- Elgar original reference
Edited by Jonathan P. Doh and Stephen A. Stumpf
Chapter 15: Management and Governance of Professional Services Firms
15 Management and governance of professional services ﬁrms Kevin D. Clark, Jonathan P. Doh and Stephen A. Stumpf Introduction In this chapter, we uncover the particular features and challenges associated with the management and governance of professional services ﬁrms.1 We begin with a discussion of the enormous global growth of professional services ﬁrms (PSF) in the areas of management consulting, information technology (IT) consulting, public accounting, investment banking, law and advertising/public relations. Problems associated with PSF service, particularly for large management consultancies, have been documented (for example, see O’Shea and Madigan, 1997; Pinault, 2000; Schaffer, 1997). Recent ethical and legal questions raised with respect to public accounting have highlighted the need to reassess the management and governance structures of PSFs. We assert that there are inherent differences in the structure of ownership and the resulting management in PSFs as compared to traditional organizations, and that research in management and governance as it is currently conceived fails to account satisfactorily for these differences. We review the research on PSFs that is suggestive of the issues we highlight. We observe, however, that this research fails to address the core incentive and alignment issues in PSFs that have contributed to the recent high-proﬁle cases. These cases, and the paucity of research to draw upon to address them, provide both a scholarly and a practical justiﬁcation for the critical importance of aggressively incorporating PSFs into the organizational theory research agenda. We will focus on one mechanism that has been identiﬁed as...
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