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Greenwood R, Empson, L (2003), 'The professional partnership: Relic or exemplary form of governance?', Organization Studies, 24(6), p.909-933
Abstract
The creation of the public corporation in the 19th century drove out the partnership as the predominant form of organizational governance. Yet, within the professional services sector, partnerships have survived and prospered. Moreover, professional services firms that chose to abandon the partnership form tended to become private rather than public corporations. Drawing upon several theories, we compare the efficiency of the partnership relative to corporate forms of governance in the context of the professional services sector. We argue that the professional partnership minimizes agency costs associated with both the private and public corporation. We also argue from tournament theory and property rights theory that partnerships have superior incentive systems for professionals in particular and knowledge workers more generally. However, drawing upon structural-contingency theory, we identify limiting conditions, which affect the relative efficiency of the partnership. We argue that the corporation, especially the private corporation, will be the preferred form of governance where the limiting conditions are prevalent. Nevertheless, we also argue that under specific conditions the partnership form of governance will persist and prosper because it remains unusually suited to the management of knowledge workers.
... Social science disciplines have shown a longstanding research interest in the management of the professions. Although the Human Resource Management (HRM) literature has been slow to engage, professional work has generated debate in the field, particularly focusing on the HR profession (Currie et al., 2015;Sandholtz et al., 2019) and the professional services firm (PSF) as an organizational and managerial context for such work (Greenwood & Empson, 2003;Swart & Kinnie, 2013). The literature on professions has increasingly centered on the socio-political processes underpinning occupations' pursuit of professional status. ...
... This results in owners aligning agents' activities with their interests through different compensation and budgetary systems (Baron & Kreps, 1999). For example, in PSFs, these include the financial 'lure' of partnership (Greenwood & Empson, 2003) for senior, professional staff instead of tenure-based rewards for junior staff (Swart & Kinnie, 2013). ...
... As is common in theoretically-driven, qualitative research, our multi-source empirical approach aimed at enhancing the internal validity of the relations between categories in our conceptualization. The external validity of our conceptualization and findings could be further tested, for example, in large PSFs where professionals with ownership stakes might be less able to overview work processes (Greenwood & Empson, 2003); in other national contexts where primary care physicians have more or less autonomy from the state, like in the US where owner-partnerships also exist; or in relation to other emerging roles that are less clearly in the same knowledge domain as the established profession (e.g., physiotherapists). ...
The management of the professions has become increasingly challenging, reflecting the emergence of new work roles in professionalized workplaces. Human Resource Management (HRM) scholars have, however, been slow to study the professions, particularly how the power they derive from ownership interacts with other forms of power. This article explores the use of different forms of power by a profession, general practitioners (GPs), in engaging with a new healthcare role, the physician associate (PA). Despite policy support for the role, we find GPs' employment of the role in primary care is low. This is explained by two GP responses to the introduction of the role: employment denial and subordination. We theorize these responses as deriving from GPs' ownership power, enhancing their managerial and knowledge‐based control over PAs. In doing so, we open‐up a research avenue in the study of workforce management focused on professions' ownership power.
... Child and Rodrigues (2003) describe double agency problems as those involving conflicts of interest between managers at different hierarchical levels, and multiple agency problems as those involving multiple principals interacting with one or more agents or multiple agents interacting with one or more principals. Although understudied, these types of agency problems are pertinent to our theorizing because they characterize key agency problems of partnerships (Greenwood & Empson, 2003), or more specifically of MFFs, which, by definition, involve partnerships among members of two or more unrelated families (Brigham & Payne, 2015). ...
... However, in MFFs, and indeed all firms with ownership structures that resemble partnerships, mutual monitoring is more important and complex (cf., Fama & Jensen, 1983a). First, if the owners are experts in their fields, as is the case in professional partnerships, the ability to mutually monitor each other's behavior might reduce the need for outsiders on the board of directors (Greenwood & Empson, 2003;Li, 2014). Second, mutual monitoring might make it easier to replace a CEO or director who is no longer competent or to prevent a descendant with inadequate ability, training, or commitment from taking over the firm (Lim, 2018). ...
... All firms of any size beyond that of micro-enterprises face possible conflicts between managers at different levels with divergent interests as well as conflicts between owners and top managers. In other words, double or multiple agency relationships internal to the firm exist (Child & Rodrigues, 2003), and are potentially as important to resolve as agency relationships between owners and managers (cf., Greenwood & Empson, 2003). Hierarchy and the delegation of authority can be an effective remedy for upper (middle)-level managers to control the behavior of middle (lower)-level managers in SFFs. ...
Multi-family firms represent an important and complex type of family firm that is not as well understood as single-family firms. We develop a governance-based framework of the agency complexities in multi-family firms, theorizing that divergent family-centered noneconomic goals between the owning families create complex inter-family agency problems that are intensified by evolving family dynamics. We propose governance mechanisms that address these problems by limiting opportunistic behavior associated with the pursuit of noneconomic goals related to firm control, family altruism, social capital, and transgenerational succession. We then present a future research agenda that can expand our knowledge of multi-family firms.
... PSFs are characterised by contingent and contested power relations among an extended group of professional peers; in the largest firms this group may comprise several hundred partners (Greenwood and Empson, 2003). These senior professionals claim extensive autonomy and grant leadership authority to their colleagues on a contingent basis (Empson and Langley, 2015), resulting in highly politicised internal competitions for power, protracted processes of consensus-based decision making, and failures to execute decisions once they have been agreed (Hinings, Brown, and Greenwood, 1991;Lawrence, Malhotra, and Morris, 2012; Morris, Greenwood and Fairclough, 2010). ...
... PSFs typically adopt a partnership form of governance, with ownership and profits shared among professional peers (Greenwood and Empson, 2003). Whereas many PSFs have abandoned partnership as a legal form, they often continue to emulate its organisational characteristics (Empson, 2007;Pickering, 2015). ...
... Given the significance of PSFs to the global economy, and high-profile examples of leadership failure , it is problematic that the PSF literature is largely silent on the topic of leadership (Empson and Langley, 2015). The PSF literature analyses governance as an archetypal organisational form at the level of structures, systems and interpretive schema (Cooper et al., 1996;Greenwood et al., 1990;Greenwood and Empson, 2003) and is therefore somewhat abstract and impersonal. When PSF scholars do address the topic of leadership it is to represent it somewhat simplistically, for example by referring to it dismissively as "cat herding" (von Nordenflycht, 2010). ...
Professional service firms (PSFs) are characterized by contingent and contested power relations among an extended group of professional peers. Studies of such firms can therefore yield important insights for the literatures on collective leadership and leader–follower relations. Yet to date PSF scholars have neglected the topic of leadership, and leadership scholars have neglected the context of PSFs. Based on 102 interviews across the consulting, accounting and legal sectors, we identify three relational processes through which professional peers co-construct collective leadership: legitimizing, negotiating and manoeuvring. We demonstrate how the relational processes taken together constitute an unstable equilibrium, both in the moment and over time, emphasizing how leadership in PSFs is inherently contested and fragile. Our model contributes to theories of collective leadership and leader–follower relations by foregrounding the power and politics that underlie collective leadership. We highlight the significance of the individual leader within the collective. We challenge assumptions concerning the binary nature of leadership and followership, by showing how colleagues may grant leadership identities to their peers without necessarily granting them leadership authority, and without claiming follower identities for themselves.
... The potentially adverse consequences of promotion tournaments on organizations' ethical climate and behavior are especially likely to burden classic professional service firms, such as law or audit firms. This is, first, because tournaments are the default route to ownership in professional partnerships (Kordana 1995;Malos and Campion 2000;Price 2003), which are the dominant and often even legally mandated organizational form in the professions (Greenwood and Empson 2003). Even if only because tournaments are more prevalent in professional partnerships than in public firms, such firms are prone to more frequently experience their negative side-effects on the organizational ethical climate. ...
... Auditors then typically have another 3-4 years to prove themselves in order to be considered for the final promotion to equity partner. To ascend to partnership, senior managers typically participate in a rank-order contest (Greenwood and Empson 2003) defined by the tournament's two controllable organizational design constructs-size and pay spread. In the largest audit firms, the so-called Big Four (KPMG 2016;PricewaterhouseCoopers 2016;EY 2016;Deloitte 2016), an average of 12.5% of the FTE are partners. ...
... Internal ownership offers auditors the prospect of a lucrative claim on future cash flows. Combined with the nontradability of partnership ownership (Hansmann 1996), this provides powerful incentives to stay with the firm (Greenwood and Empson 2003). The pay spread between partners and salaried auditors is typically substantial and plays an important role in attracting and retaining achievementoriented and status-driven people (Ridge et al. 2014). ...
Tournament-like promotion systems are the default in audit firms, which are generally internally owned professional partnerships. While awarding promotions in a contest-like fashion stimulates contestants’ motivation and productivity, it may also upset an organizations’ ethical climate and trigger ethically adverse behaviors. Since nearly all research on promotion tournaments in management has been conducted in public firms, little is known about how these incentive systems operate in professional partnerships. In this study, we analyze how the perception of the two controllable design parameters of promotion tournaments—the relative pay spread between winners and losers and tournament breadth in terms of the number of contestants that compete for a prize—affects audit firm behavior. Survey results provide evidence that the tournament’s perceived breadth prompts adverse behavior, as it does in public firms. Contrary to conventional wisdom, however, the perceived pay spread has no significant effect on adverse behavior, but triggers desirable behaviors instead. Our study suggests that promotion tournaments indeed provide powerful incentives, but also that understanding the unintended consequences of these incentives on organizational ethical climates and behavior requires tournament theory to be contextualized when it is applied in new settings like internally owned professional partnerships.
... De green paper geeft een te positief beeld van het huidige partnermodel. Op basis van Greenwood en Empson (2003) is in de green paper (p. 28) bijvoorbeeld vermeld "dat het partnermodel wordt gekenmerkt door loyaliteit en commitment, waarbij professionals directe financiële waardering ondervinden van hun werk en het werk van hun collega's." ...
... Naast het in de green paper aangehaalde artikel van Greenwood en Empson (2003) heeft Empson in 2007 een artikel geschreven over de houdbaarheid van het partnermodel in een wereld die verandert. Hierin komen zaken naar voren die relevant zijn voor het accountantsberoep. ...
... Naast de voordelen van het partnermodel worden in de green paper ook enkele beperkingen van het partnermodel genoemd, die zijn ontleend aan Greenwood en Empson (2003). Deze beperkingen zijn: (1) groeiende complexiteit van de accountantsorganisatie; (2) moeizame collectieve besluitvorming; (3) beperkte toegang tot extern kapitaal; (4) hogere kosten vanwege toegenomen juridisering; en (5) verminderde aantrekkelijkheid van het beroep in een maatschappij waarin meer nadruk ligt op de balans tussen werk en vrije tijd. ...
De Stuurgroep Publiek Belang (hierna: Stuurgroep) heeft in december 2017 de green paper Structuurmodellen Accountancy uitgebracht. In deze green paper worden fundamentele en maatschappelijk relevante vraagstukken aan de orde gesteld, namelijk de wijze waarop het accountantsberoep is georganiseerd en accountants hun geld verdienen. Het doel van de green paper is het evalueren van het huidige business-, partner-en verdienmodel van accountants en het in kaart brengen van mogelijke alternatieven. Deze thematiek sluit aan bij mijn proefschrift over de effecten van beloningsprikkels en persoonlijkheidskenmerken op oordeels-en besluitvorming van accountants (Van Brenk, 2017, 2018). Door middel van deze reactie breng ik de volgende punten onder de aandacht van de Stuurgroep, die ik hieronder verder toelicht: 1. De weergave van wetenschappelijk onderzoek is te selectief en te eenzijdig. 2. Er is bewijs voor een negatieve invloed van het combineren van controle en advies op controlekwaliteit (businessmodel). 3. Een multidisciplinaire accountantsorganisatie werkt frictie tussen audit en advisory in de hand (businessmodel). 4. Partnerbeloning op basis van individuele prestaties werkt disfunctioneel gedrag in de hand (partnermodel). 5. De negatieve impact van winstdeling op objectiviteit is het grootst wanneer de link tussen winstdeling en individuele prestaties klein is en er veel ruimte voor professionele oordeelsvorming is (partnermodel). 6. Het huidige partnermodel past niet meer bij de doelstelling van het accountantsberoep (partnermodel). 7. De conclusie dat grotere kantoren een hogere controlekwaliteit realiseren houdt geen rekening met een mogelijke zelfselectie. Mijn advies aan de Stuurgroep is om deze punten te verwerken in de white paper, zodat er een betere discussie kan plaatsvinden over de huidige en gewenste structuurmodellen van het accountantsberoep.
... The fusion of ownership, management, and operational work in the partners, as well as its economic implications for the appropriation of profits, has since fascinated organization theorists F o r R e v i e w O n l y 4 (e.g., Greenwood & Empson, 2003;Lorsch & Tierney, 2002), legal scholars (e.g., Gilson & Mnookin, 1985, 1989Hansmann, 1996) and economists alike (e.g., Jensen & Meckling, 1979;Levin & Tadelis, 2005;Morrison & Wilhelm, 2004). This broad interest is indicative of the generative potential of research in professional partnerships and professional services more broadly (as not all professional service firms adopt the partnership archetype) -not only to better understand the inner workings of PSFs, but also to advance broader organization and management theory. ...
... In short, if clients trust neither the individual professional to deliver high quality and not mis-sell services, nor the organizational structures to ensure consistent quality, they may trust mechanisms of peer control or -as we discuss next -professional sanctions. The partnership form, especially the "unlimited liability" variant, induce professionals to use rigorous F o r R e v i e w O n l y 8 peer evaluation and "clan control" (Ouchi, 1980) to prevent or penalize professional misconduct (Greenwood & Empson, 2003;Leblebici & Sherer, 2015). ...
... They so summarize the "challenge of retaining and directing highly skilled employees" (2015: 139), who -given their valuable human capital and extreme mobility -hold a substantial amount of bargaining power vis-à-vis their employers. An initial response therefore is to cater to professionals' strong preference for autonomy and discretion (e.g., Greenwood & Empson, 2003;Hinings et al., 1991;Starbuck, 1992) and rely on high decentralization of operating control and decision-making (Greenwood et al., 1990), both of which are practically rooted in individuals' independent client work, but also harks back to the tensions between professional and bureaucratic forms of organizing noted earlier "Guiding, nudging, and persuading," as Malhotra and colleagues (2006: 175) put it, are likely to be more effective than traditional forms of operating control, including remuneration. That is why PSFs typically reflect the autonomy and discretion of their professionals in their contingent remuneration systems (e.g., Coff, 1997;Gilson & Mnookin, 1985;Maister, 1993). ...
In this essay we introduce the theme of the special issue, reviewing and analyzing 25 years of the professional partnership, or P 2 stream of research. We structure our analysis around the three dimensions of control that structured the original P 2 paper-strategic, operating and financial control – and their underlying drivers: knowledge intensity, professionalized workforce, and low capital intensity. We then introduce the five papers selected for the special issue, positioning each relative to the conceptual scheme of the research field as a whole. We then identify a set of themes that are poised to dominate professional firm research for the next quarter century – namely internationalization, changing career and work-life preferences, de/re/regulation, and technology. These analyses lead us to a set of dimensions, which we present as an emerging picture of this dynamic field of research and practice.
... A key challenge for PSFs is how to persuade practitioners to share their proprietary knowledge with their colleagues (and thus, potentially, undermine their unique power base) and to deploy it for the benefit of the organization as a whole (Empson, 2001, as synthetized by Greenwood & Empson, 2003). Gardner (2015) recognizes the need to better understand peer collaboration in PSFs, especially senior level collaboration involving highly autonomous partners. ...
... For more details, see for exampleGreenwood and Empson (2003) andEmpson (2007). ...
How do tax advisors make themselves comfortable with the tax planning arrangements they recommend to their clients, in the many gray areas that characterize their field of practice? What motivates tax advisors to consult each other in this context? In this field study, we examine the processes that help (re)produce an influential informal norm of peer consultation surrounding the work of tax partners in accounting firms. Based on interviews with 36 tax advisors, most of them partners in accounting firms, our analysis focuses on rationalization processes surrounding the informal consultation norm. Our findings shed light on partners’
heavy reliance on this norm, to comfort themselves in exercising interpretive judgment about the meaning of tax rules. Clan monitoring and mutual support both play a significant role in
the process. As such, our study illustrates how peer consultation operates as an interpretive practice socially embedded in clan processes. Partners negotiate the shared meaning of the
law through clan-based interactions with their peers until a consensus is reached: the tax planning arrangement is then perceived to be robust enough and able to withstand external
challenges. Overall, our analysis points to a need to step back from the current tax avoidance debate, to better understand how clan-based interpretive judgments develop and operate in
practice, in their social context. We also hope to influence the discipline’s research agenda by encouraging academics to seek a better understanding of tax planning in action.
... Şeffaflık raporları piyasa katılımcılarının denetim firması hakkında bilgi sahibi olmasını sağlayarak saygınlığı artırabilir (Maijoor & Vanstraelen, 2012). Denetim firmaları ile müşteriler arasındaki asil-*** International Organization of Securities Commissions (Uluslararası Menkul Kıymetler Komisyonları Örgütü) vekil problemlerinden biri olan statü-itibar problemini azaltarak müşterilerin zamanlı bilgi almasını sağlayabilir (Greenwood & Empson, 2003). Aynı zamanda piyasa katılımcıları ile denetim firmaları arasında etkin ve zamanlı bir diyalog kurmasını sağlamaktadır (FRC **** , 2019). ...
... Denetim firması şeffaflık raporlarının, üçüncü kişilerin denetim firması hakkında bilgi sahibi olması (Maijoor & Vanstraelen, 2012), piyasadaki bilgi asimetrisinin azaltılması (Čular, 2017), statü-itibar probleminin azaltılması (Greenwood & Empson, 2003), denetim firmalarını sunmuş oldukları hizmetin kalitesi hakkında piyasayı bilgilendirerek denetim firmalarının rekabet edebilmesi (IOSCO, 2009), denetim kalitesini iyileştirerek uzun vadede denetim firması imajını güvence altına alması (FRC, 2019) ve denetim piyasası katılımcıları ile zamanlı bir diyalog kurulması açısından önemli olduğu açıktır. Bu çalışmada, denetim firmalarının yayımlamış olduğu şeffaflık raporlarının yayımlanma zamanını etkileyen denetim firmalarına ilişkin iç faktörler ortaya koyulmuştur. ...
Bu çalışmanın amacı, denetim firmalarının yayımlamış olduğu şeffaflık raporlarının yayımlanma zamanını etkileyen iç faktörleri ortaya koymaktır. Çalışmada, 2013-2020 yılları arasında 446 denetim firması şeffaflık raporu ve en küçük kareler ve negatif binomial regresyon yöntemleri kullanılmıştır. Sonuçlar, denetim firması yaşının, yönetim kurulu üye sayısının, ortaklık yapısı içinde yer alan yeminli mali müşavirlerin oranının, yönetim kurulu üyelerinin sahiplik yapısı içindeki paylarının ve denetim firması büyüklüğünün yayımlama zamanını etkilediğini göstermektedir. Model, büyük denetim firmaları örneklemden çıkarılarak da çalıştırılmış ve benzer bulgular elde edilmiştir. Ayrıca, uluslararası denetim ağına bağlı olan ve bağlı olmayan firmalar açısından sonuçların farklılaştığı gözlemlenmektedir.
... Şeffaflık raporları piyasa katılımcılarının denetim firması hakkında bilgi sahibi olmasını sağlayarak saygınlığı artırabilir (Maijoor & Vanstraelen, 2012). Denetim firmaları ile müşteriler arasındaki asil-*** International Organization of Securities Commissions (Uluslararası Menkul Kıymetler Komisyonları Örgütü) vekil problemlerinden biri olan statü-itibar problemini azaltarak müşterilerin zamanlı bilgi almasını sağlayabilir (Greenwood & Empson, 2003). Aynı zamanda piyasa katılımcıları ile denetim firmaları arasında etkin ve zamanlı bir diyalog kurmasını sağlamaktadır (FRC **** , 2019). ...
... Denetim firması şeffaflık raporlarının, üçüncü kişilerin denetim firması hakkında bilgi sahibi olması (Maijoor & Vanstraelen, 2012), piyasadaki bilgi asimetrisinin azaltılması (Čular, 2017), statü-itibar probleminin azaltılması (Greenwood & Empson, 2003), denetim firmalarını sunmuş oldukları hizmetin kalitesi hakkında piyasayı bilgilendirerek denetim firmalarının rekabet edebilmesi (IOSCO, 2009), denetim kalitesini iyileştirerek uzun vadede denetim firması imajını güvence altına alması (FRC, 2019) ve denetim piyasası katılımcıları ile zamanlı bir diyalog kurulması açısından önemli olduğu açıktır. Bu çalışmada, denetim firmalarının yayımlamış olduğu şeffaflık raporlarının yayımlanma zamanını etkileyen denetim firmalarına ilişkin iç faktörler ortaya koyulmuştur. ...
Bu çalışmanın amacı, denetim firmalarının yayınlamış olduğu şeffaflık raporlarının yayınlanma zamanını etkileyen faktörleri ortaya koymaktır. Çalışmada, 2013-2020 yılları arasında 446 yıl*denetim firması gözlem ve en küçük kareler yöntemi kullanılmıştır. Sonuçlar, denetim firması yaşının, denetim firması yönetim kurulu üye sayısının, denetim firması ortaklık yapısı içinde yer alan yeminli mali müşavirlerin oranının, yönetim kurulunda yer alanların sahiplik yapısı içindeki paylarının ve denetim firması büyüklüğünün şeffaflık raporlarını yayınlama zamanını etkilediğini göstermektedir. Ana model, büyük denetim firmaları örneklemden çıkarıldıktan sonra da çalıştırılmış ve benzer bulgular elde edilmiştir. Ayrıca, model uluslararası denetim ağına bağlı olan ve olmayan denetim firmaları açısından da çalıştırılmıştır. Uluslararası denetim ağına bağlı ve bağlı olmayan firmalar açısından sonuçların farklılaştığı gözlemlenmektedir. Ana sonuçları güçlendirmek amacı ile negatif binomial regresyon yöntemi kullanılmış ve bu yöntemin sonuçları en küçük kareler yöntemi ile paraleldir.
... We are not aware of any research around equity stakes transactions for professional services firms within the rich body of literature around value relevancewhich studies the relation between transaction prices and financial or non-financial information. However, these firms are generally recognised as making up a significant and distinct category in the contemporary economy since they foster the diffusion of sophisticated expertise to businesses (Greenwood & Empson, 2003;Malhotra et al., 2006). As exceptionally 'brain-intensive' organisations, they may thus serve as vital examples of the structural and management issues that other types of firms will soon face in a knowledge-based economy (Gardner et al., 2008). ...
... There is some support for the view that professional service firms are a distinct, significant category in the contemporary economy because they foster the diffusion of sophisticated expertise to businesses (Greenwood & Empson, 2003;Malhotra et al., 2006). ...
In this study, we aim to address a serious gap in the otherwise rich value relevance literature around professional services firms. Such firms are generally recognised as making up a significant and distinct category within the contemporary economy. However, there is currently a notable absence in the value relevance studies on transactions around equity stakes for this sector. We address this issue and investigate the prediction accuracy of the sales multiple—commonly used as a valuation shortcut in the industry—and the value relevance of financial and non-financial information. We do so within the country-specific setting of private equity deals executed in Italy from 2012 to 2018 regarding small accounting practices (SAPs), which we deem of interest because they present similar characteristics to their European peers and because accounting firms are qualified in the management literature as 'classic' professional service providers. This exploratory study of 76 deals confirms the superior informative value and prediction accuracy of the sales multiple. We also ran a regression of transaction prices on several value drivers, identified consistently with prior studies and mainstream valuation theory. We thus found that some non-financial information specific to the context of SAP and certain deal characteristics are value relevant and complement financial information. An example of this is a firm's location in a small town. However, contrary to expectations, the age of a firm's owner was not found to be significant.
... For example, the reward systems have become more individualized and emphasize the individual auditor's productivity, such as the number of clients or billed hours (Brock, 2006). Audit firms are also characterized by up-or-out career systems (Greenwood & Empson, 2003), which could create competition among auditors due to the desire to belong to the pool of potential partners (Connelly, Tihanyi, Crook, & Gangloff, 2014). Furthermore, increased competition in the audit market (Sweeney & Pierce, 2004) has created a need for audit firms to differentiate themselves (Fontaine et al., 2013;Jeppesen, 1998;Sarapaivanich & Patterson, 2016) by providing superior service and value (Sarapaivanich & Patterson, 2016). ...
... The audit firm can also create incentives that direct the auditor to work in a way that is preferred by the audit firm. Since audit firms arguably have up-or-out career systems (Greenwood & Empson, 2003) and reward systems that emphasize the individual auditor's productivity (Brock, 2006), auditors could be expected to be competitive in nature. However, this dissertation shows that auditors are least motivated by competition (see Table 2 in paper II). ...
... Traditionally, the 'up-or-out' model was the main career principle (e.g. Greenwood and Empson 2003), however, PSFs are increasingly moving to new career models (Malhotra, Morris, and Smets 2010;Smets, Morris, and Malhotra 2012). ...
... Secondly, we show how two crucial aspects of professional work, client-contact and transferability of skills, affect quits by providing alternative job opportunities and greater bargaining power for the employees. The dilemma for a PSF is that the employees' skills are also valuable to other firms and so the PSF risks losing these employees (Greenwood and Empson 2003;Von Nordenflycht 2010). We find that while client-contact and transferability of skills represent risks by increasing the likelihood of quit, they are mainly associated with higher job satisfaction. ...
Retaining the most valuable employees is a core priority of professional service firms (PSFs). Our study addresses turnover (quit) among employees in a PSF that hires lawyers, auditors, and management consultants. We examine the extent to which the decision to quit varies by professions, skills, and job satisfaction in a PSF in Norway. The analyses are based on a survey of employees conducted in 2013 (N = 455) combined with information on those who quit after 28 months. We find that the sub-group of non-certified auditors quit more often than all other professional groups. In addition, we find that client-contact and transferability of skills are positively related to quits, when controlling for job satisfaction, suggesting that these skills provide employees with alternative job opportunities and greater bargaining power. These measures of skills are also positively related to job satisfaction. Our study contributes to the literature on turnover and professions by emphasizing the interplay between the skills of professional workers and job satisfaction in employees’ decision to quit. In addition, we add to our understanding of the concepts of general- and firm-specific skills in a multi-profession context.
... This creates an economic dependence for individual auditors as stated in previous research on client importance (Tepalagul & Lin, 2015;Li, 2009;Chen et al., , 2018Chi et al., 2012;Reynolds & Francis, 2000;Hunt & Lulseged, 2007), which suggests the impossibility of auditor independence. Third, even if individual auditors maintain their independence in all these cases, they will still work under an independent audit firm where senior partners (managers) may put pressure on them to treat the clients more favorably because managers may tend to be more opportunistic and more focused on shortterm interests while thinking of their interests more (Doh & Stumpf, 2005;Fama & Jensen, 1983;Greenwood & Empson, 2003;Guzak & Rasheed, 2014;Jensen & Meckling, 1976;Sharma, 1997). Thus, individual auditors may treat the clients who are affiliated with the same business group more favorably in order not to lose their jobs or not to resist the pressure of managers as stated by Chi et al. (2012). ...
... Moreover, auditors may not maintain their independence when they audit firms affiliated with the same business group because they may be faced with the risk of losing all the other firms affiliated with the same business group or it may lower the possibility of auditing the potential firms affiliated with the same business group. Even if an individual auditor maintains his/her independence in all these cases, they will still work in an independent audit firm where the senior partners (managers) in the firm may put pressure on them to treat the clients more favorably because managers tend to be more opportunistic thinking of their interests more and more focused on short-term interests (Doh & Stumpf, 2005;Fama & Jensen, 1983;Greenwood & Empson, 2003;Guzak & Rasheed, 2014;Jensen & Meckling, 1976;Sharma, 1997). Thus, individual auditors may treat the clients who are affiliated with the same business group more favorably in order not to lose their job or may not resist to the pressure of the managers in audit firms according to Chi et al. (2012) who worked on client importance. ...
The aim of the study is to examine the association between audit quality and individual auditors providing independent audit service to the firms affiliated with the same business group. We used Turkish Listed firms traded in Borsa İstanbul between 2010 and 2016. These auditors have been associated with lower audit quality in terms of discretionary accruals, modified audit opinion and audit report aggressiveness. Our main results are robust to different specifications and the results remain unchanged regardless of the specification. On the other hand, we created some interaction variables to test that such a relationship would be reversed when the audit firm where the individual auditor works, was one of the Big4. We found that individual auditors providing independent audit service to the firms affiliated with the same business group in the Big4 audit firms do not affect audit quality negatively. In addition, we found that individual auditors providing independent audit service to the firms affiliated with the same business group audit the financial statements of them in timelier manner. Overall, this paper highlights and emphasizes the importance of auditing the firms affiliated with the same business group by different individual auditors to audit quality.
... In order for the participants to reflect meaningfully on the impact of the statutory audit relief, it was necessary to identify participants who were already audit partners before the change in legislation and who were still practising at the time of the study. As audit partners should be responsible for strategic decision-making within their audit firms (Greenwood & Empson, 2003), these partners were in the most favourable position to reflect on the impact of the change event. For each case, the number of selected firms and participants are presented in Table 2. ...
... Past research has used these characteristics to demonstrate the logic shift in Big 4 firms (Broberg et al., 2018;Greenwood & Suddably, 2006, Hanlon, 1996, 1997. The small and medium-sized audit firms in this study were thus embedded in their local institutional contexts: the partner(s) being interviewed had the decision-making powers and were actively involved in the delivery of services, demonstrating that they were sufficiently knowledgeable to participate efficiently in decision-making (Greenwood & Empson, 2003). ...
Although an abundance of research exists concerning larger audit firms, studies on small-scale audit firms are scarce. This study investigates how small and medium-sized audit firms deal with professional and commercial logic for sense-making and legitimisation of their strategies and practices to remain sustainable, particularly as audit practices, in a changing environment. The study focuses on a specific change event, namely a change in legislation that resulted in mandatory audit relief for certain small and medium-sized enterprises. Following a multiple-case study design, a qualitative research approach was used to show that small and medium-sized audit firms responded to a threat to their sustainability in an environment transformed by new legislation, by broadening the service offerings which coincided with selective adoption of practices related to commercial logic. Those retaining a more focused professional orientation had a positive outlook on the sustainability of their audit practices.
... Client relationships and the ability of firms to form and maintain these relationships are crucial for the long-term sustainability of firms (Broschak, 2015). Furthermore, with the knowledge and expertise of employees representing their most important resource with which to generate income (Greenwood and Empson, 2003), architectural firms must attract and retain people with unique knowledge, skills and motivation to secure firm performance (Canavan et al., 2013). Swart et al. (2015) argue that, as a consequence, the performance of professional service firms, such as architectural firms, is thus not only defined in terms of financial output, but may also be based on aspects such as the achievement of individual targets, new business growth or the value of a firm's reputational capital that is expressed in its brand (Swart et al., 2015). ...
... Each individual project thus requires a slightly different strategy and business model. Firms are often relatively small and predominantly organized as partnerships or private corporations in which professionals dominate the decisionmaking hierarchy (Greenwood and Empson, 2003;Pinnington and Morris, 2002). Due to their strong professional ethos, strategic decisions are always taken against the backdrop of professional beliefs. ...
Architectural firms can be regarded as creative professional service firms. As such, architects need to navigate creative, professional and commercial goals, while simultaneously attempting to fulfil client, user and societal needs. This complex process is becoming increasingly difficult, as the historically established role of architects has become more blurred, contested and heterogeneous. While attempting to reclaim their role or to take on new roles in collaborations with other actors, architectural firms are challenged to develop business models that are financially viable and professionally satisfactory. These business models need to facilitate firms in capturing both financial and professional value in co-creation processes, and they must also suit the project-based structure of the firm.
This research contributes insights into how firms might capture multiple dimensions of value in project-based work. It generates new perspectives on processes of organizational value capture and business model design, and provides concrete, practical insights into the difficulties of and opportunities involved in value capture by creative professional service firms.
... PSF partnership ownership structures and governance have traditionally been explained using agency theory (e.g. Fama and Jensen, 1983;Greenwood and Empson, 2003;Clark et al., 2005) rather than KBT. ...
... Publicly owned companies have recently emerged in accounting and law owing to changes in legislation and regulation (Pickering, 2012a). Senior professionals may better adapt to integration by publicly owned acquirers in professions with a longer history of public ownership, such as advertising (von Nordenflycht, 2014) or management consulting (Greenwood & Empson, 2003). ...
The client relationships and tacit knowledge of professionals are professional service firms’ (PSFs’) major value creating resources producing challenges in generating post-merger and acquisition value and risks of reducing the productivity or losing key professionals and their clients. The recent emergence of publicly owned PSFs and rapid growth through consolidating smaller privately owned firms potentially increases this risk by integrating small firms and their professionals into large public companies that may be governed very differently. This study explores post-acquisition integration processes: professional behaviours and associated performance implications in two highly acquisitive publicly owned accounting companies. In one company, the integration process was rapid and heavily directed by senior management, while in the second company, integration was more gradual, initially undirected but then facilitated by senior management. The findings suggest that integration processes can impact the behaviour of professionals and acquiring firm performance. This research contributes to the understanding of post-acquisition integration processes in PSFs and decision- making and professional behaviour in recently emerged publicly owned PSFs. The study contributes to knowledge-based theory by identifying factors that can affect the decision authority of executives and how organisational behaviour can constrain the implementation of executive integration decisions.
... Punktem wyjścia w tej dyskusji jest partnerstwo jako tradycyjna forma organizacyjna (Pinnington, Morris, 2002), która nie dość, że skutecznie opiera się globalnemu trendowi korporatyzacji przedsiębiorstw, to dobrze sprawdza się też w firmach prawniczych. Wynika to z funkcji motywacyjnej awansu związanego z przejęciem udziałów w firmie (R Greenwood, Empson, 2003), który skutkuje również większym przywiązaniem pracowników do organizacji (Wallace, 1995). Choć obserwuje się zmianę tego tradycyjnego archetypu, to komponent współwłasności pozostaje stabilny, dlatego też w efekcie zamiast wyraźnego przejścia do modelu menedżerskiego obserwuje się wyłanianie hybrydowej formy partnerstwa korporacyjnego (Empson, Cleaver i Allen, 2013). ...
W książce została poruszona tematyka SPL w odniesieniu do nauk o zarządzaniu. W poszczególnych rozdziałach zaprezentowano różne spojrzenia na
przeglądy literaturowe odnoszące się do takich obszarów jak: rynek odzieży używanej, komunikacja marketingowa w kształtowaniu wizerunku muzeów, aktywność społeczna osób starszych w miastach, rynek żywności czy elementy składowe modeli biznesowych przedsiębiorstw. Różnorodność poruszanych tematów może stanowić inspirację dla czytelników do przeprowadzenia SPL w swoich
obszarach badawczych.
... Such overselling is reinforced in contexts where large numbers of consultants need to be deployed and, in particular, where business development (selling) is valued more highly (and handsomely) in promotion and remuneration decisions, than say, technical competence/effectiveness or ethical standards (for example attention to client or societal needs) (Bogdanich & Forsythe, 2022;O'Mahoney, 2011). This emphasis on selling may be exacerbated by the 'up or out' (leave) human resources policies of larger firms, rewarding risk-taking and, often, an 'eat what you kill' culture (Empson & Greenwood, 2003;Greenwood et al., 2017). ...
... The firm's management operates through a shared power and governance model, where individuals from various ranks are appointed to formal structures such as committees and task forces to focus on specific managerial issues like diversity and hiring practices (Cochrane, 2018). Unlike decentralized management structures where all firm partners may be involved in diversity management, law firms centralize hiring and diversity-related decisions within specific committees tasked with addressing diversity issues, narrowing the set of individuals involved in these decisions (Greenwood & Empson, 2003). In summary, the characteristics of large U.S. law firms focusing on gender diversity at the top in response to external stakeholders while leaving deep-seated internal equity issues unaddressed provides an ideal context for testing our theory. ...
In male-dominated industries, organizations face considerable pressure to enhance women's representation in top leadership roles. Firms respond to this pressure by increasing gender diversity in senior positions but often fail to achieve a critical mass of senior women at the top. This raises a key question: What impact does greater gender diversity at the top have on junior women’s career opportunities? Drawing insights from the attention-based view of the firm, we theorize that firms with relatively more women in senior management compared to their industry peers, who themselves have very low levels of female representation, are likely to allocate fewer attentional resources, time and effort towards internal diversity practices. This inadvertently hurts the recruitment of women at the lower level. We propose that one way to mitigate these adverse cross-level spillover effects is to ensure women's substantive representation on committees responsible for overseeing and monitoring the firm’s diversity and hiring-related decision-making processes. We test our contentions and find support for our model using a panel dataset on the largest U.S. law firms. We conduct several supplemental analyses to provide insights into our findings.
... Indeed, this brings us to our second question of how novel these developments are. Not only have values been front and centre in a range of consulting fields like OD, but they are a core element of professionalism and ethics in terms of ideal working practices and structures such as the traditional partnership (Empson and Greenwood, 2003) and notions such as society as the ultimate client (Schein, 1997). Also, while such approaches are often seen to clash with market-based logics (like management), these too have a value base -shareholder primacy -even if clothed in objective, technocratic analysis. ...
I begin to explore some of the issues involved to help stimulate debate and empirical research on what might be termed (socially) ‘responsible consulting’ (see also Sturdy 2023). How novel, radical, and comprehensive are these developments and what are the enabling or limiting factors? And finally, what does such a ‘normative turn’ imply, if anything, for the dominant critiques of consultancy and the need for improved governance?
... Studies of collective leadership emphasise how it can serve a functional purpose in pluralistic professional environments (Denis et al., 2012;Empson & Alvehus, 2020). In professional partnerships in particular, competing interests and contested power relations may be structurally embedded, as both ownership and profits are shared among professional peers (Greenwood & Empson, 2003). Empson and Alvehus (2020) identify three relational processes through which professional peers co-construct collective leadership. ...
Our paper investigates the dynamic interplay of narratives of individual and collective leadership within a professional service firm, where an organizational narrative of collective leadership prevails. We explain how it is possible for ‘everyone’ to claim a leadership identity for themselves while simultaneously granting a leadership identity to the collective. We identify multiple leadership archetypes embedded in individuals’ identity narratives, representing their differing senses of themselves as leaders and their alignment with the organizational narrative of collective leadership. These archetypes are mutually constitutive, representing centripetal and centrifugal tendencies in relation to the organizational narrative of collective leadership. We show how individuals committed to collective leadership nevertheless construct an individual leader (the Avatar identity archetype) to embody the collective on their behalf, and this enables them to grant leadership to the collective in the abstract. We emphasise the persistent sacralization of leadership in individual and organizational narratives, even in avowedly collectivist contexts, and the value of narrative-based perspectives in highlighting practitioners’ ability to navigate and accommodate the messy coexistence of collective and individual leadership. Our study shows the importance of integrating dialectically the individual and collective dimensions of leadership, emphasizing the mutually constitutive nature of individual and collective leadership narratives.
... Multidivisional organizations or organizations with multiple hierarchical levels may have different decision-making processes and may respond differently to buyers' preferences. Thus, we also suggest examining firms with different organizational governance structures (e.g., partnerships vs. private and publicly listed companies) which could affect career promotion and hiring rules and the stakeholders to whom firms assign their propensity for proactive gender diversity actions (Greenwood & Empson, 2003). Furthermore, we assumed that gender diversity, as a signal, is observable and meaningful. ...
Research Summary
We offer a rivalry‐based perspective of gender diversity as a form of competitive action. We theorize that a firm adjusts its senior‐level female representation when they identify business opportunities that may be seized by demonstrating alignment to gender parity expectations. Examining U.S. corporate law firms and potential buyers of their services, we theorize and find that when the buyers of rivals of the focal firm increase their gender diversity, the focal firm responds by increasing its female partner representation. Reinforcing the strategic approach to managing gender diversity, we also show that a focal firm reduces its gender‐related response to rivals' buyers as the opportunity to attract those buyers decreases, and when the focal firm can use racial diversity as a credible substitute for gender diversity.
Managerial Summary
Do firms increase senior level gender diversity for normative or competitive reasons? We examine this question and test whether firms adjust their gender diversity to align with the gender diversity values of their competitors' clients. Our study shows that U.S. corporate law firms increase their level of female partners when the clients of their stronger competitors increase gender diversity in their executive rank. We also show that firms' gender diversity response weakens when there is a lower probability of luring those clients and when firms can offer racial diversity as a credible alternative signal of pro‐diversity values. Our competitive‐based view of gender diversity encourages managers to consider how and when proactive gender diversity improvement can be a mechanism for improving their firms' market position.
... Broberg et al. (2013) called this integration of the firm's structures and systems 'firmalization', where professional procedures are integrated into a system of practices and processes in the firm and become the standard for appropriate professional behaviour. Even so, studies have found persistence in the professional values and elements of professional organizations, such as peer decision-making, in these more standardized structures (Greenwood & Empson, 2003;Lander et al., 2013;Lander et al. 2017;Suddaby et al., 2009). ...
Mission maintenance in professional service firms must balance the commercial and professional logics and prevent mission drift. Based on a case study of ‘auditing in action’ in a German professional service firm we argue that mission maintenance results from interactions between the practice and field level. We find that anchors on the field level target individuals’ discretionary choices by balancing competing demands from the commercial and professional logics on the practice level. Therefore, we identify anchoring as a central cross-level mechanism for maintaining the balance between routinizing for professional quality and ‘flexibilizing’ for efficiency on the practice level. With these findings we make two contributions to the literature: an analysis of how the field level can contribute to maintaining organisations’ missions in fields that have competing logics, and the identification of anchoring as a central mechanism to balance competing demands with the expectations of referent audiences on the field level.
... A third example of functional ambiguity is leadership in professional service organizations. Many large commercial professional service organizations are led by a group of professional peers that may consist of several hundred individuals (Greenwood and Empson 2003). Within such a group, there will inevitably be informal hierarchies and power relations. ...
In this comment to Noordegraaf’s ‘Protective or connective professionalism? How connected professionals can (still) act as autonomous and authoritative experts’, we argue that Noordegraaf has contributed significant insights into the development of contemporary professionalism. However, we argue for a less binary and more complex view of forms of professionalism, and for finding ways of understanding professionalism grounded in a relational view of everyday professional work. The first section (by Johan Alvehus) suggests that Noordegraaf’s ‘connective professionalism’ is primarily about new ways of strengthening professionalism’s protective shields by maintaining functional ambiguity and transparent opacity around professional jurisdictions. The second section (by Amalya Oliver and Netta Avnoon) argues for viewing professionalism on a range of protection–connection and offers an approach for understanding how connective and protective models co-occur. Both commentaries thus take a relational, dynamic, and somewhat skeptical view on the reproduction and maintenance of professionalism.
... selection (Young et al. 2008), with strong implications for organizational types that are prone to such challenges. For instance, family firms (e.g., Aguilera and Crespi-Cladera 2012), joint ventures (e.g., Filatotchev and Wright 2011), venture-capitalist-backed firms (e.g., Bruton et al. 2010), professional service partnership firms (e.g., Greenwood and Empson 2003), public-private partnerships (e.g., Phan et al. 2005), trade associations (e.g., Mohr and Spekman 1994), and meta-organizations (e.g., Gulati et al. 2012) may struggle to select CEOs because their principals have competing interests. Delegating governance functions to the board may not be the most suitable choice, particularly when there is high relational uncertainty among principals (e.g., Das and Teng 1996). ...
What happens to intergovernmental organizations (IGOs) after their creation has remained in mystery over the years. Although the current globalized outlook has sparked new and growing interests on the role that IGOs play in the global landscape, the scholarship has largely focused on the political aspects of cooperation, primarily on how and why different IGO member states interact with each other and the outcomes associated with such cooperation. Research is yet to untangle how these organizations work and operate. This Element addresses this niche in the literature by delving into two important aspects: the management and governance of IGOs. We build on a four-year research program where we have collected three types of different data to assess the performance and governance of IGOs, the main characteristics of how they are managed and governed, and also evidence on how they develop their strategies. By analyzing all the evidence, the Element seeks to provide scholars with a description of the inner workings of IGOs, while providing guidance to policymakers on how to design, manage and govern them.
... To this end, we take advantage of the up-or-out system of promotion in U.S. law firms. This is a key feature of professional services firms and requires attorneys to either become partners or leave the law firm after a certain number of years (Greenwood & Empson, 2003). While there are certainly deviations from this, the use of up-or-out system of promotion is widespread among U.S. law firms during our study period. ...
Research summary
Buyer firms respond to supplier employee mobility by reshuffling work among suppliers. However, the extant literature has not considered plural‐sourcing firms which can bring work back in‐house. In this paper, we develop a governance framework in which buyers engage in a comparative assessment of the costs associated with different sourcing modes following supplier employee mobility. Due to the imperfect transferability of social capital and associated uncertainty, buyers face increased contracting costs when supplier employees move. This prompts plural‐sourcing buyers to increase their reliance on insourcing when the costs of adjusting in‐house capacity are relatively low and when the costs of switching to alternative suppliers are relatively high. The analysis of data on patent prosecution activities and patent attorney mobility provides support to our theory.
Managerial summary
This study provides a decision framework for buyer firms when their suppliers experience employee departures. Buyers may choose to (a) stay with the suppliers suffering employee losses or (b) follow mobile employees to their new suppliers. However, in both cases contracting becomes more difficult due to the disruption in supplier relationships or the need to work with new suppliers. There is a third option (c) though which is to bring work in‐house. We explain that buyers opt for option (c) when it is easy to expand in‐house capacity and when the costs of switching to alternative suppliers already in use are relatively high. Thus, supplier employee mobility may lead buyer firms to adjust their reliance on outsourcing even when there are no buyer employee departures.
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... As the auditors work hard, harder and even s o c i a l l y sacrifice their families, think of economic rewards to come in the near future, hoping to be part of ownership of the audit firm they follow the rules from the tradition and autonomy of career in audit firms. This bears on the studies of Greenwood and Empson (2003), Empson (2007) and Carter and Spence (2014) who stress on the efforts put in the engagements by the team members with an aim been compensated as time goes on in the firm. In another look, Gendron and Spira (2010) argue on the sense-making of organisation and professional identity work derived from narratives under threat. ...
... Health care is a knowledge intensive service in which more autonomy in the working pro-cess will better meet the employees' preference for autonomy (Greenwood and Empson, 2003;Malhotra et al., 2006). Autonomy in a professional service is also necessary to enhance employees' satisfaction (Coff, 1997), which then leads to a higher chance of exhibiting customer-oriented behaviors, and individual patients would be well taken care of in the interpersonal aspect. ...
Frontline employees’ adaptive behavior is essential to an interactive and customized service like health care because it contributes significantly to customer satisfaction and loyalty. However, less is known about what factors drive employees to perform adaptive behavior. This research aims to investigate the antecedents and consequences of adaptive behavior (including interpersonal and service offering adaptive behaviors) of frontline employees in the health care service. Based on the data of 418 cases of physicians working at public and private hospitals and clinics, the analysis reveals that interpersonal adaptive behavior is positively affected by employee’s work enjoyment, competence, and autonomy, while service offering adaptive behavior is positively influenced by work enjoyment and competence. In addition, both types of adaptive behavior of frontline employees have significant effects on employee’s service performance. The findings provide benefits to hospital managers. Since work enjoyment, competence, and autonomy positively affect physicians’ adaptive behavior, which then leads to better performance, adequate training on professional knowledge and interpersonal skills for health care practitioners as well as appropriate empowerment practices are highly recommended.
... It is their commitment to quality and public service which underscores a regulative bargain (Cooper et al., 1988) whereby professions are granted labour market privileges like monopolies, restricted practices and selfregulation which would not be tolerated in other sectors of the economy. Similarly, in terms of corporate governance (Mintzberg, 1979;Greenwood & Empson, 2003;Sherer & Leblebici, 2015;Muzio et al., 2016) professional organizations are characterised by high levels of trust and collegiality, responsible autonomy and informal peer control mechanisms. The idea being that quality and integrity depends on the socialization of staff through the professional qualification system rather than on internal controls or any other form of procedural regulation. ...
Professional misconduct has become seemingly ubiquitous in recent decades. However, to date there has been little sustained effort to theorize the phenomenon of professional misconduct, how this relates to professional organizations, and how this may contribute to broader patterns of corruption and wrongdoing. In response to this gap, in this contribution we discuss the theoretical and empirical implications of analyses that focus on the nature, antecedents and consequences of professional misconduct. In particular, we discuss how the nature of professional misconduct can be quite variegated and nuanced, how boundaries between and within professions can be either too weak or too strong and lead to professional misconduct, and how the consequence of professional misconduct can be less straightforward than normally assumed. We also illuminate how some important questions about professional misconduct are still pending, including: how we define its different organizational forms; how it is instigated by the changing nature of professional boundaries; and how its consequences are responded to in professional organizations and society more widely.
... Much organizational research is conducted in publicly traded corporations-hence the considerable attention to the role of boards of directors as conduits though which stakeholder interests and their normative preferences are represented (for a review, see Hillman & Dalziel, 2003). But other forms of ownership exist-including "partnerships" (e.g., Greenwood & Empson, 2003) and "not-for-profits" (Chen & O'Mahoney, 2011;Hwang & Powell, 2009)-that are distinguished by participation in decision processes that is wider and more inclusive than would be expected in the more hierarchically ordered publicly traded corporation. Our suspicion is that these types of organizations find responding to institutional complexity particularly problematic because of difficulties they experience in securing widespread cooperation and agreement (e.g., Cooper et al., 1996;Malhotra & Morris, 2009). ...
... For example, work for a project-based enterprise may be temporary with regard to the team as well as the organization, however, over time it may still be experienced as secure and long-term in orientation if these collaborations provide ground for long-term professional and career commitment. In this way, the investment lies in building relationships and sustainable careers, which enables workers to stay competitive in the labour market (Greenwood & Empson, 2003;Løwendahl, 2005). ...
This position paper presents the state of the art of the field of workplace commitment. Yet, for workplace commitment to stay relevant, it is necessary to look beyond current practice and to extrapolate trends to envision what will be needed in future research. Therefore, the aim of this paper is twofold, first, to consolidate our current understanding of workplace commitment in contemporary work settings and, second, to look into the future by identifying and discussing avenues for future research. Representative of the changing nature of work, we explicitly conceptualize workplace commitment in reference to (A) ‘Temporary work’, and (B) ‘Cross-boundary work’. Progressing from these two themes, conceptual, theoretical and methodological advances of the field are discussed. The result is the identification of 10 key paths of research to pursues, a shared agenda for the most promising and needed directions for future research and recommendations for how these will translate into practice.
... Entrepreneurial ecosystem governance. The PSF literature has emphasized different forms of firm-level governance ranging from collegial, managerial to entrepreneurial forms (e.g., Grabher, 2001;Greenwood & Empson, 2003;Harlacher & Reihlen, 2014). Yet, the governance of alliances of PSFs and ecosystems has not been subject to much research, if at all. ...
Although there is agreement on the role of the client in the innovation process in professional service firms (PSF), other actors have not been systematically integrated into theory building on the professional service innovation. Drawing on the entrepreneurial ecosystem literature, we develop an entrepreneurial ecosystem framework for the PSF field. The conceptual framework describes and explains the key aspects of the PSF entrepreneurial ecosystem, as well as its dynamics. This article contributes by shifting the debate about professional service innovation with a focus on the professional service firm and its clients to consider the broader entrepreneurial ecosystem of PSFs. We conclude by discussing future research opportunities on entrepreneurial ecosystems in the PSF field.
... Each individual project requires a (slightly) different strategy. Firms are often relatively small and predominantly organized as partnerships or private corporations in which professionals dominate the decision-making hierarchy (Greenwood & Empson, 2003). Due to a strong professional ethos, strategic decisions are always taken against the backdrop of professional beliefs. ...
How do organizational members handle tensions between identity and strategy in their strategizing processes? Identity-strategy struggles are particularly salient in creative professional service firms as these firms have to reconcile the often-competing value systems that they are based upon. Creative professionals continuously negotiate the values and beliefs of the different groups they belong to with their organizations’ professional and commercial goals. Yet, there has been little empirical research on their strategizing, possible inherent identity-strategy tensions and consequences for the organization. This research examines how identity work and strategy work of creative professionals are interrelated based on observational data from strategy sessions at 17 architectural firms. We found that practitioners continuously frame the arena of strategic options based on their professional identity, thereby strengthening organizational identity. The research contributes to the body of literature on strategy-as-practice by articulating how professional aspects of identity enable and constrain practitioners to shape and be shaped by their strategic actions and decisions.
... Organizational identity can foster group cohesion within a diffuse authority structure and can act as an informal means of control or managerial regulation among relatively autonomous individuals (Alvesson & Wilmott, 2002). A shared understanding of organizational identity can, therefore, help to mediate the potentially divisive effects of a diffuse authority structure that is enshrined within the partnership form of governance (Dirsmith, Heian, & Covaleski, 1997;Greenwood & Empson, 2003;Greenwood, Hinings, & Brown, 1990). A diffuse authority structure will make it easier for accountants to pursue their self-interests, but their self-interests are more likely to coincide with the interests of the organization if their selfconcepts have been shaped by a strong and shared understanding of their organizational identity. ...
This study creates a framework for analysing organizational identity change and examines the process in the context of a global accounting firm's acquisition of a UK mid-market accounting practice. It identifies the parallel processes which facilitate organizational identity change: identity regulation on the part of senior management and de-and re-identification on the part of organizational members. The study explores how changes in organizational identity are inextricably connected to organizational members' changing conceptualisations of professional identity.
... This finding is particularly relevant to professional services firms that are highly vulnerable to the loss of both human and social capital (Coff, 1997). Furthermore, unlike previously identified practices of partnership governance and collegial controls (Greenwood & Empson, 2003;von Nordenflycht, 2011: 141), the effectiveness of multiplex relationships for relationship retention is not limited to small firms. Thus, in contrast to a view that human capital-intensive firms are easily held up by the human assets of which they are comprised, the findings of this study show that, in fact, firms can reduce this vulnerability by distributing control of exchange relationships across units of the firm. ...
... Mistakes in business decisions can be more easily fixed given the flexibility to re-allocate intangible assets (Kogut & Kulatilaka, 1994), thus diminishing the costs associated with the liability of foreignness. Besides, the international expansion of KI service firms is often driven by a follow-theclient strategy (Contractor et al., 2003;Greenwood & Empson, 2003). ...
This research explores the relationship between multinationality and firm performance (M-P) in the context of micro-multinational enterprises (mMNEs) within the service sector. We examine the moderating effects of industry characteristics using a data set of 1082 Spanish service mMNEs over an eight-year period. The empirical results provide statistical evidence that knowledge-intensive service mMNEs exhibit an inverted U-shaped M-P relationship, while capital-intensive service mMNEs present a U-shaped relationship. Our findings demonstrate that knowledge-intensive service mMNEs increase their performance in the initial stage of multinationality, encounter a threshold of internationalization at relatively low levels of multinationality and have a propensity to over-internationalize. By comparison, capital-intensive service mMNEs experience negative performance effects at low levels of multinationality and positive ones as they further internationalize. Given that their operations are scale-sensitive, they tend to expand internationally by concentrating their operations in few foreign markets as a means to overcome the liabilities of internationalization and smallness. We contribute to the literatures on multinationality research in the service sector and on SME internationalization by showing that the effects of multinationality on the performance of mMNEs depend on industry characteristics and that such contextual factors provide a better understanding of the M-P relationship.
... However, in this study, the finding is tending to be divergent by which partnership businesses show higher survival rates than a sole proprietorship or private limited firms. So far, support for the theory is lacking except for Greenwood and Empson (2003) that claimed partnership form has been theorised to be an important attribute of the performance for professional service firms. Accordingly, this finding provides new evidence that simultaneously broadens the theory, in the case of SMTAs business survival. ...
Small and medium-sized tourism accommodations (SMTAs) are the backbone of the accommodation sector in Malaysia. Despite of its importance, SMTAs possess a history of business failure. To this thesis, the failure rates could be reduced provided that failure symptoms are recognised prior to business failure. To address this situation, this thesis investigates the determinant factors of SMTAs’ business survival in Langkawi Island, Malaysia. A self-administered questionnaire was distributed to 99 Malaysian entrepreneurs to elicit information on their entrepreneurial characteristics, business characteristics and business strategies. The data was analysed using survival analysis. The results showed that older and larger SMTAs demonstrated higher business survival rates than younger and smaller firms, while partnership firms possess higher survival rates than sole proprietorship or private limited firms. Conversely, entrepreneur characteristics and business strategies provided no effect to the business survival of SMTAs. The results also discovered that entrepreneur’s motivation and business location are the two factors that indicated the greatest impact on the survival of SMTAs in Langkawi Island. In particular, entrepreneurs who are encouraged by negative motivation and SMTAs located in Kedawang area were found to have higher survival rates compared to their counterparts. Results of this thesis contribute to an added value pertaining to SMTAs growth and survival within the context of island destinations in Malaysia, and the results should be of interest to the government, related agencies, investors and entrepreneurs in comprehending the reasons why some businesses survive while others not. In addition, this thesis suggests an alternative approach for assessing factors that influence business survival by using survival analysis technique instead of common approach namely multiple discriminant analysis and logistic regression.
... Sharma (1997) has been extensively cited (i.e. Greenwood, Deephouse, & Li, 2007;Greenwood & Empson, 2003;Greenwood et al., 2005) as a source extending traditional agency theory on the client-professional exchange. While it might be admirable to attempt to develop 'grand' theories that can explain a wide range of phenomena within its field, different theories are likely to have applicability and explanatory power depending on the circumstances under which a phenomenon takes place. ...
Structured Abstract
Purpose – This conceptual paper addresses the nature of value creation in professional service firms (PSFs). An extensive number of scholars have been looking at PSFs within law, consulting and engineering to understand knowledge as sources of competitive advantage. A dominant part of this literature build on agency theory to suggest that information asymmetry is an important characteristic and precondition of value creation in professional services. This paper identifies a contradiction in the notion of information asymmetry in reference to professional services firms.
Design/methodology/approach – The paper reviews theoretical contributions explaining the value creation processes in PSFs. While the context of professional services might be considered marginal in reference to agency theory, knowledge has been identified as one of the key sources of competitive advantage in the 21st century, and understanding how to develop and leverage such sources of advantage has gained extensive interest. In addition, the context of knowledge intensive and professional services has been referred to as extreme and strategically relevant to understand knowledge based value creation.
Originality/value – We argue that it is necessary to revisit the assumption of information asymmetry for two main reasons: First, any asymmetry that is proposed to exist is that of knowledge rather than information. Secondly, value creation in the context of PSFs is characterized by mutuality rather than asymmetry as co-production with clients as a core component in PSFs value creation. While PSFs might have superior esoteric professional knowledge, buyers often have superior knowledge of their own context and problem. Both of these types of knowledge are relevant in the value creation in PSFs due to the contextual and customized nature of the services they provide.
Practical implications – Two important contributions are suggested in the paper: First, the characteristics of value creation of PSFs should be revised and extended by the inclusion of knowledge asymmetry and mutuality. This is important for practitioners in that the co-operative and mutual nature of value creation needs to be recognized and nurtured, which has impact of the conduct of both suppliers and buyers of professional services. Secondly, this more complex nature of value creation needs to be recognized from an institutional perspective in that the certification of professionals should incorporate and promote the mutuality and the importance of client needs while at the same time emphasising esoteric professional knowledge and attitude and the desire to deliver what is objectively best for the client.
El objetivo del trabajo es identificar el posicionamiento ético del contador público y explorar potenciales riesgos en la pequeña firma de servicios profesionales asociadas a su plan de integridad y que requieran, en una etapa posterior, un mapeo de riesgos.
Se trata de un estudio es de carácter descriptivo aplicando la metodología cualitativa de tipo fenomenológica. Los datos recolectados surgen de una muestra de los profesionales matriculados del ámbito territorial de la Delegación Tandil del C.P.C.E.P.B.A.
De los resultados presentados se pudieron identificar algunos potenciales riesgos inherentes al ejercicio profesional de los contadores participantes del estudio como el fraude laboral, la ciberseguridad, la dependencia de proveedores de TICs, la gestión del talento humano, los controles por parte de los organismos del estado, la competencia, la reputación del servicio, el modelo de negocio y el aspecto comunicacional. Adicionalmente se asociaron a cada tipo de riesgo potencial comentarios o acciones que podrían mitigarlo. En relación con el posicionamiento de los profesionales en relación con la ética, los entrevistados la consideran como un valor inherente a la persona, predominando las valoraciones negativas sobre la regulación profesional, marcando insistentemente la poca utilidad de un código de ética profesional.
While there has been ample research on the roles of managers, no similar studies have been conducted regarding the roles of Managing Partners in law firms – a subgroup of professional service firms (PSF). However, the many differences between PSFs and industrial or other service providers suggest that the existing research on the role of managers cannot be applied to law firm Managing Partners. In order to fill that gap and analyze the roles of law firm managers, evidence was collected in 34 interviews with 36 Managing Partners from large and mid-size law firms in the DACH-Region (Germany, Austria and Switzerland) regarding their function as their firms’ top managers. Analysis shows that while the Managing Partner function varies considerably between law firms, the activities of Managing Partners can be clustered into 15 distinct roles. This study adds empirical evidence to the existing practice literature and supports our understanding of the Managing Partner function in law firms and other PSF.
La crisis sanitaria mundial provocada por el COVID-19 produjo una sustancial disminución de la actividad empresarial, que podría generar mayor riesgo de incumplimiento normativo debido a la flexibilización de los requerimientos regulatorios, la ampliación de las actividades colaborativas entre competidores y la generalización del teletrabajo. En este contexto, por demás disruptivo, los contadores públicos deben intervenir en procesos sociales con intereses diversos, asumiendo nuevos roles que les son requeridos en la emergencia.
A su vez, en el país se vienen sumando normas que regulan las interacciones entre funcionarios del estado y de las personas jurídicas, en contextos altamente afectados por delitos asociados a la corrupción. El compliance y el Plan de Integridad que lo conforma, resultan en estos tiempos de vital importancia y de allí nuestro interés por abordar los desafíos que se presentan a la profesión contable en el marco de este interesante tópico, conformando el centro de nuestro proyecto de investigación.
Chapter 2 describes the business model of a professional firm as well as the archetypes that dominate our business today. This gives us the building blocks to construct a model that meets our needs.
CEO selection is a crucial governance function influencing and driving the strategic direction of organizations. Extant research has largely assumed that boards are an efficient mechanism vested with the CEO selection function. However, boards are not always delegated with this function. In some organizations, the principals directly select the CEOs to keep effective control over the organization. Drawing on the clashing rationales of control and efficiency, this article identifies the factors influencing the governance choice of whether CEO selection is directly carried out by the principals or channeled through the board. Using a Bayesian logistic regression on a dataset of all global intergovernmental organizations, we find that the substantive character of ownership (i.e., capacity and incentive) matters more than the structure (i.e., diversity and dispersion) in such a governance choice. We also find that organizational characteristics barely have direct and moderating effects on the relationship between ownership structures and the governance choice of CEO selection. Our study has important implications for the literature on CEO selection, and strategic corporate governance research in general.
Abstract
The symposium convenes a number of the most prominent scholars in the study of professional service firms (PSFs) for a dialogue on research focusing on PSF governance. The symposium seeks to further a new research agenda which can address the shortcomings of the extant research Professional Service Firms are a growing part of global business, many PSFs are comprehensively international and PSFs are one of the largest groups of private employers of professional knowledge workers. However the research into these firms are often limited in scope and do not facilitate comparisons across disciplines (e.g. law, architecture, HRM consulting), countries and even within the same professional discipline. There is also a limited depth in many studies, not taking into account for instance the development of the HRM practices as a part of PSF governance. This makes it very difficult to analyze data in a way which can support a theorization of PSF governance as a specific phenomenon. The idea behind the symposium is to start the mobilization of an international research network which by sharing a research format can generate more comparable data on the governance in PSFs."
Management consulting firms are often discussed as being the firms whose core product is knowledge itself. However, despite the fact that consulting firms are generally aware of the value of knowledge for their own organizations and for their clients, the empirical evidence shows that even today the (economic and, above all, cognitive) value-creation potential related to the transition from consulting approaches geared to the transfer of “best practices” (consultant as expert) to consulting approaches geared to the cooperative creation of new knowledge and managerial capabilities (consultant as a facilitator of new managerial knowledge and capabilities creation processes) is rarely consciously perceived and, consequently, is not adequately planned for and exploited. This book interprets management consulting from a knowledge perspective, and proposes a general conceptual framework for investigating and interpreting that potential.
The legal profession is undergoing fundamental changes; and this is the case not just in established legal markets. Based on a state-of-the-art sketch, this paper identifies and analyzes the latest innovation initiatives and alternative business models in China’s legal profession. It finds that, propelled by market demands and benefiting from technological advancements, the provision of legal services has become highly versatile today, giving rise to various alternative service providers, especially the rapidly rising online legal service portals. Because they are technically not law firms, the exclusivity requirements on lawyer ownership and legal service provision are not applicable to them. In the meantime, the competition for large corporate clients and lucrative business transactions is fierce and will continue to be so, not only within the club of big Chinese corporate law firms, but also between Chinese law firms and international law firms globally. In this course, some leading big corporate law firms in China are observed to have creatively incorporated key corporate features in running their business and compensating their partners, effectively deviating from the partnership + pure legal services regulation. Such market realities question the necessity and effect of the regulatory restrictions on law firm legal form and ownership structure, and call for an agenda for related research in the future.
In the Architecture, Engineering and Construction (AEC) sector, information flow and knowledge management influence how companies organize, work and produce, which can be represented in a social network analysis (SNA). Information flows are a critical activity for the work done in architecture firms. The objective of this study is to analyse the social structure of architecture firms to determine how to address information flow and knowledge management. The study is part of benchmarking research related to SNA, management practices and Key Performance Indicators (KPI) in architectural offices. After an extensive literature review, a survey was implemented to develop the SNA. Findings show network type shown by the office depends on its organizational infrastructure. There are also behavioural patterns; it is possible to observe that as the firm's size increases, the density of the work-related connections in the network decreases and the average length of the path between the nodes within the network increases. Therefore, we can conclude that when offices have more human resources, as well as a pyramid structure and defined hierarchy, information flow is concentrated in small groups.
This study contributes to our understanding of the link between the multiple foci of commitment (i.e. organization, profession, team, and/or client) and the intention to quit in a knowledge-intensive organizational context. This link is important to understand given that KIOs are reliant upon the commitment of their employees in order to survive. Drawing upon the Theory of Attitudes, which enables us to link commitment and intention to quit, and the Field Theory, which enables us to understand how employees commit to various foci, we ask two research questions: (1) What is the independent impact of the professionals’ commitment to the organization, profession, team, and client on the ability of the organization to retain professionals? (2) What is the impact of the interaction between these foci of commitment (i.e. organization, profession, team, and client) and retention? Multiple regression analyses are based on data from 282 employees of a global KIO which provides outsourcing and consulting services on HRM and employment services to around 40 global clients. Our findings show that (i) organizational commitment and team commitment are negatively, and profession commitment is positively related to the professionals’ intention to quit; (ii) organizational–profession commitment interaction is negatively, and team profession commitment interaction is positively linked to the intention to quit of professionals. These results are further interpreted by drawing on 34 semi-structured interviews conducted with the professionals from the same global knowledge-intensive organization. Our results have significant implications for the leaders in KIOs as retention of such valuable human capital is central to their success.
The UK Legal Services Act 2007 permits external financing and unlimited non-lawyer ownership of legal practices through the formation of Alternative Business Structures (ABSs). For many, the impact of this changed regulation on the ‘professional partnership’, as the dominant organizational form through which legal services are delivered, will be considerable. However, to date few studies have explored this empirically. This paper addresses this gap by examining organisational changes within ABSs to assess how far these firms have departed from the professional partnership model. Focusing upon the ABS population licensed by the Solicitors Regulation Authority between January 2012 and August 2015, the study findings show a continuum of organizational responses against four specified indicators: incorporation, multi-disciplinary practices, non-lawyer ownership, and external investment. These range from those that depart little from traditional practices to those that are more radical. We conclude that, whilst regulatory reform has yet to dislodge the dominance of the professional partnership, it has disturbed the status quo and increased the variety of ‘economic units’ within which legal services are delivered.
A shift away from “up-or-out,” theconventional promotion system in professional servicefirms, has been explained as part of a wider set ofchanges in internal labor market arrangements andmanagement methods. This is investigated empirically in a sample oflarge partnerships in one profession. Up-or-out was usedby less than one-third of the sample of firms but iscommon among the largest firms. Internal reforms to the professional firm do not fully explainits rarity; up-or-out appears to be adaptable to newforms of management and internal labor market policies.This raises a number of questions about the utility of theoretical explanations of how professionalservice firms work or are changing.
We propose a theory of the market as an "intertemporal" process that integrates multiple theoretical perspectives. Using event-history methods, we analyze the dissolution of interorganizational market ties between advertising agencies and their clients as a function of three forces - competition, power, and institutional forces. The informal "rules of exchange" institutionalized in the "emergence" phase of the advertising services market include exclusivity (sole-source) and loyalty (infrequent switching). We find that most exchange relationships between advertising agencies and their clients are indeed exclusive, and most last for several years; but competition, power, and institutional forces support or undermine these rules. Most institutional forces reduce the risk of dissolution of agency-client ties. Powerful advertising agencies mobilize resources to increase tie stability, but powerful clients mobilize resources to increase or decrease stability. Competition is the weakest market force, but it has a consistent and substantial effect on tie dissolution: Competition always increases the risk of dissolution. We conclude that the market is institutionalized as imperfectly repeated patterns of exchange, because competition and changing norms about the duration of market ties destabilize market relationships.
We integrate resource dependency and institutional theory to argue that resource scarcity drives, and legitimacy enables, institutional change. Building on a historical account, we examine the sources and timing of innovation departing from standard human resource practices using event history analysis of over 200 principal offices of large law firms. Offices with human resource scarcity innovated to acquire alternative resources; highly prestigious offices had the legitimacy to be first or early adopters. Our findings highlight the value of looking to the resource side and to the notion of legitimacy in building an institutional theory of change.
Tournament models have developed into an important component of the theoretical literature on organizational reward systems. However, with one exception there have been no empirical tests of the incentive effects of tournament models in a field setting. Drawing on a panel data set from auto racing, we show that the tournament spread (prize differential) does have incentive effects on both individual performance and driver safety, that these effects peak at higher spreads, and that controlling for the dollar value of the tournament spread, the prize distribution has little influence on individual performance.
A shift away from "up-or-out," the conventional promotion system in professional service firms, has been explained as part of a wider set of changes in internal labor market arrangements and management methods. This is investigated empirically in a sample of large partnerships in one profession. Up-or-out was used by less than one-third of the sample of firms but is common among the largest firms. Internal reforms to the professional firm do not fully explain its rarity; up-or-out appears to be adaptable to new forms of management and internal labor market policies. This raises a number of questions about the utility of theoretical explanations of how professional service firms work or are changing.
Previous studies of knowledge transfer have identified a variety of impediments that derive from the knowledge base and the organizational context. However such explanations do not take account of the central role that individuals play in the knowledge transfer process, specifically in articulating and legitimizing the knowledge base and in shaping and interpreting the organizational context. This article examines the merger process as experienced within six accounting and consulting firms. It finds that professionals resist knowledge transfer when they perceive that the merging firms differ fundamentally in terms of the quality of their external image and the form of their knowledge base. Whilst professionals may attribute their resistance to commercial and objective concerns, their responses are also governed by highly personal and subjective factors. This study identifies this complex combination of factors as the twin fears of exploitation and contamination.
This paper identifies two archetypes in large Canadian law firms to show how ideas of professionalism and partnership are changing, due in part to shifts in discourses in the wider institutional context. These changes in discourse themselves alter the interpretation of organizational structures and systems. This theme is explored through the concept of tracks and sedimentation. We explore the emergence of an organizational archetype that appears not to be secure, and which results in sedimented structures with competitive commitments. The geological metaphor of sedimentation allows us to consider a dialectical rather than a linear view of change. Case studies of two law firms show how one archetype is layered on the other, rather than representing a distinct transformation where one archetype sweeps away the residues of the other.
This paper analyzes the survival of organizations in which decision agents do not bear a major share of the wealth effects of their decisions. This is what the literature on large corporations calls separation of 'ownership' and 'control.' Such separation of decision and risk bearing functions is also common to organizations like large professional partnerships, financial mutuals and nonprofits. We contend that separation of decision and risk bearing functions survives in these organizations in part because of the benefits of specialization of management and risk bearing but also because of an effective common approach to controlling the implied agency problems. In particular, the contract structures of all these organizations separate the ratification and monitoring of decisions from the initiation and implementation of the decisions.
Despite the growing number of studies of professionals in organizations, surprisingly little attention has been given to the way in which professions shape organizations. This research addresses this issue by examining the determinants of formal structures in large law firms for decision making in two areas: compensation and promotion. We argue that the structures for compensation decisions are strongly influenced by contemporary business strategies adopted by law firms, as indicated by a number of organizational characteristics. Because promotion decisions are closely tied to the institution of professional authority, however, structures for these decisions are largely unaffected by such strategies. The implications of this study for a number of lines of organizational research are suggested.
Many formal organizational structures arise as reflections of rationalized institutional rules. The elaboration of such rules in modern states and societies accounts in part for the expansion and increased complexity of formal organizational structures. Institutional rules function as myths which organizations incorporate, gaining legitimacy, resources, stability, and enhanced survival prospects. Organizations whose structures become isomorphic with the myths of the institutional environment-in contrast with those primarily structured by the demands of technical production and exchange-decrease internal coordination and control in order to maintain legitimacy. Structures are decoupled from each other and from ongoing activities. In place of coordination, inspection, and evaluation, a logic of confidence and good faith is employed.
The resource-based view proposes that reputation is a resource leading to competitive advantage. Past research tested this by using Fortune ratings to measure reputation, but these ratings are theoretically weak. This paper integrates mass communication theory into past research to develop a concept called media reputation, defined as the overall evaluation of a firm presented in the media. Theoretical and empirical analyses indicate that media reputation is a resource that increases the performance of commercial banks.
Based upon classical and contemporary theory and empirical research, this text forms a sociological analysis of organizations, focusing on the impacts that organizations have upon individuals and society.
Drawing on neoinstitutional and learning theories, we distinguish three distinct modes of selective interorganizational imitation: frequency imitation (copying very common practices), trait imitation (copying practices of other organizations with certain features), and outcome imitation (imitation based on a practice's apparent impact on others). We investigate whether these imitation modes occur independently and are affected by outcome salience and contextual uncertainty in the context of an important decision: which investment banker to use as adviser on an acquisition. Results of testing hypotheses on 539 acquisitions that occurred in 1988-1993 show that all three imitation modes occur independently, but only highly salient outcomes sustain outcome imitation. Uncertainty enhances frequency imitation, but only some trait and outcome imitation. The results highlight the possible joint operation of social and technical indicators in imitation, illuminate factors that moderate vicarious learning processes, and show asymmetries between learning from success and failure.
An ethnographic field study in Big Six public accounting firms, where management by objectives and mentoring are used as techniques of control, examines how organizations transform professionals into disciplined and self-disciplining organizational members whose work goals, language, and lifestyle come to reflect the imperatives of the organization. The study shows that the scope and effect of these techniques shaped the identities of organizational participants but that the discourse of professional autonomy fueled resistance to these pressures toward conformity. Implications of these results are discussed as they relate to conflict between professionals and organizations and to the critical study of organizations.
Since the late 1960s, a number of U.S. and British law firms have quietly, and successfully, gone global. Traipsing after their far-flung corporate clients, these law firms have slowly but steadily established their own global networks. Unlike the manufacturing firms that preceded them abroad, law firms are essentially service firms, selling the ephemeral products of information, skills, and advice. As such, they rank among the first global providers of information-based services. This article takes a first cut at analyzing and underscoring the internationalization of the legal practice. It explores how law firms have entered the international economy and flags the issues that seem most relevant to their success and sustainability. The four factors that have contributed most directly to their success—size, reputation, "walking assets," and a balance between global and local interests—are not specific to the legal profession but are equally applicable to other information-based industries.
The current study examines the direct and moderating effects of human capital on professional service firm performance. The results show that human capital exhibits a curvilinear (U-shaped) effect and the leveraging of human capital a positive effect on performance. Furthermore, the results show that human capital moderates the relationship between strategy and firm performance, thereby supporting a resource-strategy contingency fit. The results contribute to knowledge on the resource-based view of the firm and the strategic importance of human capital.
This study examines the role of professional associations in a changing, highly institutionalized organizational field and suggests that they play a significant role in legitimating change. A model of institutional change is outlined, of which a key stage is "theorization," the process whereby organizational failings are conceptualized and linked to potential solutions. Regulatory agencies, such as professional associations, play an important role in theorizing change, endorsing local innovations and shaping their diffusion.
Recent sociological arguments have claimed that employee attachment in corporatist organizations is produced, not with direct coercive measures, but indirectly by employers controlling various structural conditions of work. It is argued that this also occurs in smaller organizations that do not exhibit internal labor markets nor other corporatist organization characteristics. Specifically, in smaller organizations that are structured more traditionally with the employer deciding work schedules, pay, distribution of profits, and so on, the features of employee social integration, autonomy/participation, and legitimacy of the authority structure are just as important as they are in the larger corporatist firms. This claim is generally supported with data on the job satisfaction, the organizational commitment, the intent to stay, and the turnover of dental hygienists working in dental offices that are controlled by the employer, the dentist. Work group integration and legitimacy-producting features were found to be especially important. In addition, job satisfaction, not organizational commitment (loyalty), was the crucial intervening variable in the causal process. These data indicate that certain basic conditions of work, such as social integration and legitimacy of the authority structure, are essential for employee attachment to form. The actual work structures that produce these conditions, however, can vary considerably.
In this article I examine those business exchanges in which firms hire professional service organizations and give them limited decisionmaking authority to perform knowledge-intensive tasks. I frame such exchanges within agency theory perspective and invoke the extant literature on professions to delineate several attributes that make principal-professional exchanges intrinsically distinct from others, such as owner-manager agency. In doing so, I question and complement some key assumptions in agency theory and also discuss explicitly how the study of principal-professional exchanges helps highlight important considerations not addressed in the mainstream theory. I then present an expanded framework that integrates agency theory and the literature on the professions and present several propositions to outline four types of restraints on potential opportunistic behavior of professional agents: (1) self-control, (2) community control, (3) bureaucratic control, and (4) client control. The article ends with theoretical and empirical implications.
To improve understanding and design of organizational incentives, we used confidential compensation data obtained for four distinct organizational levels (ranging from plant manager to corporate chief executive officer) to evaluate the ability of tournament, managerial power, and agency theories to explain these observed compensation data. Our results suggest that organizational incentives are most appropriately characterized by a combination of these models, rather than being completely described by a single theoretical description.
Professional work conditions (and not only the general ideology) foster individualism. The professional's sense of power and authority flows not only from his actual command over special knowledge but also from his control over interpersonal situations. The first established professions—medicine, law, the ministry, and architecture—were typically concerned with the problems of individuals. Only indirectly did they define society as their client. Today, individualized service becomes an ideological remedy for the ills of a social situation, a screen for the social problems caused by the bureaucratic systems through which services are delivered—most notably in the medical and teaching professions.
The ideological insistence on individual aspects, the neglect of the whole, merges with specialization to confine the professional in an ideological conception of his role: the importance of narrow responsibilities is consciously and unconsciously emphasized, exaggerating the "dignity" of the functions. The dominant ideology attributes to professionals and experts special prestige as well as "moral and intellectual superiority": sharing in this ideology, professionals can easily mystify to themselves their actual power. Moreover, they are locked into conformity with the role society offers them to play—locked in by their vocational choice, by the particular mystique of each profession, and by their whole sense of social identity.
Finally, the technocratic ideology of science and objectivity excludes from the specialist's concern the social and political consequences of his acts. Nowhere is this truer than in the technical and scientific fields.
Despite the frequent assertion that knowledge management is an important strategic activity, there have been relatively few empirical studies of the processes involved in this, particularly in knowledge intensive firms. The paradox inherent to codification projects is that they are dependent on professional staff willingly transferring the knowledge that often underpins their status. My purpose in this article is to examine whether and how this paradox is resolved by presenting a case study of a knowledge codification project under- taken by a professional service firm (PSF). I argue that the successful assertion of property rights relates, ironically, to its limitation. Codification takes place in a way that does not nullify the consultants’ expert role in front of the client. That there appear to be limits to how far such a reductive exercise can capture the activities of the consultants has implications for grammatical models that aim to describe and theorize about organizational processes or sequences of actions. I discuss these in the latter part of the article.
This study set out to address two basic questions: why do law firm lawyers work as much as they do and why do they feel that their work is invading their nonwork life? The results show that the factors related to the number of hours worked do not necessarily translate into feelings of work spillover and that the number of hours worked is not very important in mediating effects on work spillover. Work motivation was positively associated with the number of hours worked, but unrelated to feelings of spillover. For women, having preschool children is also highly related to hours worked, but this is not important in understanding work spillover. Conversely, factors that were found related to work spillover are not associated with the number of hours lawyers work (e.g., promotional opportunity, social value of work and profit driven). Work overload is the only common determinant. This pattern of findings suggests that the factors associated with hours worked may not necessarily produce feelings of work spillover and it is critical to distinguish between the two variables in order to examine their different antecedents.
The calculation of a population correlation coefficient is important when trying to assess the generalizability of the results of prior research. This paper uses meta-analysis to calculate population correlation coefficients for accountants» job satisfaction with its antecedents, indeterminants and consequences. A total of 16 meta-analyses were carried out for seven antecedents, two indeterminants and one consequence of accountants» job satisfaction. In four of the meta-analyses of samples of all accountants studied, the sampling error variance accounted for all or a large proportion of the variance between the corrected sample correlations and hence the population correlation coefficient could be observed. When the sampling error variance accounted for only a relatively small proportion of the variance between the corrected sample, correlations meta-analyses were carried out, where possible, for sub-groups of accountants working in particular work environments. In one of these subsequent meta-analyses the population correlation coefficient was observed.
This article takes a sceptical view of the functionalist understanding of the nature and significance of ‘knowledge’ in so-called knowledge- intensive companies. The article emphasizes the slipperiness of the concept of knowledge, the ambiguity of knowledge, its role in what is constructed as knowledge work and the evaluation of work outcomes. Given this ambiguity, the management of rhetoric, image and social processes appears crucial in organizations of this kind. Difficulties in demonstrating competence and performance - as well as the significance of producing the right impression - make work identity difficult to secure. However, this is a key element in doing knowledge work. Successful rhetoric, image production and orchestration of social interactions call for the regulation of employee identities.
Recent developments in information technology have inspired many companies to imagine a new way for staff to share knowledge and insights. Instead of storing documents in personal files and sharing personal insights with a small circle of colleagues, they can store documents in a common information base and use electronic networks to share insights with their whole community, even people scattered across the globe. However, most companies soon discover that leveraging knowledge is actually very hard and is more dependent on community building than information technology. This is not because people are reluctant to use information technology, rather it is because they often need to share knowledge that is neither obvious nor easy to document, knowledge that requires a human relationship to think about, understand, share, and appropriately apply. Ironically, while information technology has inspired the "knowledge revolution," it takes building human communities to realize it.
In Almost Like a Whale, geneticist Steve Jones 'updated' Darwin's Origin of Species. Now in Coral: A Pessimist in Paradise, he does the same for Darwin's earlier Structure and Distribution of Coral Reefs. With 150 years or so of hindsight, and with coral in the news as a victim of climate change, Jones has plenty of material to play with. Daniel Pauly — who says he'd have bought the book just for the cover — reviews Coral as one of the 'good reads' in this year's Spring Books special. Elsewhere, Kathleen Taylor reviews The Canon by Natalie Angier. This targets the same market as Bill Bryson's A Short History of Nearly Everything but takes a different tack — and is shorter! Pat Shipman reviews The Invisible Sex, an antidote to male-dominated anthropology.
The personal networks and the attitudes toward clients of a unique set of bureaucratic professionals-corporate giving officers-are examined. Motivated by the finding that the corporate support of a nonprofit is a function of a firm's reputation among contributions professionals (Galaskiewicz, 1985), this paper examines the structure of these professionals' networks and tests to see if proximity results in two giving officers recognizing and/or thinking well of the same nonprofits in their community. Data were analyzed from a survey of 150 publicly-held business corporations in the Minneapolis-St. Paul metro area. The more proximate two officers were in the network, the more likely they were to evaluate prospective donees in the same way. Professional associations had an indirect effect on how giving officers evaluated nonprofits in that actors who belonged to the same association were more proximate in the contact network. Highly professionalized contributions staff in different firms tended to recognize the same nonprofits in their task environment, independent of their proximity in the network. Finally, job status had an indirect effect on how staff evaluated nonprofits. Under conditions of environmental uncertainty, or when two officers were not members of the same professional association, job status influenced proximity in the network. Thus job status, professional associations, and proximity in the professional network each in its own way had some effect on the knowledge and evaluations of giving officers in our case study.
Lawyers have traditionally practiced law in general partnerships with each partner personally liable for all firm obligations. Increasing liability risks have caused many lawyers to consider converting their firms to limited liability enterprises. This Article reviews the limited liability entities now available for the practice of law including the PC, the LLC, and the LLP. The Article describes the limitations on liability inherent in the various entities and suggests constraints mandated by court rules and ethical considerations. The Article next addresses selected operational and tax concerns facing lawyers practicing in limited liability enterprises as well as issues relating to a multistate practice. In conclusion, the Article suggests that limited liability entities should supersede general partnerships as preferred vehicles for the practice of law.
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This paper proposes that organizations overcome problems of market uncertainty by adopting a principle of exclusivity in selecting exchange partners. This general proposition in turn implies two specific hypotheses. First, the greater the market uncertainty, the more that organizations engage in exchange relations with those with whom they have transacted in the past. Second, the greater the uncertainty, the more that organizations engage in transactions with those of similar status. A study of investment banking relationships in the investment grade and non-investment-grade debt markets from 1981 to 1987 provides support for the hypotheses. The implications of this analysis for stratification and concentration in the market are discussed.