210159283Save Citation »Export Citation »E-mail Citation »

                                                                          A discussion of the segmentation of service sector functions and the offshoring of lower-status jobs. The segmentation of service sectors, even though the work is performed along functional lines, is heavily gendered because the occupations themselves are gendered. Lower-wage female jobs are outsourced (in this case, to Ireland). Available online for purchase or by subscription.

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                                                                          • England, Kim V. L. “Suburban Pink Collar Ghettos: The Spatial Entrapment of Women?” Annals of the Association of American Geographers 83.2 (1993): 225–242.

                                                                            DOI: 10.1111/j.1467-8306.1993.tb01933.xSave Citation »Export Citation »E-mail Citation »

                                                                            An analysis of commuting patterns reveals that many females have shorter commutes than their male counterparts, in part because they are more involved with home- and family-related duties, which limit the time they can spend away from home. This creates pockets of relatively immobile yet qualified women, of which suburbanizing services can take advantage. The lack of mobility of these female employees reduces competition for their work and, therefore, keeps wages low. Available online for purchase or by subscription.

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                                                                            • Howcroft, Debra, and Helen Richardson. “Gender Matters in the Global Outsourcing of Service Work.” New Technology, Work and Employment 23.1–2 (2008): 1–2: 44–60.

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                                                                              A discussion of the gendering of offshored work, with particular emphasis on call centers, shared service centers, and the information and communication technologies (ICT) sector. The authors point out that, although they focus on gender, other dimensions such as ethnicity and class also structure the way in which offshored jobs affect local societies. Available online for purchase or by subscription.

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                                                                              • McDowell, Linda. Capital Culture: Gender at Work in the City. Oxford: Blackwell, 1997.

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                                                                                A study of the way in which female roles and feminized occupations are constructed in cities, often by the dominant masculine culture.

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                                                                              • McDowell, Linda. “Men, Management and Multiple Masculinities in Organisations.” Geoforum 32.2 (2001): 181–198.

                                                                                DOI: 10.1016/S0016-7185(00)00024-5Save Citation »Export Citation »E-mail Citation »

                                                                                This article, a follow-up to Capital Culture (McDowell 1997), takes another look at the interviews and examines how male roles and occupations are also constructed, emphasizing how only certain male roles (associated with particular high-profile occupations) are dominant and high status. Available online for purchase or by subscription.

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                                                                                • Nelson, Kristen. “Labor Demand, Labor Supply and the Suburbanization of Low-Wage Office Work.” In Production, Work, Territory: The Geographical Anatomy of Industrial Capitalism. Edited by Allen J. Scott and Michael Storper, 149–171. London: Allen & Unwin, 1986.

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                                                                                  This chapter documents the suburbanization of back-office functions, those that typically comprise low-wage and feminized jobs. Nelson documents how suburbs with many underemployed women are targeted. Gong and Wheeler 2002 (cited under Intrametropolitan Geography) also highlights that a low-wage, flexible, female labor force is a factor in locating producer services in suburban areas.

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