Organizational Ability and Performance in U.S. Legal Services Firms

Rajiv D. Banker, Tracie S. Frost, Muktak K. Tripathi and Eunyoung Whang

Data Envelopment Analysis Journal, 2021, vol. 5, issue 1, 83-113

Abstract: We quantify organizational ability for U.S. legal services firms using the two-stage data envelopment analysis (DEA) method of Demerjian et al. (2013). In the first stage, we estimate the DEA-based, technical efficiency of legal services firms following the production frontier approach. In the second stage, we measure organizational ability as the residual from the DEA + OLS model after controlling for efficiency determinants. We validate the measure by showing the persistence of organizational ability and the predictability of firms' future financial performance. Furthermore, we contribute to the literature examining professional service firms and organizational ability by identifying the determinants of ability through different classes of human resources and experience.

Keywords: U.S. professional (legal) services; DEA efficiency; organizational ability; American Lawyer (AM LAW) Top 100; performance; strategic choices; human resources; experience (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:now:jnldea:103.00000032

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