Winners and Losers in Professional Services: What Makes the Difference?

This paper seeks to explain differences in performance among professional service firms competing in the international market. The empirical analysis focuses on a single industry within this sector: advertising. A comparison between winners and losers is used to isolate the variables with significant explanatory value. The main findings are: 1. Most important explanatory variables for variance in competitiveness among advertising agencies are measures of international activity (duration and intensity of business activity outside the domestic market); 2. Size, scope, creativity and reputation have strong explanatory value for variance in competitiveness among advertising agencies; and 3. Some of the common explanations for variance in competitiveness among manufacturing firms lack explanatory value for differences among advertising agencies (e.g., productivity per employee).