The Economics and Sociology of Management Consulting

Cover......Page 1
Title......Page 5
Half-title......Page 3
Copyright......Page 6
Contents......Page 7
Figures......Page 9
Tables......Page 10
Preface and acknowledgments......Page 11
The literature on management consulting......Page 19
Theories used in this book......Page 23
Sociological neoinstitutionalism......Page 24
Signaling theory......Page 26
Transaction cost economics......Page 30
Embeddedness theory......Page 32
Transaction cost economics versus embeddedness theory......Page 36
Transaction cost economics versus sociological neoinstitutionalism......Page 42
Signaling theory versus transaction cost economics......Page 44
Sociological neoinstitutionalism versus signaling theory......Page 45
Signaling theory versus embeddedness theory......Page 47
Embeddedness theory versus sociological neoinstitutionalism......Page 48
The case against incommensurability......Page 50
PART I The mechanisms of the consulting market......Page 57
2 Why do consulting firms exist and grow? The economics and sociology of knowledge......Page 59
Transaction cost analysis of consultancy......Page 63
Methods as a special type of knowledge......Page 70
The growth of consulting from a transaction cost perspective......Page 73
The growth of consulting from other theoretical perspectives......Page 79
3 How do supply and demand meet? Competition and the role of social institutions......Page 86
Unbounded profession......Page 87
Unbounded industry......Page 88
Unbounded service lines and product standards......Page 89
Confidentiality and relational risk......Page 90
Product intangibility......Page 91
Interdependent cooperation......Page 92
Uncertainty reduction through trust and \"networked reputation\"......Page 93
Experience-based trust......Page 94
Networked reputation......Page 95
Networked reputation, competition, and firm growth......Page 96
Typical steps of assignment decisions......Page 99
Empirical support and extensions......Page 102
Strong feelings of the academic community......Page 104
Concepts of power and the sources of consultants\' influence......Page 105
Investment in consulting as discretionary spending......Page 110
Quality certainty through embeddedness effects......Page 113
Clients\' increasing professionalism in managing consultants......Page 114
Consultants\' stress and the market mechanisms......Page 115
5 Substitutes or supplements? Internal versus external consulting......Page 119
Economic analysis of internal consultancy......Page 121
Consultants\' knowledge......Page 123
Clients\' know-how absorption and consultants\' independence......Page 124
Flexibility......Page 125
Economic choice criteria between internal and external consultancy......Page 126
Sociological analysis of internal consultancy......Page 128
Internal consultancy as competition and supplement to external advice......Page 132
PART II The drivers of managing a consulting firm......Page 135
6 Diversified services or niche focus? Strategies of consulting firms......Page 137
The emergence of IT outsourcing and consulting......Page 138
The introduction of enterprise resource planning systems......Page 139
The increasing overlap of service types......Page 140
Changing financial requirements......Page 141
The economic explanation......Page 142
Sociological accounts......Page 146
The niche strategy......Page 149
The divisionalization strategy......Page 150
The alliance and network strategy......Page 152
Discussion......Page 154
Service marketing and the market mechanisms......Page 158
Four components of marketing measures......Page 160
Four clusters of consulting firms......Page 161
Discussion......Page 167
8 The economics and sociology of knowledge distribution: organizational structure and governance......Page 170
The governance structure......Page 172
Project organization and the pool concept of staffing......Page 175
Competence centers, the one-firm concept, and organizational culture......Page 178
The one-firm concept and organizational culture......Page 181
Knowledge management......Page 183
Active management of knowledge and incentives to knowledge contributions......Page 191
Personnel selection......Page 196
The role of case studies in personnel selection......Page 199
Validity of and doubts about the case study method......Page 201
The signaling effect of personnel selection......Page 203
The social homogenization effect of personnel selection......Page 205
Discussion......Page 207
Careers and promotion: the economic account......Page 208
Embeddedness effects and the careers of female consultants......Page 213
Sociological neoinstitutionalism and the careers of female consultants......Page 215
Discussion......Page 217
PART III Conclusions......Page 221
The knowledge economy and management consultancy......Page 223
Economics and sociology: paradigms, methods, or jargon?......Page 227
Theoretical extensions and future research options......Page 234
References......Page 241
Index......Page 265