The Dissemination of Management Consulting Innovations and the Pace of Technological Improvements

Stephen C. Hansen and John S. Hughes

Journal of Institutional and Theoretical Economics (JITE), 2005, vol. 161, issue 3, 536-555

Abstract: This paper models management consultants' decisions about the order of client engagements when the consultant reduces clients' costs. The consultant can either immediately spread the innovation to all clients or sequentially spread the innovation to one client at a time. Licensing agreements, along with learning by doing, enhance the appeal of sequential engagements that delay the dissemination of innovation. However, concurrent engagements, or immediate dissemination, yield more clients who gain cost reductions for more periods. Whether the consultant finds that sequential or concurrent engagements optimal depends on her bargaining power and the magnitude of learning by doing.

JEL-codes: L13 L84 O31 (search for similar items in EconPapers)
Date: 2005
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