The Effects of Competition on Referral Alliances of Professional Service Firms

Inwoo Nam (), Thomas S. Gruca () and Roger Tracy ()
Additional contact information
Inwoo Nam: College of Business, Chung-Ang University, Seoul 156-756, South Korea
Thomas S. Gruca: Tippie College of Business, University of Iowa, Iowa City, Iowa 52242
Roger Tracy: Deans Office, Carver College of Medicine, University of Iowa, Iowa City, Iowa 52242

Organization Science, 2010, vol. 21, issue 1, 216-231

Abstract: The supply side of many professional service markets consists of two different pools of providers: generalists and specialists. Specialists usually gain access to new clients through referrals from generalists. To ensure a continuing stream of engagements, specialists often form referral alliances with multiple generalists. Engaging the right generalist partners and allocating resources to the resulting referral relationships are among the most important challenges facing these specialist firms. In this study, we examine how competition affects the management of referral alliances over time. Because of the high level of inseparability of the professional service engagement, the nature of competition among specialists is complex. Building on the ecological view of competition, we model the degree of niche overlap in the specialist's home markets and the generalists' markets as well as the potential overlap due to the proximity of rivals vis-à-vis generalists. Using data on visiting consultant clinics involving cardiology specialty practices and rural hospitals from a Midwestern state over a 13-year period, we find that the various aspects of niche overlap influence the involvement of these specialist professional service firms in referral alliances as well as resources they allocate to these relationships. In addition to expanding our understanding of vertical, bilateral alliances between professional service firms, this study enhances our general understanding of strategic alliances by demonstrating how partner attractiveness and the actions of rivals affect the resource allocation decisions of firms managing multiple strategic alliances over time.

Keywords: professional services; strategic alliances; population ecology; referral alliance (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://dx.doi.org/10.1287/orsc.1090.0448 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ororsc:v:21:y:2010:i:1:p:216-231

Access Statistics for this article

More articles in Organization Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().