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Exploring the dynamics of the disaggregated intercity corporate network in the Yangtze River Delta, China: a relational event approach

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Abstract

There has been a proliferation of studies trying to explain the driving forces behind the formation and evolution of intercity corporate networks. Previous approaches, however, require the input of aggregated data such as the connectivities of cities, a static network or a few discrete-time network snapshots. This may potentially cause the loss of information on the microscopic dynamics in corporate networks. In this paper, we explore the use of an approach invoking relational event models (REM), which has the advantage of being able to directly process continuously recorded disaggregated data on the establishment of each office. This allows for a more fine-grained analysis of the dynamics underlying the formation of the network. To demonstrate its potential in this research field, this paper applies REM to explain the temporal dynamics of the intercity corporate network in the Yangtze River Delta region of China. The result shows that there are preferential attachment and persistence effects in the evolution of the network, and this alongside the impact of several city covariates. Nonetheless, REM relies on event history and cannot model the forward-looking process in firms’ location choice. The lack of detailed information regarding the date of the establishment of offices also poses a challenge to the application of REM in the study of corporate networks. We also conclude that it may be fruitful to apply REM to other forms of intercity networks, especially those significantly affected by event histories, such as commuting and knowledge networks.

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Notes

  1. The other factor is third-variable effects, but they can be controlled by employing them as covariates (Butts, 2008). Therefore, these effects are not the main constraints on applying REM to intercity corporate networks.

  2. In this case, the situation that firms have not established offices in cities other than the selected location can be considered as “the non-occurrence of other events”.

  3. This may be a problem for prediction, but we are only interested in the explanation here.

  4. See Outline of the Regional Integration Development Plan of the Yangtze River Delta.

  5. While there are millions of firms in the database, most of them are small and have no offices in cities other than the place where they are headquartered. Therefore, we only focus on Fortune China 500 firms in this study.

  6. As opposed to Broekel and Bednarz (2018), who study both the formation and dissolution of links, we only considered link formation (i.e. the establishment of offices) in this study. This is because although the state of offices (e.g. opening, cancelled or revoked) can be found in the database, only around half of the offices that were cancelled or revoked have available information on the date of closing. By contrast, all offices have the information on the date of registration/establishment.

  7. This combines the service value used in the interlocking network model (Taylor, 2001) to measure the heterogeneity of offices.

  8. The earliest office was established on May 16, 1982, and was located in Shanghai, as with its headquarter.

  9. Although capital cities normally are already popular with investors, while smaller cities often compete for potential investors with preferential benefits, the benefits a smaller city can offer are limited by its administrative power (see Ma, 2005). As a result, they usually attract firms by simply offering tax incentives or land with low rent, rather than, e.g. comprehensive industrial policies with the support of provincial governments, or massive infrastructure investment that is made possible by the fiscal power only a high-level city has.

  10. Data source: The Audit Announcement Catalogue of China’s Development Zones (2018 Edition).

  11. Government subsidies have "rescued" Jianghuai Automobile Group, with profit in 2019 eventually exceed 100 million RMB (In Chinese). URL: https://www.qctt.cn/news/002_2791006.

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Authors and Affiliations

  1. Zhejiang University of Technology, Chaowang Road 18, Hangzhou, 310014, Zhejiang, China

    Luqi Li

  2. School of Urban and Regional Science, East China Normal University, Dongchuan 500, Shanghai, 200241, China

    Luqi Li & Xiang Kong

  3. Department of Geography, Ghent University, Krijgslaan 281, S8, 9000, Ghent, Belgium

    Luqi Li & Ben Derudder

  4. KU Leuven Public Governance Institute, Parkstraat 45 bus 3609, B-3000, Leuven, Belgium

    Ben Derudder

  5. Deakin International Office, Deakin University, 221 Burwood Highway, Victoria, 3125, Australia

    Wei Shen

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  1. Luqi Li
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  2. Ben Derudder
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  3. Wei Shen
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  4. Xiang Kong
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Correspondence to Ben Derudder.

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Li, L., Derudder, B., Shen, W. et al. Exploring the dynamics of the disaggregated intercity corporate network in the Yangtze River Delta, China: a relational event approach. J Geogr Syst 24, 115–140 (2022). https://doi.org/10.1007/s10109-021-00358-2

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  • DOI: https://doi.org/10.1007/s10109-021-00358-2

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