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A model of professional service firms performance with an application to US accounting firms

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  • Edouard Ribes

    (CERNA i3 - Centre d'économie industrielle i3 - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris sciences et lettres - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper models the dynamics of professional services firms performance. To do so, it first describes how those firms produce their specific outputs and how their productivity drives competitiveness. The associated equilibrium in then used to propose profit optimal organic and inorganic growth strategies, which are then discussed to account for the effect of potential future technological disruption. Applying the proposed theory to US accounting firms explains the differences in performance observed between large (i.e. more than 50 partners) and small (i.e. less than 50 partners) accounting partnerships and suggests that small (resp. large) US accounting partnerships mainly grow inorganically (resp. organically).

Suggested Citation

  • Edouard Ribes, 2019. "A model of professional service firms performance with an application to US accounting firms," Working Papers hal-01825739, HAL.
    • Handle: RePEc:hal:wpaper:hal-01825739
    Note: View the original document on HAL open archive server: https://minesparis-psl.hal.science/hal-01825739v4
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    File URL: https://minesparis-psl.hal.science/hal-01825739v4/document
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    References listed on IDEAS

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    1. Xavier Gabaix & Augustin Landier, 2008. "Why has CEO Pay Increased So Much?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(1), pages 49-100.
    2. Lassala, Carlos & Carmona, Pedro & Momparler, Alexandre, 2016. "Alternative paths to high consulting fees: A fuzzy-set analysis," Journal of Business Research, Elsevier, vol. 69(4), pages 1367-1371.
    3. Edouard Ribes, 2018. "Growth patterns of US professional services firms," Working Papers hal-01762381, HAL.
    4. De Fuentes, Cristina & Porcuna, Rubén, 2016. "Main drivers of consultancy services: A meta-analytic approach," Journal of Business Research, Elsevier, vol. 69(11), pages 4775-4780.
    5. Axel Anderson & Lones Smith, 2010. "Dynamic Matching and Evolving Reputations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 77(1), pages 3-29.
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    Cited by:

    1. Edouard Ribes, 2021. "Scoping the transformation of the professional services industry," Working Papers hal-01889350, HAL.

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    Keywords

    Professional Services; Firm performance;

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