Strategic and Functional Orientation of Small and Medium Sized Enterprises in Professional Services: An Analysis of Public Accountancy

Abstract

This stud)^ examines how SMEs in public accountancy remain competitive, promote and deliver their services. The association among strategic planning, functional diversification (services and markets), methods of promotion and delivery is also exar?zined. These SMEs fuce considerable difficultj~ in overcoming both in-house arzd external barriers in accessing clients requiring non-traditional services (e.g. management consultirzg), arzd clients involved in internntional business (broadly defined). The resiilts show that the proactive, Junctionally diversified, andor internationallj~ oriented firms outpe$orm the reactive, filnctionalljl concentrated, and local rnarket orierztedfirms. The competitive advantage for the former categories is bused on flexible specialisntion such as custornisatiorz of services for specific groiips of clients, speed of deliver)! collaboratiotz with other producer service firms, and specialised skills. These firms iitilise informal networks to pronzote their services with minimal investments in sl~onsorshil~s or media selling. Face-to-face interaction with clients continues to be the preferred mode of service delivery despite the increased adaptutiorz of local area networks and other modes of irzformatiorz technology by the proactive, fiazctionally diversified or internationally oriented firms.

Dynamic capabilities as antecedents of the scope of related diversification: the case of small firm accountancy practices

“…One of the most important, if not the most important, source of business advice for small firms is these practices (Mole, 2002). Moreover, there is evidence that those practices that have broadened their scope beyond that of standard accountancy services enjoy substantially higher profits as well as higher revenue per partner than those whose scope is limited to accountancy services (Bagchi-Sen and Kuechler, 2000). However, despite this apparent incentive for small firm accountancy practices to seek a broadening of the scope of their service provision, previous research indicates substantial differences in terms of the scope of advisory services they provide (Gooderham and Nordhaug, 2000).…”

Influence factors for operational control and compensation in professional service firms

“…Previous studies in service industries establish links between aspects of customer service and sales (Wymer and Zhu, 1999), repeat business (Fornell, 1992), and profitability (Bagchi-Sen and Kuechler, 2000). For important firm goals, managers attempt to foster goal congruency between professional service providers and the firm.…”

The role of knowledge and learning in the internationalisation of professional service firms

“…Therefore, leverage mechanisms that tap into and capture this tacit learning will determine the extent to which firms utilise existing and create new knowledge in the internationalisation process (Aharoni, 1996;Grant, 1996). We find, however, few models or empirical work that elucidate such mechanisms, other than face-to-face social interaction (Bagchi-Sen & Kuechler, 2000;Beaverstock, 2004;Faulconbridge, 2006;Lowendahl et al, 2001), and employee secondments and training (Moore & Birkinshaw, 1998) by which the experiential, tacit knowledge of individuals that comprise the firm and stem from its networks is used at a collective level to inform internationalisation decisions.…”