Strategic consensus and regional strategic orientations within professional services firms : a multiple case study of the Big Four accounting firms

MASTER THESIS INTERNATIONAL MANAGEMENT

Strategic consensus and regional strategic orientations within professional

services firms: A multiple case study of the Big Four accounting firms

MSc. Business Administration – International Management

Second reader: Francesca Ciulli MSc Student: Tess Rijntjes

Student ID: 6070167

Date: January, 29, 2015

1 Statement of originality

This document is written by Tess Rijntjes, who declares to take full responsibility for the contents of this document. I declare that the text and work presented in this document is original and that no source other than those mentioned in the text and its references have been used in creating it. The faculty of Economics and Business is responsible solely for the supervision of completion the work, not for the contents.

2 Abstract

This multiple case study explores to what extent there is strategic consensus among managers at different levels within professional services firms concerning their organizations’ regional strategic orientation. Strategic consensus deals with the extent to which managers from the same corporation share similar perceptions of corporate strategy (Ambrosini and Bowman, 2003). The study combines the international business literature on regionalization versus globalization patterns of multinational enterprises, (e.g. Rugman and Verbeke, 2004), with the strategy literature on managerial perceptions and strategic consensus. By analyzing quantitative and qualitative annual report data, insight is provided into the strategic orientation on the regional-global continuum according to both Rugman and Verbeke’s approach (2004) and according to CEOs within the firms. Semi-structured interviews with managers at different levels of the Dutch offices of the Big Four firms, shed light on the extent of strategic consensus concerning the firms’ regional strategic orientation and how this relates to the annual report data. The findings show that there is to a large extent strategic consensus among managers within the firms. In general, managers perceive the corporate strategic orientation to be global. This global presence is driven by the strategic priority of being present wherever their (multinational) clients operate. However, within a national context, this implies that the focus is on national clients. Hejazi (2007) highlights the importance of the national dimension for home region oriented MNEs, however, this study shows that for professional services firms, even when having a global strategic orientation, they still have very strong national practices.

Keywords: Regional strategic orientations, globalization, professional services firms, the Big Four accounting firms, managerial perceptions, strategic consensus.

3 Acknowledgements

First of all, I would like to sincerely thank my supervisor, Johan Lindeque for his great support and useful suggestions during the process of writing my thesis. Secondly, I would like to thank all the managers at the Big Four organizations who took the time for participating in the interviews and giving me great detailed information that was of utmost importance for this research.

4 Table of contents

1.Introduction………...7

1.1 Gap in the literature and research question………...9

1.2 Research structure…………...………...10

2. Literature review...………...11

2.1 Regional strategies and the triad regions………...11

2.1.1 Regional orientations………...12

2.2 Industry specificity………...……...15

2.2.1 Professional services……..…....………...15

2.2.2 Accounting firms as a special case………...17

2.3 Managerial perceptions………...18

2.3.1 Strategic consensus………... 19

2.3.2 Drivers of strategic consensus……….………...21

2.4 Conceptual model...24

3. Methodology..………...26

3.1 Qualitative case study research…………...……….………...26

3.2 Multiple case study research design...28

3.3 Case selection – unit of research……...………...………...…...29

3.3.1 The Big Four…...………...….30

3.4 Data collection methods.………...………...…...31

3.4.1 Annual reports...…..………...….32

3.4.2 Semi-structured interviews.………...……..33

3.4.3 Analysis strategy of textual data...36

4. Results...38 4.1 Within-case analysis...38 4.1.1 ACC...38 4.1.2 DedicatedPro...50 4.1.3 I&E...62 4.2 Cross-case analysis...72

4.2.1 Regional strategic orientations and strategic consensus...72

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5. Discussion...77

5.1 Findings related to the working propositions...77

5.2 Content of consensus and emerging patterns...79

6. Conclusions...82

6.1 Contributions...82

6.2 Managerial implications...83

6.3 Limitations...84

6.4 Suggestions for future research...84

7. References...85

8. Appendices...93

Index of Tables and Figures Table 1. Regional strategic orientations………...………...13

Table 2. The Big Four accountancy firms in 2013...31

Table 3. Participants and duration of interviews...34

Table 4. Interview questions and link to working propositions...35

Table 5. Codebook of annual reports and interview data analysis……….…...…37

Table 6a. ACC – Quantitative results from annual report data...39

Table 6b. ACC – Qualitative results from annual report data...40

Table 7a. ACC– Results from semi-structured interviews – Drivers of consensus...43

Table 7b. ACC– Results from semi-structured interviews – Drivers of consensus...46

Table 7c. ACC – Results from semi-structured interviews – Content of consensus...49

Table 8a. DedicatedPro – Quantitative results from annual report data...51

Table 8b. DedicatedPro – Qualitative results from annual report data...52

Table 9a. DedicatedPro – Results from semi-structured interviews – Drivers of consensus..55

Table 9b. DedicatedPro – Results from semi-structured interviews – Drivers of consensus..58

Table 9c. DedicatedPro – Results from semi-structured interviews – Content of consensus..61

Table 10a. I&E – Quantitative results from annual report data...62

Table 10b. I&E – Qualitative results from annual report data...63

Table 11a. I&E – Results from semi-structured interviews – Drivers of consensus...65

Table 11b. I&E – Results from semi-structured interviews – Drivers of consensus...68

Table 11c. I&E – Results from semi-structured interviews – Content of consensus...71

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Figure 1. Client globalization creates pressure for professional services firms to globalize

their offerings……...………...16

Figure 2. Drivers and consequences of strategic consensus………....…...……...21

Figure 3. Conceptual model...25

Figure 4. Embedded multiple case study design…………...……….29

7 1. Introduction

The field of international business literature evolved over the course of the past decade from a global perspective on international strategy (Kogut, 1985; Levit, 1983; Prahalad & Doz, 1987) towards a more regional perspective on international strategy (Rugman and Verbeke, 2004). Researchers in the field started to question whether a global strategy in the form of production and distribution of products of a homogeneous nature on a worldwide basis as outlined by Levit (1983), and as often pursued and externally communicated by multinational enterprises (MNEs) in their formal statements (Proff, 2002; Rugman, 2001; Rugman and Hodgetts, 2001), ever existed and ever will exist.

Rugman and Verbeke (2004) were the first to empirically provide evidence for the regionalization argument, by showing that the majority of the world’s largest 500 companies (Global Fortune 500 companies) fulfil regionally defined strategies rather than global international strategies. When looking at the global distribution of the companies’ sales, Rugman and Verbeke (2004) provided four categories of regional strategic orientations for MNEs; MNEs' strategic orientation either classifies as being home region oriented, bi-regional, host region oriented or global (Rugman and Verbeke, 2004). Hereafter, for this research, independent of what position the MNEs may have on this regional versus global continuum, reference will be made to regional strategic orientations of the organization.

A substantial amount of regionalization studies pay considerable attention to the importance of industry characteristics in analyzing regional versus global strategies. Manufacturing firms are decoupled from firms from the service sector in order to provide insights into the industry effect within the context of regionalization versus globalization (e.g. Contractor et al, 2003; Li, 2005; Rugman and Verbeke, 2008). Next to the industry effect of manufacturing versus service firms on the regionalization debate, intra-industry differences are of high importance as well (Rugman and Verbeke, 2008) and consequently, subsectors for both manufacturing and service firms have received considerable attention in the regionalization paradigm.

Among those subsector-specific studies is the study by Kolk and Margineantu (2009), which assesses how the Big Four multinational accounting firms fit in the global versus regional spectrum and conclude that, “the Big Four are somewhere between globalization and bi-regionalization” (Kolk and Margineantu, 2009, p.2). Moreover, those highest ranked accounting firms are within the professional services sector, “as a result of their size and reach, most exposed to the forces of globalization” (Perera et al, 2003, p.28). Therefore, there are arguments that professional service firms, in particular the ‘big’ accounting firms, in

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contrary to the majority Fortune 500 firms that are studied by Rugman and Verbeke (2004), do not focus on the home region specifically but are more globally dispersed. Consequently, this research focuses on professional services firms and conducts a multiple case study on managerial perceptions and strategic consensus of managers working for the Big Four accounting firms in the Netherlands

In the context of international strategy, the importance of managers is highly recognized (Rugman and Hodgetts, 2001). MNEs network managers are stated to be “the real drivers of globalization” (Rugman and Hodgetts, 2001, p. 333). Besides, Rugman and Verbeke (2004) argue that managers’ perception of when successful presence outside the MNEs home region is achieved may differ from firm to firm. Managers thus tend to develop their own perception of an organization’s strategy (Falkenberg and Gronhaug, 1989). Consequently, suggested is that as MNEs are ‘assigned’ to one of the four regional strategic orientation categories, this does not automatically implies that managers within the MNE perceive the firm’s regional strategic orientation as being the case.

A substantial body of strategy research focuses on managerial perceptions and the extent to which managers from the same corporation share similar perceptions of the corporate strategy (e.g. Ambrosini and Bowman, 2003; Bowman and Ambrosini, 1997; Dess, 1987; González-Benito et al., 2012; Kellermanns et al., 2011; Tarakci et al., 2014). This level of shared managerial perceptions is referred to as strategic consensus. Strategic consensus is defined as the “shared understanding of strategic priorities among managers at the top, middle and/or operating levels of the organization” (Kellermanns et al., 2005, p.721).

Throughout the strategic consensus literature, strategic consensus among managers at different levels of the organization is linked to organizational performance (Ambrosini and Bowman, 2003; Kellermans et al., 2005; Kellermans et al., 2009; Tarakci et al., 2014). The rationale behind pursuing a coherent understanding of a firm’s strategy is that “strategic consensus enhances organizational performance by improving coordination and cooperation within the organization” (Kellermans et al., 2005, p.720). Strategic consensus on a firm’s strategy thereby leads to more efficient strategy implementation (Kellermans et al., 2005).

Consequently, in the context of the regionalization versus globalization paradigm, in order to increase the effectiveness of a MNEs international strategy, managers throughout different levels of the organization should have a shared understanding of the regional strategic orientation of the firm.

9 1.1 Gap in the literature and research question

Previous regionalization versus globalization studies did not pay much attention to if and how the strategic orientation of a MNE in the globalization-regionalization continuum is reflected in managerial perceptions. In other words, no insight has been provided into how managerial perceptions of a MNE’s strategy actually relate to the regional strategic orientation MNEs have according to the classification provided by Rugman and Verbeke (2004). As MNEs often present their strategic orientation in their formal statements as being highly global (Proff, 2002), there might be an imbalance between the formal image of the international strategy the MNE externally communicates and their 'actual' status in the regional oriented versus global continuum identified by Rugman and Verbeke (2004). Furthermore, argued is that actual realized strategies cannot directly be derived from formal (mission) statements or corporate documents but result from the strategy perception of managers (Ambrosini and Bowman, 2003).

Hence, it is worth analyzing whether there is indeed some form of strategic consensus among managers within a firm and how it actually relates to the international strategic orientation of the organization as externally communicated and/or as classified by the regionalization literature. This research therefore initiates the empirical examination of how managers perceive the regional strategic orientation of their firm. Since strategic consensus among managers at different levels of the firm increases the effectiveness of the strategy (Kellermanns et al., 2005), the extent that there is agreement among managers about the regional strategic orientation of the firm thus seems to matter in relation to organizational performance.

Expected is, that there is a difference between the extent of strategic consensus among managers at different levels. As senior managers tend to be more involved in strategic decision making and are thereby more informed about strategic priorities (Floyd and Wooldridge, 1992), it is more likely that they have a higher level of shared understanding of the international strategic orientation than lower level managers. Consequently, as senior managers tend to have knowledge of the strategy in its broadest terms, it is more likely that their perception of the international strategy relatively closely reflects the regional strategic orientation.

This leads to the following research question (RQ):

RQ: To what extent is there strategic consensus among managers at different levels within professional service MNEs about the regional strategic orientation of their firm?

10 1.2 Research structure

The remainder of this research is structured as follows. First, the literature review discusses the regionalization versus globalization paradigm and the importance of industry specific matters in this perspective. Subsequently, the literature review deals with managerial perceptions and strategic consensus theories and how these could be linked to the regionalization theme. The conceptual foundations on strategic consensus linked to organizations’ (regional) strategic orientation, provide the basis for the working propositions. The literature review ends with the presentation of a conceptual model that shows the relationship between the relevant concepts derived from the literature and the ‘position’ of the working propositions. The section that follows described the methodology of the multiple case study conducted and the data collection methods that are used for this research. Quantitative annual report data will establish whether the strategic orientation of the Big Four accounting firms qualify as being either home region oriented, host region oriented, bi-regional or global according to Rugman and Verbeke’s (2004) approach. Subsequently, attention will be paid to examining how the CEOs formally present their regional strategic orientation in the annual reports to see how this relates to their assigned regional strategic orientation category. Thereafter, semi-structured interviews will provide qualitative data of how this formal external picture on the one hand, and on the other hand, the MNEs’ regional strategic orientation according to Rugman and Verbeke’s standards (2004), are reflected in managerial perceptions about the organizations' strategic orientation and thereby to what degree there is strategic consensus among managers of different levels throughout the organization. The results- and discussion section will discuss within- and across-case results concerning the working propositions, emerging themes and thereby the relevant contributions of this research. The research concludes with a summary of key findings and contributions, managerial relevance, limitations of the research and some suggestions for future research.

11 2. Literature review

The upcoming section will provide an overview of the relevant theoretical insights as extracted from the existing literature. The first part will elaborate on the topic of regional strategies and the corresponding regional orientation categories that mark the ‘status’ of an MNE in the regional versus global continuum (Rugman and Verbeke, 2004). Subsequently, this literature review will highlight the topic of industry specificity in relation to the regionalization debate. More specifically, differences between services firms and manufacturing firms will be acknowledged (Contractor et al, 2003; Li, 2005; Rugman and Verbeke, 2008) and a further specification of the relevant subsector for this research, the professional services industry, will be provided. Thereafter, as this research deals with managerial perceptions of the international strategic orientation of the firm and the degree that there is strategic consensus among those managers, a section will follow that focuses on the topic of strategic consensus and factors that are of influence on the level of strategic consensus.

2.1 Regional strategies and the triad regions

There is confirmation of the importance of the regional market as opposed to the global market on international strategy of multinational enterprises (MNEs) (Banalieva and Athanassiou,2010; Ghemawat, 2005; Oh,2009; Proff, 2002; Rugman, 2001; Rugman and Brain, 2003; Rugman and Hodgetts, 2001; Rugman and Oh, 2013; Rugman and Verbeke,2004). However, MNEs executives and other actors like industry analysts and university professors often refer solely to the global characteristics of the MNE’s international strategic orientation (Rugmand and Hodgetts, 2001)

A regional strategy as opposed to a global strategy is stated to be concentrated on the

home-region and / or host regions, meaning that instead of business activity taking place in a

single global market it tends to be regionally focused (Rugman, 2001, Rugman and Brain, 2003; Rugman and Hodgetts, 2001; Rugman and Verbeke, 2004). These regional blocks referred to in the recent literature have been derived from the triad regions as identified by Ohmae (1985). The original triad represents a geographic space that consists of the United States, the European Union and Japan. Ohmae (1985) argues that global economic power is concentrated in these three geographic regions and that the triad was home to most innovations in industry and represented the three largest markets in the world for most new products. However, in the light of the current regional strategy argumentation, the concept of

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encountered in attempt to repeat their home triad based market share performance in the other two regions of the triad (Ohmae, 1985). Consequently, only a limited number of MNEs have succeeded to become globally successful across all three triad regions and thereby can be classified as triad powers. A triad power is stated to be a company that has both (1) equal penetration and exploitation capabilities and (2) no blind spots, in each of the triad regions (Ohmae, 1985). Recent literature on regionalization among the triad regions adopted a broader conceptualization of the triad, where the extended triad consists of NAFTA (US, Canada and Mexico), the expanded EU and Asia-Pacific (Rugman and Verbeke, 2004).

2.1.1. Regional strategic orientations

In order to test empirically whether MNEs’ triad power is indeed a rare concept, Rugman and Verbeke (2004) conducted their pioneering research on regional and global strategies of multinational enterprises. The focus of their study is on a sample of the 500 largest companies in the world (the Global Fortune 500), which all qualify as being multinational. Out of those 500 companies, 380 were selected, which together accounted for 79.2% of total sales of all 500 firms in 2001. Across those 380 MNEs, 71,9% of sales were earned on an intra-regional basis, thus representing a relative dominance of sales within a specific (home) region. Consequently, it appears that the world’s largest MNEs in reality effectively have regional and not of global strategies. Very few MNEs are capable of selling standardized products and services across the globe, meaning that globalization in its purest form does not apply to the majority of the world’s 500 largest MNEs (Rugman and Verbeke, 2004).

The outcomes of the research by Rugman and Verbeke (2004), produces a classification of MNEs into four categories with corresponding criteria.

13 Strategic Orientation of

the MNE

Criteria Distribution of Global Fortune 500 Firms (data for 2001)

Distribution of Global Fortune 500 Firms

(data for 2012) Home Region Oriented At least 50% of sales are

earned in the home region of the Triad*

64% (320 firms) 43% (215 firms) Bi-Regional At least 20% of sales in

each of two regions but less than 50% in any one region**

5% (25 firms) 7,8% (39 firms) Host Region Oriented Sales proportion of over

50% in a triad market other than the home region

2,2% (11 firms) 2,6% (13 firms)

Global Sales proportion of over 20% in each of the three triad regions, but less than 50% in any one triad region

1,8% (9 firms) 5,2% (26 firms)

No data or insufficient data

MNEs for which the sales data was not available of insufficient

27% (135 firms) 41,4% (207 firms)

Table 1. Regional Strategic Orientations. Source: Rugman and Verbeke (2004), Fortune Global 500 (2012) Notes:

* This threshold was chosen because the authors assume that when a specific region represents more than 50% of total sales, that region will have most impact on the strategy of the MNE and will both shape and constrain strategic actions taken by the MNE

** The threshold of 20% was chosen since having two regional markets which each account for at least one fifth of a MNE’s sales, was assumed to represent impressive market success from comprehensive downstream FSAs in the two triad regions.

A number of explanations of the relative overrepresentation of sales dominance within a specific triad region are provided in the regionalization literature (e.g. Rugman, 2005; Rugman and Brain, 2003; Rugman and Verbeke, 2004; Rugman and Verbeke, 2007). A key argument put forward by Rugman and Verbeke (2007), concerns the liability of foreigness. Liability of foreigness (LoF) represents the ‘ additional costs of doing business abroad’ and puts constraints on international standardization (Rugman and Verbeke, 2007). LoF tends to be higher outside the home region than within the home region, consequently, operating

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outside the home region (inter-regional) comes at higher adaption costs than operating within the home region (intra-regional) (Rugman and Verbeke, 2007). In other words, the liability of

intra-regional LoF tends to be significantly lower than the liability of inter-regional LoF

(Rugman and Verbeke, 2007). Evidence of the existence of liability of inter-regional LoF presented throughout regionalization literature is based on the observation that the majority of the MNE activities, including both sales, assets and employment, are mostly concentrated in the MNE's home region (Hejazi, 2007). Moreover, the MNEs global presence can be restrained by the limits to the transferability of their knowledge base to other parts of the world. In other words, their firm specific advantages (FSAs) often have a location bound (LB) nature (Rugman and Verbeke, 2004).

As the results of the study by Rugman and Verbeke (2004) show, there is an overrepresentation of MNEs that belong in the home region oriented category (see Table 1). Thus, very few firms actually have balanced sales among the triad regions of Europe, North America and Asia. Hereby, Rugman and Verbeke (2004) demonstrated that the major part of the world’s largest 500 companies pursue regional international strategies rather than global international strategies.

Consequently, empirical evidence of a prominent home regional focus amongst the 500 largest MNEs worldwide is provided and the pioneering research by Rugman and Verbeke (2004) triggers the need for further examination of the regionalization concept. Several researchers have subsequently extended the regionalization paradigm initiated by Rugman and Verbeke (2004). Hejazi (2007) acknowledges that the majority of MNE business activity is regionally concentrated, however, the researcher states that this is often driven by a national dimension. The framework presented by Hejazi (2007) therefore allows for a disentangling of the national and regional dimensions. Consequently, next to the four regional dimensions identified by Rugman and Verbeke (2004), Hejazi (2007) stresses that although MNEs may access region wide or global markets, they are often predominantly home country oriented.

15 2.2 Industry specificity

The initial regionalization research by Rugman and Verbeke (2004) does not pay attention to differences between different industries in analyzing regional strategies of MNEs (Rugman and Verbeke, 2008). However, in order provide a regional strategy analysis of different industries, both broad and more narrow industry-categories are examined in extending the initial regionalization research (Kolk et al., 2014). This approach where industry specificity is taken into account also encouraged researchers to perform research on more specific industry categories such as electric utilities (Kolk et al., 2014), retail (Mohr et al., 2014), food and beverages (Fillipaois and Rama, 2008; Gardner & McGowan, 2010), financial services (Grosse, 2005) and professional services (Kolk and Margineantu, 2009). Thus, resulting from the regionalization debate, researchers pay considerable attention to the importance of industry characteristics in analyzing regional versus global strategies. The current study takes the importance of industry specificity into account and therefore the upcoming section provide analyses of the service industry and more specific of the professional service industry respectively.

2.2.1 Professional services

Rugman and Verbeke (2008) acknowledge that services can be very different in terms of key properties and consequently affect international strategy in different ways. However, in general, service firms have fewer options to separate production from consumption, and they are required to transfer more complex and wide-ranging resource bundles into a host environment (Rugman and Verbeke, 2008). Moreover, the often inseparable nature of services from where they are consumed as they are created, speaking for a high level of interaction between the buyer and the seller, demands specific needs for local responsiveness (Li, 2005).

Besides, there are especially strong regulations of foreign firm’s entry and operations when it comes to service industries as opposed to manufacturing firms (Li, 2005; Rugman and Verbeke, 2008). This burden of regulations will hold especially across regions, since much progress has been made in intra-regional reduction of entry barriers, influencing service industries as well. Consequently, if this is the case, inter-regional LoF is significantly higher than intra-regional LoF.

On the other hand, Contractor et al. (2003) state it is important to note is that not all services are homogeneous in nature and that there are essential differences between different types of services in terms of capital intensity and knowledge intensity (Contractor et al, 2003). Contractor et al. (2003) argue that knowledge based service sector are to a larger degree

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driven by intangible assets and have significantly lower fixed capital costs. A substantial amount of knowledge based service firms are able to ‘follow their clients’ abroad and since they already have clients established abroad, they have the certainty of having a market for their services (Stumpf et al., 2003). Besides, knowledge based service firms possibly have a greater global standardization, which lowers entry barriers and enables to profit from foreign expansion sooner (Contractor et al., 2003). Therefore, from the arguments related to the differences between knowledge based and capital based firms as presented above, it can be inferred that knowledge based service firms have capabilities of expanding abroad sooner and with a lower amount of risk than capital based service firms (Contractor et al., 2003; Stumpf et al. 2003). Professional services firms are part of knowledge based services (Contractor et al., 2003).

Over the course of the past few decades, PSFs have expanded their fields of business from offering accounting and audit services, to offering a broad package of services including law, tax services, management consulting, financial advisory services, human resource consulting, entrepreneurial services and much more (Brock and Powell, 2005; Kolk and Margineantu, 2009; Sieber and Griese, 1998; Stumpf et al., 2002; Suddaby et al., 2007).

As highlighted earlier, the follow the clients principle enables knowledge based service firms to internationalize at a rapid pace (Contractor et al., 2003; Stumpf et al., 2003). Several researches on PSFs within an international perspective affirm the importance of professional service clients in the course of their international strategy. Perera et al. (2003) argue that a combination of technological improvements and quick spread of MNEs caused PSFs to operate on a global scale just like their multinational clients. As the spread of multinationals increased, they exerted pressure on PSFs to expand offerings and office locations so that they were able to offer more extensive and integrated services across a wide range of countries in which the MNEs operate (Stumpf et al. 2003).

Figure 1. Client globalization creates pressure for professional services firms to globalize their service offerings. Source: (Stumpf et al., 2003)

17 2.2.2 Accounting firms as a special case

Accounting firms, especially the ‘big’ accounting firms are according to a large body of industry specific IB literature in an advanced state of globalization (Carmona and Trombetta, 2008; Cooper et al., 1998, Parera et al., 2003). Perera et al. argue (2003, p.28), accounting firms have been “most exposed to the forces of globalization” which is reflected in their services and spread of offices.

The ‘big’ accounting firms carry out the audits for almost 100% of multinationals (Sieber and Griese, 1998). Accounting and audit services tend to be grouped together distinctive from non-audit services (Perera et al., 2003). The top of the accounting firms are currently made up of four firms, for the rest of the research they will be referred to as ‘The Big Four’.

The IB literature on accounting firms describes several processes of harmonization of accounting standards on a global scale. As counts for PSFs in general, the fact that the Big Four have followed large clients internationalization patterns had large impact (Kolk and Margineantu, 2009). Besides, the harmonization of accounting standards increased at rapid pace over the past decade (Carmona and Trombetta, 2008; Cooper et al., 1998). Over a 100 countries accepted and adopted a single standard for accounting and audit professions ; the

International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS). As accounting firms adopt such a ‘single worldwide accounting language’, reporting

and measurement differences across countries that inhibit global standardization disappear (Carmona and Trombetta, 2008). Hence, the harmonization of accounting standards is a step towards global standardization, which lowers entry barriers and enables to profit from foreign expansion sooner (Contractor et al., 2003).

However, several studies also noted conflicting issues in the international field of accounting firms (Kolk and Margineantu, 2009; Stumpf et al., 2002; Suddaby et al., 2007). On the one hand, accounting firms, and especially the 'big' firms are stated to be in an advanced state of globalization and thereby offer harmonized, standardized accounting services (Carmona and Trombetta, 2008; Cooper et al., 1998, Parera et al., 2003). On the other hand, despite global standard setting, several researchers argue that accounting firms are still heavily affected by legal, regulatory and local constraints, these local differences point to the previously discussed ‘burden of regulations’ that exists among regions, which tends to press especially hard on service firms (Li, 2005; Rugman and Verbeke, 2008). Kolk and Margineantu (2009, p.10) consequently report; “despite of attempts at global standard setting, accounting work, but most notably various areas covered by advisory services, are affected by

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the myriad of legal, regulatory and local practice constraints that are specific to the jurisdictions in which the Big Four operates, and which seem to necessitate adaption”.

It thus seems that although IAS and IFRS are globally accepted, these standards do not ‘operate’ in isolation of other legal and regulatory constraints (Kolk and Margineantu, 2009). Accounting firms might therefore be considered ‘rapid globalizers’ due to technological incentives and pressures from global clients to expand globally alongside with them, issues of inter-regional liabilities of foreignness may still hold.

At this point the relevant literature has been discussed in order to provide insight into the regionalization versus globalization continuum and their corresponding regional orientation categories. Subsequently, the topic of industry specificity in relation to regionalization pointed out that when it comes to internationalization patterns of MNEs, the industry in which a firm operates is of great importance. In spite of the majority of the world’s largest 500 MNEs being home region oriented (Rugman and Verbeke, 2004), PSFs and specifically the Big Four accounting firms are often argued to have global presence instead. Despite patterns of rapid globalization of these firms, it is not ruled out that issues of inter-regional LoF might still hold.

However, the regionalization literature as discussed so far did not provide insight into how the regional strategic orientation of the firm is actually perceived within the firm. More specifically, the topic of managerial perceptions should provide more insight into how managers actually tend to experience their firm’s regional strategic orientation. Argued is that a certain level of shared managerial perceptions, i.e., strategic consensus, should enhance the effectiveness of (international) strategy implementation (Kellermanns et al., 2005). The upcoming section will therefore shed light on the topic of managerial perceptions and strategic consensus and elaborate on factors that influence this level of shared understanding of the strategy among managers.

2.3 Managerial perceptions

The importance of managers in international strategy is recognized and MNEs network managers are even stated to be the real drivers of globalization (Rugman and Hodgetts, 2001). However, as Rugman and Verbeke (2004) acknowledge when discussing the limitations of using sales data for the prescription of strategy, managerial perceptions of when successful presence outside their home region is achieved may differ from firm to firm. Hence, as MNEs are assigned to one of the four categories of strategic orientation as drawn by Rugman and

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Verbeke (2004), this does not automatically mean MNEs’ managers actually perceive the firm’s strategic orientation as being the case. The upcoming section will attempt to provide clarity on managers’ cognitive understanding and agreement when it comes to the firm’s strategic orientation. In order to get a grip on managers’ understanding and the way they experience their firm’s regional strategic orientation in their day to day operations it is important to get an insight into how managerial perceptions are formed and what influences them. In the field of studying managerial perceptions on different strategy (related) aspects, much is written on issues of managerial agreement upon the strategy throughout the organization, i.e. on the issue of strategic consensus (e.g. Ambrosini and Bowman, 2003; Falkenberg and Gronhaug, 1989; Floyd and Wooldridge, 1992; Gonzales-Benito et al., 2012; Kellermanns et al., 2005; Kellermanns et al., 2011; Tarakci et al., 2014)

Formulation and implementation of an MNEs strategy are usually assumed to be the main responsibility for a group of managers (Falkenberg and Gronhaug, 1989). Each manager interprets strategic information he or she receives for the organization as a whole. Consequently, perceptions of the organizational strategy are formed and are important aspects of how managers perceive their organizational environment (Falkenberg and Gronhaug, 1989). Organizational theorist emphasize that “environments are not given realities, but created through processes of attention and interpretation” (Pfeffer and Salancik, 1978, p.13). Thus, strategies perceived by managers are likely to influence their behavior (Ambrosini and Bowman, 2003). Hence, perceptions of an organization’s strategy probably have more influence on managerial behavior than formal statements of strategic intent as originally proclaimed by the organization (Ambrosini and Bowman, 2003). Although managers may be aware of a formal statement of corporate level strategy, they are likely to act in line with what they perceive to be the ‘actual’ strategy (Ambrosini and Bowman, 2003).

2.3.1. Strategic consensus

Since there are often many managers involved in formulating and implementing strategy, there are many actors interpreting the environment (Falkenberg and Gronhaug, 1989).. However, it is of great importance to know whether managers’ perceptions and interpretations coincide (Falkenberg and Gronhaug, 1989). A substantial amount of strategy research focuses on this cohesiveness of managerial perceptions and highlights the topic of strategic

consensus. Strategic consensus refers to “the shared understanding of strategic priorities

among managers at the top, middle and/or operating levels of the organization” (Kellermanns et al., 2005, p.721).

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Consequently, Ambrosini and Bowman (2003) argue that where there is strong consensus about the existing strategy, the strategy is more likely to be effective. Successful execution of a designed strategy requires managers to act on a common set of strategic priorities, and achieving strategic goals depends on the level of shared understanding and eventually commitment (Floyd and Wooldridge, 1992). Hence, in a large body of strategy literature the positive effect of strategic consensus on organizational performance is highlighted. However, it is important to note that strategic consensus does not automatically means actual commitment to the strategy, but on the other hand, a lack of consensus points to the absence of a shared view of the strategic direction of the organization (Kellermanns et al., 2011). If there is no shared perception of the corporate level strategy it would be highly unlikely that managers act in a consistent manner and have a shared view of the goals and actions of the organization (Ambrosini and Bowman, 2003). Consequently, a lack of strategic consensus negatively effects organizational performance (Kellermanns et al., 2005).

In addition, strategic consensus should be examined at multiple organizational levels, both within and between organizational groups and at the level of the organization as a whole (Tarakci et al., 2014). As the definition of strategic consensus points out the importance of shared understanding, the need exists for collective appreciation of both the reasons behind a strategy as well as a shared awareness of intended actions (Kellermanns et al.,2005). According to Kellermanns et al., (2005) this implies that consensus should exist among managers at multiple levels of the hierarchy. Subsequently, the definition of strategic consensus as formulated by Kellermans (2005), also incorporates the importance of the

content of consensus. The content of consensus describes what managers agree about, and

could be for example environmental conditions, organizational goals, and strategic methods. (Floyd and Wooldridge, 1992). In earlier strategy literature, strategy making was seen as a task only reserved for top managers, and the content of consensus therefore were framed as agreement about the goals and means that would result out of a decision making process (Kellermans. 2005). However, with the acknowledgement of the importance of both top management as middle- and operating-level management, content is more about strategic priorities (Kellermans, 2005, p.722).

Lower and middle managers may not always be aware of very specific strategic means and ends like top managers, however, they are more likely to focus on the relative importance of specific initiatives, or, strategic priorities (Floyd and Wooldridge, 1992, Kellermanns et al., 2005). Consequently, the content of strategic consensus might differ across managerial levels

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of the firm (Kellermans, 2005). Within the frame of this research, the content of consensus refers to the understanding of the regional strategic orientation and related strategic priorities. As senior managers tend to be more aware of the specific means and ends of the strategy (Floyd and Wooldridge, 1992), and thereby have knowledge of the strategy in its broadest terms, it is more likely that their perception of strategy relatively closely reflects the regional strategic orientation. The following working proposition (WP) is formulated:

WP 1. As the level of managers’ seniority increases, their perception of the MNEs strategic orientation more closely reflects the regional strategic orientation of the firm.

2.3.2. Drivers of strategic consensus

There are numerous factors at both the organizational level and the individual level that might influence the level of strategic consensus within organizations (Ambrosini and Bowman, 2003; Falkenberg and Gronhaug, 1989). This section provides an overview of important drivers of the extent to which there is strategic consensus among managers within an organization. Figure 2 shows a graphical presentation of these drivers of strategic consensus and its consequences.

Figure 2. Drivers and consequences of strategic consensus. Source: Ambrosini and Bowman, 2003, p.220

Create awareness (prevent ignorance): it is important that strategic decisions are

communicated throughout the organization in order to create a shared knowledge (Ambrosini and Bowman, 2003; Rapert et al. 2002). A lack of strategic awareness could result from a CEO or a narrow group of top managers ‘autocratically’ designing the strategy without continuous communication to lower (managerial) levels (Ambrosini and Bowman, 2003). In

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this case, it would imply that the strategic decisions that relate to or may influence the regional strategic orientation of the organization are communicated.

A gulf between strategies designed by top management and awareness among managers lower in the organizational hierarchy is referred to as the implementation gap (Floyd and Wooldrige, 1992). The continuous aspect of strategy communication is especially important, strategic planning is often seen as an annual ritual, however, it should be seen as an ongoing, emergent debate in order not to cause a lack of consensus (Browman and Ambrosini, 2000).

WP 2: The larger the implementation gap between top management and managers at lower levels in the organization, the lower the level of strategic consensus of the MNE’s regional strategic orientation.

Strategy Ambiguity: Managers are likely to develop their own rationales concerning

the strategy of the organization based on interpretations of what is happening around them (Ambrosini and Bowman, 2003). Like other people, managers only possess limited perceptual ability and limitations in their capacity to handle information (Falkenberg and Gronhaug, 1989). Interpretations may be influenced by a number of individual factors like managers’ educational background, functional background, personal preferences, and their own experiences (Daniels et al. 1994; Falkenberg and Gronhaug, 1989). Moreover, individual managers each have their own role or position within the organization which brings related responsibilities, activities and expectations. Each of these factors may influence managerial perceptions of the organization’s strategy (Falkenberg and Gronhaug, 1989). Consequently, it is plausible that managers that have responsibilities and tasks in an international work context, due to their experience, are more informed about international strategic issues and the associated strategic priorities, and that among those manages there is a more aligned perception of the firms regional strategic orientation. Moreover, as the international context thereby is closer to their personal work environment, these managers are expected to be more aware of international strategic issues and have a shared understanding of the related strategic priorities.

WP 3: The level of strategic consensus of the firm’s regional strategic orientation is higher among managers that have tasks and responsibilities within an international context.

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Rationales (believability): A lack of consensus may exist when strategies that are

formulated for motives other than those based on interests of the organization itself (Ambrosini and Bowman, 2003). Often, outside parties are involved in strategy formulation, such as consultants, which may result in a lack of a sense of logic about the strategic orientation of managers within the firm (Bowman and Kakabadze, 1997 in Ambrosini and Bowman, 2003). There is a need for understanding of the reasons behind a strategic decisions as well as overall awareness of the intended actions needed to implement the strategy (Kellermanns et al., 2005). Hence, if the rationale behind the strategic orientation is not communicated or is kept within the hands of outside parties, managerial consensus is likely to be absent (Ambrosini and Bowman, 2003). The rationale behind the regional strategic orientation of the firm in this case most logically represents amongst others, the international dispersion of activities of the firm like sales, and/or employees as identified sources of the regional strategic orientation by Rugman and Verbeke (2004) and Hejazi (2007). Hereby, these factors provide information about the sources of the regional strategic orientation of the firm and if properly communicated, may increase the level of strategic consensus among managers. Consequently, in order to have a shared ‘believe’ of the regional strategic orientation, managers need to be aware of the sources that explain its existence.

WP 4a: Strategic consensus increases when managers are informed about the sources of the regional strategic orientation

WP 4b: As managers are informed about the sources of the regional strategic orientation, their perception of the firm’s strategic orientation more closely represents the regional strategic orientation of the firm.

Interest: An important aspect of strategic consensus relates to the level of interest of managers

(Ambrosini and Bowman, 2003; Kellermanns et al., 2005). Managers may feel they will not be affected by the consequences of the strategic issues and thereby feel not involved and consequently, are not interested in the content of the firm’s strategy (Ambrosini and Bowman, 2003). Anderson and Paine (1975) pointed out that in managerial perceptions, there tends to be a lot of bias in selectivity. As can be inferred from the research by Ambrosini and Bowman (2003), if the regional strategic of the firm is perceived as not influential to the managers themselves, managers will be selective in to what extent they will consider the strategic

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orientation as a whole and process information that deals with the regional strategic orientation. Without sufficient commitment to the strategy, it is likely that managers doubt whether the strategy is feasible and whether it just serves the interest of the organization and undermines their self-interest (Kellermanns et al., 2005).

Hence, managers’ commitment to the contemplated strategy tends to depend on the ‘right’ balance as perceived by managers between the strategy serving the organization as a whole and on the other hand, also their personal self-interest (Floyd and Wooldridge, 1992; Kellermanns et al., 2005). Therefore, managers that are affected by international strategic issues are more likely to encounter implications of the regional strategic orientation of the organization. Consequently, if the regional strategic orientation of their organization is more of personal self-interest, managers are expected to have a more shared understanding of the regional strategic orientation and related strategic priorities.

WP 5: The level of strategic consensus about the regional strategic orientation will tend to be higher among managers who are affected by international strategic issues.

2.4 Conceptual Model

The conceptual model as presented below shows the relationships between the concepts derived from the existing literature that are studied in order to answer the research question. Moreover, the conceptual model shows the relationship between the working propositions and these theoretical concepts.

There are four important drivers of strategic consensus derived from the research by Ambrosini and Bowman, (2003). These are categorized under awareness, strategy ambiguity, rationales and interest. The conceptual model presents the two important ‘pillars’ of this research, on the one hand, in order to answer the research question on the extent to which there is strategic consensus and explain the causes of the level of consensus, the drivers of strategic consensus are identified and examined. Each driver of strategic consensus is stated to influence the level of strategic consensus among different managerial levels

On the other hand, the aim is to provide insight into how managerial perceptions actually relate to the ‘regional profile’ that can be made up for the organization according to Rugman and Verbeke’s (2004) approach and the CEO’s external presentation of their organizations’ strategic orientation in the annual reports. Expected is that managerial seniority and the degree to which individual managers are aware of the rationales behind the regional strategic orientation of the firm, which is also identified as driver of strategic consensus,

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influence the degree to which managers’ perception of the firm’s strategic orientation reflects their regionalization category and/or formal statements as externally communicated.

Figure 3: Conceptual model. Source: Author

Managerial Levels (Job Role)

Perception of Strategic Orientation Reflects ‘Actual’ Regional Profile Strategic Consensus About International Strategic Orientation of the Organization

Awareness Strategy Ambiguity Rationales Interest

WP1

WP2 WP3 WP4a WP5

WP4b a

26 3. Methodology

This chapter will describe the methodology that is used for this research. The first section will elaborate on qualitative case study research and why it is suited for the research in question. Subsequently, the research design of a multiple case study is described that adopts a deductive bottom up approach as described by Shepherd and Sutcliffe (2011). Thereafter, explained will be how and why theoretical sampling is used for the case selection of this multiple-case study and an introduction to the Big Four accounting firms is provided. The chapter will then continue with describing the data collection methods and a thematic coding data analysis method will be described that is used to analyse the textual data from both annual reports and semi-structured interview data. Throughout the methodology section, the relevant quality criteria of internal validity, external validity, construct validity and reliability will be covered as the phase of research is discussed where they predominantly apply to.

3.1 Qualitative case study research

The research design for this study is a multiple-case study based on qualitative research methods. A case study is defined to be “an in-depth exploration from multiple perspectives of the complexity and uniqueness of a particular project, policy, institution, program or system in a ‘real-life’ context” (Simons, 2009, p.21). The purpose of this research is to examine how the international business topic of regional strategic orientations relates to the human aspect of managerial perceptions of strategy and strategic consensus within the context of professional services firms.

As highlighted by Doz (2011), many different theories can provide valuable insights to the IB research field. This research acknowledges the openness and richness of the IB field and therefore combines regionalization vs. globalization theories with theories related to managerial perceptions and strategic consensus. As managers each have their own perceptions on their firm’s (international) strategy (Falkenberg and Gronhaug, 1989), a qualitative research approach aims to provide insight into how these managerial perceptions relate to the ‘actual’ strategic orientation of the firm. As described by Eisenhard (1989), the research question is tightly linked to the context of existing literature and qualitative data should provide insight into complex social phenomena that cannot be addressed by quantitative data. This research aims to answer the following research question:

To what extent is there strategic consensus among managers within professional service MNEs about the regional strategic orientation of their firm?

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This research adopts a deductive bottom up case study approach as described by Shepherd and Sutcliffe (2011) that focuses also on broader constructs and is open to emerging themes. Deductive research generally takes a ‘top-down’ approach where the research questions are defined from existing theory (Saunders and Lewis, 2012). However, criticism on the deductive top-down approach is that the focus is exclusively at the level of the variables described in the hypotheses (Shepherd and Suttcliffe, 2011). Therefore, this deductive bottom up case approach draws propositions that direct attention to some aspects that should be examined for the purpose of answering the research question (Yin, 2009) and provide guidance to the research and data collection. However, there is also focus on building and refining theory as new insights emerge from the findings.

In case study research, internal validity is concerned with establishing phenomena in a credible way when analyzing the data (Riege, 2003). That implies that the researcher does not only takes note of patterns of similarities and differences between respondents’ experiences or beliefs but also aims to identify what factors are behind those patterns (Riege, 2003). In order to increase internal validity it is important to provide a clear research framework demonstrating the relationships between variables (Gibbert et al., 2008). Such a conceptual framework is provided following the literature section and presents the relationships between the relevant concepts and the related working propositions. Second, by pattern matching the researcher should compare the empirically observed patterns with predicted ones or patterns that are established in previous literature in different contexts (Gibbert et al., 2008). Consequently, the working propositions deal with predicting such patterns and the empirically observed patterns will be compared with those established patterns. In order to establish pattern matching, both within- and cross-case analysis is necessary (Riege, 2003) and will therefore be part of this study.

Throughout the different phases of doing case study research, it is also important to ensure the reliability of the study. Reliability means that if the research would be replicated by subsequent researchers along the same steps again that the same results will show (Gibbert, 2008). Hereby, errors and biases in the research are kept to a minimum (Yin, 2009). In order to enhance reliability two tactics are described; producing a case study protocol and putting together a case study database (Yin, 2009). A case study protocol deals with the documentation of how the entire case study has been conducted (Gibbert et al., 2008). Therefore, throughout this research major attention is paid to specifying all the relevant issues of how the case study is going to be conducted. Subsequently, as described by Gibbert et al., (2008) a case study database is put together that includes important case study documents and

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the narratives collected such as the annual reports used, recordings of interviews and interview transcripts.

3.2 Multiple case study research design

Case studies can cover a single case or multiple cases and then draw a set of ‘cross-case’ conclusions (Yin, 2009). Thus, compared to a single case study, a multiple case study enables carrying out both a within- and cross-case analysis (Saunders and Lewis, 2012). For this research, the multiple case study design is appropriate since the research question implies the need to perform a cross-case analysis of professional services firms, in this case the Big Four accounting firms.

An important characteristic of multiple case studies is that it deals with replication logic instead of sampling logic (Yin, 2009). The sampling logic is based upon the criterion that the sample has to represent the whole population (Saunders and Lewis, 2012). This logic does not count for a case study (Yin, 2009). Replication logic implies that each case serves as an experiment that stands on its own as an analytical unit (Yin, 2009). The cases that are selected may be selected because they either predict similar results (literal replication) or because they predict contrasting results for certain anticipatable reasons (theoretical

replication) (Yin, 2009). As the Big Four accounting firms are grouped together as being

similar in terms of size, types of services and international presence (Beattie et al., 2003), for this research the overall cases are selected to predict a literal replication. Yin (2009) argues that the rationale for multiple-case design is directly linked to the replication logic. However, as the multiple case study design is an ‘embedded’ one, different units of analysis are identified for theoretical reasons. Consequently, when it comes to the subunits of managers at different levels, contrasting results are predicted an therefore the replication logic on this level is more linked to theoretical replication.

There are different types of multiple case study designs that can be selected (Yin, 2009). That is to say, a multiple case study may consist of multiple holistic cases or multiple embedded cases (Yin, 2009). Holistic case studies examine the case as one unit, whereas embedded designs identify a number of subunits and thereby different levels of analysis (Rowley, 2002). Since strategic consensus deals with the extent to which managers at different levels within the same organization share similar perceptions of corporate strategy (Ambrosini and Bowman, 2003), it is implied that managers across different levels of the organization need to be analysed. Consequently, within each firm, different subunits of managerial levels are identified. With the embedded multiple case study design, results from

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the different subunits are drawn together in order to produce an overall within-case analysis (Rowley, 2002; Yin, 2003) and this then allows a cross-case analysis to be completed (Yin, 2003). Figure 4 shows a graphical representation for the embedded multiple case study design for this research.

Figure 4. Embedded Multiple Case Study Design. Source: Author

3.3 Case selection – Unit of the research

The goal of this research is to examine to what degree there is strategic consensus among managers within professional services firms about the firms’ regional strategic orientation. The specific characteristics of the industry multinationals are operating in is an important theme to consider when analysing regional strategic orientations (Rugman and Verbeke, 2008). Consequently, within this research industry specificity is taken into account. Due to their seemingly distinguishing characteristics in the regional versus global continuum (Kolk and Margineantu, 2009), this research focuses on firms within the professional services industry in specific. Although there is no overall agreement, IB research often puts forward the ‘big’ accounting firms as being a special group within the professional services industry in terms of being able to serve a global market (Carmona and Trombetta, 2008; Cooper et al., 1998, Parera et al., 2003). Using terminology of Thomas (2011), the Big Four accounting firms together are argued to represent a deviant case. Hence, the Big Four accounting firms are selected as a sample of PSFs firms located in The Netherlands. More specifically, as the

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research question deals with managerial consensus about the strategic orientation of the firm and strategic consensus itself deals with shared understanding among managers at different levels of the firm (Kellermanns, 2005), the managers within the Big Four companies, at different levels of each firm are therefore the specific units of analysis.

When the purpose is to build theory from case studies, the cases are often chosen for theoretical instead of statistical reasons (Eisenhardt, 1989). In other words, as Eisenhardt (1989) defines it, this research is based on theoretical sampling. As described above, the Big Four firms are selected as a sample from PSFs firms for theoretical reasons. Consequently, the sample of cases is not randomly selected but chosen to replicate or extend the emergent theory (Eisenhardt, 1989).

When selecting cases, it is important to comply with a certain level of external validity (Yin, 2009). External validity deals with the problem of knowing whether the research findings are generalizable beyond the case study (Gibbert et al., 2008; Yin, 2009). Even though case study research does not deal with statistical generalization, it should rely on analytical generalization (Gibbert et al., 2008). Analytical generalization refers to generalizing from empirical findings to theory instead of to a population (Gibbert, 2008; Yin, 2009). Analytical generalization thus deals with using replication logic in multiple case studies (Yin, 1989). As this research design is one of an embedded multiple case study design, both within and cross-case analysis of the Big Four accounting firms and the embedded units of analysis of the managers at different levels should provide a good basis for analytical generalization.

The literature section provided the arguments from the existing theory concerning the global characteristics of the Big Four accounting firms. As part of the section on case selection, the next session will elaborate on the origination of the Big Four and provide clearance on what firms are actually part of the Big Four and are subsequently the cases selected for this research.

3.3.1. The Big Four

The majority of audits on public companies are carried out by a small group of accountancy firms and consequently, the ‘big’ accounting firms carry out the audits for almost 100% of multinationals (Sieber and Griese, 1998). Accounting and audit services tend to be grouped together distinctive from non-audit services (Perera et al., 2003). The portion of accounting firms that count as the ‘top’ of accounting firms are commonly referred to as the Big Four (Global Accounting Firms, 2014). A variety of research that focuses on the top of the accounting firms either uses the terminology of Big Four, Big Five or Big Six accounting

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firms when referring to the top of accounting firms, depending on the time of publication. Here the top of the accounting firms will be referred to as the Big Four (in 2013).

The Big Four are structured as a network where the member firms are privately owned and independently managed (Kolk and Margineantu, 2009). The member firms share a common brand and quality standards and there is overarching coordination by the entity usually referred to as ‘International’ or ‘Global’ (Kolk and Margineantu, 2009).

The table below summarizes the Big Four Firms and data about the location of their headquarters, the number of countries they serve, and the services they provide.

Company 1. Deloitte 2. PwC 3. EY 4. KPMG

Headquarters

United States (New

York) United Kingdom (London) United Kingdom (London) The Netherlands (Amstelveen)

Nr. of

Countries 150+ 150+ 150+ 150+

Home region Americas EMEA EMEA EMEA

Services • Audit • Financial Advisory • Humsn Capital • Legal • Operations • Risk • Tax • Technology • Audit and Assurance • Advisory • Family Business Services • Human Resources • Legal • Tax • Audit and Assurance • Tax • Advisory • Transactions • Strategic Growth Markets • Specialty Services • Audit • Tax • Advisory

Table 2. The Big Four accounting firms in 2013. Source: Ranking Adapted from Global Top Accounting Firms

Website, (2014); Nr of countries and home region adapted from Global Annual Reports, Deloitte (2013), PwC (2013), EY (2013) and KPMG (2013); Services and headquarters adapted from company websites Deloitte, PwC (2014), EY (2014) and KPMG (2014).

3.4 Data collection methods

Case studies typically combine different data collection methods (Eisenhardt, 1989). There are six sources of evidence when collecting data for case studies: documentation, archival records, interviews, direct observations and participant-observation (Yin, 2009). Moreover, this data may be qualitative and/or quantitative (Eisenhardt, 1989; Yin, 2009).

The concern of construct validity is especially important during this data collection phase (Gibbert et al., 2008). Construct validity deals with the establishing the appropriate operational measures in line with the theoretical concepts being researched (Riege, 2003; Yin, 2009). For case studies, reaching construct validity is often seen as problematic (Yin, 2009) as case studies are generally perceived to be more subjective than qualitative research methods (Riege, 2003). In order to enhance construct validity, the researcher should draw conclusion from multiple sources of evidence. (Gibbert et al., 2008, Riege, 2003; Yin, 2009). Multiple