Beyond dichotomies: a multi-stage model of governance in professional service firms

Abstract

This study asks: how does governance change over time as a professional service firm (PSF) increases in size and complexity? Governance has long been a central theme in the literature on PSFs. Previous studies have presented dichotomized models of organizational archetypes and legal forms: professional partnership versus managed professional business, adhocracy versus professional bureaucracy, partnership versus corporation, private versus public corporation. The current study argues that this approach ignores the variety of governance forms within the PSF sector– in reality a PSF will adopt multiple forms of governance over time as it increases in scale and complexity. Adapting Greiner’s classic model of the stages of organizational growth, this study presents a multi-stage model of governance in PSFs. The study highlights the crises and reversals that may occur during this process of evolution by presenting two cases: a small, young corporation and a long-established, large global partnership. The chapter concludes by analyzing the key conceptual differences between Greiner’s generic model and this study’s PSF-specific model and argues that these differences are associated with the distinctive nature of power dependencies within a PSF.