Ownership and Performance of Professional Service Firms

Understanding the effects of ownership upon organizational performance is a well-established theme in organization theory, but comparison across ownership forms has been neglected. We develop hypotheses comparing public corporations, private corporations and partnerships and test them in a sample of large management consultancies. We find that private corporations and partnerships outperform public corporations. We attribute this difference to increased monitoring by owners and greater motivation by professional workers seeking ownership stakes. Contrary to Durand and Vargas (2003), we find that organizational complexity has neither a direct nor a moderating effect. Copyright © 2007 SAGE Publications.