Date: April 12, 2013 Topic: The Shrinking ... - Georgetown Law

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area. As it stands, our measure suggests that both corporations have the same level of supplier concentration. However, firm B clearly has a less concentrated portfolio of suppliers given that it has 4 different suppliers for the same practice area. To account for this, we counted the number of law firms undertaking work for the focal firm in each practice area (this information is available from ALM) and then averaged these. A high number of this measure suggests that the focal firm has multiple suppliers in the same practice area, which is indicative of low concentration in the provision of legal services. Consistent with our results, the coefficient for this variable remains positive and significant at the 6% level. DISCUSSION AND CONCLUSION A substantial body of research has examined the conditions under which plural sourcing is likely to occur. Moving beyond the question of when it occurs, the issue of how firms choose the balance between making and buying in plural sourcing has remained underexplored. This study fills that gap. In doing so we identify two mechanisms that dictate the make-buy balance in plural sourcing, namely resource co-specialization and supplier concentration. Our framework enables us to predict the make-and-buy mix in the context of legal services provision. The empirical findings support the view that when making and buying, firms exploit resource co-specialization and supplier selection to tip the balance in favor of in-house production and delivery. Dynamic panel regression analysis uncovered broad-sample statistical support for five of the six hypotheses derived from our plural sourcing framework. We noted statistically significant and practically substantial increases in the reliance on inhouse lawyers with increases in the number of countries where the firm had operations, with increasing R&D and advertising expenses as a percentage of sales, when the GC is part of the firm’s TMT, and as the number of law firms providing work for the firm increases. These trends proved robust to alternative estimation strategies that took full advantage of the panel 26
study design and accounted explicitly for omitted variable issues and for the possibly endogenous determination of key independent variables. Overall, these findings provide broad-based support for our make-and-buy framework that explains how firms decide to balance internal and external activities. To help interpret the regression results and add additional insight in the legal services context, we draw on evidence from semi-structured interviews with just over fifty in-house lawyers at corporations and banks in the US and UK. 5 A key finding of this study is that opportunities for co-specialization of legal and other firm-level resources enhances the extent of insourcing in plural sourcing. Internal legal resources may be utilized for co-specialization in various arenas, including when firms internationalize, and when they wish to harvest the results of R&D and advertising. According to one GC: [I]f we’re developing a new market, then we will make it our job to ensure that we understand the legal and regulatory environment in that market and that we train managers how best to exploit opportunities in that market, whilst complying with the company’s policies and processes. Arguably, external counsel would be just as knowledgeable about such regulatory issues in general. However, managers can be better assisted in exploiting market opportunities by the in-house counsel who has an intimate knowledge of the business. For example, another GC noted: It hasn’t really altered my fundamental belief that the work should be done internally, and can be done internally, more cost effectively and more efficiently, by a very commercially attuned and commercially embedded legal function. Such intimacy extends to the interaction between the R&D function and the in-house intellectual property (IP) lawyers: 5 Interviews were undertaken by the first author during May 2010 and December 2010. The interviewees also confirmed the appropriateness of the setting to study the design of plural sourcing strategies. 27
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Date: April 12, 2013 Topic: The Shr
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PROGRAM AGENDA & ROOM LOCATIONS The
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The Shrinking Pyramid: Implications
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Independent variables Technology us
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Our research reconciles these two d
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REFERENCES Alavi, M., Leidner, D. E
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Table 1: Representative Excerpts fr
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Table 2: Descriptive Statistics Var
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Table 4: Results of Individual Fixe
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1 DECONSTRUCTING BIG LAW The Future
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The Stanford Law School Research Pr
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2011 General Counsel with Power
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Executive Summary of Key Findin
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General Counsel with Power? 201
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Page 107 and 108: Resource Co-Specialization and Supp
Page 109 and 110: al., 2009), plural sourcing (Bradac
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Page 117 and 118: also distinct from economies of sco
Page 119 and 120: In case studies of innovating firms
Page 121 and 122: knowledge. This translates into a r
Page 123 and 124: To be included in our sample, we re
Page 125 and 126: Law firms. In order to measure the
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Page 131: services. The coefficient for selli
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Page 139 and 140: Dick the Butcher, wishes for lawyer
Page 141 and 142: Gulati R, Puranam P. 2006. Compleme
Page 143 and 144: Sako M. 2013. Professionals between
Page 145 and 146: Table 3. Panel data regression mode
Page 148 and 149: The Shrinking Pyramid: Implications
Page 150 and 151: Limiting the Damage of Lateral Part
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Date: April 12, 2013 Topic: The Shrinking ... - Georgetown Law

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