Does Headquarter Function Concentration Promote City Growth and Spillover Effects? An Evaluation Using Firm-Level Data from India

Defining city as an aggregate of firm-level activities, this chapter connects Indian city growth with spatially varying service sector performance. With empirical granularity, this chapter examines a new dataset to identify distinct levels of sectoral achievement, in terms of hierarchically classifying headquarter (HQ) agglomerations, contributing to uneven Indian city activity. Examining the financial records (prowess) of nearly 36,000 registered Indian firms between 1988 and 2014, the performance indicators of service-oriented firms are aggregated at city-level to gauge sectoral growth contributing to Indian urban development. Using a conceptual city classification, Indian cities are organised and mapped to their common HQ locations (using ArcGIS) to engage the performance-based findings with the geography of dissimilar service clusters across India. First, Mumbai, Delhi and Bangalore were identified as India’s Alpha, Beta and Gammaˉ financial, hardware and software agglomerations. Second, classifying contemporary activities, Alpha (1) and Beta (1) cities occupied the top tier with large-sized firms; Gammaˉ (6) cities occupied the middle tier with medium-sized firms; and Theta (45) cities occupied the bottom tier with many small-sized firms, implying a bigger role of dispersed small companies in complementing activities of big companies in nearby large cities. Third, the rising entrepreneurship of Theta cities near Alpha/Beta cities suggests the importance of regional and local policies in driving knowledge and resource spillover effects on city growth.