watch needs to be kept that this advantage of labor flexibility is not eroded by over
burdensome regulation.
The relevant labor market for many staff is heavily circumscribed by the choice of the
firm’s location and the feasibility of commuting there. This is an argument for a review of
transport priorities as the labor market will function in a more integrated way if people can
travel more easily across the city. This consideration also has implications for the
provision of new housing in London and the South East (where most staff live) - where it is
built will bear upon which parts of the city have easy access to the labor force that will be
housed there.
4.2 Personal Relationships
4.2.1 Face-to-Face Interaction
Almost all the perceived advantages of being in the cluster turn on the fact that being
physically close enables face-to-face contact and relationship building to take place. E-
mail, telephone and video conferencing, while extensively used, are seen as complementing
prior face-to-face interaction. Both formal and informal interaction is of great importance.
It is notable that some respondents indicated that certain business might not take place at all
if face-to-face contact were not possible. This is a powerful argument for keeping the
cluster as compact as possible (possibly envisaged in terms of time and ease of travel rather
than physical distance).
4.2.2 Knowledge Transfer
Proximity within the cluster produces a density of interaction and information that
promote knowledge transfer. This is important for the dynamism and the ability of firms in
the cluster to serve clients in high value added complex activities. Notably it is particularly
emphasized by banks which occupy a central place in the cluster. Such knowledge transfer
is effected by a variety of mechanisms all of which are promoted by compact space.
Examples include: formal and informal meetings, labor mobility and chance meetings. The
policy implication again is that it is important to maintain as far as possible the geographic
compactness of the cluster. In terms of transport policy it implies that it is important that
plans to develop locations near the cluster need to take into account ease of movement
within the cluster.
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