colonizing knowledge in psf - greenwood and suddaby

8/4/2019 Colonizing Knowledge in PSF - Greenwood and Suddaby

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Colonizing knowledge:Commodificationas a dynamic of jurisdictional expansionin professional service firms

Roy Suddaby and Royston Greenwood

ABSTRACT This paper provides a field level analysis of the process by which

management knowledge is produced.Two linked dynamics are identi-

fied as important components of this process. The first is the com-

modificationof management knowledge, or the tendency to reduce

knowledge to a routinized and codified product. We argue that the

commodification of management knowledge is a cyclical process that

has been institutionalized by the interests of distinct categories of

social actors.The second dynamic, termed colonization, refers to the

migration of Big Five professional service firms into adjacent pro-

fessional jurisdictions. Colonization is the result of intensification of

commodification and has produced intense conflict and change in

the organizational field of management knowledge production.

K E Y W O R D S knowledge management organizational fields professional

service firms (PSFs)

1. Introduction

Increasing attention is being focused on the importance of knowledge within

organizations (Brown & Duguid, 1998; N onaka & Takeuchi, 1995). Par-

ticular attention is being given to professional service firms (PSFs), such as

law, accounting and management consulting firms, which are seen, not only

as prototypes of knowledge intensive organizations (Peters, 1992) but, also

9 3 3

Human Relations

[0018-7267(200107)54:7]

Volume 54(7):933953:017840

Copyright 2001

The Tavistock Institute

SAGE Publications

London, Thousand Oaks CA,New Delhi
http://www.sagepub.co.uk/http://www.sagepub.co.uk/


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as substantial contributors, in their own right, to our collective store of

management knowledge (Furusten, 1995; Guillen, 1994).

Although considerable study has been devoted to understanding the

internal dynamics of managerial knowledge production within these firms

(Moore & Birkinshaw, 1998), scant at tention has been paid to the overall

system of production of management knowledge in society generally. The

absence of theoretical or empirical examination is surprising, given the dra-

matic growth in consumption and popularity of management knowledge.

The global management consulting industry, for example, has been growing

more than twice as fast as the world economy for the past decade and, in

2000, will exceed more than US$100 billion in annual revenues (Consultants

News, 1999). Large consulting and business advisory firms are among thefastest growing organizations globally (Kennedy Research Group, 1997).

These firms also enjoy an unprecedented degree of influence over other busi-

ness organizations and have been described as forming a new global elite in

political and economic influence (The Economist, 1997).

The production and consumption of management knowledge involves

complex interactions between sets or communities of organizational actors.

These interactions define not only what management knowledge is but also

how it is produced, legitimated, distributed and, ultimately, consumed. Expli-

cating the roles of actors engaged in the process of management knowledge

production is an important step towards answering the questions: What is

management knowledge? What are the social processes by which manage-

ment knowledge is constructed? and Which institutions in society claim the

jurisdiction of knowledge production?

This article will document the structure of the field of management

knowledge production. It explicitly adopts a broader and more dynamic ana-

lytical framework than has been traditionally applied. We use the organiz-

ational field as our primary unit of analysis (Scott, 1995). Defined ascommunities of organizations that , in the aggregate, constitute a recognized

area of institutional life: key suppliers, resource and product consumers,

regulatory agencies and other organizations that produce similar services or

products (DiMaggio & Powell, 1983: 143), organizational fields occupy a

level of analysis that is both broader and more interactive than traditional

notions such as industry or market sector.

Our analysis of the organizational field of management knowledge sug-

gests two linked processes by which the social construction of management

knowledge occurs. The first, knowledge commodification, describes the

process by which managerial knowledge is abstracted from context and

reduced to a transparent and generic format that can be more easily lever-

aged within PSFs and sold in the market place. Commodification occurs as

Human Relations 54(7)9 3 4


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managerial knowledge products move cyclically between communities of

actors within the organizational field. Our observation of the process sug-

gests that the cycle of commodification is intensifying and, increasingly,

becoming internalized within the confines of large, conglomerate PSFs such

as the Big Five accounting firms.

The second process, knowledge colonization, describes the struggle by

large conglomerate PSFs to expand the scale and scope of their managerial

knowledge products. Inevitably, such expansion requires these organizations

to migrate into new knowledge territories. Colonization is a natural conse-

quence of knowledge commodification, which makes proprietary managerial

products both transparent and imitable and thus subject to intensifying com-

petition . Colonization involves the legitimation of specific social actors as theappropriate sources of management knowledge and the de-legitimation of

others. Colonization generates jurisdictional disputes between professional

communities and, although such disputes are not a new phenomenon

(Abbott, 1988), colonization efforts appear to emphasize competition at the

organizational level rather than the level of the profession and have, conse-

quently, raised the significance of conglomerate PSFs such as the Big Five in

inter-jurisdictional disputes.

Describing these two processes aids understanding of a series of issues

about the nature of management knowledge production and consumption.

First, it provides an analytical framework for understanding the rapid growth

of management knowledge products and the firms that produce them.

Second, it provides a theoretical basis for the increasing presentation of

management knowledge as a reified property in contemporary discourse.

Finally, it provides an opportunity for critical reflection on the role of specific

social actors in the process of production and consumption of management

knowledge.

We illustrate the processes of commodification and colonization withexamples drawn from the field of professional business services, which

includes management consulting firms, Big Five accounting firms, universi-

ties, management gurus and consumers. In the following sections we describe

the structure of the organizational field within which management know-

ledge is socially constructed. We elaborate the concept of commodification

and describe the cycle of knowledge production, a recurring pattern of cre-

ation, legitimation and consumption of management knowledge. In subse-

quent sections we argue that the rate of commodification is intensifying,

speculate on its cause and discuss implications. In the final section we

describe colonization and discuss the intense institutional conflict and change

that necessarily accompanies the jurisdictional expansion of select organiz-

ations into new knowledge spaces.

Suddaby & Greenwood Colonizing know ledge 9 3 5


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2. The organizational field of management knowledge

production

Following Hirsch (1972), our frame of reference is the organizational field

of management knowledge production, comprising all the organizations

engaged in the process of developing and filtering new managerial products

as well as the more technical subsystems of application and consumption of

those products. Our primary focus is on the knowledge product itself and

how the interactions between actors in the field shape and influence norma-

tive and cognitive perceptions of the managerial practices from production

to consumption.

The organizational field of management knowledge production can bedepicted as consisting of distinct organizational groups or sets (Evan,

1966; Hirsch, 1972). Micklethwait and Wooldridge (1997) identify three

such groups; business schools, management consulting firms and manage-

ment gurus. To these should be added large conglomerate PSFs and con-

sumers.

These organizational groups, although relatively distinct, are not

impermeable and overlap between them occurs. Still, the organizational

groups form a partial social system of mutual dependence that, collectively,

provides an array of resources essential to the production of management

knowledge.

The traditional role of each category of actor is described in the balance

of this section. The roles described are neither exclusive nor static. That is,

the descriptions are idealized roles of categories of actors that have changed

over time and often become conflated.

Business schools

Business schools serve three traditional functions. First, and perhaps most

importantly, they provide a quality control function for managerial know-

ledge currently in use. Academic research follows, rather than leads, the use

of managerial practices in the workplace (Barley et a l., 1988; Strang, 1997).

This may be explained by the reflective nature of much academic research

that is devoted to testing the validity and reliability of managerial concepts

in use. Business schools, in this sense, provide a forum for sober second

thought, where managerial knowledge is evaluated and refined. We term th is

function due diligence.

Studies of the validity of practices and ideas inevitably produce sug-

gestions for improvement. The process of trying to understand extant know-

ledge produces new insights that form the basis for new managerial fads.



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Business schools, therefore, may become important sources of new mana-

gerial knowledge. We term this process research-led innovation.

These two functions represent an ideal type for academics in the

process of management knowledge production, a role that some critics

suggest has never been fully achieved because academic research has been

overly detached from the business community (Pearce, 1999; Pelton, 1996).

Moreover, the assumption that academic research actually leads to improv-

ing business practice is highly contested (Pearce, 1999; Porter, 1997). Not-

withstanding these concerns, the idealized ro le of academics has substantial

grounding in observed experience. Responding in 1998 to the growing threat

of corporate universities, for example, the then President of the Academy

of Management affirmed the traditional role of business academics in gener-ating new managerial knowledge:

It is the rare manager or firm that creates knowledge about manage-

ment, and it is even rarer for a consultant to create knowledge

(although some most assuredly do). Thus, [business schools] potential

value-added contr ibution over time may well be the creation of know-

ledge. As a result, effective basic and applied research may be our long-

term competitive advantage.

(Hitt, 1998: 218)

A variety of pressures on academic research threaten business schools.

Foremost are significant commercial pressures on researchers to participate

directly in the marketplace by commodifying academic research (Wilmott,

1995). A related form of pressure arises from the diminishing boundaries

between business schools and other actors in the organizational field. Clients

(i.e. executives) and consultants are, increasingly, establishing a presence in aca-

demia by collaborating with various business schools (Haynes, 1998). Theresult may well diminish the traditional role of testing, validating and refining

extant managerial knowledge. These observed pressures are, in fact, consistent

with the themes of this article; that commodification of managerial knowledge

is producing colonization of universities by large conglomerate PSFs.

Business schools play an important third role in the management know-

ledge commodification process. By educating and accrediting an ongoing

stream of management students, they generate the foundation for consump-

tion of managerial knowledge products. Business education produces a

common language, shared analytical tools and unified values or assumptions.

Business schools, therefore, provide the cognitive foundation for the legiti-

macy of extant management knowledge and the ongoing need to continually

update it.



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Gurus

Gurus serve the primary function of translating managerial knowledge

between communities in the field (Clark & Salaman, 1998; Huczynski,1993). They abstract theoretical concepts generated in the academic com-

munity and convert them to a generic form. They also draw on, and gener-

alize, the experience and practices of the consulting community and

consumers of management consulting services. Gurus, therefore, typically

straddle boundaries within the organizational field, originating in either busi-

ness schools (Michael Porter, Henry Mintzberg) or consulting (Tom Peters,

Robert Waterman, Peter Drucker).

Gurus not only make ideas accessible, they serve the important func-

tion of legitimation. Legitimation involves gaining normative acceptance.

This is achieved by translating specific managerial practices into the popular

business press, presenting these ideas in organizations or at conferences and

promoting them through their own consulting work. Gurus may be distin-

guished from pure consultants or academics by their individual reputation,

which exceeds that of any organization with which they might be associated.

Consultants

Consultants convert managerial knowledge into useable and saleable form.

This is accomplished through a variety of methods, each of which contr ibutes

to an overall process ofcommodification. Commodification involves the con-

version of localized, experiential and highly contingent managerial know-

ledge into a reified, commercially valuable form presented as objective,

ahistorical and having universal principles. To accomplish this, management

knowledge that originates from academic theory or from industry or con-

sumer experience must be codified, abstractedand translated.Codification requires converting individual experience into something

that can be stored, moved and reused. It has been described as a people to

documents approach whereby experience is extracted from the person who

developed it, made independent of that person, and reused for various pur-

poses (Hansen et al., 1999). The ultimate goal of codification is to convert

the project experience of consultants into a form that can benefit other con-

sultants. Often this involves storing such information in a computer database

that can be accessed by others (Gibbins & Wright, 1999).

Abstraction is the process by which the raw information presented by

codification is converted into a more portable and universal form. It requires

the synthesis of codified experience into relatively simplistic templates or

icons that can be easily understood and implemented by junior consultants.



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Converting management knowledge into a routinized checklist or an easily

recognizable template, such as the strategic grid of the Boston Consulting

Group, the McKinsey 7-S framework or the Five-Forces template of

Monitor Consulting Group, makes subsequent re-application of such know-

ledge by junior consultants more acceptable to clients. It provides a veneer

of objectivity and universality to management knowledge, making it gener-

alizable to a variety of local contexts or cultures. Abstract icons are also more

saleable because they provide a convenient summary that clients can easily

remember and use (McKenna, 1999). Abstracting managerial knowledge to

a template or icon also makes it more portable, allowing it to move easily

amongst consultants and between a variety of clients.

Translation involves the re-application of codified and abstractedknowledge into a variety of different organizational contexts. It implies the

physical movement of ideas from a local context to global space (Czarni-

awska & Joerges, 1996). It a lso includes an element of semantic movement

or subtle shift in meaning as the or iginal knowledge product is disembedded

from its original context, abstracted into iconic form and reembedded in

another, somewhat different organizational context (Furusten, 1995; Guillen,

1998).

Conglomerate professional service firms (the Big Five):

Very large PSFs, exemplified by the Big Five accounting firms (Pricewater-

house Coopers, Ernst & Young, Deloitte Touche, Arthur Andersen and

KPMG), are an emerging significant organizational community in the

management knowledge industry. Big Five firms are growing rapidly, both in

scale and in the scope of professional services they offer. Two decades of

merger activity have produced an elite grouping of firms that control nearly

90 percent of the global audit market (CIFAR, 1995) and 20 percent of theglobal consulting market (Kennedy Research Group, 1997). Their rapid

growth and diversification of function serves to distinguish them from other,

more specialized or pure consulting firms such as McKinsey or Boston Con-

sulting Group. The Big Five, moreover, appear to be internalizing many of

the functions of the field of management knowledge production inside indi-

vidual organizations. Each of these observations will be elaborated in sec-

tions 5 and 6.

Consumers

Consumers represent a poorly understood component of the organizational

field. There is clearly a strong, and growing demand amongst consumers for



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management knowledge products. Yet there is an obvious scepticism of the

validity and quality of the product they consume (Kieser, 1998). A variety of

explanations have been offered for the simultaneous growth of consumer

demand and consumer scepticism. Perhaps the most popular is the notion

that the consumption of managerial consulting services is a consequence of

technical or aesthetic fashion (Abrahamson, 1996). Consumption occurs

regardless of improvements to technical efficiency because actors in the

organizational field (management consultants, gurus, business schools)

provide a collective legitimating discourse that makes consumption not only

normatively acceptable, but rational and mandatory (Rovik, 1996).

Although the notion of fads and fashions provides some conceptual

basis for understanding the phenomenal growth of the management con-sulting industry, it fails to account for the increasing decoupling of con-

sumption and ut ility. That is, it does not provide a detailed understanding of

the mechanics by which the detachment of technical and aesthetic value

occurs, nor does it provide a description of the process by which certain

actors, and their managerial knowledge products become legitimated. These

issues are addressed, in some detail, in the discussion of knowledge com-

modification which follows.

3. The cycle of management knowledge production and

consumption

Each of these communities of actors (business schools, gurus, consultants,

the Big Five PSFs and consumers) plays a critical role in the ongoing pro-

duction and consumption of management knowledge. Their ongoing inter-

actions form a social set through which managerial discourse circulates, and

from which ideas are shaped into concrete practices with commercial prop-erties and value. Boundaries between the groups are not finite and individuals

often move freely from one group to the other.

Management knowledge has a life cycle. As new managerial practices

emerge from the field, they are refined by the academic community,

abstracted and legitimated by gurus and commodified by consultants. The

act of commodification makes the knowledge product imitable which, in

turn, intensifies competition and stimulates demand for new management

knowledge products. This creates a cycle of k nowledge production and con-

sumption that both stimulates and feeds consumer demand (see Figure 1).

It is difficult, and perhaps deceptive, to ascribe distinct and sequential

stages to the process of management knowledge production. The events most

likely occur contemporaneously. For expository purposes, however, it is



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useful to think of the movement of discourse about a given managerial know-ledge product as occurring in four stages, each of which primarily involves

the contr ibution of one of the actor-groups discussed above.

Barley et al. (1988) suggest that discourse around new managerial

knowledge occurs first amongst practitioners and, over time, moves into the

business schools. Similarly, Strang (1997) observed a distinct sequence of

movement, in the diffusion of Quality Circles, from the popular business

press, to consultants and finally to business schools:

Journalists are especially prominent in 197781, appearing as 9 of the

16 authors located in this period. Consultants appear more frequently

in the peak year of 1982. But in both periods, academics are hardly

present at all (two in 197781, none in 1982). The situation reverses


D u e D i l i g e n c e a n d i n n o v a t i o n

L e g i t i m a t i o n C o l o n i z a t i o n

C o m m o d i f i c a t i o n

C O N S U M E R S

p r i m a r y a c t o r s : b u s i n e s s s c h o o l s

p r i m a r y f u n c t i o n : t e s t i n g a n d

r e f i n i n g e x t a n t k n o w l e d g e

s e c o n d a r y f u n c t i o n : i n n o v a t i o n

a n d g e n e r a t i o n o f n e w m a n a g e r i a l

k n o w l e d g e

t e r t i a r y f u n c t i o n : s o c i a l i z a t i o n o f

c o n s u m e r s

p r i m a r y a c t o r s : ' g u r u s '

p r i m a r y f u n c t i o n : a b s t r a c t i n g

t h e o r e t i c a l k n o w l e d g e f o r

a p p l i c a t i o n s a n d t r a n s l a t i n g i t t o

o t h e r c o m m u n i t i e s

s e c o n d a r y f u n c t i o n : p o p u l a r i z i n g

m a n a g e m e n t k n o w l e d g e

p r i m a r y a c t o r s : l a r g e c o n s u l t i n g f i r m s

p r i m a r y f u n c t i o n : c o n v e r t i n g a b s t r a c t

k n o w l e d g e i n t o a s a l a b l e p r o d u c t

p r i m a r y m e c h a n i s m s :

1 . c o d i f i c a t i o n

2 . a b s t r a c t i o n

3 . t r a n s l a t i o n

p r i m a r y a c t o r s : B i g F i v e

p r o f e s s i o n a l s e r v i c e f i r m s

p r i m a r y f u n c t i o n : e x t e n d i n g

c o m m o d i f i e d m a n a g e r i a l k n o w l e d g e

t o n e w d i s c i p l i n e s

p r i m a r y m e c h a n i s m : p r o f e s s i o n a l

e n c r o a c h m e n t t h r o u g h p r o d u c t

d i v e r s i f i c a t i o n

Figure 1 The cycle of knowledge production and consumption


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in 1987 and 19923. 32 authors or 72% of the sample during these

periods note professorial appointments in colleges and universities.

(p. 18)

This analysis suggests that an appropriate starting point for the cycle of

knowledge production and consumption is when gurus appropriate a new

managerial practice or idea and disseminate it through the popular business

press. We term this first stage the legitimation phase. An important aspect of

legitimation is the act of converting new ideas or managerial practices into

language that can be understood by a wider audience. Gurus disseminate

these ideas to a wider audience by virtue of their public profile and through

venues designed to access a mass audience, such as popular books, televisionand other media appearances and through corporate and academic seminars.

During the second phase of the cycle of knowledge production and con-

sumption, management knowledge is converted to a product. This occurs

through codifying, abstracting and translating managerial practices. This

process takes place primarily within consulting firms, part icularly large con-

sulting firms where there are economic advantages in the mass-customiza-

tion of knowledge products. The ultimate goal of this stage is to routinize

management knowledge by converting esoteric professional expertise into

procedures, manuals or checklists that can be administered by relatively

inexperienced junior consultants (Hansen et al., 1999) and sold, with minor

modification, to a variety of corporate consumers.

Converting managerial knowledge into products provides several com-

petitive advantages to consulting firms. Foremost, it allows such firms to

leverage their knowledge product. Leverage refers to the practice of hiring

a large number of junior professionals at a lower cost than the revenue they

generate (Maister, 1993). Converting managerial knowledge into routines,

templates or checklists increases a consulting firms capacity to leveragebecause the management practice becomes more transparent and more easily

understood and implemented by junior professionals who lack significant

client experience.

Codifying, abstracting and translating knowledge also makes the

managerial practice more portable. A routinized checklist and accompany-

ing template can be readily moved within the organization (Davenport &

Prusak, 1997) and across national boundaries (Guillen, 1998). It also pro-

vides an element of standardization within the organization. Rather than

depending on the individual skills and experience of a broad range of pro-

fessionals, consulting firms can provide a relatively predictable and uniform

management practice to its clients. This helps to make the management

knowledge product more saleable in that it provides a degree of branding



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for the firm in the global marketplace wherein the firm becomes closely

associated with a particular knowledge product (McKenna, 1999).

The third stage of the cycle involves the extension of commodified

managerial knowledge products into new professional jurisdictions. This is

undertaken primarily by the Big Five PSFs who find economies of scope in

transferring commodified managerial practices from one professional juris-

diction to another. Big Five firms, thus, have successfully adapted traditional

audit practices to strategic planning in the form of a strategic audit. They

similarly have abstracted other practices, such as activity based costing from

the relatively narrow confines of financial accounting to a wide variety of

management consulting contexts, such as human resource planning and

organizational design. We term this stage of the cycle colonization.Extending commodified management knowledge products to new pro-

fessional jurisdictions tends to intensify the cycle of management knowledge

production for two reasons. First, commodified knowledge is easily imitable

by competitors, which tends to increase competition between consulting

firms and intensifies the demand for new management knowledge products.

Second, colonization of neighbouring professional jurisdictions by Big Five

firms generates conflict (colonization and its implications will be described in

detail in the following sections).

The final stage of the cycle is the analysis and refinement of existing

products. This occurs primarily at business schools where academics scruti-

nize and test extant managerial knowledge and practices. It can also occur,

however, in other parts of the field, as when, for example, clients adapt

generic managerial products to accommodate unique or local situations

(Rovik, 1996) or when consultant-gurus provide best-practice critiques of

managerial concepts in use (Peters & Waterman, 1982). In performing this

activity, business academics, gurus and clients provide a form ofdue diligence

by ensuring that knowledge claims made by others are accurate. An import-ant outcome is the innovation or creation of new managerial knowledge that,

in turn, becomes popularized, legitimated and ultimately commodified. The

need for new knowledge products serves as an engine of change: the cycle

begins anew.

4. Implications of commodification

Applying the notion o f commodification to the field of management know-

ledge production yields several useful insights. First, it offers some expla-

nation for the increased decoupling of technical and aesthetic value of

management consulting products. Marxs notion of commodity fetishism



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distinguished between producing goods and services for their technical use

or producing a commodity, an object which only has exchange value in a

market economy (Caplan, 1989; Goldman & Wilson, 1983; Nelsen &

Barley, 1997). Marx theorized that the objects of exchange, the commodity,

lose their value as technical objects that can be used by the maker, but

become more valuable as objects which can be traded or exchanged in the

market. Over time, the commodified products technical use becomes

detached from its value as a social object.

The loose coupling between use and exchange value provides some

explanation for Abrahamsons (1996) observation about the increasing dis-

tinction between technical and aesthetic value in the consumption of

management consulting services. Management knowledge is valued not onlyfor its contribution to achieving organizational efficiency, but also for its

ability to enhance careers, give status or to consolidate actors positions

within the organizational field. Similarly, the collective acceptance of

management knowledge products by other actors in the organizational field

provides a level of taken-for-grantedness of the process and provides the

cognitive schema for continued consumption (Greenwood & Hinings,

1993).

A second insight offered by applying the notion of commodification to

the field of management knowledge production is in understanding why

knowledge, generally, and management knowledge, specifically, is increas-

ingly treated as a property in contemporary discourse. A necessary outcome

of valuing a good or service more for its exchange value than its use-value is

the tendency to reify that good or service. Marx observed that a natural

outcome of the tendency of individuals engaged in the process of commodi-

fication is to treat their social relations as if they were natural things. Services

produced for exchange, thus, become detached from their producers and

become objectified. Managerial practices become dis-embedded from theirlocal context and transformed into universal principles of management. As

managerial knowledge products become objectified, we become focused on

the property characteristics of the outcome of the knowledge production

process rather than concerning ourselves with issues about how and why

certain types of knowledge are produced.

A final observation is that the process of converting esoteric experience

and expertise into routine templates increases the transparency of that know-

ledge. Commodified knowledge is more easily imitated. Imitability increases

competition (Wernerfeldt, 1984). Commodification thus intensifies compe-

tition (Abbott, 1988). Ultimately, consumers will pay more for a customized

knowledge product, administered by professionals, than for an off the rack



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commodity product delivered by inexperienced juniors (Hansen et al., 1999).

Commodification, therefore, produces a spiralling need for new ideas and

managerial practices that can be commodified and sold.

5. Intensification of the cycle

Commodification leads to hyper-competition. Abbott (1988) illustrates this

sequence with reference to the inability of computer programmers to effec-

tively establish control over their knowledge product because of rapid com-

modification. Within the first three decades of programming capability, there

have been four or five generations of experts in programming, each onerapidly outmoded by software that made its knowledge a commodity (p.

241). Commodification of the capacity to program intensified competition so

much that the cycle-to-market for new programming techniques was reduced

from cycles measured in years to cycles measured in weeks.

There is considerable evidence that the pace of commodification is

quickening (i.e. the contact between players is more frequent) and is becom-

ing more significant (i.e. more fatal). The time lag between dominant ideas

in management consulting is diminishing. Consultants speak about the need

to get new consulting strategies to the market quickly, a practice which is

viewed as a primary dr iver of the overall frenzied growth of the management

consulting industry (Kennedy Research Group, 1997).

The quickening pace of commodification has disturbed the cycle of

management knowledge production (as described in Figure 1) in two ways.

First, the pressure for new knowledge products has led to jurisdictional

migration. In the effort to provide new knowledge products with which to

feed the cycle of knowledge production and consumption, and in an effort

to extend the commercial utility of existing products, consulting firms, par-ticularly the Big Five, are looking to extend themselves to new professional

jurisdictions. We term this process the colonization of knowledge.

Second, the same pressure is leading to the internalization of roles

previously provided by discrete actors. Thus, firms seek to create, as well

as disseminate, managerial knowledge. That is, the Big Five are att empting

not only to commodify managerial knowledge products but to commodify

theprocess by which new knowledge is created. Doing so, however, raises

the problem of legitimacy: that is, how can these firms legitimate their self-

generated knowledge? One consequence has been the co-option of uni-

versity actors and institutions into their domain. We examine each process

in turn.



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6. Colonization of knowledge

The ongoing need for new managerial knowledge that results from com-

modification generates a field-wide migrat ion of certa in actors who seek new

intellectual space. The act of commodifying knowledge generates compe-

tition for new ideas, new services and new knowledge products, which pushes

firms to seek new sources of ideas. It also creates an atmosphere of intense

competition in which knowledge producers seek to extend the life cycle of

their knowledge products by extending their scope of application. This is the

essence of mass customization of services in which well-defined knowledge

products form the basis of a product platform that can be used, with minor

modifications, in new markets (Gilmore & Pine, 1997). Exploiting newmarkets most often requires an aggressive migration into adjacent pro-

fessional jur isdictions.

Amongst those groups of actors engaged in the cycle of knowledge pro-

duction, this migration is most apparent with large diversified consulting

firms such as the Big Five PSFs. Using the colonization of knowledge as an

explicit strategy, these organizations have transformed themselves from

accounting firms to consulting firms and, ultimately, to multidisciplinary

business service providers.

The migration of Big Five firms began with the commodification of

audit services. A series of mergers between account ing firms, beginning in the

1960s and culminating in the mid-1990s, produced an elite grouping of the

eight (then six and ultimately five) largest accounting firms in the world

(Wooten & Wolk, 1996). The intense concentration of accounting firms pro-

duced by these mergers created a mature market for audit services. Com-

petition between firms for audit clients became intense (Stevens, 1991). Audit

work became a commodity product (Margheim & Kelly, 1992) with little dif-

ferentiat ion between firms or services (Simunic, 1980). The Big Six firms alsofaced an impending litigation crisis as shareholders of failed corporations

sued accounting firms for negligent audits (The Economist, 1992).

As audit work became commodified, the Big Six firms turned to other

work that offered higher profit and less risk. The most profitable was manage-

ment consultancy and by the end of the 1980s, management consulting had

replaced audit and assurance as the most profitable source of revenue (Stevens,

1991). Arthur Andersen, a firm that had long recognized the importance of

computers and information technology for its future growth, led the move to

management advisory services. By 1991, consulting accounted for 43 percent

of Andersens total revenue compared with 34 percent for audit (Public

Accounting Report, 1992). In 1998 consulting services produced over 70

percent of the firms income (Public Accounting Report, 1999).

Collectively, the Big Five dominate the global market for consulting



15/21

services. They occupy the top five positions in the 50 largest consulting firms

and their ra te of revenue growth is over twice as fast as established consult-

ing firms such as McKinsey or Booz-Allen & Hamilton (Consultants N ews,

June, 1999). More significantly, of the total consulting revenue generated by

the 50 largest consulting firms, the Big Five (plus Andersen Consulting, which

is now split from its parent, Arthur Andersen) earned more than 50 percent.

The Big Five are thus dramatically transforming themselves into con-

glomerate professional services firms, no longer referring to themselves as

accountants (Greenwood et al., 1998). They have championed the concept

of multidisciplinary practices or MDPs and targeted a broad range of

related professional jurisdictions for future colonization.

One of the most controversial targets has been the migrat ion of the BigFive into the legal profession. The movement began in Europe several decades

ago where firms either acquired existing law firms or developed internal law

practices. Today, PricewaterhouseCoopers is the largest law firm in France,

Arthur Andersen owns the largest law firm in Spain and each of the Big Five

firms has a legal presence in countr ies whose regulatory regimes permit MDPs

(Trebilcock & Csorgo, 1999).

In North America the incursion of the Big Five into the legal profession

has generated considerable controversy. In Canada, Ernst & Young estab-

lished a captive law firm in Toronto in 1997 that has, since, grown to house

over 200 lawyers (Melnitzer, 1999). Ernst & Young has also established an

alliance with a Washington, DC law firm in anticipation of regulatory

approval of MDPs by the American Bar Association ( Journal of Accoun-

tancy, 2000). Other intellectual spaces identified for colonization include

advertising, public relations, lobbying and investment banking.

The colonization project of the Big Five firms is related to the broader

strategy of dominating the field of management knowledge production. This

can only be accomplished by fully internalizing the management knowledgeproduction cycle within the confines of a single organization. As presently

constructed, power is diffusely distributed in the organizational field. That

is, no single group or firm has the power or resources to solely determine the

success or failure of a given managerial knowledge product. The interdepen-

dent nature of structural power in this field is not surprising, given that

management knowledge is a process of social construction and outcomes in

the field are the product of interactions of diverse groups with d ifferent and

often conflicting interests.

Internalizing these diverse functions, therefore, can only be accom-

plished by very large firms, with a global scale of activities. The Big Five

firms are characterized by a variety of features consistent with this, includ-

ing a diffuse internal power structure (Greenwood et al., 1990) and a global

scale. But in order to successfully internalize the capacity to validate and



16/21

innovate management knowledge and, perhaps more importantly, to acquire

the ability to legitimate that knowledge to consumers and to constituents at

the societal level, the Big Five have turned their colonialist efforts to uni-

versities.

7. Internalizing the management knowledge industry

The Big Five have been particularly aggressive in their efforts to re-create,

inside themselves, the innovation and theorization activities formerly pro-

vided by universities. They have employed a variety of strategies to accom-

plish this internalization. Two of the most prominent are the establishmentof knowledge centres and the creation of linked relationships with promi-

nent business schools.

Knowledge centres

Each of the Big Five and nearly all of the largest management-consulting firms

have knowledge centres (Moore & Birkinshaw, 1998). These centres

consist, primarily, of large databases of experts, consultants with specific

industry experience who can be called upon for projects that require their

par ticular experience and skill, or databases of individual experience gained

by consultants on assorted projects. The databases can be accessed by other

professionals within the firm who can learn indirectly from others prior

experience or directly, by contacting an individual with substantial experi-

ence in a particular area.

Often these knowledge centres mimic aspects of universities, exhibit-

ing a dual commitment to teaching, research and dissemination of results.

Arthur D. Little, for example, established its corporate university in 1964.Consultants from the firm teach courses in strategic management, organiz-

ational design and change management and graduates of the one year

program receive an MSc in Management (Meister, 1998). The program,

approved by the American Association of Schools and Colleges of Business

(AASCB), has recently formed an alliance with Bostons Babson College and

will emphasize its expertise in fostering entrepreneurship in organizations. A

similar alliance has been established between PricewaterhouseCoopers and

the University of Georgia (King, 1998).

University linkages

Increasingly, knowledge centres draw upon the expertise of prominent aca-

demics. Academic gurus, such as Rosabeth Moss Kanter and Jeffery Pfeffer,



17/21

are invited to present current research to an audience of practitioners and

partners with a view to giving the firm a strategic jump on the marketplace

for current managerial knowledge (Micklethwait & Wooldridge, 1997). Aca-

demic/practitioner linkages are further extended by the co-production of

management books for the popular business press. Typically these books are

co-authored by an academic and a practitioner. The intent is to ra ise the legit-

imacy of each firms knowledge product by association with acknowledged

experts. It is important to note that academic/practitioner linkages serve

mutual self-interests. Academic gurus receive substantial sums for their

presentations and their popularized management books. Their host universi-

ties similarly benefit from the resultant exposure of their academics in the

form of free publicity, donations and additional economic rewards.The internalization of stages of the cycle of management knowledge

production is a significant phenomenon on two accounts. First, although it

is consistent with the prediction of transaction cost theorists that state that

market functions may be brought into hierarchies (Williamson, 1975), it is

not apparent that doing so actually reduces transaction costs. These firms

incur enormous costs in establishing knowledge centres, knowledge officers

and knowledge management programs. Booz Allen Hamilton, for example,

spent nearly US$5 million to establish its Knowledge Online Project

(Kennedy Research Group, 1997). American Management Systems will

spend almost 10 percent of its gross revenue on similar knowledge manage-

ment systems over the next few years. Andersen Consulting, which regularly

spends 6.5 percent of its revenue on training, will spend an additional

US$220 million on its Knowledge Xchange technology program (Kennedy

Research Group, 1997). McKinsey reportedly spends 10 percent of its rev-

enues on knowledge management.

The second aspect of this phenomenon is that it makes universities the

targets of colonization efforts. The movement of management consultingfirms, either directly or indirectly, into the field of management education and

research directly threatens the function of universities in the cycle of know-

ledge production and consumption. More importantly, it threatens to under-

mine the due diligence role of universities. Although these internalized

knowledge centres seem intent on mimicking aspects of university research

faculties, it is not clear that much priority has been spent on empirically

testing and refining emerging knowledge products.

8. Conclusion

Jurisdictional conflict between professionals is not a new phenomenon

(Abbott, 1988). Indeed, claims of expert knowledge to occupy intellectual



18/21

space is one of the defining characteristics of professionalization (Friedson,

1986). The processes that have been described here are, however, funda-

mentally unique because of the profound role of organizations in all aspects

of knowledge commodification and colonization. Whereas issues of jurisdic-

tional conflict between professions were usually resolved through the inter-

action of professional associations or, alternatively, state regulators (Abbott,

1988), commodification and colonization practices appear to be the direct

result of the increased tendency of professional services to be delivered by

large, complex organizations.

The production of managerial knowledge occurs through the complex

interaction of a network or field of organizations. By pursuing individual

interests, actors within the field produce an informal structure that innovatesnew managerial knowledge and regulates its production and consumption.

Increasingly, some organizations seek to internalize the process of knowledge

production within their boundaries, which is a marked departure from the

historical model where colonization struggles occurred at the level of the pro-

fession rather than the firm and was legitimated by arguments of public inter-

est (Friedson, 1986). The contemporary model is an organizational level

strategy for commodification and colonization of different forms of know-

ledge with firm profit as the primary justification.

An objective of our analysis has been to provide a framework and

vocabulary for understanding this emerging area of organizational activity.

The complementary notions of commodification and colonization provide

elemental tools for addressing the fundamental paradox of increased scepti-

cism and increased consumption of managerial knowledge products. They

also provide a basis for questioning the current trends to treat management

knowledge as a property or knowledge object in contemporary discourse

(Savary, 1999).

The framework, however, raises as many questions as answers. Theaggressive role of conglomerate played by the Big Five in reshaping the field

of management knowledge production remains poorly understood. Detailed

ethnographic research might offer a more detailed analysis of the mechan-

isms involved in commodification and colonization at the level of individual

firms. Such research might also offer more insight into the motivations of

individual actors as well as the power relations between firms and between

the Big Five and other powerful social actors.

The configuration of actors presented here is also subject to addition

and revision. What, for example, is the role of the media (i.e. popular busi-

ness press, academic business press and other outlets) in legitimating claims

to expertise made by various actors engaged in the commodification process?

How are the dual actions of commodification and colonization related to



19/21

broader processes of commercialism and appropriation of knowledge at the

societal level? Finally, business academics are an integral part of commodifi-

cation and colonization. The framework presented here provides an oppor-

tunity for serious self-reflection and the possibility for opening a dialogue

about the future role of business schools and academics in the construction

of what, ultimately, becomes management knowledge.

Acknowledgements

The authors would like to acknowledge the financial support of the Social

Sciences and Humanities Research Council of Canada and the J. Walter Izaak

Killam Foundation.

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Roy Suddaby is an assistant professor of management and organizationsat the Henry B. Tippie School of Business at the University of Iowa. He

is currently researching the emergence of new organizational forms in the

legal profession.

[E-mail: [email protected]]

Royston Greenwood is the Associate Dean of research and the Telus

Chair of Strategic Management at the University of Alberta.He has pub-

lished extensively on issues of change management, professional service

firms and managing knowledge intensive firms.

colonizing knowledge in psf - greenwood and suddaby

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