| dc.description.abstract | Purpose
– This conceptual paper address
es the nature of value creation
in professional
service firms (PSFs). An extensive number of scholars have been
looking at PSFs within
law, consulting and engineering to understand knowledge as sour
ces of competitive
advantage. A dominant part of this literature build on agency t
heory to suggest that
information asymmetry is an important characteristic and precon
dition of value creation
in professional services. This p
aper identifies a contradiction
in the notion of information
asymmetry in refer
ence to professional services firms.
Design/methodology/approach
– The paper reviews theoretical contributions explaining
the value creation processes in PSFs. While the context of prof
essional services might be
considered marginal in reference to agency theory, knowledge ha
s been identified as one
of the key sources of competitive advantage in the 21st century
, and understanding how to
develop and leverage such sources
of advantage has gained exten
sive interest. In addition,
the context of knowledge intensi
ve and professional services ha
s been referred to as
extreme and strategically relevan
t to understand knowledge base
d value creation.
Originality/value –
We argue that it is necessary to revisit the assumption of inf
ormation
asymmetry for two main reasons: First, any asymmetry that is pr
oposed to exist is that of
knowledge rather than information. Secondly, value creation in
the context of PSFs is
characterized by mutuality rather
than asymmetry as co-producti
on with clients as a core
component in PSFs value creation.
While PSFs might have superio
r esoteric professional
knowledge, buyers often have superior knowledge of their own co
ntext and problem.
Both of these types of knowledge are relevant in the value crea
tion in PSFs due to the
contextual and customized nature of the services they provide.
Practical implications
– Two important contributions are suggested in the paper: Firs
t,
the characteristics of value creat
ion of PSFs should be revised
and extended by the
17
inclusion of knowledge asymmetry and mutuality. This is importa
nt for practitioners in
that the co-operative and mutual nature of value creation needs
to be recognized and
nurtured, which has impact of the conduct of both suppliers and
buyers of professional
services. Secondly, this more complex nature of value creation
needs to be recognized
from an institutional perspectiv
e in that the certification of
professionals should
incorporate and promote the mutuality and the importance of cli
ent needs while at the
same time emphasising esoteric professional knowledge and attit
ude and the desire to
deliver what is objectively best for the client | |
