AJS Volume 109 Number 4 (January 2004): 811���51 811 2004 by The University of Chicago. All rights reserved. 0002-9602/2004/10904-0001$10.00 Power and Position in the World City System1 Arthur S. Alderson and Jason Beckfield Indiana University Globalization has renewed interest in the place and role of cities in the international system. Recent literature proposes that the fate of cities (and their residents) has become increasingly tied to their po- sition in international flows of investment and trade. Data on the branch locations of the world���s 500 largest multinational enterprises in 2000 are subjected to two broad types of network analytic tech- niques in order to analyze the ���world city system.��� First, 3,692 cities are analyzed in terms of three measures of point centrality. Second, blockmodeling techniques are employed to generalize further about the positions and roles played by cities in the system. These tech- niques are used to trace out the structure of the world city system, locate cities in the context of a global urban hierarchy, and explore the degree to which this diverges from a simple one-to-one matching of cities onto nation-states in the world system. The phenomenon of globalization has renewed interest in thinking about cities as loci of action in the world system. Recent literature proposes that cities have become increasingly decoupled from local (i.e., regional or national) political geography as the salience of their position in interna- tional networks of investment and trade has grown (Friedmann 1986 Knox and Taylor 1995 Sassen 2001). Globalization is argued to be gen- 1 Early versions of this paper were presented at the Social Science History Association annual meeting in St. Louis, October 2002 the American Sociological Association annual meeting in Anaheim, Calif., August 2001 and the workshop ���Global Processes and Inequality��� organized by the Swedish Council for Planning and Coordination of Research in cooperation with the Swedish Council for Social Research and the Swedish Collegium for Advanced Study in the Social Sciences, Stockholm, October 2000. We thank Michael McKenna, Jim Moody, Chris Chase-Dunn, Tom Gieryn, Scott Long, and Doug White for their comments and assistance. This research was supported by a grant to the first author from the World Society Foundation. Direct all correspondence to Arthur S. Alderson, Department of Sociology, Indiana University, Ballantine Hall 744, Bloomington, Indiana 47405. E-mail: aralders@indiana.edu

American Journal of Sociology 812 erating a new geography of centrality and marginality that cuts across the old core/periphery, North/South, and East/West divides in the world system (Sassen 1994, p. 4). In particular, developments of the past few decades are seen as producing a new global hierarchy of cities, at the apex of which are located what have variously been referred to as ���world cities��� (Friedmann 1986) or ���global cities��� (Sassen 2001). Such cities constitute the key nodes or command points that exercise power over other cities in a system of cities and, thus, the world economy. To date, research on world cities and on the structure of the larger world city system has tended toward the impressionistic. In large part, this is attributable to the paucity of data appropriate to a rigorous ex- ploration of the structure of the world city system (Smith and Timberlake 1995a Taylor, Walker, and Beaverstock 2002). For Short et al. (1996), this state of affairs constitutes the ���dirty little secret��� of world city research: ���Few of the many papers on the global urban system draw upon original data common hypotheses are repeated rather than tested and most draw upon the assumptions of previous papers. The dominance of London, New York, and Tokyo, for example, is more often asserted than dem- onstrated��� (p. 668). Moreover, when data are assembled with the aim of locating individual cities in a global urban hierarchy, they typically consist of information such as counts of corporate headquarters or banks, rank- ings of cities in terms of population or air passenger traffic, or the location of stock markets, Olympic Games, or even Rolling Stones concerts (Short et al. 1996). While such data are in some instances the best available and can yield real insights (e.g., Chase-Dunn 1985 Chase-Dunn and Manning 1999), they are less than ideal. For instance, researchers utilizing counts of corporate headquarters to identify and rank world cities (e.g., Abbott 1997 Cohen 1981 Godfrey and Zhou 1999 Lyons and Salmon 1995 Meijer 1993) must simply assume that such attributional data reflect the character of relations with other cities in the world city system (Smith and Timberlake 1993, p. 197). Researchers, in other words, must assume what they set out to establish: cities are situated in a ���system,��� and some cities���as a result of the position that they occupy in this system���are better situated than others. One way out of this trap is to build on the strong affinity between the literature on world cities and social network analysis, as Smith and Tim- berlake have repeatedly noted (1993, 1995a, 1995b, 2002). As conceptu- alized in the literature, the power of world cities is inherently relational: cities do not have power in and of themselves they have power to the extent that they function as command points and centers of planning and thus establish the framework in which other cities operate in the world economy. Similarly, social network analysts suggest that power is best viewed as a consequence of patterns of social relations that generate op-

World City System 813 portunities and constraints: some actors are favored because they occupy positions that are more favorable than others (Granovetter 1973 Padgett and Ansell 1993 Guiffre 1999). Moreover, network analysts have devel- oped a set of tools that enable those interested in pursuing the world city hypothesis to assess (1) the degree of power wielded by individual cities and (2) the positions of and roles played by different types of cities within the world city system. Smith and Timberlake (1993, p. 197) characterize this potentially happy mating of theory and method as a ���perfect marriage.��� Unfortunately, few researchers have pursued this union. The key exceptions include David Meyer���s (1986) exploration of the dominance of core financial centers (e.g., London, New York, and Tokyo) over South American cities through the medium of international bank offices and Smith and Timberlake���s (1995b, 2001, 2002 see also Shin and Timberlake 2000) own pioneering work on air travel among Friedmann���s (1986) world cities.2 In this article we take up Smith and Timberlake���s call for more network-oriented analysis and take another step toward mapping the contemporary world city system. Our approach differs from Meyer���s and Smith and Timberlake���s in that we focus on what we view as a key relation linking cities into a world system of cities: that between multinational enterprises (MNEs) and their subsidiaries.3 Our data consist of information on the headquarter and branch locations of the world���s 500 largest multinational firms in 2000. The data are coded as directional (i.e., distinguishing between senders and receivers) and valued (i.e., allowing multiple ties between cities). This produces a matrix linking 3,692 cities across the globe. In this article, we assess the power of world cities in light of three measures of point centrality (namely, outdegree, closeness, and betweenness). As the world city hy- pothesis suggests that choices received are important, we also assess the prestige of world cities as the indegree of each city. Having established a ranking of world cities in terms of network centrality, we then employ blockmodeling techniques to assess the regular equivalence between cities. Blockmodeling techniques enable us to abstract from information about individual cities and generalize about the nature of relations between 2 In his admirable work on U.S. cities, Christopher Ross (1987, 1992) has done similar research that joins network analysis to the traditional human-ecological concern with metropolitan dominance (e.g., Duncan et al. 1960 Hawley 1950). 3 Smith and Timberlake���s (1995a, p. 86) typology of intercity linkages identifies 12 families of relations. While all these relations could be usefully explored, the literature on world cities typically identifies the multinational enterprise as a central agent in the generation of the world city system. Nonetheless, it bears emphasizing that there are important cultural, social, and political dimensions to ���world city���ness,��� and the question of the degree to which they are isomorphic to the economic remains an open one.

American Journal of Sociology 814 positions in the world city system and the roles played by different types of cities in that system. The questions that we address in this paper are concrete. First, while numerous rankings of world cities have been proposed, few have utilized the sorts of relational data necessary to firmly establish such rankings empirically. Thus one aim is simply to determine which cities are in fact central to the MNE-generated city system. Second, having established a ranking of world cities in terms of network centrality, we then examine precisely what sort of ���system��� these cities form. Is it one composed of cohesive subgroups, bounded, perhaps, by region along the lines of re- gional trading blocks? Is it a core/periphery system? A simple hierarchy? And what roles are played by different types of cities within this system? Finally, if globalization is indeed generating a new geography of centrality and marginality, this should be reflected in slippage between the map of the world city system and established maps of the world system (e.g., Snyder and Kick 1979 Bollen 1983 Nemeth and Smith 1985 Smith and White 1992). We thus explore the degree to which the power and position of cities in the world city system deviate from a one-to-one matching of cities onto nation-states in the world system. WORLD CITY HYPOTHESES Three decades ago, Stephen Hymer (1972) was assigned the task of pro- ducing an essay that would look forward to the turn of the 21st century. While Hymer is primarily known for his influential work on the multi- national enterprise, the paper that he produced is remarkable for the degree to which it anticipates contemporary thinking on the implications of globalization for processes of urbanization.4 Extrapolating from trends in the organization of business since the Industrial Revolution, Hymer speculated on what increasing ���multinationalization��� of the world econ- omy would mean for cities: [It would] tend to produce a hierarchical division of labor between geo- graphical regions corresponding to the vertical division of labor within the firm. It would tend to centralize high-level decision-making occupations in a few key cities in the advanced countries, surrounded by a number of regional sub-capitals, and confine the rest of the world to lower levels of 4 As noted below, most contemporary research on the world city system takes its lead from Friedmann, who appears to have been unaware of Hymer���s work. He credits Castells (1972) and Harvey (1973) with initiating the change in thinking on cities that his own work has advanced and suggests that it was not until the 1980s that ���the study of cities [was] directly connected to the world economy��� (Friedmann 1986, p. 69).

World City System 815 activity and income, i.e., to the status of towns and villages in the new Imperial system. Income, status, authority, and consumption patterns would radiate out from these centers along a declining curve, and the existing pattern of inequality and dependency would be perpetuated. The pattern would be complex, just as the structure of the corporation is complex, but the basic relationship between different countries would be one of superior and subordinate, head office and branch plant. (Hymer 1972, p. 114) Joining location theory to Chandler and Redlich���s (1961) classic dis- tinction of three levels of management, Hymer (1972) predicted that the structure of the world city system would come to reflect the structure of the modern multinational firm. With increasing internationalization, the activities associated with the day-to-day operations of the firm will spread across the globe. One result would be the diffusion of industrialization to developing countries and the creation of new centers of production outside the highly industrialized core of the world economy. ���Midlevel��� activities associated primarily with the coordination of managers at the first level will tend to be more geographically concentrated. As their demands are similar (e.g., the need for white-collar labor, communication, and infor- mation), such activities will tend to cluster across industries in the same midlevel cities. Activities at the highest level, those involving goal setting and planning, will grow even more concentrated, driven by the need for face-to-face interaction at the highest levels of decision making and the need to be near capital markets, government, and media. To the extent that this correspondence between the centralization of control within the firm and the world economy grows, geographical spe- cialization will come to reflect the hierarchy of corporate decision making. By the end of the 20th century, Hymer (1972) thought that power in the world economy would become even more concentrated in the hands of multinationals sited in a small number of cities located in core countries and thus foresaw the emergence of a world city system dominated by such traditional powers as New York, London, Paris, and Tokyo.5 The structure of income and consumption would likewise come to reflect the structure of status and authority: The ���best��� jobs would concentrate in or near the major centers, which would transform centers of planning into centers of product innovation and high-status consumption as well. In contrast to some later thinking on globalization and the city, the idea that the consolidation of the ���regime of multinational corporations��� might create opportunities for upward mobility within the urban hierarchy for previously underdeveloped regions is rejected. Instead, globalization would likely reperipheralize the underdeveloped world���albeit within a 5 Hymer (1972, p. 124) also offers that Moscow and ���perhaps��� Beijing would attain the status of world city by the year 2000.