Professional Service Firms come out of the shadows
The Professional Service Firms sector has emerged as one of the most rapidly growing and profitable within the global economy. A new publication brings together leading scholars in the field to examine and elucidate this sector's ever-increasing significance.
Over the past three decades the PSF sector has emerged as one of the most rapidly growing, profitable, and significant sectors of the global economy. In 2013 the accountancy, management consulting, legal, and architectural sectors alone generated revenues of US$ 1.6 trillion and employed 14 million people. When sectors such as engineering services and advertising are included the figure rises to US$ 2.5 trillion and 18 million respectively. This is comparable in terms of revenues to the global commercial banking sector. The largest PSFs are now global giants, individually on a par with far more famous publically quoted corporations. The study of PSFs therefore is important.
The Oxford Handbook of Professional Service Firms, a new publication from Oxford University Press, marks the coming of age of Professional Service Firms (PSF) scholarship. Edited by Laura Empson, Daniel Muzio, Joseph Broschak, and Bob Hinings, the Handbook brings together leading scholars in the field and offers many potentially important insights into these organisations and their significance within the knowledge economy. It also suggests new lines of inquiry that may shed further light on the activities and performance of PSFs and the professionals who work within them.
For many years these theoretically distinctive and empirically significant firms, such as accounting, consulting, and law firms, have remained in the shadows of organisational research. Management scholars have been slow to recognise the scale and significance of the sector, perhaps because PSFs are typically privately owned, disclose very little financial information, and prefer to operate close to their clients and out of the public eye.
However, a bibliometric search of the Scopus database reveals that there are now almost 300 peer reviewed academic articles explicitly referring to PSFs, and the number of new entries is growing. There is a regular stream of new scholarship in leading management journals, and the recent launch of a specialist journal, the Journal of Professions and Organizations, further signals the growing maturity of this field. The Oxford Handbook of Professional Service Firms therefore makes a timely contribution by bringing together and critically reflecting on the complex array of literature that has been published in recent decades on the topic of PSFs.
PSFs play an important role in developing human capital, creating innovative business services, reshaping government institutions, establishing and interpreting the rules of financial markets, and setting legal, accounting and other professional standards. Furthermore, the high salaries they offer mean that they are able to attract a large proportion of the best qualified graduates. As such PSFs, and the professions more generally, are linked through their recruitment and promotion practices to patterns of social stratification, but also potentially to social mobility.
PSFs have historically acted as vehicles for the diffusion of new and often radical business practices and structures. More controversially, in recent years some have been involved in a string of high profile corporate malpractice cases, highlighting the extent to which the PSFs’ traditional assurance role can become compromised as they seek to become more directly involved in shaping and implementing their clients’ strategies.
The influence of PSFs is not limited to the business world but stretches into broader social arenas. They are, for instance, among the top ten “corporate” donors to US presidential and congressional campaigns; they have taken the lead in the reform of public services, the administration of justice, the structure of professional qualifications, and the operation of insolvency regimes.
Studying PSFs can offer insights into the challenges facing organisations within the knowledge economy, and deepen understanding of more conventional organisations. Traditional management models, which are often derived from the empirical setting of manufacturing firms, offer only limited insight into the complex interpersonal and organizational dynamics that operate within PSFs. However, by understanding the peculiarities of PSFs and their management, scholars can develop a deeper level of insight into more conventional organisations, and organizations seeking to move away from conventional management models to accommodate more knowledge-based forms of working.
The Oxford Handbook of Professional Service Firms is now available to order from the Oxford University Press website.