Success Strategies and Knowledge Transfer in Cross-Border Consulting Operations

208 Pages·2000·5.207 MB·English

by  Roger Svensson (auth.)

Success Strategies and Knowledge Transfer
in Cross-Border Consulting Operations
Economics of Science, Technology and Innovation
VOLUME 19
Series Editors
Cristiano Antonelli, University a/Torino, Italy
Bo Carlsson, Case Western Reserve University, USA.
Editorial Board:
Steven Klepper, Carnegie Mellon University, USA.
Richard Langlois, University o/Connecticut, USA.
1.S. Metcalfe, University o/Manchester, UK.
David Mowery, University o/California, Berkeley, USA.
Pascal Petit, CEP REMAP, France
Luc Soete, Maastricht University, The Netherlands
The titles published in this series are listed at the end oft his volume.
Success Strategies and Knowledge Transfer
in Cross-Border Consulting Operations
by
Roger Svensson
The Research Institute of Industrial Economics
Stockholm, Sweden
.....
"
Springer Science+Business Media, LLC
Library of Congress Cataloging-in-Publication Data
Svensson, Roger.
Success strategies and knowledge transfer in eross-border eonsulting
operations / by Roger Svensson.
p. em.-- (Economics of scienee, teehnology, and innovation ; 19)
Inc1udes bibliographical references and index.
ISBN 978-1-4613-6972-1 ISBN 978-1-4615-4385-5 (eBook)
DOI 10.1007/978-1-4615-4385-5
1. Business eonsultants. 2. International business enterprises-
Management. 1. Title. II. Series.
HD69.C6 S954 2000
658.4'6--dc21 99-086381
Copyright 2000 by Springer Science+Business Media New York
@
Originally published by Kluwer Academic Publishers in 2000
Softcover reprint of the hardcover 1s t edition 2000
All rights reserved. No part of this publieation may be reprodueed, stored in
a retrieval system or transmitted in any form or by any means, mechanical,
photo-copying, recording, or otherwise, without the prior written permis sion of
the publisher, Springer Science+Business Media, LLC.
Printed on acid-free paper.
CONTENTS
List of Figures ix
List of Tables xi
Preface and Acknowledgements xv
Chapter
1 Introduction 1
1.1 The Consulting Sector Deserves more Attention ................ 1
1.2 The First Book about International Consulting Operations ........ 4
1.3 Unique Data on Tender Documents .......................... 7
1.4 The Role of Consulting Firms and their Services ............... 8
1.5 Outline of the Book ...................................... 12
2 Theoretical Framework 15
2.1 The Nature of Consulting Services: Long-Term Relationships .... 15
2.2 The Nature of Consulting Firms ............................ 18
2.2.1 Independent Firms ................................ 18
2.2.2 Knowledge-Based Firms .......................... 20
2.3 The Market Structure: Scope Economies ..................... 25
2.4 The Customers: The Clients ............................... 28
3 International Consulting 31
3.1 International versus Domestic Consulting .................... 31
3.2 The Demand Shock Theory ............................... 34
3.3 The Entry Mode Choice by Nordic Consulting Firms ........... 38
3.4 Summary .............................................. 45
4 Development Agencies, Clients and Consulting Firms 47
4.1 The Role of Development Agencies ......................... 47
4.2 Bilateral versus Multilateral Development Agencies ........... 50
4.3 Procurement Rules ...................................... 55
4.4 Summary .............................................. 61
VI
5 Knowledge Transfer 63
5.1 Knowledge Transfer in the Consulting Sectors ................ 63
5.2 Organization Mode and Development Level .................. 67
5.3 Transfer through Training and Cooperation ................... 70
5.4 Summary .............................................. 75
6 Success Factors when Tendering 77
6.1 Alternative Tender Systems ............................... 77
6.2 Competition Step 1: Prequalification and Invitation ............ 79
6.3 Competition Step 2: Tender Document and Final Selection ...... 82
6.3.1 Hypotheses ...................................... 82
6.3.2 Bivariate Analysis ................................ 86
6.3.3 Multivariate Analysis ............................. 91
6.3.4 Interpretations, Consequences and Policy Implications .. 97
6.4 Negotiated Contracts .................................... 99
6.5 Summary .............................................. 101
7 Management Services and State-Owned Consulting Firms 103
7.1 Engineering versus Management Services .................... 103
7.2 Consequences of the Trend toward Management Services ...... 112
7.3 Privately Owned versus State-Owned Consulting Firms ........ 114
7.4 Predation by Putting Rivals at a Cost Disadvantage ........... 118
7.5 Consequences of the Exclusive Dealing Contract ............. 122
7.6 Summary .............................................. 123
8 Success Strategies and Competitiveness in the Global Market 125
8.1 Focus on Specific Host Countries ......................... 125
8.2 The Modern Consulting Firm ............................. 130
8.3 Typical Mistakes ....................................... 135
8.4 Cooperation with Contractors ............................. 137
8.5 Government Assistance and Subsidies ....................... 139
8.6 Swedish Consulting Firms and Multilateral Development
Agencies ............................................. 141
8.7 Summary ............................................. 146
9 Conclusions 149
VB
Appendix
A Swedish and Nordic Consulting Exports 157
Al Databases and Sample Selection .......................... 157
A2 History of Swedish Consulting Finns ...................... 159
A3 Basic Statistics on Finns ................................. 163
A4 Statistics on Sectors and Regions .......................... 167
A5 Statistics on Tender Documents ........................... 171
B Questionnaires 179
B.l Questionnaire on Finns ................................. 179
B.2 Questionnaire on Proposals .... , ......................... 183
References 187
Abbreviations 193
Index 195
LIST OF FIGURES
1.1 Flow diagram for an investment project ......................... 10
1.2 Flow diagram for a restructuring project. ........................ 12
6.1 Alternative tender systems .................................... 78
6.2 The relationship between success ratio for tenders in competition
and negotiated contracts as a proportion of all awarded contracts
for Swedish CFs in percent of contract values ..................... 99
7.1 Composition of services in projects that Swedish CFs tendered for
between 1995 and 1997 across financing in percent of tender values .. 107
7.2 Composition of services in projects that Swedish CFs tendered for
between 1995 and 1997 by sector in percent of tender values ....... 108
7.3 Composition of services in awarded and lost tenders that Swedish
CFs competed for between 1995 and 1997 across financing in
percent of tender values ..................................... 110
7.4 Composition of services in awarded and lost tenders that Swedish
CFs competed for between 1995 and 1997 by sector in percent of
tender values ............................................... 111
7.5 Composition of services in projects that Swedish CFs tendered for
between 1995 and 1997 by firm group in percent of tender values ... 115
7.6 The relationship between state-owned operators and CFs ........... 119
A.l Swedish sales in Sweden, developed countries and emerging markets
by CFs in 1996 in gross sales and MSEK ........................ 166
A.2 Swedish, Norwegian and Danish exports to emerging markets by
CFs distributed on financing in percent ......................... 170
A.3 Distribution of tender values for all, awarded and lost tenders for
Swedish CFs across financing between 1995 and 1997 in percent .... 176
LIST OF TABLES
1.1 Extent and division of infrastructure sectors included in the analysis .. 6
3.1 A model for the choice of entry mode strategy in foreign markets
for consulting firms ......................................... 37
3.2 Sales from permanent foreign offices and exports from Sweden by
Swedish CFs distributed on emerging and developed markets in
1996 in MSEK ........................................... 39
3.3 Permanent and representative offices located abroad by Swedish
CFs in 1999 ............................................... 40
3.4 Permanent and representative offices abroad by Danish CFs
in 1999 .................................................. 43
4.1 Awarded contracts in the whole sample and when the CF has no
previous experience with the host country or the client across
financing groups in number and percent. ....................... 51
4.2 Awarded contracts in host countries with which the CF has
previous experience distributed on new and old clients in
number and percent ........................................ 52
4.3 Sida's and Danida's budget in 1998 distributed on implementing
organizations in MSEK, MDKK and percent ..................... 54
4.4 Procurement rules across some multilateral development agencies ... 56
5.1 Training included in projects in emerging markets across financing
groups for all tender and negotiations in number and percent ....... 71
5.2 Training included in projects across development level of the host
country for all tenders and negotiations in number and percent ...... 72
5.3 Joint ventures with local CFs in projects in emerging markets
across financing groups for all tenders and negotiations in number
and percent ............................................... 73
5.4 Joint ventures with local CFs in projects across development level
of the host country for all tenders and negotiations in number and
percent .................................................. 74
6.1 Factors that may influence the invitation of CFs
(number and percent) ...................................... 81
6.2 Basic statistics and hypotheses for the explanatory variables ........ 85
6.3 The tenderer's previous experience w~th the host country related to
awarded and lost tenders (number ani percent) .................. 86
6.4 The team leader's degree of education related to awarded and lost
tenders (number and percent) ................................. 87
6.5 The team leader's international experience related to awarded and
lost tenders (number and percent) .............................. 88
XlI
6.6 The tenderer's experience with the client related to awarded and
lost tenders (number and percent) ............................ 89
6.7 The tenderer's visits to the clients related to awarded and lost
tenders (number and percent) ................................. 90
6.8 The tenderer's local offices related to awarded and lost tenders
(number and percent) ...................................... 91
6.9 The influence of different factors on the outcome of the tender
evaluation by probit analysis .................................. 93
6.10 The influence of different factors on the outcome of the tender
evaluation across fmancing groups ............................ 96
6.11 Explanatory factors for negotiated contracts and comparisons with
tenders in competition in averages of number, years and percent .... 100
7.1 Classification of services supplied by CFs ..................... 105
7.2 Combination of services included in contracts that Swedish CFs
tendered for between 1995 and 1997 in percent ................. 106
7.3 Combination of services included in awarded and lost tenders that
Swedish CFs competed for between 1995 and 1997 in percent ..... 109
7.4 Terms of employment and exclusive right to professionals in
private and state-owned CFs ................................. 116
8.1 Proposals submitted to, and awarded contracts in, host countries
in which Swedish CFs have a represenatative, a permanent or no
office between 1995 and 1997 in number and average number ..... 127
8.2 Proposals submitted to, and awarded contracts in, host countries
with which Swedish CFs have and have not previous experience
between 1995 and 1997 in number and average number ........... 129
8.3 Consulting contracts in Eastern Europe financed by EU divided
on supplying countries between 1995 and 1998 in MEUR and
percent ................................................. 142
8.4 Consulting contracts financed by the World Bank and AsDB
divided on supplying countries between 1967 and 1998 (disburse-
ments) in MUSD (current prices) and percent ................... 143
8.5 Success ratios for Nordic CFs when tendering for projects
financed by AsDB between 1992 and 1996 in number and
percent ................................................. 144
Al Swedish CFs includedin the surveys and their main foreign
infrastructure sectors of operation ............................ 160
A2 Sales and exports by Swedish CFs in 1992, 1994 and 1996 and
comparisons with CFs from other Nordic countries in current
prices and MSEK .......................................... 164
A3 Swedish sales and exports by private and state-owned CFs in
1992, 1994 and 1996 in current prices and MSEK ............... 165