 Firm Size and Industry Structure Under Human Capital Intensity: Insights from the Evolution of the Global Advertising IndustryAndrew von Nordenflycht ()
Organization Science, 2011, vol. 22, issue 1, 141-157 Abstract: Although existing literature assumes that the human capital intensity of professional services leads to small and flimsy firms, several professional services feature large, long-lived firms. To develop insights about firm size and industry structure in human capital intensive industries, I analyze the structure and evolution of the advertising industry. Drawing on a range of quantitative and qualitative evidence, I develop two hypotheses regarding the industry's structure and consolidation: (1) size differentiation , in which firm size and industry structure are connected to the size distribution of clients' projects, and (2) financial intermediation , in which the industry's consolidation is ascribed to organizational innovations that mitigate transaction costs between external investors and ad agency owners. I then discuss the applicability of these two hypotheses to other professional services. The analysis suggests several new insights about the value of capital, the nature of demand, and the nature of assets in human capital intensive industries. Keywords: human capital; professional services; industry structure; financial intermediation; industry evolution; advertising agencies; vertical differentiation (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:inm:ororsc:v:22:y:2011:i:1:p:141-157 Access Statistics for this article More articles in Organization Science from INFORMS Contact information at EDIRC. |
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