Doctoral Dissertation Research: The Internationalization of Professional Business Services: Impetus or Impediment to the Development of Advertising Services in Southeast Asia?

University Of California-Berkeley, Berkeley CA

Investigators

Abstract

A few foreign transnational corporations (TNCs) dominate professional business services (advertising, accounting, legal, and management consulting activities) worldwide. An analysis of location patterns of branch offices of these global producers finds that Asia Pacific has the highest concentration of global business service centers of all developing regions, with Southeast Asian cities emerging as important third tier hubs in the global business service network. Existing literature on the internationalization of business services views these peripheral nodes of global networks as passive recipients of foreign investment. Yet in many business services in Southeast Asia, locally generated dynamics appear to be emerging which indicate that the region is shifting from being a passive recipient of foreign investment, to a generator of local business service activity and a source of competitive advantage for TNCs. The main goal of this doctoral dissertation research project is to examine foreign direct investment in professional business services -- the form it takes, its determinants and its impacts on developing metropolitan economies of Southeast Asia. A secondary goal of the research is to determine implications for public policy. This research addresses current theoretical biases based on a case study of the Southeast Asian advertising and marketing industry. The analysis has two components: an in-depth case study of the industry's development in a single city, Bangkok, to develop and refine the theoretical framework, and a cross-national comparative study of the development trajectories of a single TNC firm operating in Bangkok, Manila, Kuala Lumpur and Singapore. The TNC acts as a proxy to control for variation in firm organization, strategies, ownership and services, thus regional variations in the TNC's strategy, role, and interaction with other locally based firms will indicate differences in country-specific factors. Hypotheses are tested using a mixed research approach that combines in-depth, semi-structured interviews with firms and key informants, archival research of organizational histories and government policies, and statistical analysis of the service economy and professional business services industries in each city. Anticipated findings from this research are that: (1) sources of firm competitive advantage increasingly originate locally, in the branch firm and through linkages with other local agencies, suppliers, and supporting institutions; and (2) TNC investment is having a stimulating, rather than stifling, effect on the development of local factors of production in this industry. This project research will contribute to a refinement and deepening of knowledge in three key theoretical areas of regional development studies: international producer services theory, East Asian development theory, and the theory of international networks of production clusters. In particular, the research will provide insights into urban economic development in Southeast Asia through enhanced understanding of the impacts of internationalization and emerging local dynamics in foreign-dominated global business service industries. The findings will also inform developing countries about the development of policy frameworks and initiatives aimed at promoting the knowledge economy and enhancing innovation and productivity through professional business services. As a Doctoral Dissertation Research Improvement award, this award also will provide support to enable a promising student to establish a strong independent research career.