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The Dissemination of Management Consulting Innovations and the Pace of Technological Improvements

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  • Stephen C. Hansen
  • John S. Hughes

Abstract

This paper models management consultants' decisions about the order of client engagements when the consultant reduces clients' costs. The consultant can either immediately spread the innovation to all clients or sequentially spread the innovation to one client at a time. Licensing agreements, along with learning by doing, enhance the appeal of sequential engagements that delay the dissemination of innovation. However, concurrent engagements, or immediate dissemination, yield more clients who gain cost reductions for more periods. Whether the consultant finds that sequential or concurrent engagements optimal depends on her bargaining power and the magnitude of learning by doing.

Suggested Citation

  • Stephen C. Hansen & John S. Hughes, 2005. "The Dissemination of Management Consulting Innovations and the Pace of Technological Improvements," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 161(3), pages 536-555, September.
    • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200509)161:3_536:tdomci_2.0.tx_2-j
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • L84 - Industrial Organization - - Industry Studies: Services - - - Personal, Professional, and Business Services
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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