Reputation and performance in large law firms

Michael Smets, Tim Morris, W. Morris

Research output: Contribution to conferencePaperpeer-review

Abstract

Reputation is a signalling device that serves as a proxy for the quality of a firm’s products, strategies and employees relative to its competitors, when communicating with clients and other stakeholders. It is especially important for professional service firms because of the complex and intangible nature of their service and because of the advantages it confers in the market for high-quality professional staff. This paper extends and refines existing research on reputation which shows positive returns to reputation for professional service firms. We use different rankings of the top 50 law firms in the UK to measure reputation and examine their relationship with financial performance as expressed in firm revenue and profits. We find positive but diminishing returns to reputation even within this group and we find a stronger relationship between reputation and profits than fee income. We conclude that reputation may be an important source of competitive advantage for leading firms but it seems to offer little leverage for others. If these results are generalizable across other professional sectors this raises the question of how the majority of firms can differentiate themselves.
Original languageEnglish
Publication statusPublished - 2008
Event2008 Academy of Management annual meeting - Anaheim, CA, United States
Duration: 8 Aug 200813 Aug 2008

Other

Other2008 Academy of Management annual meeting
CountryUnited States
CityAnaheim, CA
Period8/08/0813/08/08
OtherThe questions we ask

Keywords

  • law
  • reputation
  • professional service firms

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