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Chapter 10: Entrepreneurial strategies for professional service firms
When I started doing research on the strategic management of professional (business) service firms more than 20 years ago (1988–89), I found very little written on both strategy and management in this particular context. Maister had published some of his most cited articles on the management of partnerships (e.g. 1982, 1985), but his book Managing the Professional Service Firm did not get published until 1993—the year after I completed my first study. A few books were published on more general organization and management issues (e.g. Alvesson, 1989, 1995; Sveiby & Risling, 1987), but not specifically on strategy in PSFs. My starting point theoretically became some classical sociology literature on the role of professions and professionals in organizations (e.g. Abbott, 1988; Etzioni, 1961, 1964; Gouldner, 1957, 1958; Hughes, 1958; Schön, 1983; Vollmer & Mills, 1966), yet the primary focus of these researchers was far from the strategy of business firms. One notable exception may be Raelin (1985), but his focus was on “the clash of cultures” when professionals are employed by non-professional organizations, as opposed to the opportunities involved when professionals organize their activities in professional business (service) firms. This lack of research interest was surprising, as the professional (or knowledge intensive) service sector grew tremendously throughout the second half of the twentieth century all over the Western world (see e.g. Aharoni, 1993, for an early account of this phenomenon from an international perspective). However, by the late 1980s, the interest had started to grow among academics as well, most notably in terms of the Centre for Professional Service Firm Studies at the University of Alberta, Canada, organized by Professors Cooper, Greenwood, and Hinings, and a small group of researchers brought together by Professor Aharoni at Duke University, USA. In one of the most cited research-based publications on professional service firm management, Greenwood, Hinings, and Brown (1990) coined the term “P2 strategic management,” pointing out that professional service firms at that time typically shared two characteristics: They were managed by professionals abiding by the norms of conduct common to their profession, and they were partnerships—that is, internally owned by senior members of the firm. The professional partnership (or P2-form) provided a solution to the problem of the “clash of cultures” (Raelin, 1985), and tied even cosmopolitan-oriented senior professionals (Gouldner, 1957, 1958) semi-permanently to the firm, through ownership and profitsharing systems. One limitation of their empirical data, though, was that they were collected within a particular set of firms within a single industry, namely the so-called “Big Eight” accounting and auditing firms.
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