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Edited by Markus Reihlen and Andreas Werr
Chapter 13: The globalizing professional service firm: managerial and organizational challenges
Globalization demands (at least) two sets of entrepreneurial activities from organizations. First, the formulation of global strategies is inherently entrepreneurial (e.g. Cassiman & Golovko, 2010; Sullivan & Daniels, 2008). Emerging opportunities and threats on a global scale demand creative, flexible, and novel approaches by firms as they move from their home markets onto unfamiliar territory (Jones & Coviello, 2005). Further, while we most often associate entrepreneurship with new products and markets, Shane and Eckhardt (2003) remind us that organizational changes themselves can also be entrepreneurial. While many professional service firms have certainly been innovative in proactively exploring market opportunities, many more have implemented managerial and organizational innovations in order to exploit these opportunities. And the environmental dynamism and complexity presented by the deregulated and increasingly global market for professional services create the backdrop for us to ask why, how, and what is happening in these contexts. In this chapter we thus survey globalizing professional services in order to study contemporary managerial challenges and organizational innovations. Our research is thus squarely within one of the key questions asked by entrepreneurship scholars, namely “why, when and how different modes of actions are used to exploit different entrepreneurial opportunities” (Shane & Venkataraman, 2000: 218). Globalization presents significant challenges for service firms in general, and professional service firms (PSFs) in particular. Historically professional services were delivered locally, and thus most professional service firms were small, local organizations. However, contemporary technological advances and deregulation have enabled the emergence of ever larger, national, regional, and now some global PSFs. Whereas professional services had been fragmented, local, and labor-intensive, in the past 20 years some professional service industries have become concentrated, international, and capitalintensive. World market leaders and brands have been created in most professional service sectors. There seems to be an evolutionary path from local or national industries with little international presence to more global business, and the emergence of a few industry-dominant firms. Increased international competition accompanied by raised client expectations has led larger PSFs to globalize their product and client portfolios.
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