Bridging Uncertainty in Management Consulting: The Mechanisms of Trust and Networked Reputation

This article analyzes the market of management consulting and identifies institutional and transactional uncertainty as its principal features. Based on these uncertainties, it is argued that competition in this market takes place on entirely different grounds than in other business sectors. It is s...

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Bibliographic Details
Published in:Organization studies 2003-02, Vol.24 (2), p.269-297
Main Authors: Gluckler, Johannes, Armbruster, Thomas
Format: Article
Language:English
Subjects:
Business services
Competition
Consulting services
Management
Management consultants
Networks
Organization theory
Perceptions
Reputations
Studies
Trust
Uncertainty
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Summary:This article analyzes the market of management consulting and identifies institutional and transactional uncertainty as its principal features. Based on these uncertainties, it is argued that competition in this market takes place on entirely different grounds than in other business sectors. It is suggested that the main drivers of competitiveness are neither price nor measurable quality, but rather experience-based trust and a mechanism labeled 'networked reputation.' An embeddedness perspective is employed to develop the concept of networked reputation as an intermediate mechanism that complements the duality of system versus personal trust and accounts for firm growth. Secondary data on the German consulting market is reinterpreted, illustrating the significance of these mechanisms, and demonstrating how management consulting is situated in structures of social relations.
ISSN:0170-8406
1741-3044
DOI:10.1177/0170840603024002346