Global Professional Service Firms Research Articles

Professional service firms and the manufacturing of the corporate nobility

AbstractGlobal professional service firms (GPSFs) are key actors in contemporary capitalism. They (co-) produce and disseminate new business practices, linking firms, sectors, and countries, integrating them into a global system. We examine a second, less studied function of these firms: underpinning capitalism’s status hierarchies. We ask whether these firms have emerged as producers of a new corporate nobility—as an extension of elite universities, and as a stepping stone in the selection and promotion of top executives. Focusing on the US, we ask: do global professional service firms merely amplify the credentials of elite universities, or can they compensate for an absence of an elite education in the careers of US top managers? and do professional service firms equip future top managers with specific expertise or merely with symbolic capital? Based on a sample of 2,610 top executive managers from leading American firms in 2005 and 2018, we study the role law, consulting, or audit firms played in their careers. Using multinomial regression analyses, we find that the career function of GPSFs varies: consulting firms amplify existing status and enhance the symbolic capital of alumni, aiding their ascent to the most prestigious jobs in US top firms. In contrast, top managers leverage audit firm roles to compensate for a non-elite background, yet then tend to be channelled into narrow, specialist roles in top management. We relate these results to Bourdieu’s state nobility analysis and propose an augmented typology of these firms at the heart of contemporary capitalism.

Effective horizon management in transnational administration: Bespoke and box‐ticking consultancies in anti‐money laundering

AbstractEfforts to combat global money laundering have established a transnational administrative regime that provides peer review mutual evaluations that are coordinated among national public administrations. Led by the Financial Action Task Force, this regime encourages compliance with anti‐money laundering (AML) standards to detect “effectiveness” in administrative capacity despite an absence of reliable data on money laundering activity. This article examines how national administrations engage different types of consultants in the preparation of mutual evaluations. I distinguish between the use of bespoke consultants who actively interpret effectiveness by wealthier countries, and “box‐ticking” consultants from global professional service firms which developing countries are more reliant on. As such, the transnational administration of AML governance and its links to consultants reflects and reinforces global power asymmetries. Wealthy countries can positively use consultants to manage their policy horizons, while developing countries are left with short‐term compliance that is not aimed at building administrative capacity.

Seeding the cloud: Consultancy services in the nascent field of cyber capacity building

Transnational issues in public administration are charged with coordination problems between public and private actors. This is especially true for nascent issue fields. The mitigation of global cyber risks represents one such emerging issue. International organizations have encouraged the development of cybersecurity strategies as an integral part of national security regimes and to strengthen the global security environment. Cyber capacity building (CCB) efforts respond to these calls and disseminate digital risk management to recipient states. At a time where public administrations have not determined a position on CCB, global professional service firms have affirmed the importance of external third-party knowledge on cybersecurity issues. They are “seeding the cloud” to benefit from the field as it matures. Through the application of the Strategic Action Field framework, I highlight how field dynamics are shaped through framing contests and reflected in the practices of policy production.

Protectionism through legislative layering: Implications for auditors and investors

Protectionism is on the rise. Although it tends to be associated with tariffs on imports, governments are increasingly applying other mechanisms to influence international business. Import substitution initiatives have been used to replace purchases from foreign producers with local alternatives. Russia implemented import substitution through legislative layering where layers of regulation created requirements targeting different industries and companies. Following sanctions imposed in 2014 on Russia, the government responded with additional import substitution efforts. We are interested in effects of such measures on the Big 4, global professional service firms, and the choice of auditors by partially privatized enterprises (PPEs). PPEs have more complex multilevel agency problems because it is less clear who is in charge. We find that companies with state ownership were more likely to switch away from the Big 4, and this was more pronounced for companies in strategic industries. It also contributed to companies switching from the Big 4 to the next tier of audit firms. After 2015, PPEs were less likely to receive a modified audit opinion on IFRS audits. However, auditor changes did not occur at the cross-listed enterprises that are under enhanced monitoring from global investors and foreign stock exchanges.

From cultural differences to cultural globalization: towards a new research agenda in cross-cultural management studies

Purpose This paper responds to calls for a new raison d’être in the field cross-cultural management (CCM) and culture-sensitive studies of international business (IB) more broadly. It argues that one way of addressing the crisis of confidence in the field is to develop a line of inquiry focussed on corporate-driven cultural globalization. This paper also proposes a theoretical approach informed by international political economy (IPE) and postcolonial theory and outlines a research agenda for future work on cultural globalization. Design/methodology/approach The paper is a desk-based analysis that draws on relevant research in the wider social sciences to insert cultural globalization into the CCM/IB field’s intellectual project. Findings The paper finds the field of CCM and culture-sensitive IB studies more broadly to be almost exclusively focussed on studying the impact of cultural differences. Surprisingly, little attention has been devoted to the phenomenon of corporate-driven cultural globalization. Research limitations/implications The paper redirects the field and presents a research agenda, calling for studies on the role of four related actors in cultural globalization: MNEs, global professional service firms, business schools and CCM/IB researchers themselves. Practical implications CCM/IB scholars may be able to reorient themselves towards the phenomenon of cultural globalization and, in so doing, also seize an opportunity to contribute to important debates about it in the wider social sciences. Originality/value The paper suggests possibilities for renewal by redirecting CCM/IB towards the study of cultural globalization and by encouraging the field to develop a postcolonial sensibility in future research on the phenomenon.

Neo-colonial dynamics in global professional service firms: a periphery perspective

ABSTRACT This article analyses neo-colonial dynamics at peripheral units of a Western global professional service firm. Drawing on postcolonial theory, an empirical study at global news agency Reuters’ subsidiaries in Mumbai and Bangalore shows how socio-ideological and technocratic control mechanisms allow subsidiary workers to elevate their status, while still cementing their role as dominated in the global hierarchy and silencing any resistance. Thus, on the one hand, it might appear that the global service firm provides periphery units the opportunity to become equals of core units, representing a ‘nurturing’ role achieved by instilling aspirational values and shaping imaginations. On the other hand, coercive and universalising routines such as performance assessments highlight the ambivalent nature of global firm initiatives to incorporate the periphery on an equal footing with core units, demonstrating the countervailing nature of contemporary power relations.

Global professional service firms as agents of globalization: a political perspective

In the last few decades, ‘global’ professional service firms (GPSFs) have emerged as major international businesses. Whilst a lively debate in management studies has developed in recent years over the intra- organizational implications of this phenomenon, the role of GPSFs in the globalization of the world economy has received scant attention. In this paper, we address this imbalance through an inter-disciplinary synthesis of the literature at the intersection of the professions and transnational governance, and apply a political perspective to frame our analysis. Our contribution is twofold. First, we argue for a broadening of the research agenda of management studies to better elucidate the critical role of GPSFs as world organizers. This role, we argue, should become a core theme in research given that GPSFs are no longer just businesses engaged in cross-border work and investment but are highly active participants in transnational governance. Second, we shed light on and conceptualize the specific power strategies deployed by GPSFs as part of their role as world organizers. We develop an integrative framework which, firstly, distinguishes between governance ‘design’ and ‘implementation’ and, secondly, specifies how GPSFs exert power in each of these related areas. This model provides a theoretical scaffolding for understanding how GPSFs become ‘lords of the dance’ (Scott, 2008) in the world economy.

Professionals with borders: The relationship between mobility and transnationalism in global firms

Recent claims assert that the transnational has displaced the national in importance vis-à-vis the governance of international professional organizations. Crucial to such claims are assumptions about rising geographical mobility and the emergence of cosmopolitan professionals who are increasingly detached from national professional regimes and contexts. We interrogate claims about the importance of transnational spaces through a cross-national study of global professional service firms in 12 countries. Our study demonstrates how the imperatives of client service, the locally rooted nature of social capital and cultural barriers all contrive to limit the ability and necessity of professionals to move across borders in their work and the pursuit of successful careers. The vitality of transnational firms appears to depend on professionals who are, for the most part, locally groomed – professionals with borders - who may only experience one short period of limited geographical mobility, usually early in their careers. Where transnational mobility is in evidence, it tends to take a more virtual than physical form. These results temper arguments about the rise and, certainly, extent of, physical mobility among elite employees of global professional service firms and, in turn, about the extent to which the transnational has supplanted the national as the most important frame of reference for professional organization. Rather, they support views that see the transnational and local as co-existing and interconnected.

Money, honour and duty: Global professional service firms in comparative perspective

Research on professional service firms describes these organizations as having been increasingly colonized by commercial imperatives over the last 30 years. Extant studies contrast this now dominant ‘commercial logic’ – which privileges revenue generation - with a ‘professional logic’ – which privileges public service. There are two problems with this commercialization thesis. Firstly, it focuses almost exclusively on Western European and North American empirical contexts in order to draw conclusions about ostensibly ‘global’ firms, thereby universalizing a particular. Secondly, professionalism and commercialism are conceived of in essentialized fashion, with meanings ascribed to each a priori. In the present study, we seek to move beyond these problems by drawing on a comparative empirical study of partners in professional service firms in China and Japan. The results show that firms in each context demand quite different forms of capital and dispositions from firm members. This implies that literature on global professional service firms need to take cognizance of the extent to which certain ‘rules of the game’ are applicable beyond Western countries. Conceptually, the study both outlines a framework for understanding professional service firms in comparative perspective, and proffers a theorization of professionalism as a de-essentialized form of symbolic capital whose meaning is culturally contingent.

The Big 4 in Bangladesh: caught between the global and the local

PurposeThe purpose of this paper is to explore the work practices of Big 4 firms in Bangladesh with the aim of exploring the extent to which global professional service firms (GPSFs) can be thought of as being genuinely “global”.Design/methodology/approachInterviews were undertaken with the vast majority of Big 4 partners in Bangladesh. These interviews explored a number of themes related to the professional service work context in Bangladesh and the relationship between local and global firms.FindingsThe central finding of this paper is that although the Big 4 have a long-established presence in Bangladesh, local societal factors heavily influence the realities of work for accountants there. In most cases the Big 4 firms establish correspondent firms (instead of full member firms) in Bangladesh and tend to offer restricted service lines. Additionally, the paper identifies professional, commercial and cultural barriers to greater Big 4 involvement in the local market. Conceptually, the chief contribution of this paper is to explore how the effects of globalizing capitalism and standardised “best practices” in global professional service work are mediated through the societal effects of Bangladeshi society, resulting in the Big 4 having only a tentative presence in the Bangladeshi market.Research limitations/implicationsThe findings cast doubt on the extent to which self-styled GPSFs are truly “global” in nature. Future work examining the Big 4, or accounting more generally, in the context of globalization, would do well to pay greater attention to the experience of professionals in emerging markets.Originality/valueWhilst there has been much work looking at accounting and accountants in the context of globalization, this work has tended to privilege “core” western empirical settings. Very little is known about professional service firms in “peripheral” emerging markets. Furthermore, this study extends the application of the system, society and dominance framework by mapping the interactions and dynamics of these three sources of influence in the setting of PSFs.

Global Professional Service Firms and the Challenge of Institutional Complexity: ‘Field Relocation' as a Response Strategy

ABSTRACTIn this paper we use the case of the internationalization of English law firms into Italy, and the refocusing of their operations on the city of Milan, to make a number of contributions to existing literatures on responses to institutional complexity. First, we contribute to the literature on how organizations address complexity at the field level, by revealing the role of ‘field relocation' as a particular response strategy. We also identify a number of organizational tactics – re‐scoping, re‐scaling, and re‐staffing – through which ‘field relocation' is accomplished. Second, we also show the importance of further developing our understanding of the geography of institutional fields by highlighting how the ‘receptivity' of different field locations may affect responses to complexity. This identifies the importance of geographically locating fields and sub‐fields in studies of organizational responses to institutional complexity.

Control in the multinational enterprise: The polycentric case of global professional service firms

This paper contributes to research on control in multinational enterprises (MNEs) by considering the case of global professional service firms (GPSFs). Drawing on fieldwork in four firms, it argues that GPSFs are seeking greater control over their subsidiaries in order to provide integrated cross-national services to global clients and, in the process, are becoming subject to a center-subsidiary tension similar to that observed in more conventional MNEs. However, and importantly, the paper also argues that the center-subsidiary tension operates differently in GPSFs. This is because central control in this particular context is pursued by not only headquarters but also subsidiaries based in core economies where major global clients are headquartered. Such polycentric control leads to the center-subsidiary tension expressing itself along not just the vertical (headquarters-subsidiary) axis but also the horizontal (inter-subsidiary) one and, in particular, along core-periphery lines. The research and managerial implications of these findings are discussed.

Global Professional Service Firms and the Challenge of Institutional Complexity: Field Relocationn as a Response Strategy

Global Professional Service Firms and the Challenge of Institutional Complexity: Field Relocationn as a Response Strategy

Engaged and committed? The relationship between work engagement and commitment in professional service firms

Our study explores the relationship between employee engagement and foci-commitment of employees in professional service firms (PSFs). PSFs compete on the basis of their ability to encourage their employees to generate exceptional knowledge-based services and products, acting within and beyond the organizational boundaries. In order to achieve these outputs, the PSFs need to ensure that their professionals are engaged and committed. Drawing on 375 surveys from the employees of a global PSF, we compare two models to test the relationship between work engagement and multi-foci commitment: the organization, the client, the team and the profession. We first explore an overall positive effect of work engagement on commitment to all four foci. We then compare the overall impact to the independent effects of work engagement dimensions on four commitment foci. Our findings suggest that work engagement with three dimensions is a better-fitting model in the PSFs context.

Letter from the Editor-in-Chief: JIBS publication criteria and their consequences

OVERVIEW OF JIBS 41.7 This issue of JIBS contains eight articles that were all submitted to my editorial team; the topics span a wide range of issues in international business (IB) studies. Each article makes a valuable contribution to IB research when assessed on the JIBS three-fold criteria for publication: fit, quality and contribution. The issue opens with an article by Ambos, Andersson and Birkinshaw examining the consequences of initiative-taking in MNE subsidiaries in terms of bargaining power, autonomy and influence. Two articles on institutions and IB follow: Chacar, Newburry and Vissa on the role of home-country institutions in performance persistence research, and Kim, Kim and Hoskisson on the impact of institutional change on performance of business group MNEs in Korea. Sun, Mellahi and Thun conduct a qualitative study of political embeddedness of foreign MNEs in the Chinese automotive industry. The impact of returnee entrepreneurs, FDI and interfirm employee mobility in affecting the innovation performance of Chinese high-tech firms is studied in Liu, Lu, Filatotchev, Buck and Wright. The next two papers focus on international marketing. Dou, Li, Zhou and Su analyze relationship satisfaction between global professional service firms and their clients in China. Lastly, Sinkovics, Jean and Cavusgil examine the role played by information technology in international customer-supplier relationships in Taiwan. The issue concludes with an article by Colantone and Sleuwaegen examining the impacts of globalization through international trade flows on the entry and exit patterns of manufacturing firms in eight European countries.

Exploring relationship satisfaction between global professional service firms and local clients in emerging markets

Extending the perspective of agency theory, this study incorporates both professional and local knowledge asymmetry into a model of relationship satisfaction between global professional service firms and their local clients. The model also includes learning orientation and adaptation that are theorized to regulate the impact of knowledge asymmetry on goal incongruence, which ultimately affects relationship satisfaction. China was selected as the setting of the study because it is the largest emerging market, has seen double-digit growth of advertising expenditures for the past two decades, and is home to many multinational advertising agencies that have increasingly pursued local clients as revenue sources. Multiple informants from 177 domestic Chinese firms and their multinational advertising agencies were personally interviewed, and the dyadic data were used to test the model. Results show that both types of knowledge asymmetry lead to goal incongruence, which causes client dissatisfaction. The role of learning orientation varies, as does the role of adaptation, in moderating the impact of knowledge asymmetry on goal incongruence and the impact of goal incongruence on relationship satisfaction. Theoretical and managerial implications of the findings are discussed, along with the limitations of the study and future research directions.

Promotion to partner

PurposeThis longitudinal study seeks to advance the understanding of consultant relationship competencies and interpersonal style in promotions to partner.Design/methodology/approachThe relationship management survey (RMS), 360‐degree competency assessment and FIRO‐B interpersonal style instrument were completed by 382 principals in two global professional service firms (PSFs) as part of their professional development. Client assessments of competencies in the areas of building relationships, trust, and collaboration, and self‐assessed interpersonal style, were used to predict promotion to partner over a five‐year period.FindingsInterpersonal style preferences for expressing inclusion towards others, and wanting openness from others, are linked to clients' perceptions of relationship competencies each of which predicts promotion to partner (multiple R2=0.474).Practical implicationsPSFs need to select and develop people who have interpersonal style preferences that support the relationship competencies essential for their advancement and firm success. Consultants can enhance their promotion potential by building relationships with clients, developing mutual trust, and fostering collaboration – which may require altering their style to be more inclusive of and open with clients.Originality/valueThe behavioral aspects of consultant‐client relationships can be targeted so as to enhance individual development and promotion potential, and to guide PSFs in apprenticing future partners and obtaining more client work.

Reinserting the Professional into the Study of Professional Service Firms

In discussions of the globalization of professional service firms there is an increasing recognition that understanding the �social construction� of organizational architectures is essential. In this paper we argue, using the management of transnational law firms as an example, that to effectively understand these social constructions we must reincorporate an understanding of the principles of professionalism into discussions. We highlight the importance of occupational autonomy to professionals and how this is likely to influence the strategies used by global professional service firms. We also point to what we term the �varieties of professionalism� and the spatially variable professional projects that underlie the values and identities of lawyers. This reveals the way rational and efficient forms of organizing have to be adapted as a result of professional values and the diverse ideals and beliefs of lawyers in different international jurisdictions.

Transnational communities and business systems

The paper examines the concept of ‘transnational communities’ as a way of understanding globalization practices in business and management. It argues that ‘transnational communities’ are emergent properties of the internationalizing of economic activity. Three specific aspects of this process are considered in detail: the development of multinational companies; the development of international regulatory bodies; and the development of cognitive and normative frameworks through the practices of business education, management consultancies and other global professional service firms. It is argued that in each case, transnational spaces are emerging; within these spaces, transnational communities are developing. The article calls for more research into the diverse nature of these spaces and communities as a way of avoiding the sterile polarities of what Held et al. (1999) refer to as the ‘hyperglobalists’ and the ‘sceptics’.