• About Us
  • About The Institute
  • What We Do
  • FAQs
  • About the Task Force
  • In The News
  • Financial Statements
• Our Work
  • Working Papers
  • Annual Reports
  • Reports on Canada
  • Presentations
  • Other Research
  • Clusters
  • Management Project
  • World Economic Forum
• Sidebars
• Media
  • Press Releases
  • Latest Headlines
• Events
  • Upcoming Events
  • Events Archive
• Links
• Contact

Head offices and high-value clusters are both found in larger cities

A major statistical challenge in measuring the relationship between head offices (a) and high-value business services and occupations is that both tend to locate in large metropolitan areas. If we measure the simple statistical relationship between the number of head offices and the employment in business services cluster, we see a very tight linkage (Exhibit A).

But before we conclude that more head offices mean more people in the business services cluster, we should note that the larger the city, the more people in the business services cluster
(Exhibit B) and the larger the city the more head offices there are (Exhibit C). We see the same interrelationships when we look at employment in other clusters and Richard Florida’s creative class. We also see the same relationship when we assess salaries.

It is quite possible that bigger cities simultaneously bring both more head offices and more people and higher salaries in high-value services and occupations – and that the specific impact of the number of head offices is nonexistent.

There are statistical techniques which allow us to control for the size of the city when we assess the relationship between the number of head offices and the employment in the business services cluster. Thus we can differentiate between the impact of city size and the number of headquarters on the cluster or occupation of interest.

What we observe is that the size of the city is much more important than the number of head offices. But in some cases the number of head offices does explain more of the variance between city regions on clusters and occupations. In this report we show all our correlation results after controlling for city size.

———————————————-
a Our head office definition for this sidebar is the companies on 2005 Fortune 1000 and the largest 107 Canadian-owned companies on FP500. These 107 firms have revenue that would rank them higher than the smallest company on the Fortune 1000. We use Fortune 1000 and FP500 lists for head offices because Statistics Canada does not disclose data for NAICS 55 for all the Canadian CMAs.

Upcoming Events