The Clustering of Financial Services in London*



3.3 The Importance of Personal Relationships

The defining characteristic of a cluster is the close proximity of related firms. We
asked how this was advantageous (Table 5).

Table 5: The Importance of Close Proximity to Other Firms

How important are each of the following reasons for having a location in close proximity to other
firms in London?

1

2

3

___5_

___0_

Total

It is easier to build and maintain personal contacts

12

15

46

123

101

T

1177

The ability to have face-to-face contact

14

15

37

108

117

1^2^^

1172

It is easier to build relationships of trust and cooperation

17

33

71

98

73

13

1053

It is easier to communicate because we have a common
understanding of the business

27

33

67

108

51

17

981

We generally have complementary expertise with such firms

24

47

101

80

34

19

911

Multi-disciplinary teams can be assembled more quickly

30

46

73

86^^

4T^

27~

890“

The supreme importance of maintaining personal contact and being able to interact
face-to-face is clear. In the questionnaire survey as a whole, the importance of maintaining
personal contact and being able to interface face-to-face were the second and third most
highly ranked factors. The compactness of the City also aids the ability to establish
relationships of trust. There are no significant differences between lines of activity
regarding the importance of trust. The existence of common understanding and
complementary expertise are classic characteristics of dynamic clusters and are much in
evidence here. Larger firms are significantly more likely to rate trust and ease of
communication as being important and have a distinct, though not quite significant,
tendency to rate personal and face-to-face contact as being highly important.

The importance of face-to-face contact was underscored by the interview survey,
which cast light on why it is important. Several firms emphasized the importance of a face-
to-face meeting for conducting complex transactions where it is important to fashion
agreement while reducing the chances of misunderstandings or creating antagonism. A
face-to-face meeting has the advantage that more information is conveyed, including

18



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