Evaluating the Service Operating Efficiency and Its Determinants in Global Consulting Firms: A Metafrontier Analysis

Gowangwoo Park,Kanghwa Choi,Seok-Kee Lee

doi:10.3390/su131810352

Abstract

Knowledge consulting services are one of the fastest growing fields in the knowledge service industry since the 2010s and have been emerging as a core area of the knowledge economy. Accordingly, consulting services are actively sought and provided in various fields, including business strategy and management, accounting, and ICT, and global consulting firms have experienced rapid growth. However, previous research evaluating the performance or service quality of knowledge consulting services is relatively scarce. In particular, there are barely any studies that apply the data envelopment analysis (DEA) model to measure the relative operating efficiencies of consulting firms in the global consulting service field. This study measured the operating efficiency of 27 global consulting firms using DEA. As global consulting firms are managed differently depending on the characteristics of the country in which they operate, the 27 global consulting firms were classified into three groups by region (USA, Europe, Asia) to measure their meta-efficiency (ME), group efficiency (GE), and technology gap ratio (TGR) and identify the causes of inefficiency at global consulting firms. The contextual variables within consulting firms that affect efficiency were analyzed using Tobit regression. Based on the analysis results, this study suggests strategies for enhancing the operating efficiency and realizing sustainable growth in global consulting firms.

Highlights

Accepted: 13 September 2021Deepening globalization, revolutions in information and communication technologies and the advancement of the service industry, and higher income levels of consumers resulting in the sophistication and diversification of demand in the 21st century have all led to the arrival of knowledge-based economies
Revolutions in information and communication technologies and the advancement of the service industry, and higher income levels of consumers resulting in the sophistication and diversification of demand in the 21st century have all led to the arrival of knowledge-based economies
The metafrontier data envelopment analysis (DEA) results showing the group efficiency (GE), ME, and technology gap ratio (TGR) of the individual consulting firms are given in Table 2 below

Summary

Introduction

Accepted: 13 September 2021Deepening globalization, revolutions in information and communication technologies and the advancement of the service industry, and higher income levels of consumers resulting in the sophistication and diversification of demand in the 21st century have all led to the arrival of knowledge-based economies. Unlike past economies, which were centered on labor and capital for creating added value, information and knowledge form the core of competitiveness in a knowledge-based economy. In this sense, consulting services, which use a relatively higher input of knowledge to augment existing industrial expertise and provide innovative and new knowledge and information to various firms, have been recognized as a “knowledge-intensive business service (KIBS)” among the many businesses and services that have gained greater attention with the emergence of knowledge-based economies (OECD, 2007). The demand for business consulting services across various fields—customer experience, M&A and divestitures, change management, performance improvement practices, and sustainability—has been rising over the recent years as firms seek to strengthen their global competitiveness and maximize corporate value amid rapid changes in the business environment. Along with the continuous growth of global companies, firms that provide consulting services have undergone enormous changes both in quantity and quality.

Methods

Results

Conclusion