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Mark E. Pickering, Strategic decision making in publicly traded professional service companies: an exploration of senior professional participation in acquisition decision processes, Journal of Professions and Organization, Volume 4, Issue 2, July 2017, Pages 179–202, https://doi.org/10.1093/jpo/jow014
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Abstract
The recent emergence of publicly traded professional service firms (PSFs) has raised questions as to the previously theorized advantages of professional partnerships for managing professionals. Conflicting findings on the performance implications of public ownership have led to calls for research on management processes in these organizations with sparse research finding that some publicly traded PSFs mimic strategic decision making of partnerships, although in a diluted form. This study sought to explore how mimicking the involvement of senior professionals in strategic decisions associated with partnerships may matter for publicly traded PSFs and to theorize as to the mechanisms through which this involvement may affect outcomes. Grounded theory was used to examine the acquisition processes of two acquisitive publicly owned accounting companies, one of which included senior professionals in these strategic decisions and one did not. Findings include: (1) senior professional involvement in strategic decisions might affect firm outcomes through: constraints to decision speed and risks, increased decision quality and increased senior professional motivation and commitment; (2) substantial professional ownership of a public corporation may not be sufficient to align the interests of internal and external owners without senior professionals being able to influence company strategic decisions; (3) the proportion of professional ownership of publicly owned PSFs may affect managerial decision processes and outcomes with ownership structures of the cases reflecting a hybrid between public corporations and private partnerships; (4) shareholder composition may transition towards a ‘pure’ public corporation form over time with potential implications for decision authorities.
