The Role of Contact Requirements in Producer Services Location

The authors explore the role of contact requirements in the locational tendencies of producer service establishments. Empirical evidence from two demand-side surveys suggests that close proximity between vendors and clients is required for contracts that involve frequent buyer–seller interaction (face-to-face linkages). These types of contracts are shown to be relatively low duration and/or low cost in nature. Specific activity classes that exhibit these characteristics include data processing, computer software development, product testing, and equipment repair services. In contrast, more advanced (and often more expensive) services such as management consulting and industrial design exhibit lower levels of contact sensitivity. The paper concludes with a discussion of forthcoming prospects for the development of a contact-based model of producer service location.