| A limited number of American and European transnational corporations dominate advanced business services worldwide. Their subsidiaries and affiliates are located in global business centers in every region of the world. The author examines how investment by these corporations impacts the development of the host country industry in Southeast Asia. Using advertising as a case study, the dissertation details the development of dynamic advertising industries in three Southeast Asian urban centers, stemming from localization of transnational firms operating in these cities. The study presents new perspectives on the role of second and third tier world cities in delivery of business services, the development and strengthening of service clusters, and public sector policies to promote advanced business service development in emerging economies. Five key findings emerge from this study. First, transnational subsidiaries are more autonomous and locally embedded than suggested by the command and control construct of World Cities literature and producer service studies. Their global networks operate on the basis of distributed intelligence, hence local knowledge generation is important, necessitating the deep involvement of local people, firms, and institutions who understand the local environment and culture. Second, transnational firms can catalyze local business service cluster creation, setting off a mutually reinforcing dynamic that strengthens local resources, firms and organizations. Third, the strength of localization in the firm and cluster varies from case to case, reflecting the distance between the home and host country's socio-economic structure and culture, and the global rank of the urban center in the business service network. The greater the distance, the stronger the localization effect. Fourth, dynamic peripheries do not follow a development trajectory from expatriate dominance to total localization; rather they move toward more sophisticated hybridization. Industry hybridization occurs when local networks and international networks develop in tandem. Finally, the most successful firms and innovative clusters are the most hybridized. As a result, protection policies to promote local industry development often generate counterproductive impacts because they limit global flows of people and knowledge. Instead, governments need to craft targeted cluster development programs, which include strategies to build effective mechanisms of global interaction. |
