Service diversification and growth of professional service firms

Service diversification and growth of professional service firms

This study investigates the impact of service diversification on the rate and mode of firm growth in professional service firms (PSFs). Drawing on the extant PSF literature, we identify differing views regarding the growth impact of service diversification. Specifically, some scholars suggest that t...

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Veröffentlicht in:Long range planning 2018-02, Vol.51 (1), p.111-126
Hauptverfasser: Eckardt, Rory, Skaggs, Bruce C.
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Sprache:eng
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Accounting firms
Business schools
Firm growth
Growth
Mergers and acquisitions
Professional service firms
Service diversification
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container_title Long range planning
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creator Eckardt, Rory
Skaggs, Bruce C.
description This study investigates the impact of service diversification on the rate and mode of firm growth in professional service firms (PSFs). Drawing on the extant PSF literature, we identify differing views regarding the growth impact of service diversification. Specifically, some scholars suggest that the external client benefits associated with service diversification should allow PSFs to expand revenues at a rapid pace and pursue less merger and acquisition activity, whereas others imply that increased diversification can cause internal challenges with respect to learning costs, coordination and innovation that can limit the rate of revenue growth and encourage more mergers and acquisitions. We test these competing views using longitudinal data on 137 accounting firms and cross-sectional data on 125 law firms and find that service diversification is negatively associated with the rate of firm revenue growth and positively associated with the use of mergers and acquisitions.
doi_str_mv 10.1016/j.lrp.2017.06.003
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subjects Accounting firms
Business schools
Firm growth
Growth
Mergers and acquisitions
Professional service firms
Service diversification
title Service diversification and growth of professional service firms
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