Namrata Malhotra

Variation in Organization Form among Professional Service Organizations

This chapter examines the sources of variation in organizational form among accounting and law firms. We first summarize research in the organization of professional service firms and explain its evolution. This is followed by the argument that variations around the P2 archetype have emerged in response to different market and institutional pressures faced by accounting and law firms. Drawing on contingency and institutional theory, we show how the changing balance between the influence of market and institutional factors has resulted in structural variation.

The Nature of Knowledge and the Entry Mode Decision

Previous work on the choice of mode of entry into foreign markets highlights the central role of knowledge and the attributes of knowledge in choosing an appropriate governance form for its transfer internationally. The literature suggests that protection of knowledge from the threat of opportunism posed by licensees and business partners in other contractual modes is a primary driver of the choice of mode. However, the knowledge construct itself is oversimplified in the entry mode literature and needs more explication to enable a clearer understanding of its implications for entry mode choice. In this article, I examine in depth the variety of different types of knowledge held by firms and how these relate to each other and combine to constitute a source of advantage. A qualitative case-based analysis of semi-structured interviews in firms entering foreign markets suggests that the combination of different knowledge types held by a firm is an important factor in reducing the risk of misappropriation of knowledge by business partners. This has important implications for the choice of mode of entry. When a firms competitive advantage lies in a combination of multiple types of knowledge, especially experiential knowledge held by individuals, teams, and the organization rather than just easily codifiable and understandable basic technical knowledge, the threat of opportunism is mitigated to such a degree that it is often unimportant in mode of entry decisions. Hence, firms have greater flexibility in choosing a mode of entry than is suggested by current literature. In light of these findings, I suggest that it may be more useful to conceptualize a firm as a knowledge entity, rather than a contractual entity, for examining entry mode decisions.

Episodic and Systemic Power in the Transformation of Professional Service Firms

We examine the roles of episodic and systemic forms of power in radical organizational change. Drawing on a study of three attempted transformations in professional service firms from traditional professional partnerships into managed professional businesses – one relatively complete and two incomplete – we identify two key mechanisms that link episodic and systemic forms of power and show how those mechanisms affect the likelihood that organizations will be able to successfully undergo radical change. We find that episodic power is able to initiate and energize radical change when it represents a significant break from traditional authority structures and is legitimated through appeals to traditional organizational values. We find that systemic power is able to institutionalize radical change when the systems associated with it are legitimated by the skilled use of language by key actors and then left to operate independently by those actors. By articulating the specific mechanisms that link episodic and systemic power, our study provides a more complete model of the role of power in radical change, enabling better prediction of the likelihood of successful transformation and a fuller theoretical explanation of change outcomes.

New career models in UK professional service firms: from up-or-out to up-and-going-nowhere?

In this paper, we empirically examine how professional service firms are adapting their promotion and career models to new market and institutional pressures, without losing the benefits of the traditional up-or-out tournament. Based on an in-depth qualitative study of 10 large UK based law firms we find that most of these firms do not have a formal up-or-out policy but that the up-or-out rule operates in practice. We also find that most firms have introduced alternative roles and a novel career policy that offers a holistic learning and development deal to associates without any expectation that unsuccessful candidates for promotion to partner should quit the firm. While this policy and the new roles formally contradict the principle of up-or-out by creating permanent non-partner positions, in practice they coexist. We conclude that the motivational power of the up-or-out tournament remains intact, notwithstanding the changes to the internal labour market structure of these professional service firms.

Changing Career Models and Capacity for Innovation in Professional Services

A number of professional sectors have recently moved away from their longstanding career model of up-or-out promotion and embraced innovative alternatives. Professional labor is a critical resource in professional service firms. Therefore, changes to these internal labor markets are likely to trigger other innovations, for example in knowledge management, incentive schemes and team composition. In this chapter we look at how new career models affect the core organizing model of professional firms and, in turn, their capacity for and processes of innovation. We consider how professional firms link the development of human capital and the division of professional labor to distinctive demands for innovation and how novel career systems help them respond to these demands.