GaWC Project 4

Embeddedness, Knowledge and Networks:
British Expatriates in Global Financial Centres

Funded by ESRC (1998-2000)

Linked to Transnational Communities: An ESRC Research Programme

Grant Holder: J.V. Beaverstock

Research Associates: J.T. Boardwell and R.A.M. Bostock

[Results]

Introduction

As British financial transnational corporations (TNCs) have continued to concentrate their activities within global financial centres (GFCs), they have become key locations for expatriate labour, whose specific knowledge, expertise, skills and intelligence are required in situ because of the crucial roles they have in `face-to-face' contact between firm and client, financial markets, and business and social networks. The role of expatriate workers in GFCs, however, still remains a relatively `invisible' facet of globalization processes in the world economy. There is now an urgent need for research which investigates how highly-skilled professional and managerial expatriate labour in finance transfers knowledge over time and space, and how such labour embeds itself, and accumulates local knowledge, within the social and cultural milieu of GFCs.

Context

Two major research arenas contextualise the raison d'être of this project:

(i) Globalization, global financial centres and highly-skilled professional and managerial labour migration

 Global cities, and especially their GFCs, have become key `basing points' for expatriate highly-skilled professional and managerial labour. As GFCs, like London, New York, Tokyo and Singapore, have continued to attract disproportionate flows of financial capital, foreign banks and other financial producer service TNCs, they have become `complexes' of economic, social and cultural power in the global economy. Equally, GFCs have become key locations for global expatriate labour, particularly those highly-skilled workers who move within financial TNC office networks. Despite rapid improvements in information technology, communications and transportation, and the actual cost of sending staff abroad [1], however, financial TNCs have continued to employ expatriates within GFCs. Expatriates are posted to GFCs because they have the specific knowledge, expertise, skills and intelligence required to ensure the efficient operation of both the international financial system, and the global reach of the TNC. Moreover, expatriate workers remain an important global labour market process within financial TNCs because of the crucial roles they have in `face-to-face' contact between firm and client, `wheeling and dealing' in international markets, and involvement in social, and often transnational, networks which are of the utmost importance in the accumulation of financial capital within, and between, GFCs.

(ii) Globalizing and embedding migrant knowledge: social networks and cultural life experiences

 Running parallel to recent studies of highly-skilled professional and managerial labour migration within financial TNCs GFC office networks, has been a myriad of work, couched within the new economic geography/sociology, which has focused upon embeddedness, knowledge, expertise, business and social networks, gender, and cultural change within GFCs, especially the City of London. In particular, the emphasis has been focused towards the organizational cultures of financial TNCs, and the connections/relationships that exist between knowledge, and the production/circulation of knowledge in finance, particularly within and between, formal business and informal social networks. Thus, in a GFC like the City of London for example, an individual's global financial knowledge and expertise is very much constructed, reproduced and embedded at the local, through: involvement in complex business and social networks; everyday cultural life experiences; gender relations; wealth; the location of their `meeting places'; and, their reaction/involvement in the culture capital of the City's day-to-day financial atmosphere, tacitly couched in story making and rumour. Moreover the performance of a financial TNC in a GFC is also very much linked to the success and speed with which their transnational workers accumulate and circulate knowledge, expertise and intelligence in the institutional workplace. As Thrift (1994, 336) argues, an important element of the City of London's `global corporate network' is its `constant throughflow of workers' from other GFCs. Or to put it another way, it can be argued that the competitiveness of a British financial TNC located in New York City or Singapore's financial districts is just as dependent upon the success of their expatriate workforce in embedding into an expatriate cultural lifestyle, where cultural capital is accumulated and circulated from personal interaction and contacts within expatriate and indigenous business and social networks, than it is upon capital being accumulated through financial transactions.

This project investigates how highly-skilled professional and managerial expatriate labour transfers knowledge over time and space, and accumulates local knowledge within the social and cultural milieu of global networks concentrated within London, Singapore and New York City.

Research Aims

The project has three major research aims:

(i) to advance our understanding of why financial TNCs still require British professional and managerial expatriates to be located in GFCs in these time of rapid improvements in information technology, and how such labour constructs local knowledge outside of the workplace through becoming economically, socially and culturally embedded in an expatriate lifestyle, undertaken in particular networks and spaces;

 (ii) to collect a new and unique set of quantitative and qualitative data on the existence of British expatriate transnational communities, which includes gathering data from both financial TNCs and migrants themselves, especially those posted in Singapore and New York City;

 (iii) to contribute to the development of methodology in the arena of migration studies and the new economic geography/sociology by adopting a multi-method approach to the study of British expatriate transnational communities, with a considerable emphasis placed upon extending the value of qualitative methods in migration research.

Research Methodology

The methodology builds upon a combination of quantitative and qualitative techniques:

 (i) literature review of sources drawn from the globalization literature which intersects with migration studies, labour market analysis, human resources, global cities research and the new economic geography/sociology, to advance our understanding of British transnational expatriate labour in GFCs. In addition, documentation produced by financial TNCs, international relocation agencies, and established expatriate consultancies will be reviewed.

(ii) postal questionnaire survey of global migration flows within London based financial TNC GFC office networks.

(iii) interview surveys

(a) interviews with financial TNCs - in order to develop a wider understanding of global migration, international secondments, transfers and exchanges. Important issues to be addressed include: recruitment, skills and knowledge; career histories; social backgrounds; age and gender of migrants; the firm's global migration strategies and remuneration packages; and, the cultural significance of using such labour in these times of rapid improvements in information technology, business travel, and the growing use of indigenous labour.

(b) interviews with migrant labour in Singapore and New York City - will address expatriate culture, and extend our understanding of how such labour accumulates local knowledge and capital through their everyday life experiences outside of formal work, and how such knowledge is then reproduced in the formal workplace. This will be achieved by investigating their: career histories and trajectories; age; gender relations; household formation; social-cultural-economic experiences of working and living in Singapore and New York City; and social networks.

(iv) focus-groups involving return migrants from other GFCs, now re-employed within London based TNCs, will be questioned about their recent social-cultural-economic experiences of expatriate everyday life, social networks, and the accumulation of knowledge and intelligence outside of their formal workplace.

(v) personal diaries will be kept by expatriates for a period of two weeks in which they can map their social networking and cultural experiences.

Academic and Policy Implications

This project will advance our theoretical and empirical understanding of globalization and transnational communities, in three main ways.

First, the project will extend our knowledge and understanding of the operational aspects of TNCs in facilitating transnational communities. It will provide an empirically grounded study of the rationale used by TNCs in planning and using such expensive labour resources in these times of information technology, business travel, and high costs of sending expatriates to GFCs. Another important policy implication of this project is to understand how expatriates' transfer their knowledge over time and space, between London and other GFCs, and how participation in social and business networks, refines and accumulates knowledge, which can then be taken back to the workplace and used to further enhance the competitiveness of the British TNC.

Second, the project will develop our understanding of the everyday cultural experiences of expatriate labour in GFCs. British expatriate labour who work in international finance are extremely well rewarded, in terms of both salaries and relocation costs, which were highlighted very `visibly' by the Nick Leeson affair. Working as a manager of Barings Futures, it was estimated that his earnings were about US$300,000 per annum, and with bonuses, could have reached US$2 million, for 1994 (Financial Times, 1995, 28 February, p3). Moreover, this publicity revealed a very lavish lifestyle, which was not out of place in Singapore's British expatriate financial transnational community.

Third, this project will help us begin to develop new approaches to migration. The research will dovetail studies of globalization and the new economic geography/sociology with more convention writings on migration, and also develop and enhance the use of qualitative and ethnographic methods, which will provide exemplars for future studies.

Specific policy outputs from the project will benefit both the private and public sectors, including:

 (i) financial TNCs, to extend their understanding of expatriate labour strategies and understanding of how expatriates gather work-specific knowledge and intelligence through their social and cultural networks, and everyday living experiences;

 (ii) relocation TNCs and expatriate consultancies, to extend their understanding of how expatriates, and their dependants, adjust to the everyday cultural living experiences of being an expatriate worker;

 (iii) the ONS, to extend their longitudinal and qualitative data on professional and managerial migration flows between Greater London and other countries, which will provide data for them to help develop, refine and evaluate the multiplier-effect of expatriate knowledge (beyond remittances) with respect to their contributions to UK competitiveness; and,

 (iv) relevant professional organisations and other relevant user groups, including the Corporation of London.

[1] Estimated at an average of [sterling] 82,340 per annum within European cities during 1997, excluding salaries (Donkin 1997).