eThesis - Kauppakorkeakoulun sähköiset gradut

This study presents different ways for firms to internationalize and discusses the typical ways of PSFs going abroad. Furthermore, it highlights the headquarters/subsidiary integration and brings out the various challenges related to the subject.

Professional service firms (PSFs) differ from other service firms with the service they deliver: it requires significant interaction with the client and is customized to meet the client’s unique needs. Professionals working in PSFs are highly educated, and their daily work is constrained by the professional norms of conduct. Knowledge is also an inseparable part and forms the core of professional service firms. Already now, professional service firms have influenced the global economic activity strongly, and according to previous studies, the number of knowledge-intensive firms will increase remarkably in the future. Therefore, PSFs can be called the idealized organizations of today.

Business law firms are canonical examples of PSFs. However, research on law firms is harder to find than research on other professional service firms. Law firms are tough places to work and the working atmosphere is characterized by fierce competition. Lawyers work even longer hours than other professionals in PSFs, and although working hours in theory are flexible, work is often difficult to keep separated from the personal life. Internally, law firms keep a clear division between the lawyers, the fee earners, and the support staff.

Both organizational and environmental factors may push companies to internationalize. Often, it is impossible to mention only one reason behind the firm’s decision to go abroad. A business law firm that is willing to internationalize its operations can choose between various options. For a law firm, the reputation is crucial, and thus keeping the control over the new unit is of special interest. Hence, the most suitable ways for them to internationalize have been mergers and acquisitions. Law is also people’s business in which personal contacts and networks are important. Therefore, it is crucial to have local lawyers when entering a new market. In general, law firms have gone abroad later than other professional service firms.

Integration after a merger, acquisition, or greenfield is a complex task that becomes even more complicated when the deal is cross-border and/or happens in a professional service firm. Common integration challenges are unpreparedness and bad timing, poor communication, lack of a credible vision as well as power struggles. In cross-border integration, language creates a deeper communication gap between the units, and cultural issues have a bigger role than in domestic deals.