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This paper identifies some of the policy implications of the changing distribution of Advanced Business Services across Australia’s capital cities over the period 1986 to 2001. For the purposes of the paper ‘Advanced Business Services’ are defined to include firms that; derive most of their sales from business clients; provide product development and / or cost management solutions tailored to the individual needs of clients; apply a high degree of creativity and intellectual analysis in delivering these solutions; and act as the primary provider (as opposed to retailer) of the intellectual content in question.

As value chains have become more ‘unbundled’ under global operations through strategies like out-sourcing and distributed manufacturing, Advanced Business Services are likely to have taken on elevated significance as agents of technology diffusion. They are likely to have become the repositories of much of the creative thinking, strategic analysis and network management required to keep production firms competitive.

Arguably, Advanced Business Services transact their work through highly social networks in which face to face contact is often a crucial element. If so, the technology diffusion role of Advanced Business Services is likely to exhibit a strong spatial bias. Somewhat paradoxically, while globalisation and production chain unbundling is allowing Advanced Business Services to reach out to clients in distant regions and countries, their impact on economic innovation and competitiveness may well be strongest in the home region.

In this context, the tendency towards consolidation of Advanced Business Services into Australia’s biggest cities, in particular Sydney and Melbourne, is of policy concern.

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