Governance of professional service firms: a configurational approach

Abstract

Professional service firms (PSFs) such as accounting firms, management consultancies, or advertising agencies use very different forms of governance ranging from traditional professional partnerships to public corporations. In spite of the extensive literature, little academic work has been done to synthesize the wealth of theoretical and empirical work on PSF governance into a more comprehensive theory of PSF governance. Taking configuration theory as our theoretical approach, we identify three classes of design parameter (legal form, organizational governance structure, and the systems for managing professionals) and six contingency factors (service commoditization, service diversification, firm size, capital intensity, firm culture, and risk of litigation) that are synthesized into four configurations of PSF governance. These are described, respectively, as the founder-dominated, the collegial, the managerial, and the entrepreneurial configuration.

The Index Number Problem with DEA: Insights from European University Efficiency Data

“…Obviously, the reported analysis results and differences regarding the distinction between general technological progress ("frontier shift") and its use on the one hand and the individual organizational reasons for efficiency changes ("catch-up") on the other hand for universities are interesting and should be studied further. In addition, in-depth analysis is required in terms of resource and organizational consequences of such efficiency development results for universities as done, e.g., in the health care or service sector [102,103]. For example, it can be questioned if an institution or a department should receive unequivocal research or teaching funding when long-term negative developments of efficiency are recognized.…”

Changing regulation and the future of the professional partnership: the case of the Legal Services Act, 2007 in England and Wales

“…In the past 'insider ownership' contributed to the resilience of the P 2 archetype even in firms with a marked increase in professional managers (Empson et al, 2013). By contrast, the opportunities to substitute new practices for existing ones are much greater in ABSs' where non-lawyers have 'effective control rights (Harlacher, 2010). Even though many law firms introduced committee structures and delegated decision-making to elected partners (Lee, 1992), other partners retained sufficient power to obstruct, influence or control decision-making (see Morris et al, 2010).…”

Decision‐making and leadership challenges in partner‐based, owner‐managed companies

“…This mix of roles can have an effect on clarity and speed in decision making and could potentially be detrimental. In a company where governance is based on a principal-agent relationship the roles are relatively un-ambiguous (Harlacher & Reihlen, 2014). This dichotomy appears to have attracted only limited attention from scholars, and the potential to understand the challenges of decision making in this context could help increase the knowledge of how to run owner managed firms efficiently.…”

“…In professional service firms (PSF), for example, law, accounting and management consulting firms, organizational solutions range from partnerships where the ownership, leadership and governance structure is completely based on internal resources, to public corporations where ownership, leadership and governance structure are separated (Alvesson & Kärreman, 2015). Historically the former type of partner-based arrangements was dominant in professional service firms, but a development by which public corporations became more common began in the 1980s and the dominance of the partnership solution no longer exists (Harlacher & Reihlen, 2014;Malhotra et al, 2015;Pickering, 2015a). Some of the differences between these two types of organizations are that public corporations tend to be run by professional management teams, incur agency costs, have short term perspectives, and possibly bring loyalty issues.…”