Sustainable Development or Specialization? The Role of International Functions in Selected Cities of the World

Abstract

Many papers address the issue of large cities and their functions on the international stage, including the command and control function, world city function, and global city function. However, there is a lack of comprehensive research on cities and their full impact on the international scene as well as the significance of the command and control (C&C) function of cities, global cities, and world cities. Therefore, this paper provides an initial attempt at a comprehensive analysis of this subject matter. The purpose of this paper is to illustrate the relationship between the command and control function, global city function, and world city function. Ossan’s triangle is used to show the share of the command and control function, the world city function, and the global city function in the given cities. This method has not previously been used in the analysis of city functions. Four city types are identified in this study on the basis of the share of each function within the overall significance of each studied city. Research has shown that the most important cities in the world do not belong to any of these four categories, which suggests that no single function is dominant and that there does not exist a strong diversity of functions in any given major city. The predominance of one function or a balance between all three functions is not always associated with the largest and most important cities operating within the global economy. This is more likely to be the case for cities without well-developed command and control functions, world city functions, and global city functions. Examples of such cities include Harbin and Abu Dhabi.

1. Introduction

During the 1950s and 1960s, the establishment of corporate headquarters became a symbol of the relevance of a city [1], due to the close proximities of government offices and transportation hubs making it easy to access external markets. The proximity of banks, law firms, and other specialized businesses also contributed to attracting corporate headquarters to major cities. Thus, the power of corporations expanded beyond the cities in which their corporate headquarters were located [2]. The previous literature on the function of major cities on the international stage frequently examines the notion of the world city and the global city, as well as the idea of the command and control function.

Ideas emerging in the 1960s and 1970s [3,4] became more systematized via specific research methodologies developed over the last two decades, and this made it possible to rank major cities on the basis of their world city functions [5], global city functions [6], and the command and control function [7]. In the modern world, the decisions and policies of corporations produce key impacts far beyond the scope of everyday business management and internal power dynamics. Corporate power is intermingled with government power; for example, corporations can provide financing to political parties, which may help them gain some degree of control over countries in which they operate. This understanding of the command and control function as it relates to corporations, where corporate power may actually exceed government power, underscores the unprecedented political and economic power that large corporations wield—the consequences of which remain unknown [8]. Concepts such as the world city, global city, and the command and control function of cities only describe a given function of a major city on the international stage. At the same time, key issues such as the diversification of the local economy [9] and that of particular sectors of the economy are very important for the overall economic stability of a city and its degree of resilience in the face of a crisis—all of which constitute the components of the command and control function of a city [10].

The previous literature does not provide comprehensive analyses of the functions of cities characterized by international connectivity. The present paper is designed to help fill this gap in scientific knowledge by examining the key relationship between the command and control function, the world city function, and global city function for a number of cases. These data are then used to assess the degree of balance between the aforementioned functions and the predominance of a given function, if applicable. At the same time, this type of approach makes it possible to comprehensively assess the international role of major urban centers.

2. Theoretical Background

P. Hall [4] developed the now well-known concept of a world city and, in 1999, a ranking was created showing the inter-city connections of cities around the world [11]. It was not until 2008 that the concept of the global city became grounded in methodologies which enabled its analysis in terms of the global function of cities on an international scale. The first set of comprehensive metrics designed to compare large numbers of cities on a global scale in relation to their global functions was created by S. Sassen and coworkers [12]. It is important to note that this team of researchers also created some uncertainty by describing global cities as centers of commerce. This nomenclature was then used by the AT Kearney Company to rank global cities. Their ranking system employed more than 60 metrics, aggregated into the following seven categories: legal and political frameworks, economic stability, ease of operating a business, money flows, business centers, creativity and information flow, and living conditions. The first city ranking included 75 major global cities serving as centers of trade and money flows around the world. The ranking of global cities began in 2010 [13].

The command and control index (CCI) was first introduced by G. Csomós [7]. The key reason for creating this index was a need to demonstrate the strength of select cities in terms of the command and control function in a comprehensive manner, something that had not been accomplished by a number of earlier indices focused on the domestic and global economy. Earlier research works focused on the command and control function of cities in relation to the number of corporate headquarters located there and the company revenues [2,14,15,16]. The introduction of the CCI may be described as a key step forward in the assessment of cities and their role in the world economy. The index uses more financial parameters than revenue only, which makes it better suited to reflect the economic rank of a city in relation to earlier data based on the number of corporate headquarters located in a given city. G. Csomós’ [7] new command and control index included revenue, profitability, fixed asset values, and company market value. The new index, as it is based on multiple components, provides a much clearer picture of the economic strength of a city [7].

It may be assumed that the political, economic, and social environment in which a given company operates, along with its corporate culture, represent important factors affecting key market behaviors and the way in which the business is managed. Companies listed by Forbes Global 2000 [17] are public entities traded on stock exchanges. Their management is obligated to issue financial reports on a regular basis to inform stockholders of the level of profitability as well as other key metrics. The former is linked with revenue, which may also affect the market value of a publicly traded company. In practice this means that regardless of the geographic location of corporate headquarters the main aim of a public company is to make a profit. As a result, the command and control index may be used to compare cities regardless of their location in the world in terms of their command and control function.

According to S. Hymer [11], the emergence of international or multinational companies has produced a system in which their strategic decisions are made in just a few cities serving as decision centers on a world scale. This theory no longer fully holds, as in the 21st century it is possible to observe a number of new and increasingly strong decision centers, especially across Asia, all of which generate increasingly strong impacts upon the world’s economy [18]. On the other hand, R.B. Cohen [19] states that corporations located in cities may play the role of command and control centers in the international system. Cities are becoming international decision centers and corporate centers. J. Friedmann and G. Wolff [3] looked at leading cities and concluded that the relatively few cities which dominate in terms of capital concentration should be perceived as one system of cities. They used this assumption to show that world cities represent world centers controlling the global economy.

Theoretical constructs developed in the 1960s and 1970s assumed the presence of just a few cities that could be classified as world centers of trade, business, and economic control [4,16,19,20]. This prompts the following question: Does it make sense in the 21st century to consider just a dozen or so cities as global control centers? The degree of international connectivity applicable to hundreds of cities [21,22] and the hundreds of cities functioning today as command and control centers [23,24] show that the narrow approach of the 20th century may no longer make sense in the changed world of the 21st century [25].

S. Sassen [20] states that global cities function as centers of management, finance, and key specialized services aimed at other businesses. Large transactions between corporations require the services of supporting companies in sectors such as consulting, public relations, and law. Global cities also serve as centers of production and innovation utilized by foreign customers [26]. On the other hand, P.J. Taylor and B. Derudder [5] argue that while there exists a certain degree of dispersal of the various functions of the world economy, its control functions remain concentrated within the world city network. It is also important to note that the command and control function is not necessarily directly linked to the degree of the worldwide connectivity of a city. For example, this is the case with key cities such as Hong Kong, Taipei, New Delhi, and Kuala Lumpur, all of which are highly interconnected with other cities in the world, but are not exceptionally strong in terms of the command and control function [10].

The lack of reliable data is a key problem in the analysis of the function of cities on the world scale, which is something that Beaverstock et al. [11] call the “Achilles’ heel of research” on world cities. The classification of world cities may be hindered by a shortage of firms, which may be limited to a single sector of the economy. This type of narrow classification does not reflect their true impact on the economic function of the given city [27]. Some note that the creation of a ranking based solely on the largest companies may discriminate cities that are smaller. It is argued that world city and global city rankings do not properly reflect the key strengths and connectivities of smaller cities [28]. The same may be true relative to the command and control function—it is based on a list of the largest firms, most frequently located in the largest cities of the world [7] or key regions of the world [29].

3. Research Methods and Data Sources

The study covers three functions of cities (C&C, world city, global city), which are recognized city rankings that place cities on the international stage, showing the city from different angles. At the same time, there are function rankings for individual years, thanks to which it is possible to compare the rank of cities and determine these functions’ dependencies for a specific city and between cities. Analysis in the present paper relies on data obtained from the Forbes Global 2000 list [17], AT Kearney [30], and Globalization and World Cities [31]. The Forbes Global 2000 list includes 2000 of the largest public companies, based on revenue, profitability, fixed asset value, market value, and headquarter location. In addition, major metropolitan areas with corporate headquarters were examined as part of the study. Next, CCI values were calculated using the method provided by Csomós [7] for all cities featuring the HQ of a company listed by Forbes Global 2000. The world city function is investigated by the Globalization and World Cities (GaWC) organization, which publishes city rankings in relation to intercity connectivity. GaWC examines companies engaged in advanced producer services. In addition, each firm must have an affiliate in at least 15 cities outside of the HQ city, which illustrates its strong connection with other cities. On the other hand, the global function of cities was assessed by AT Kearney on the basis of key metrics aggregated into the following seven categories: legal and political framework, economic stability, ease of doing business, money flows, business centers, creativity and information flow, living conditions. The said data were used to create an index that describes the global function of cities.

The metropolitan area serves as a basic spatial unit in research on world cities, global cities, and cities functioning as economic command and control centers. However, many studies that cover this subject area use the terms world city, global city, and command and control city—this despite the fact that the actual area examined is the greater metropolitan area of each given city and not simply the core city of the given metropolitan area. The present paper examines the studied functions for cities with the assumption that this implies entire metropolitan areas. The paper assesses data on the control and command function, global function, and world city function for entire metropolitan areas, which enables proper comparisons of these areas.

Data provided by Forbes Global 2000 yield the following analytical results: In 2018, there were 395 command and control cities in the world; 374 were world cities according to the GaWC, and 135 were global cities according to AT Kearney. Only 102 cities were found on all three of the said lists, which means that they functioned as command and control centers, world cities and global cities, all at the same time. Further analysis focused only on these 102 cities. The three ranking systems discussed here illustrate different functions of the city; therefore, the variables used to assess the three said functions are not autocorrelated and are independent, as they were calculated based on different data sets.

The rank of each city was standardized using the median value for each given city. The data here represent ranks, not numerical values, which is why the formula for the median was used, as given by K. Kukuła and L. Luty [32]:

$$V_{med}={\displaystyle \frac{mad\left(X_j\right)}{med\left(X_j\right)}}$$

where the following are used:

−

The median of the variable X_j;

−

The median of the absolute deviation of the variable X_j;

The median of the variable X_j for increasing values of the variable X_j was calculated using the following formula:

$$\begin{array}{c}\dots \mathrm{w}\mathrm{h}\mathrm{e}\mathrm{n}\mathrm{n}\mathrm{v}\mathrm{a}\mathrm{l}\mathrm{u}\mathrm{e}\mathrm{s}\mathrm{a}\mathrm{r}\mathrm{e}\mathrm{e}\mathrm{v}\mathrm{e}\mathrm{n};\hfill \\ \dots \mathrm{w}\mathrm{h}\mathrm{e}\mathrm{n}\mathrm{n}\mathrm{v}\mathrm{a}\mathrm{l}\mathrm{u}\mathrm{e}\mathrm{s}\mathrm{a}\mathrm{r}\mathrm{e}\mathrm{o}\mathrm{d}\mathrm{d}:\hfill \\ \hfill med\left(X_j\right)={\displaystyle \frac{1}{2}}\left(x_{\left({\displaystyle \frac{n}{2}}\right)j}+x_{\left({\displaystyle \frac{n}{2}}+1\right)j}\right)\hfill \\ \hfill med\left(X_j\right)=x_{\left({\displaystyle \frac{n}{2}}+1\right)j}\hfill \end{array}$$

where x_ij is the ith ordering statistic of the variable X_j

The median absolute deviation for the variable X_j is calculated using the following formula:

$$mad\left(X_j\right)={med}_{i=1,2,\dots ,n}\left|x_{ij}-med\left(X_j\right)\right|$$

Next, in order to eliminate negative values up to V_med, the minimal value min_V_med was added with the minus sign left out, which yields standardized positive values V_stand

$$V_{stand}=V_{med}+\left|\mathrm{m}\mathrm{i}\mathrm{n}\_V_{med}\right|$$

and now the minimum value equals 0.

The following step consisted of the calculation of the percentage share for each city via the addition of values ${\sum all=V}_{stand}GC$ + $V_{stand}WC+V_{stand}CCI$ i and the share for each variable where the following hold:

• GC—global city;
• WC—world city;
• CCI—command and control index.

In addition, the deviation from the average value of the percentage share indicates which cities are characterized by the most distorted distribution of the three studied metrics. Next, the variability of the three functions for selected cities are shown using an Ossan triangle, a representation used quite often in comparisons between three characteristics [33,34,35]. However, it has not been previously employed in city function analysis with respect to functions characterized by international significance.

An Ossan triangle is used in the paper to illustrate the share of the command and control function, world city function, and global city function in the overall structure of international connectivity. The triangle was produced using the following formula in an Excel sheet:

triangle = SERIE(;Triagonal!x₁:x_n;Triagonal! y₁:y_n;1)

• x₁—value for first x city;
• x_n—value for last x city;
• y₁—value for first y city;
• y_n—value for last y city;
• where the following hold:
• x = 0.5 × $V_{stand}GC$ + $V_{stand}WC$;
• y = $V_{stand}GC$

The triangle shows the share of the international connectivities of a city for each specific city function: command and control function, world function, global function.

4. Comprehensive Typology of Cities in the World with Respect to Their Functions Characterized by International Significance

Figure 1 shows the relationship between the relevance of the command and control function, world function, and global function in the studied cities. In order to make the diagram easier to read, the names of cities are not marked. The resulting data show that Berlin is the city that is the most specialized in terms of functions with international significance. In Berlin, the global function represents 83.8% of the significance of its international functions, with 13.7% related to its world function and 2.5% its command and control function. Other cities with a dominant global function are the following: Porto Alegre (75.5%), Brussels (69%), Los Angeles (68.8%), Vancouver (61.8%), Vienna (60.9%).

Research has shown that there does not exist a city where all three functions characterized by international relevance would have an equal share—in many cases, one function tends to be dominant. Four distinct city types are identified in the paper in order to show differences between the studied cities basing on the predominance of one function or the lack of a given function in a given city. In the case of perfect balance, each function would produce one third of the overall international function of a given city. For Types 1, 2, and 3, it was assumed that functional predominance is a state whereby one of the three functions represents at least a doubling of the average share or at least 2/3 of the international function of a city. In the case of Type 4, it was assumed that functional balance is achieved when no function deviates 10% or more from the perfect 1/3 share. This leads to functional shares ranging from 23.33% to 43.33%. Again, this is assumed to be a state of balance in terms of functions with a degree of international significance.

Cities meeting the said criteria were assigned to four city types:

• Type 1. Dominance of the world city function;
• Type 2. Dominance of the global city function;
• Type 3. Dominance of the command and control function;
• Type 4. Cities characterized by a balance of the first three functions.

When discussing the dominance of a single function, what comes to mind first is that of the world city function (Type 1). The world city function represents more than 66.66% of overall international functionality at the following cities: Changsha (75.5%), Dubai (75.6), Manama (73.9), Jakarta (73.7), Milan (73.6), Chengdu (71.6), Muscat (67.7), Kuala Lumpur (67.6). Only four cities were classified as Type 2 cities: Berlin (83.8), Porto Alegre (75.4), Brussels (69.0), Los Angeles (68.8). Type 3 cities were the following: Nagoya (78.1), Shenzhen (69.9), Seattle (68.9), Osaka (68.8), Beijing (67.0).

The largest number of cities fit the profile of Type 4, which indicates a balance of functions (nine cities) (

Table 1. Percentage share of each function in relation to the overall international function.

City	World City %	Global City %	Command and Control (C&C) %
Houston	33.54	28.49	37.98
Abu Dhabi	35.17	39.38	25.45
Copenhagen	42.03	27.67	30.30
Dublin	28.65	38.60	32.75
Harbin	35.30	32.13	32.56
Kolkata	35.59	27.03	37.38
Rio de Janeiro	38.48	31.25	30.27
Stockholm	28.71	37.76	33.54
Toronto	27.85	37.12	35.03

). The two most balanced cities were Harbin (world city—35.30%; global city—32.13; C&C—32.56%) and Dublin (world city—28.65%; global city—38.60%; C&C—32.56%). A total of 26 cities (25.5%) out of the 102 cities studied were assigned to Types 1 through 4. Neither dominance nor balance of functions was observed in the remaining 74.5% of the studied cities.

Figure 2 shows that the most spatially concentrated type is Type 1. Apart from Milan (Italy), all the cities shown in Figure 2 are located in Asian countries. It should be noted that these cities are distributed quite evenly across the continent. The Arabian Peninsula, China, and Southeast Asia are represented here. Type 2, with the dominance of the global city function, is represented only by four cities, located in Belgium, Germany, USA, and Brazil. In turn, cities where the command and control function dominates (Type 3) are located in East Asia, and only Seattle (USA) represents another continent. The spatial distribution of cities with balanced functions (Type 4) is different. They are found in North America, South America, and Asia. It is clear that there are many Asian cities in Types 1, 3, and 4, but it is not a continent where the dominant function is the global city (Type 2).

The classification system described above does not yield a typical ranking of cities, but is designed to illustrate the relationship between key functions in a city. For example, the city of Harbin in characterized by a balance between the examined functions despite the fact that its rank is 72 out of 102 in terms of the command and control function, 97 out of 102 in terms of global city status, and 101 out of 102 in terms of its international connectivity. On the other hand, Stockholm was ranked 26th, 36th, and 40th, respectively. While these results are highly dissimilar, both cities are characterized by a balance of functions, although the two cities are very different in terms of their international significance. The same rule applies to Types 1, 2, and 3. A given city may be dominated by one function, but this situation may occur in a city with a strong international reputation and also a city with much less international relevance.

Cities not assigned to any of the four city types identified in the present study need not be overly concerned when competing with their ranked counterparts. What makes them unique is the lack of dominance of any one function and the lack of balance between functions. This group of cities includes some of the leading economic centers of the world including Beijing, New York, London, Tokyo, Paris, Shanghai, Hong Kong, Brussels, Singapore, and Los Angeles. Types 1 through 4 tend to include less well-known cities that happen to be important in the area of economic command and control and its overall economic and political significance in the world. Of course, this is not the same level of global impact as that associated with many of the previously mentioned leading cities of the world. This point prompts the following key question: Is the command and control function generated only by the largest corporations or can it be produced also at lower levels of economic significance?

5. Discussion

The existing research literature on city functions with international significance is extensive; however, it does not encompass a comprehensive approach to such functions. The present paper represents an attempt to fill this knowledge gap. There does not exist a perfect method that can be used to describe the functions of a city [27], as every type of analysis will involve incomplete data, and some data may be omitted inadvertently. This is one reason for the use of Ossan’s triangle—it helps to visualize the relationship between the three studied city functions for selected cities around the world. This method enabled the creation of a typology presenting the degree of dominance and/or balance for the studied functions for each examined city.

The paper also makes the point that the predominance of one function or balance between all three functions is not always associated with the largest and most important cities operating in the world economy. This is rather the case with cities without well-developed command and control functions, world city functions, and global city functions. Examples of such cities are Harbin and Abu Dhabi. Moreover, almost three out of four of the studied cities did not fit the profile of the four city types identified in the paper. This means that they are neither dominated by a single function nor are they balanced. On the one hand, a good balance between international city functions may be helpful in times of economic crisis when declines in one function tend to be compensated for by the remaining functions, something called the stork effect [10], while on the other hand, the dominance of one function may help a city build a good brand name for itself. This is the case with Milan and its renowned fashion industry [36] and Boston and its world-famous universities [37].

The present paper examines large cities characterized by all three of the studied functions. This approach helps to obtain information on the significance of city functions at large scales, but does not provide knowledge at the local and regional scale. B. Godfrey and Y. Zhou [38] argue that it is important to evaluate local affiliates of corporations that implement the decisions of corporate headquarters, and not just their corporate parent companies and their hometowns. In addition, Sassen [39] also recognized the fact that some command and control functions now do exist at the regional and subregional level. This may be associated with the migration of some corporate headquarters to smaller cities since the 1970s [40].

This gap in knowledge has been filled to some extent by P. Raźniak, S. Dorocki, and A. Winiarczyk-Raźniak [29], who investigated the command and control function of the largest 500 companies in Central Europe. They examined both corporate headquarters and affiliates of foreign corporations operating in this part of Europe. It also appears sensible to investigate the command and control function at the country level [41] as well as the regional level, as noted by Taylor and Csomós [42], who examined smaller regional cities that may in some cases become important nodes in the world economy, at least in the case of some sectors of the economy. This point is reinforced by Raźniak et al. [43] who analyzed the command and control function for the energy industry.

6. Conclusions

It can be concluded that the perfect world city does not exist—the city that would be dominant in all aspects of the economy, as measured by the various metrics used to rank cities [44]. There are no cities characterized by a perfect balance between city functions relevant on the international stage. One may speak of dominance or predominance only, which of course may preclude an analysis of balance in city functions.

Cities dominated by a single function may become renowned for that function, and this may be quite advantageous from a marketing point of view. However, in the event of a crisis associated with that one function, the city may suffer substantially. It may be argued that multifunctional cities are optimal, as they are not dominated by any one function. While a city of this type may not be highly recognizable in the world, its worldwide rank will not suffer in the face a major decline in one of its functions due to offsetting effects from its other major functions. It is noteworthy that multifunctional cities can have highly developed functions, as well as being cities with weak functions.

It is therefore reasonable to suggest that further research ought to also focus on regional and local cities, not just cities with worldwide or continental significance. Such cities could include provincial capitals, regional cities, and county seats, as well as the administrative regions that surround these cities. Such research could help fill the large gap in local and regional data that exists today. In addition to conducting more comprehensive research on the function of cities at the international scale, it would be worthwhile to examine cities from the perspective of more than one function. In this case, it would be reasonable to evaluate different methods that could be used to analyze the economic position of cities at the world scale.

The article aims to show the city in the new light of the comprehensive approach to the international functions of cities and to present a new method of measuring city rank. This is a preliminary study proposing a new approach to studying the functions of cities in a single research year. In the future, however, the variability of these functions over time should also be investigated. The present study serves as a basis for further detailed analysis.