Cities becoming increasingly important to business success
More than 60% of businesses believe cities will have a greater role to play in enabling their work, by the end of the decade. The technological capacity of cities, and their talent pools, are the most attractive things to businesses when considering launching in a new location.
After the pandemic-induced lockdown months disrupted urban livelihoods and lifestyles, cities are returning to normal – and that includes once again being recognised as key engines of economic growth and social activity. As the world’s leading cities continue to attract a concentration of wealth, resources and talent to their borders, they are becoming an increasingly important factor among the strategies of global businesses.
A new study from consultants at Protiviti and Oxford University has found that the majority of business leaders agree that the growing benefits of city size, significance and prestige will propel economic and business growth leading up to 2030. Based on survey results from 200 global CEOs, executives and board members, 64% of C-suite and board members agree that the role of cities for business will increase during the next decade. This included 24% of businesses who said the changes would be “significant.”
Dr. Vlad Mykhnenko, associate professor of Sustainable Urban Development at the University of Oxford, who led the survey’s Oxford team of scholars, in the project, said, “It has become common to describe cities as engines of growth. But the rise of cities over at least the last 60 years has indeed been accompanied by quite a spectacular expansion of the world economy. Since 1960, for every 1% increase in the level of urbanisation globally, the world economy has grown by $3.1 trillion. Cities are the engines of growth and global business leaders are clearly recognising this.”
Interestingly, not all geographies were equally enthused by the prospects of cities. While 72% of business leaders in Europe and in Asia-Pacific said cities would become more important to their businesses by 2030, this was more muted among 56% of business leaders in North America. This may highlight a number of trends which mean cities cannot simply rest on their laurels and expect to attract companies by virtue of being large concentrations of resources.
In the case of the North American business viewpoint, the researchers suggested the perspective on cities had been influenced by growing unrest caused by the extreme political polarisation in the United States. While these factors have been most pronounced in the US due to the media cycle, however, they are not unique to North America.
Business leaders will begin to perceive threats to their local cities differently around the world. Threats span shrinking tax revenues, aging infrastructure, uncertainty in real estate markets, cybersecurity threats, privacy concerns, political and social unrest, and climate change – which many city leaders see as their greatest threat. For example, in Europe, data privacy and cyber security and climate change and sustainability were the top two threats to urban life, according to 46% of respondents. These are not disconnected issues, either – and will have a knock-on impact on the political climate and government regulation.
So which factors can cities push to ensure they can still attract businesses to set up shop within their limits? In both North America and Asia-Pacific, business leaders considered being a technology hub the most important factor – as this can facilitate the opening up of new digital revenue streams, along with boosts to cyber security.
In Europe, by contrast, technology was a much less important factor to businesses than the human capital present in a city. 54% of businesses noted that the talent pool of a city would be the main driver to attract them to a city in the next decade. This was followed by infrastructure, which 40% of firms cited as crucial for enabling their business to thrive.
