Performance In Professional Service Firms Research Articles

When and how digital platforms empower professional services firms: an agility perspective

PurposeDrawing on a strategic agility perspective, the authors develop a theoretical framework and empirically examine how digital platform adoption and capability impact business performance via digital-enabled strategic agility in the context of professional service firms.Design/methodology/approachThe authors propose and examine a conceptual framework based on survey data from 127 professional service firms in New Zealand.FindingsThis study reveals the impact of digital platform capability on the business performance of professional service firms that employ digital platform technologies. The results suggest that organizational innovation and managers' creative efficacy will be used as distal antecedents and contribute to digital platform capabilities. In addition, digital strategic agility can mediate the link between digital platform capabilities and business performance.Originality/valueThis study is one of the first to investigate when and how digital platforms empower professional service firms. This study reveals the role of digital strategic agility and digital platform capabilities in knowledge-intensive enterprises. This research advances the development of knowledge-based economy in the information age by applying and extending strategic agility to the uncertain and volatile business environment. The authors' new conceptualization provides a deeper understanding of how and why professional services business and organizations can adapt to the post-COVID era smoothly and successfully.

The Influence of Corporate Strategy on the Performance of Professional Service Firms under Covid-19 Pandemic

Professional service firms has been regarded as prototypes of knowledge economy and “future enterprise” (Boussebaa& Faulconbridge, 2019)[1]. With the development of digital technology and rapidly changing external environment, companies face great challenges. Especially when the Covid-19 pandemic stoke the world. Previous researches indicated valid relation between corporate strategy and firm performance. (Porter, 1991[2]; Park, Shin and Jurn, 2009[3]). This article adopted quantitative analysis, taking three professional service firms as case studies. Secondary data is collected through financial reports, and official websites of the three companies. It is revealed that the largest professional service firms, though striving with the VUCA environment, managed to maintain a profit. Based on acquired information, the author first made a descriptive analysis of the data, then conducted correlation test and linear regression test. The relationship between both independence variables and company performance was identified to be valid.

HR flexibility and firm performance in professional service firms

AbstractHuman resource (HR) flexibility emerges as the most critical source of flexibility for professional services firms (PSFs), given that the success of these companies depends on the knowledge, expertise and behaviors of their employees. Nonetheless, few empirical studies have analyzed the extent to which the characteristics of the workforce explain the results of this type of firm. This study attempts to advance in this line of research by analyzing the influence of HR resource flexibility dimensions (skill flexibility – SF and behavior flexibility – BF) on PSF performance. It also examines whether HR coordination flexibility (CF) strengthens the effect of SF and BF on performance. Matched data from 97 general managers and 291 professionals in a sample of Spanish PSFs is used to test the hypotheses through structural equation modeling methodology. The study demonstrates that employee BF has a significant effect on the development of new services in PSFs. The moderation model shows that HR CF increases the influence of BF on the development of new services. Contrary to what was expected, no significant relationship between SF and PSF performance was found.

Setting the Scene: Partners’ Leadership Behavior and Employees’ Perceptions of Work Performance in Professional Service Firms

The effect of leadership behavior on work performance is highly context sensitive. We address this notion by investigating leadership behavior in one important but understudied organizational context—namely, professional service firms (PSFs). We examine how partners’ leadership behavior in a PSF relates to employee self-leadership, creative climate, and work performance (N = 442). The results show that partners’ consideration leadership behavior is positively related to employees’ perceived work performance. Moreover, partners’ consideration and intellectual stimulation leadership behavior are especially important drivers of self-leadership and creative climate in a PSF, which in turn are positively related to employees’ work performance. Theoretical and practical implications are discussed.

Diversification, Branding, and Performance of Professional Service Firms.

This article analyzes the effects of diversification and brand breadth on firm performance for professional service firms (PSFs). The research aim is two-fold. First, we test whether moving into products may put at risk the core resources that sustain PSFs’ competitive advantage. Second, we study which branding strategies best match their diversification attempts. Broad (narrow) brands characterize a branding strategy with scarce (plentiful) associations to specific product characteristics. We analyzed trademark portfolios of 47 U.S.-based management consulting firms in the 2000 to 2009 time period. Panel regression results suggest that (1) PSFs always benefit from diversification when they remain pure-service providers; (2) performance is positively related to a strategy of specialized narrow brands.

Ownership structure and performance of professional service firms in a declining industry: Evidence from Vietnamese securities firms

This study posits that the declining industry is a good institutional environment to examine the relationship between ownership structure and firm performance of Vietnamese securities firms. This downturn decreases the return on investment of the industry and creates incentives for managers to expropriate shareholders more severely. In addition, different groups of shareholders recognizing the status of the industry may have their own reactions which are likely to affect firm performance. Using pooled OLS regression with a sample of 240 observations from 56 Vietnamese securities firms over the period from 2009 to 2016, we find supporting evidence of convergence-of-interest with a significantly negative relationship between insider ownership and profitability. In addition, foreign ownership is also positively related to firm performance. Firm size affects positively firm performance while number of employees has a negative impact on profitability.

Performance of professional service firms from emerging markets: Role of innovative services and firm capabilities

Professional service firms (PSF) from emerging markets face a financial dilemma: PSFs tend to utilize high-wage labor, yet their emerging market status makes foreign clients cautious regarding quality and less willing to pay high prices. To allay these concerns, PSFs may be able to develop attractive, highly innovative services, but as the resource-based view (RBV) notes, this requires emerging market firms to possess critical capabilities to support such a competitive advantage. Relying on services theory, we propose that entrepreneurial orientation (EO) of management and expert human capital (HC) are critical capabilities, enabling a PSF to develop and market innovative services profitably. In testing our model on 201 Indian PSFs, we find a mediating role for innovativeness whereby EO and HC drive service innovation which, in turn, accounts for financial performance. Further, we find EO positively moderates the innovative service–performance relationship as proactive, risk-tolerant managers improve foreign marketing. Insights for theory and practice are provided that enable PSFs to overcome the constraints and challenges of their emerging market origin.

Lateral hiring and the performance of professional service firms: the moderating effects of leverage ratio

We theorized and tested the performance implications of the lateral hiring by professional service firms (i.e. law firms). Using a longitudinal dataset of lateral partner hires in 148 US law firms between the years of 2004 and 2008, the results indicated that the size of lateral hiring had a reversed U-shape relationship with the financial performance of a firm. In addition, the leverage ratio (i.e. the ratio between associate lawyers and partners) significantly moderated the reversed U-shape relationship between lateral hiring and firm performance, such that the placement of the bend in the curvilinear relationship, that is, the threshold, occurred more quickly at a low than at a high leverage ratio. This study contributes to the literature on strategic human resource management in professional service firms by providing empirical evidence on the effect of lateral hires and by emphasizing that lateral partner hiring should be considered with other important HR issues to fully capitalize lateral partners.

"Modes of Acquisition, Relational Assets Transfer, and Performance in Professional Service Firms"

Drawing on M&A literature and relational perspective in employee mobility, we develop theory to investigate the transfers of relational assets, namely client ties in professional service firms (PSF...

"Customer Interaction Strategy, Intellectual Capital, and Performance in Professional Service Firms"

Consultants and other professional service firms compete by bringing their knowledge resources to bear on their customers’ challenging problems. Such knowledge resources can reside in workers and/o...

Impact of error management culture on knowledge performance in professional service firms

Knowledge is the most crucial resource of the 21 st century. For professional service firms (PSFs), knowledge represents the input as well as the output, and thus the fundamental base for performance. As every organization, PSFs have to deal with errors - and how they do that indicates their error culture. Considering the positive potential of errors (e.g., innovation), error management culture is positively related to organizational performance. This longitudinal quantitative study investigates the impact of error management culture on knowledge performance in four waves. The study was conducted in 131 PSFs, i.e. tax accounting offices. As a standard quality management system (QMS) was assumed to moderate the relationship between error management culture and knowledge performance, offices' ISO 9000 certification was assessed. Error management culture correlated positively with knowledge performance at a significant level and predicted knowledge performance one year later. While the ISO 9000 certification correlated positively with knowledge performance, its assumed moderation of the relationship between error management culture and knowledge performance was not consistent. The process-oriented QMS seems to function as facilitator for the more behavior-oriented error management culture. However, the benefit of ISO 9000 certification for tax accounting remains to be proven. Given the impact of error management culture on knowledge performance, PSFs should focus on actively promoting positive attitudes towards errors.

Ownership and Performance of Professional Service Firms

Understanding the effects of ownership upon organizational performance is a well-established theme in organization theory, but comparison across ownership forms has been neglected. We develop hypotheses comparing public corporations, private corporations and partnerships and test them in a sample of large management consultancies. We find that private corporations and partnerships outperform public corporations. We attribute this difference to increased monitoring by owners and greater motivation by professional workers seeking ownership stakes. Contrary to Durand and Vargas (2003), we find that organizational complexity has neither a direct nor a moderating effect.

Reputation, Diversification, and Organizational Explanations of Performance in Professional Service Firms

Growing interest in knowledge as a competitive asset suggests the benefit of studying professional service firms (PSFs). These firms are highly successful examples of organizations whose ability to manage knowledge is critical to their success. Furthermore, they are worthy of study because they constitute a significant sector of the economy, whether measured by their size, numbers, or influence. Despite their significance, little is known of the determinants of their performance. This paper proposes that the core tasks of PSFs raise unusual strategic and organizational challenges, the resolution of which affects organizational performance. We elaborate the effects of reputation and diversification and contrast them to theory for goods-producing industries. We also hypothesize that PSF managers face a choice in designing structures between the retention and motivation of the professional workforce and transferring knowledge from partners to other professionals. These predictions are tested and supported by data from the largest 100 U.S. accounting firms for the period 1991–2000. The paper thus contributes to a theory of professional service firm management.

Direct and Moderating Effects of Human Capital on Strategy and Performance in Professional Service Firms: A Resource-Based Perspective

Direct and Moderating Effects of Human Capital on Strategy and Performance in Professional Service Firms: A Resource-Based Perspective

WORK‐FAMILY POLICIES AND PROGRAMMES IN A PROFESSIONAL SERVICES FIRM: USES AND EFFECTIVENESS

Schwartz (1992) has suggested that professional firms may be the vanguard in supporting the career advancement of women. Professional firms typically recruit and hire a considerable number of university graduates that are women. In the last few years, almost half the new hires by public accounting firms have been women. In addition, women graduates have performed as well as their male counterparts in their university programmes. It also takes less time to advance to senior management (admission to partnership) in professional firms than is the case in most large private sector corporations. Finally, the evaluation of performance in professional service firms is based on productivity (e.g., billable hours, new business development) which are more objective than performance ratings of one's manager. In addition, many professional firms have institutionalised new technologies which make it easier to work flexibly and at home (computers, fax machines).