Handbook of Research on Entrepreneurship in Professional Services
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Handbook of Research on Entrepreneurship in Professional Services

Edited by Markus Reihlen and Andreas Werr

The expert contributors discuss entrepreneurship and innovation from a number of different perspectives, including the entrepreneurial professional team, the entrepreneurial firm and the institutional environment. The first part of the book looks at the challenges of entrepreneurship specific to the professional service firm while the second explores the creation and exploitation of entrepreneurial opportunities in the professional service team. Part III turns to the organization and Part IV to the management and growth of the entrepreneurial professional service firm. The final part discusses the interplay between professions, firms and the institutional environment.
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Chapter 1: Towards a multi-level approach to studying entrepreneurship in professional services

Markus Reihlen and Andreas Werr


Over the last decade, most professional services, such as those provided by management consultants, engineering consultants, lawyers, accountants, advertising agencies, and market research firms, grew rapidly in all advanced industrial nations. These services are at the crossroads of three major developments: the rise of the service economy, the increasing role of scientific and technological knowledge in business, and changes in the organization and production of knowledge work in many companies (e.g. Bell, 1973; Tordoir, 1995). Unlike manufacturing companies, which can derive their competitive advantage from patents, cost-effective locations, or unique physical products, professional service firms (PSFs) gain their competitive advantage primarily from having the ability to create and sustain knowledge (Werr & Stjernberg, 2003), reputation (Glückler & Armbrüster, 2003), and institutional capital (Reihlen, Smets, & Veit, 2010). Services in general, and professional services in particular, represent an increasing part of most Western economies. The global market for professional services was estimated at approximately $1 trillion in 2002, with 85 percent generated in the so-called developed economies (UNCTAD, 2004). Professional and other kinds of knowledge-intensive services are seen as the future for these Western economies, as manufacturing and other kinds of labor-intensive activities are outsourced to low-cost countries. Entrepreneurship and innovativeness in professional services are thus expected to become an important driver or engine for the future prosperity of these economies reflected by progressive market dynamics. In the European Union, for instance, professional services grew annually between 2004 and 2007 in sales by more than 10 percent and in employment by more than 6 percent.1

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