The Economics and Sociology of Management Consulting

Abstract

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.

Consultancy's Consequences? A Critical Assessment of Management Consultancy's Impact on Management

“…managers in sector) (e.g. Armbru¨ster, 2006;Bergh and Gibbons, 2011) Non-project-specific work Product development (e.g. commodification, research and joint ventures) Promotion (marketing services, relationship building and 'thought leadership') Consulting industry profile/success Recruitment Commodification of ideas simplifies and/or translates them which helps knowledge flow/awareness, but might affect quality -'mere rhetoric' (e.g.…”

Changing Organizational Reputation in Management Consulting

“…Reputation is therefore very important for management consulting and other PSFs because it is a signal of quality which can be strengthened, or damaged with serious consequences for firm survival and success (Armbrüster, 2006;Coffee, 2006;Greenwood et al, 2005;Von Nordenflycht, 2010). Strong reputations permit firms to charge premium prices (Sherer and Lee 2002;Maister, 1992) and hire high quality professionals (Starbuck, 1992;Hitt et al, 2006).…”

“…While some of the well-known strategy and general consulting firms had offices in Germany, the field of management consulting was not as mature, nor as dominated by well-established actors, as in the Anglo-American context (Kipping and Engwall, 2002;Sahlin-Andersson and Engwall, 2002;Armbrüster, 2006). Many of Bespoke Solutions' clients were 'mittelstand' who offered short-term, problem solving engagements with a relatively small value compared to the longer, large-scale and highly profitable engagements offered by multinationals.…”

Instrumental client relationship development among top-ranking service professionals

“…Clearly, the stronger the client-consultant relationship, the less chance there is that the client will seek out a competitor (Appelbaum & Steed, 2005;Johnson & Selnes, 2004). An emotional connection with the business partner is therefore essential, and indeed, numerous authors have established state that trust -the basis of a positive emotional bond -is the most important aspect of cooperation between business partners (Armbrüster, 2006;Hislop, 2002;Kipping & Engwall, 2002;Taminiau, Berghman, & Den Besten, 2013). In summary, the development of strong and trusted informal relationships between service professionals and clients is a complicated and subtle process; yet, once established and adequately maintained, these relationships can be instrumental to the generation of business.…”