Management consultancy is a key sector in the economic change toward a service and knowledge economy. Originally published in 2006, this book explains the mechanisms of the management consulting market and the management of consulting firms from both economic and sociological perspectives. It also examines the strategies, marketing approaches, knowledge management and human resource management techniques of consulting firms. After outlining the relationships between transaction cost economics, signaling theory, embeddedness theory and sociological neoinstitutionalism, Thomas Armbrüster applies these theories to central questions such as: Why does the consulting sector exist and grow? Which institutions connect supply and demand? And which factors influence the relationship between clients and consultants? By applying both economic and sociological approaches, the book explains the general economic changes of the previous thirty years and sharpens the relationship between the academic disciplines.

This article analyzes the market of management consulting and identifies institutional and transactional uncertainty as its principal features. Based on these uncertainties, we argue that competition in this market takes place on entirely different grounds than in other business sectors. We suggest that the main drivers of competitiveness are neither price nor measurable quality, but rather experience-based trust and a mechanism we label ‘networked reputation.’ An embeddedness perspective is employed to develop the concept of networked reputation as an intermediate mechanism that complements the duality of system versus personal trust and accounts for firm growth. We reinterpret secondary data on the German consulting market, illustrate the significance of these mechanisms, and demonstrate how management consulting is situated in structures of social relations.

 In service sectors such as management consulting, it is very difficult to measure the impact or success of a service even after it has been delivered. In these markets of goods between experience and credence, symbolic value is helpful and necessary to complement quality perceptions. The leading management consulting firms, in particular, do not only deliver data-driven analyses but also represent and symbolize the rational approach to business issues. This article looks at the role of personnel selection in the context of quality symbolization. It argues that the predominant tool for personnel selection in the consulting sector, the case study, accounts for both a signalling effect of rationality to the business environment and a subjectification of consulting staff to the consulting culture and rationality beliefs. The case is made that, rather than leading to a valid selection of high-performance personnel, the process of personnel selection has latent effects, which nonetheless contribute to the consulting industry's success.

This paper argues that Karl Popper's notions in his work The Open Society and Its Enemies offer an approach to under-explored issues in organizational research, independent of Popper's epistemology. Popper's thoughts on the philosophy of science have largely been rejected in organization studies, and his socio-philosophical notions have hardly been considered. Yet they provide a frame of reference for viewing management trends, such as anti-bureaucratism and collectivist forms of work organization, in a different light. Popper's socio-philosophical notions suggest that `closed' patterns of thinking are detrimental to a liberal-democratic social order. The paper argues that an outline of the philosophy of openness and closedness and an application to managerial concepts allows for insights into whether certain types of managerial thinking stand in contrast to, or in accordance with, a liberal-democratic order. It is concluded that, through the Popperian lens, some supposedly liberationist movements of management (liberation from bureaucracy or from a lack of belonging and emotion at work) possess clear traits of closedness and thus resemble the intellectual underpinnings of totalitarianism.

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This essay responds to Sorge and van Witteloostuijn (2004) and argues that consulting firms play an important economic role in helping organizations trigger and deal with change. Sorge and van Witteloostuijn claim that management consultancy is a business in which clients buy into hype-driven and unsubstantiated advice, and they imply that consultants yield returns from short-term opportunism based on information asymmetries. We propose that clients have several sources for assessing consulting service quality, and word-of-mouth effects discourage short-term opportunism of consultants. We also question Sorge and van Witteloostuijn's view that the need for organizations to change is largely a myth. We present data on economic changes over the last three decades to which firms had to respond and continue to do so. Accordingly, we argue that the continuing demand for consultancy is genuine, rather than induced by hype.

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