GaWC Research Bulletin 395

(A)

The Spatial Mobility of Corporate Knowledge: Expatriation, Global Talent and the World City

J.V. Beaverstock^*

INTRODUCTION

Expatriation, and other forms of labour mobility that crosses international borders within and between firms, is a crucial organisational strategy for the spatial mobility of knowledge in the world economy.  At the organisational level, firms deploy their knowledge-rich, managerial and expert human capital to circulate both tacit and explicit (codified) knowledge between subsidiaries, clients and suppliers to develop the organisation, and service existing and new clients outside of the home country.  Expatriation is a process which stretches tacit knowledge across time and space (Beaverstock, 2004; Faulconbridge, 2008) because of the importance of ‘being (there)’ (Gertler, 2003) to manage, engage in the production system and, or service clients in co-location.  Far from being on the wane in these times of advanced information technology and communication, expatriation is a strategic mechanism for the firm to deliver knowledge, skills, expertise and experience to a particular point in space and time (an office or subsidiary or gas extraction field) (Beaverstock, 2004; Edström & Galbraith, 1977; Millar & Salt, 2009; PricewaterhouseCoopers, 2010a; Scullion & Collings, 2006).

Expatriation is a vital global organisational strategy for knowledge-intensive professional services in sectors like accountancy, consulting and law where the delivery of knowledge, bespoke solutions and value is embodied in the employee, especially where the reputation and credentials of the firm rests on the success of the professional employee-client relationship (Beaverstock, 2004; Faulconbridge, 2008; Jones, 2008).  Beyond, the firm, expatriation feeds into the competitiveness of cities and regions acting as a conduit to replenish knowledge, skills and know-how in local labour markets.  Indeed, many world city boosterists and commentators suggest that attracting and retaining global talent is a significant factor of production in the success of a world city in the network society (Beaverstock, 2010; Castells, 1996; Florida, 2002; Wigley, 2008).

The purpose of this chapter is to examine the agency of expatriation as an organisational strategy for the spatial mobility of knowledge within the firm and as a global process which enhances the competiveness of the world city, and particularly the international financial centre. Accordingly, the rest of this chapter is divided into seven parts.  Following this introduction, parts two, three and four, focuses on explaining the significant concepts which underpin the strategy of expatriation as a physical medium of knowledge creation, transfer and exchange within organisations and between different spatial contexts.  In detail, part two examines the structural organisation of firms and their mechanisms for creating, sharing and exchanging knowledge within the multi-locational organisation, drawing primarily on the work of transnational management theorists, Bartlett & Ghoshal’s (1998).  Part three reviews the human resource perspectives that explain the organisational strategy of expatriation and their role in the firm’s global knowledge management system.  Part four looks specifically at the agency of place, the world city, in concentrating and reproducing knowledge management within the network society (Castells, 1996) and enhancing the expatriate’s spatial knowledge networks and career paths (Beaverstock, 2005; 2010).  Parts five and six respectively, introduces case studies of expatriation within global accountancy firms and discusses the agency of foreign workers in the competitiveness of London’s financial district (Beaverstock, 2007a; 2010; Beaverstock & Hall, 2012).  Part seven sets out the conclusions and argues that expatriation will continue to be a significant form of knowledge development, transfer and exchange within organisations, and an essential driver for spatial economic development and competiveness.

The firm, international business strategy and knowledge management

Increasingly, the resource of knowledge (for example the traits of high value added professionalism, expertise, skills and intelligence, whether in the established professions, R&D, medicine, science and, or engineering), is often a ‘sticky’ tacit competence embodied in human capital (Gertler, 2003; Lowendahl, 1997).  The management of that knowledge, on a global scale, has become a key strategy (and challenge) for the firm (Schuler, Jackson & Tarique, 2011; Scullion & Collings, 2010; Whelan, Collings & Donnelian, 2010).  It is now readily acknowledged that transnational firms organise their assets, labour, interests and client- and supplier relationships in dynamic and complex networks, which span world regions in many different commodity and value chains (Dicken, 2011).  Simultaneously, firms are ‘transnational communities’, a collective of complex inter-relationships and amalgamations of employees of all nationalities, status and skill-sets, where the transnational corporation (TNC) is a,

“…thick web of communication possibilities vertically and horizontally … [where] … [m]anagers’ careers would be varied and involve movement across different subsidiaries as well as into head office.  Senior management would reflect a wider group of nationalities and experiences than in the multinational enterprise.  Learning would be dispersed, often disorganized but usually multi-directional in terms of its effect” (Morgan, 2001, p.120).

However, in order to get a more refined and structural explanation of how knowledge is created and shared between a firm’s international subsidiaries, at a conceptual level, one can draw on the writings of two eminent management theorists, Christopher Bartlett and Sumantra Ghoshal, in their widely acclaimed, Managing Across Borders. The Transnational Solution (1998).  Bartlett & Ghoshal (1998) provide a framework to analyse how corporate knowledge, both tacit and codified, is developed and disseminated within the international, multi-locational firm, providing structural building-block to account for the strategy of firms engaging in global staffing and expatriation.

Bartlett & Ghoshal (1998, 75) suggest that a core competence of the multi-locational firm is the “development and diffusion of knowledge” within the organisation in order to efficiently manage assets, capabilities and operations across-borders (Table 1).  In their organisational typology of the transnational – Multinational, Global, International and Transnational, the firm manages its organisational characteristics differently, and if we focus on the ‘development and diffusion of knowledge’, we can observe a liner progression in the sharing of knowledge, from a ‘Multinational’ structure where it is, “developed and retained in each unit” to a ‘Transnational’ structure where it is “developed jointly and shared worldwide” (Bartlett & Ghoshal, 1998, p.75; Table 1).  As I have noted elsewhere, “the key attribute of knowledge development and diffusion in transnational firms is that it is circulated both vertically (up and down from headquarters) and horizontally (laterally between subsidiaries) between all units of the firm.  Transnational firms are integrated networks spanning cross-border activities which are sustained by communication and mobility between different subsidiaries and head office” (Beaverstock, 2007a, p.411).  In a similar vein to Bartlett & Ghoshal (1998), Nohria & Ghoshal (1997, p.4) define the firm as a, “differentiated network” reflecting the network structure of the organisation made up of a multitude of linkages, chains and relationships, “(1) the ‘local’ linkages within each national subsidiary; (2) the linkages between headquarters and the subsidiaries; and (3) the linkages between headquarters and the subsidiaries themselves.”

Table 1: Organisational characteristics of the transnational.

There is now sufficient evidence to suggest that firms, whether in Bartlett & Ghoshal’s (1998) “International” or “Transnational” organisational characteristics, manage their knowledge development and diffusion through complex systems of knowledge management which draw upon a combination of physical and virtual dissemination and exchange (Faulconbridge, 2008; Mellahi, Frynas & Finlay, 2005).  Firms are relational entities with sophisticated knowledge management systems to develop, share and exchange explicit and codified knowledge through electronic transmission and virtual proximity, aided through efficient and confidential transmission systems and ICT, including video-conferencing software and latterly, intra-firm social networking systems.  But, when we start to consider the development, diffusion and exchange of tacit knowledge, which is often very sticky and embodied in the experience, competences, expertise, skills and learning capacities of an individual, the most efficient, and possibly cost-effective, mechanism to transfer those embodied attributes cross-border from subsidiary A to subsidiary B is by physical movement, which could take the form of business travel (Faulconbridge, Beaverstock, Derudder & Witlox, 2009) or an international assignment (Brewster & Scullion, 1997; Collings, McDonnell, Gunnigle & Lavelle, 2010; Scullion & Collings, 2006).

Moreover, the advent of the ‘Transnational’ form of the contemporary firm has created the conditions for the development of a globally functioning international division of highly-skilled executive, established professional and managerial, and high value scientific labour (including medicine, technology, R&D, engineering etc).  This global labour market is inherently reproduced through local labour markets, but importantly also through the burgeoning number of international assignments and other types of hyper-mobile employees that are present in many different industrial sectors of the world economy like: aerospace and mineral extraction (Millar & Salt, 2009); professional services (Beaverstock, 2004; Faulconbridge, 2008; Jones; 2010]) executive education (Hall, 2009); banking and financial services (Beaverstock & Hall, 2012); high technology (Harvey, 2009); and, I.T. and R&D (Mahroum, 2000; Saxenian, 2007). In order to examine further the significance of inter- and intra-firm international assignments as a mechanism for knowledge management and exchange within and between firms, it is important to draw on the International Human Resource Management (IHRM) discipline and discuss the organisational strategy of expatriation and global staffing systems.

Expatriation, global talent and knowledge exchange

TNCs use international assignments as a fundamental internationalisation strategy to transfer and exchange knowledge, expertise and learning between foreign subsidiaries and, or other forms of global investments.  These international assignees are synonymous with the organisational label ‘expatriate’ (Brewster, 1991; Tung, 1988) and in the discipline of business studies an entirely new branch of management science was created from the late 1960s to focus on this segment of the firm’s internal labour market, aptly named International Human Resource Management (IHRM).  At the crux of IHRM are the organisational strategies posited to explain why TNCs use expatriates in their foreign subsidiaries and not locally recruited staff, whether that is in mineral/energy extraction sites in the BRICS economies, manufacturing plants in SE Asia and, or offices in world cities.

The TNC’s strategy to deploy expatriates in lieu of local, or home country nationals, is at the centre of debates in contemporary IHRM (Black, Gregerson, Mendenhall & Stroh, 1999; Tung, 1988).  Over forty years ago, Edström & Galbraith’s (1977) seminal research on international assignments set the benchmark for clarifying why TNCs transfer staff between their subsidiaries to utilise and be strategic with their human resource capital.  Edström & Galbraith (1977) recognised that the TNC adopted international assignments as an integral strategy for managing its professional and managerial, and scientific and expert staff within the firm’s portfolio of foreign investments, and therefore, in the confines of its international internal labour market.  They suggested that TNCs specifically used international assignments for three main strategic purposes:

1. As a direct mechanism to fill positions, vacancies, in foreign locations that cannot be easily taken by local qualified staff because they are not available;

2. As part of the TNCs internal global management development programme to enhance the experience, skills and competences of junior and middle-ranking managers and professionals irrespective of the supply of locally qualified managers in the host location;

3. As an integral part of the TNCs to develop the global organisation of the firm in terms of corporate strategy, command and control systems, and the sharing of best practice, learning and knowledge.

Edström & Galbraith’s (1977) studies of the rationale for the international transfer of managers within TNCs to fill positions, develop manager and develop the firm, still resonates strongly with contemporary analyses of expatriation (Collings et al., 2010), and more latterly scholarship on firms’ global staffing regimes and global talent management (Scullion & Collings, 2006).

In Collings & Scullion’s (2006) review of global staffing and expatriation, they synthesis the findings of other contemporary IHRM scholars in order to interrogate further Edström & Galbraith’s (1977) writings on the foundations of international assignments within TNCs.  For example, drawing on Sparrow, Brewster & Harris’ (2004) research on globalizing human resource management, they note that the principal strategy for sending staff on an international assignment is six-fold: for career development; to establish an international cadre of managers; to fill local vacancies because of a lack of qualified home country nationals; to transfer expertise; to manage and control foreign assets; and to control global strategy and policy.  Furthermore, Collings & Scullion (2006) disaggregate the purpose of expatriation into two conceptual frames (after, Evans, Pucik & Barsoux, 2002).  First, as demand-driven assignments, which resonates with the organisational requirement to fill vacancies, manage new investments or solve problems in situ because there is a dearth of locally qualified home country nationals. Second, as learning-driven assignments for the career development of the individual and as a mechanism to transfer, share and exchange knowledge between the expatriate and home country nationals.

From the early-2000s, the business discourse surrounding TNCs and international assignments has shifted away from expatriation to understanding the global staffing of organisations as talent management and, or talent mobility (Tarique & Schuler, 2009).  Florida (2002) has brought the subject of talent onto the social sciences stage alongside his reading of the creative class, but it is in the realm of business and management studies that the credentials of the globally nomadic professional, managerial and, or highly-expert scientific worker are referred to as global talent.  For example, in 2000, PricewaterhouseCoopers (2000a; 2000b) reported on expatriates in the discourse of traditional international assignments, focusing on their business rationale, global compensation packages and predicted futures.  A decade on, PricewaterhouseCoopers (2010a) regularly publishes in a new framework that is understanding the dynamics of ‘Talent Mobility 2020’, which is not out of sync with other global consulting firms (for example, Deloitte’s (2012) report on ‘The Global Talent Challenge’ or The Corporation of London’s (2011) study of Access to Global Talent).  The longevity of expatriation as an organisational strategy is now centred on the global management of intellectual capital in high value occupations and skills, reflecting the intensifying shift away from multinational firm structures (i.e. the dissemination of knowledge primarily from the corporate HQ to subsidiaries) to the transnational mode, reflecting the sharing and exchange of knowledge and staffing between all units of the firm (as noted in Bartlett & Ghoshal’s (1998) ‘transnational’ form of the firm).  As PricewaterhouseCoopers (2010a, p.16) note,

“Assignments in the past were typically categorised by organisations as being either short-term or long-term. Today we see many more varied requirements from businesses and assignees and alignment with the organisation’s talent management objectives. Along with short-term and long-term assignments, we have frequent travellers, commuters, intra-regional, and virtual secondments to customers and supplier sites, as well as various assignee and talent types, such as executive, skill set and project-based, developmental, and employee initiated, all creating a need for robust global assignment policy framework.”

By 2020, PricewaterhouseCoopers (2010a) predict that the average number of international assignments worldwide in its sample database of 900 companies will grow by +50% from 2009 levels, reaching an upward maximum of approximately 400,000. Significantly, they suggest that much of this growth in global mobility will be generated by, and in, the emerging markets, as more skilled employees from these countries enter the global talent pool.  Therefore, expatriation as an organisational strategy is still an important facet of the firm’s portfolio of global talent mobilities (Beaverstock, 2010; Faulconbridge et al., 2009; Millar & Salt, 2009).  The role of international assignments reflect on the one hand the requirements of the firm to be competitive in a highly-globalized world, both in terms of business systems and location, and on the other, the expectations of talent to have highly value-added mobile careers enhancing promotion prospects, personal remuneration and a cosmopolitan sense of well-being (Beaverstock, 2011; Beaverstock & Hall, 2012).  But, it must be acknowledged that alongside more assignees there will be, “more business travel, more virtual tools, and especially more quick, short-term, and commuter assignments” (PricewaterhouseCoopers, 2010a, p.4).

World cities, expatriation and the spatial mobility of knowledge

Invariably, in the manufacturing and service sectors of the world economy, the organisational structure and location of the firm provides an overwhelming urban working and living experience for the expatriate.  Expatriates are city dwellers throughout the globe.  But, there is a growing body of evidence to suggest their agency, practice and performativity are crucial processes which account for the geo-economic sustainability, competiveness and relationalities of world cities (Beaverstock, 1994; 2011; Ewers, 2007; Friedmann, 1986; Sassen, 2001a; 2006).  Indeed, many commentators have discussed the role of highly-skilled international migrants (Beaverstock, 1994; 2005, 2007b), ‘transnational elites’ (Friedmann & Wolff, 1982), the ‘new international professionals’ (Sassen, 2001b) and ‘dominant managerial elites’ (Castells, 1996) in the making of world cities and their complex inter-city relations and networks.  In many ways, organisational processes of expatriation, talent management and global staffing are nourishing the knowledge bases of world cities providing a continuous through-flow of talent into these places to secure high rankings in the many commercial, and highly influential, global urban hierarchies, like for example Z/Yen’s Global Financial Centre Index (2011), Mastercard’s (2008) Worldwide Centres of Commerce Index or the Mercer Group’s (2011) Quality of Living Worldwide City rankings.

The expatriate, like home country elites, are pulled into world cities and their organisational networks by the agency of the firm or potential employer through intra- or inter-company transfers, or other migratory paths, like for example ‘free-movers’ as in the single market of the European Union (Favell, 2008).  Given the structural position of world cities in the New International Division of Labour (Cohen, 1981; Hymer, 1972; Friedmann, 1986) their spatial economies have unprecedented ‘global reach’ and ‘command and control’ (Sassen, 2001a) facilitated through: high concentrations of corporate HQs; significant agglomeration economies (clusters) in international finance, professional services, the media, education; health, medicine, biotechnologies, R&D, and creative and cultural industries; cutting-edge information technology and communication; and, state of the art infrastructure (Cook, Pandit, Beaverstock, Taylor & Pain, 2007; Olds, 2007; Sassen, 2006).  The firms in these high-value world cities economies, whether TNCs or small and medium-sized enterprises in manufacturing or services, create unprecedented conditions for the demand of highly-skilled labour which are articulated in a globally functioning spatial division of labour (Beaverstock & Broadwell, 2000).  Moreover, over the last forty years or so, the growth of the producer service ‘complex’ in world cities (Sassen, 2006), particularly in those of the Global North – London, New York, Chicago, Boston, Los Angeles, Paris, Frankfurt, Brussels, Madrid, Amsterdam - have shaped the circumstances for brisk labour market demand in sectors like advertising, banking, financial services, professionals services (accounting, consulting, legal, real estate) and information technology (Corporation of London, 2011).  But, the growth of the producer complex has not been limited to European and North American cities. For example, in Singapore, approximately 1 million jobs have been created in the service sector between 1991 and 2008, of which a third (0.32 million) were in financial and professional services (accounting, legal, real estate etc) (Ministry of Manpower, 2009), and similar structural changes are occurring in Moscow (Kolossov, Vendina & O’Loughlin, 2002), Hong Kong (Meyer, 2000), Shanghai (Lai, 2009) and Mumbai (Patel, 2007).

World cities economies are important structural agents in the spatial mobility of knowledge.  Their internal structure, global reach and economic authority, manifested in complex intra- and inter-city networks, are perpetuated through the high-value, knowledge-rich labour force which are attracted to work and live in these places (Beaverstock, 2005).  Essentially, world cities are the global melting pots for highly-talented labour, of all nationalities, both internal and international, who fill vacancies, labour market demand, in the high-value added, knowledge-intensive complexes of the city (whether that be in finance, professional services, creative industries, the media, R&D).  The bottom-line is that expatriation and other forms of mobilities, like business travel, are key organisational strategies to deliver skills and expertise, and learn at the point of demand, often through the medium of ‘face-to-face’ interaction.  ‘Face-time’ remains a very efficient and valued mechanism to exchange tacit knowledge over time and space, in working environments that survive on direct interaction with clients to ensure quality of service, leadership, bespoke solutions and problem solving, and the delivery of complex management systems (Beaverstock, 2007a; 2007b; Faulconbridge, 2008; Jones, 2008).

Finally, it is also important to acknowledge that world cities have significant agency in enhancing an expatriate’s career aspirations, wealth creation and living experience (Beaverstock, 2005).  Spatial career paths accumulate and exchange knowledge and learning within and between different employers and world city postings and living experiences.  Expatriate career paths are a conduit in which knowledge is created and consumed in world city networks, particularly in an expatriate’s everyday life experiences and transnational spaces (work, the home, social spaces etc.).  The everyday world city life-worlds of expatriates, supplying knowledge-intensive skills and competencies to the workplace and in “transnational social spaces” (Smith, 1999, p.120) through “ephemeral networks and practices” (Beaverstock, 2005, p.711), reproduce specific epistemic communities whose life-courses significantly enhance careers and the accumulation of financial, social and cultural capital. 

Global staffing and expatriation in professional service firms

In the international service economy, the World Trade Organization acknowledge that people can deliver services to clients across borders through physical movement which is an integral part of the General Agreement on Trade in Services (defined as GATS Mode 4) (OECD, 2003).  In professional services, which encompass knowledge-intensive, often bespoke and highly idiosyncratic services built on reputation and established credentials, the liberalisation of trade in ‘natural persons’ (GATS Mode 4) is essential for the firm to circulate knowledge and expertise across-borders, embodied in the tacit professionalism and expertise of the archetypal ‘professions’ like architects, accountants, or lawyers (Greenwood & Lachman, 1996; Morris & Empson, 1998; Lowendal, Revang & Fosstenlokken, 2001).  In the professional service firm (PSF), its key asset is the knowledge capacity of its professional labour force of both managers and professionals, and capital is accumulated, clients courted and serviced, and ultimately revenues and profits accrued through the performance of this workforce and successful interaction with the client.  Morris & Empson (1998, p.610) suggest that a PSF is, “an organization that trades mainly on the knowledge of its human capital, that is its employees and the producer-owners, to develop and deliver intangible solutions to client problems.”  Thus, in PSFs, one of the most efficient mechanisms to deliver knowledge, and tacit knowledge which is embodied and stuck to the established professionals, is through the physical movement of professionals from the firm to the client, or within the global structure of the firm (Lowendahl, 1997).  PSFs supply bespoke knowledge and expertise to their clients and suppliers, and maintain internal organisational control through co-location using personal interaction, expatriation and hyper-mobilities (Beaverstock 2007a, 2007b; Faulconbridge, 2008; Faulconbridge, Beaverstock, Taylor & Nativel, 2011; Jones, 2008; Nachum, 2000).

Global accounting firms continue to use international assignments and other forms of corporate mobilities to deliver knowledge and expertise between their international offices and firm-client relations.  Over the last decade or so, global accounting has been dominated by the ‘Big Four’, PricewaterhouseCoopers (PwC), Deloitte, Ernst & Young and KPMG International with respect to fee income ($m) and professional employment (Table 2).  In 2010, combined, the ‘Big Four’ employed almost half a million professional staff (partners and lawyers) each in an average of 149 countries.  Global accounting firms require a wholly-own presence in each market to deliver its service in co-location with the client (Dunning, 1993; Hanlon, 1994; Greenwood, Rose, Brown, Cooper & Hinings, 1999).  Accordingly, these firms sell their major services to clients, audit and assurance, corporate finance, consultancy and insolvency (www.thecityuk.com) through direct, physical contact with the client, supported by an infrastructure of specialist financial products, I.T. software and legal closure (certificated qualifications and membership of chartered institutes).  Partners and qualified staff, depending on their specialism, liaise on a constant basis with clients and co-suppliers (for example law firms) to pitch for new business, execute contracts and deliver bespoke services, often in project teams with other professional services depending on the nature of the business.

Table 2: Top 10 international accountancy networks, 2011 (ranked by annual total income $m).

The prevalence of global staffing regimes, international assignments or other forms of mobility, in the ‘Big Four’ accounting firms and other smaller global firms, is a normalised organisational strategy for knowledge exchange, transfer and learning within the firm-client relationship (Beaverstock, 2007a; Hanlon, 1999).  All of the ‘Big Four’ have global mobility programmes: to fill vacancies that cannot be procured from local home country labour; as part of management development programmes, for all career structure and grades with the firm; and as a strategy to enhance the corporate culture of the global firm or partnership structure (Table 3).  PricewaterhouseCooper’s (2010b, p.42) strategic approach to global mobility and leadership aptly summarises the organisational role of international assignments in the global firms,

“Moving our talent people to different locations around the world to match client and business needs is key to enabling us to offer the right expertise at the right time.  An experience abroad develops the global business skills and international experience of our people … we continue to invest heavily in our global mobility programme.  In FY 2010, we added another 1,600 new participants to our secondment programme, up from 1,400 in FY2009.”

Table 3: Global mobility in the ‘Big Four’ accounting firms.

Deloitte’s (2010, p.7) 2010 Annual Review champions its commitment to global mobility for its professional staff emphasising that mobility is all about, “moving the right people with the right skills to the right places at the right time to meet the needs of the business, clients, talent and marketplace–is a competitive imperative … Mobility opens minds, and can open opportunities.”  Beyond the Big Four’, 2010 data from the UK accountancy professional bodies indicates that of the 424,003 qualified members, 28% were resident outside of the United Kingdom (119,720), which had increased by +43% (+36,339) from 2002 when 83,381 members were outside of the UK (www.thecityuk.com).

At the organisational level, global professional services firms are very much akin to Bartlett & Ghoshal’s (1998) ‘Global ’and ‘Transnational’ organisation where knowledge is shared between all subsidiaries and units of the organisation.  Beaverstock’s (2004, 2007a, 2007b) recent analyses of expatriation within global accounting, legal and investment banks has reworked Edström & Galbraith’s (1977) initial dimensions of international assignee transfer policies within organisations specifically to theorise international assignments in professional services: to fill positions; develop managers; and develop the organisation (Table 4).

Table 4: Dimensions of transfer policies in transnational professional service firms.

Global talent in London’s financial district

London’s financial district, composed of the City of London and since the late 1980s, Canary Wharf, has been a magnet for expatriates in banking, finance and professional services since the end of the Nineteenth Century following the influx of US, European and Japanese banks (Michie, 1999).  As we enter the decade of the 2010s, London is the premier global financial centre ahead of New York, Singapore and Hong Kong (Z/Yen, 2011).  London’s competiveness rests on: its ability to attract the major US, European and Asian global financial institutions; the quality of its financial environment and regulation; and, importantly, its ability to attract and retain an international, talented labour force in fierce competition with other leading financial centres (Beaverstock, 2010; Cook et al., 2007; Jones, 2010; Z/Yen, 2011).  London has a truly deep international ‘talent pool’ for elite foreign workers of all nationalities from the European Economic Area (EEA) and non-EEA countries (Corporation of London, 2011; Wigley, 2008).

The nature and function of occupations in London’s financial district are highly-knowledge intensive and essentially non-substitutable through information technology or mass recruitment from the local, regional or national labour market.  As research has shown elsewhere (Beaverstock, 1994; Beaverstock, 2007b; Jones, 2010; Thrift, 1994), these jobs are highly prized after and require a tight set of explicit and tacit knowledge bases, which often require experience of working in other financial centres and, or directly with global clients in secondment arrangements.  The cornerstone of these high-value banking and financial services jobs is the ability to work in situ as a leading process for knowledge exchange and transfer remains ‘face to face’ contact (Amin & Thrift, 1992; Thrift, 1994).  Consequently, a significant driver of the competitiveness and complementary of London as a global financial centre is the continual supply of elite, expatriate labour that come to work in its burgeoning global banks, other financial institutions and professional services firms.  Many of those workers coming into London from outside of the EEA would have entered as Inter-Company Transfers (ICTs) for specific time-periods to fill vacancies, develop professionalisation and management, and develop the firm (Beaverstock & Hall, 2012).

Prior to 2009, the United Kingdom Border Agency released data on work permits for non-EEA nationals.  Between 2000 and 2008, a total of 58,911 work permits were issued to non-EEA nationals in Financial Services (Salt, 2010), and given the structure of the UK’s economy, a very high proportion of these would have entered as ICTs to work and reside in London.  The London Borough of the Corporation of London (its constituency boundary is the City of London) estimated that in 2009 approximately a quarter of the City’s banking, financial and professional services 300,000 workers (75,000) were foreign (Aldrick, 2009), i.e. expatriates from both EEA and non-EEA destinations.  Using the Corporation of London’s 25% ratio of foreign works to total employment in City-jobs, Beaverstock & Hall (2012) have calculated possible estimations for the magnitude of expatriates in London’s financial district (The City of London and Canary Wharf) in any given year since the early 2000s (Table 5).  Thus in 2007, at the height of the boom, there could have been an estimated 104,000 foreign workers (expatriates) working in the City of London and Canary Wharf.  But, these approximations are possibility under-estimations as they would have failed to acknowledge those hyper-mobile workers that characterise the City’s international labour market (e.g. longer-term business travel, short-term rotations of less than one year, and business commuting, Faulconbridge et al., 2009).

Table 5: Estimation of foreign workers in City-related jobs in the City of London and Canary Wharf, 2000-2011.

Conclusions

In this chapter, I have argued that expatriation, also more commonly known as international assignments, remains a key strategy for the firm to transfer and exchange knowledge between both subsidiaries and clients-alike.  TNCs that engage in international production through foreign direct investment, whether in mineral extraction, manufacturing plant and, or office networks, explicitly use expatriation and other modes of corporate mobilities as an organisational strategy to deepen, broaden and enlarge intrinsic and generic knowledge within the firm.  But, gone are the days of one way flows of knowledge and people between the HQ and subservient, knowledge poor subsidiaries.  As Bartlett & Ghoshal (1998) and others (for example, Morgan, 2001), have quite rightfully acknowledged, contemporary firms are highly ‘transnational’ in scope, where knowledge is shared between all subsidiaries and people flow in multi-directions for learning, knowledge transfer and exchange, and the sharing of best practice, whether in management systems or for the rolling out of corporate policy and strategy.  In the knowledge-intensive sectors of the economy, which encompasses banking, finance, accounting and legal services and other activities like advertising, creativity, performance and even elite sports, expatriation and corporate mobilities are a key modus operandi of the firm because idiosyncratic knowledge, skills, expertise and competences are embodied in the individual worker and seldom cannot be substitutable with ICT or other forms of technological transmission.  As an organisational strategy, expatriation still facilities the co-location and immediate proximity of the knowledge-rich employee, of whatever nationality, with the specific client or work colleague to deliver, transfer or exchange knowledge, which is often in tacit form and ‘sticky’ to the ‘eye of the beholder’, the expatriate.  As the study of global accounting firms illustrate, international assignments remain a major strategy of the firm to engage with its clientele and build the knowledge capacity of its worldwide labour force, which are increasingly being labelled as global talent.  Moreover, expatriation and other forms of corporate mobilities has become a vital component of firms’ global talent management and, or global staffing regimes.

Secondly, it is important to acknowledge that the world cities are the nodes in society where knowledge is sunk, produced and circulated within and between firms in similar sectors and agglomeration economies, or clusters.  Many leading theorists acknowledge that world cities have economic agency through their command and control functions and global reach (Sassen, 1991b), where such agency is orchestrated through the strategic operations and ‘everyday decision-making’ of boardroom executives, fee-earning professionals and expert scientific labour.  Importantly, the composition of this highly-skilled labour market is global in scope, composed of both home country nationals and expatriates, who are at the forefront of knowledge production, transfer and exchange.  Indeed, as I have suggested, the world city’s incumbent knowledge economy is continually being sustained by the labour processes of exceptionally highly-qualified and experienced individuals, of all nationalities, who bring a degree of depth to the city’s so called, global talent pool.  World cities are the places where global talent pools are created, sustained and, for the very successful cities, like London, New York, Hong Kong and Singapore, nurtured and developed. Without such internationally focused and spatialised labour markets reproduced through expatriation and corporate mobilities, the spatial mobility of both tacit and codified knowledge would circulate very inefficiently between firms and cities because they are simply just not ‘being (there)’ (Gertler, 2003).

As to the future, the management and capture of global talent is going to be highly competitive for both firms and cities.  At the organisational level, corporate mobilities will consist an array of global talent systems, from expatriation to the hyper-mobilities of flexi-patriation, including business travel and commuting, and firms’ human resource policies will become more reactive to clients needs as they demand more globally flexible professionals and talented labour to deliver bespoke solutions and expertise.  With respect to world cities, competition to ‘win the war for talent’ will become rife as cities try to out bid each other with metrics like high rankings in quality of life indices, remuneration, sustainability for example, to secure talent in order to create economic growth and stimulus through highly efficient production and consumption systems.

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NOTES

^* Jonathan V. Beaverstock, School of Geography, University of Nottingham, UK, email: jonathan.beaverstock@nottingham.ac.uk