Gaining Talent While Damaging Reputation Among Clients? Antecedents and Consequences of Introducing Flexible Career Structures in Law Firms

41 Pages Posted: 1 Feb 2013

See all articles by Anna Littmann

Anna Littmann

EBS Universität für Wirtschaft und Recht - EBS Business School - Department of Strategy, Organization & Leadership

Ansgar Richter

University of Liverpool - Management School (ULMS)

Date Written: January 16, 2013

Abstract

In recent years, many professional service firms (PSFs) have moved away from the strict application of tournament principles in their career systems, while others have retained these classical structures. In this paper, we provide an assessment of the importance of two types of reputation of a PSF – the reputation as an employer and its reputation among clients – as antecedents of the introduction of flexible career systems, such as non-equity partnership and permanent positions. We argue that while flexible career systems may increase the attractiveness of a firm in the talent market, they can also negatively impact its reputation among clients. Hence, a firm with a high reputation as an employer and a high reputation among clients is less likely to introduce more flexible career structures. Furthermore, we propose that the effect of introducing more flexible career structures on financial performance depends on a firm’s initial reputation. We test our arguments using a sample of 159 firm-year observations of 43 large and medium-size PSFs active in Germany. The results provide support for the idea that reputation is an important determinant of the effectiveness of flexible career structures in PSFs.

Keywords: Tournament, professional service firms, law firms, reputation, employer attractiveness

Suggested Citation

Littmann, Anna and Richter, Ansgar, Gaining Talent While Damaging Reputation Among Clients? Antecedents and Consequences of Introducing Flexible Career Structures in Law Firms (January 16, 2013). EBS Business School Research Paper No. 13-01. Available at SSRN: https://ssrn.com/abstract=2207830 or http://dx.doi.org/10.2139/ssrn.2207830

Anna Littmann (Contact Author)

EBS Universität für Wirtschaft und Recht - EBS Business School - Department of Strategy, Organization & Leadership ( email )

Gustav-Stresemann-Ring 3
65189 Wiesbaden, Hessen
Germany
+49 611 7102 1438 (Phone)

Ansgar Richter

University of Liverpool - Management School (ULMS) ( email )

Chatham Street
Liverpool, L69 7ZH
United Kingdom
44 [0]151 795 3713 (Phone)
44 [0]151 795 3001 (Fax)

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