VALUE CREATION IN LAW FIRMS
A STAKEHOLDER PERSPECTIVE ON DIFFERENT VALUE PROPOSITIONS
Adriaan Immanuel Pieter van de Hoef Student number 10282637
Date of submission 19-07-2015 FINAL DRAFT
Qualification: Executive Programme in Management Studies – Strategy Track Universiteit van Amsterdam- Amsterdam Business School
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AUTHOR’S STATEMENT OF ORIGINALITY
This document is written by Adriaan van de Hoef who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.
The Faculty of Economics and Business of the University of Amsterdam is responsible solely for the supervision of completion of the work, not for the contents.
3 TABLE OF CONTENTS LIST OF TABLES ………...6 LIST OF FIGURES ………....8 ABSTRACT………..…..9 CHAPTER 1. INTRODUCTION ...………..….10
CHAPTER 2. LITERATURE REVIEW ………..……12
2.1 RESEARCH QUESTION ………...12
2.2 LAW FIRMS………...13
2.3 STAKEHOLDER THEORY ………..14
2.4 THE BUSINESS MODEL ………..15
2.5 THE VALUE PROPOSITION ………15
2.6 COMMUNICATION ………..16
2.7 BUSINESS MODEL AND BUSINESS STRATEGY ………20
2.8 GENERIC STRATEGIES ………..21
2.9 BUSINESS MODEL DESIGN ………...21
CHAPTER 3. RESEARCH DESIGN ………..…….25
CHAPTER 4. METHOD ……….…….26
4.1 DEFINING DIFFERENT VALUE PROPOSITIONS ………27
4.2 LINKING CONTENT WITH STRATEGY ………...29
CHAPTER 5. RESULTS ……….…….30
5.1 VALUE PROPOSITION ELEMENTS ………...31
5.2 VALUE PROPOSITION ELEMENTS: NORTHERN EUROPE COMPARED WITH CENTRAL/ SOUTHERN EUROPE ………..34
5.3 STAKEHOLDER PERSPECTIVE ……….35
5.4 BUSINESS MODEL CONTENT AND GENERIC STRATEGIES ………..40
CHATPER 6. DISCUSSION ………41
6.1 IMPLICATIONS FOR RESEARCHERS ………...43
6.2 PRACTICAL IMPLICATIONS ……….44
6.3 LIMITATIONS ………...44
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REFERENCES ……….47 APPENDICES ………..53
APPENDIX A: GENERAL FEATURES OF LAW FIRMS (BOTH FROM EUROPE
(EXCL. UK) AND US AND UK ………54 APPENDIX B: DATA FOR ATTENTION FOR STAKEHOLDERS: EUROPEAN
LARGEST LAW FIRMS (EXCL. UK) IN TERMS
OF REVENUE 2014 RANKING ……….………..55 APPENDIX C: DATA FOR ATTENTION FOR STAKEHOLDERS: US AND UK
LARGEST LAW FIRMS IN TERMS OF REVENUE 2010 RANKING …………..………….57 APPENDIX D: SCREENSHOT FROM THE WEBSITE OF GARRIGUES ………..………...59 APPENDIX E: SCREENSHOT FROM THE WEBSITE OF LOYENS&LOEFF …………..………….60 APPENDIX F: SCREENSHOT FROM THE WEBSITE OF MATHESON, EUROPE’S 26TH
LARGEST LAW FIRM IN TERMS OF REVENUE ………..………...61 APPENDIX G: SCREENSHOTS FROM THE WEBSITE OF FIDAL, EUROPE’S SECOND
LARGEST LAW FIRM IN TERMS OF REVENUE ………..………...62 APPENDIX H: SCREENSHOT FROM THE WEBSITE OF BAKER & MCKENZIE,
THE WORLD’S LARGEST LAW FIRM IN TERMS OF REVENUE ………..………...63 APPENDIX I: SCREENSHOT FROM THE WEBSITE OF LATHAM & WATKINS, THE
WORLD’S FIFTH LARGEST LAW FIRM IN TERMS OF REVENUE ………….….………64 APPENDIX J: DATA FOR DOMINANT ELEMENTS IN THE VALUE
PROPOSITION: EUROPEAN LARGEST LAW FIRMS (EXCL. UK)
IN TERMS OF REVENUE 2014 RANKING ……….………...65 APPENDIX K: DATA FOR DOMINANT ELEMENTS IN THE VALUE
PROPOSITION: USA AND UK LARGEST LAW FIRMS IN TERMS
OF REVENUE 2010 RANKING ……….…..67 APPENDIX L: SCREENSHOT 2 FROM THE WEBSITE OF LOYENS&LOEFF ……….……….…..69 APPENDIX M: MAIN VP ELEMENTS EUROPE (EXCL. UK) ……….…………...70 APPENDIX N: MAIN VP ELEMENTS US AND UK ……….………...71 APPENDIX O: MAIN VP ELEMENTS EUROPE (EXCL. UK) VS US AND UK ………….………...72 APPENDIX P: FEATURES OF LAW FIRMS (BOTH FROM EUROPE
EXCL. UK AND US AND UK) THAT PAY ATTENTION
TO STAKEHOLDERS ………..73 APPENDIX Q: OVERVIEW OF EUROPEAN LAW FIRMS (EXCL. UK)
WITH ATTENTION FOR STAKEHOLDERS- INCLUDING
DOMINANT VP ELEMENTS ……….………..74 APPENDIX R: OVERVIEW OF US AND UK LAW FIRMS WITH ATTENTION FOR
STAKEHOLDERS- INCLUDING DOMINANT VP ELEMENTS ……….………….75 APPENDIX S: MAIN VP ELEMENTS OF LAW FIRMS IN EUROPE (EXCL. UK)
THAT PAY ATTENTION TO STAKEHOLDERS VS THE
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APPENDIX T: MAIN VP ELEMENTS OF LAW FIRMS IN US AND UK THAT
PAY ATTENTION TO STAKEHOLDERS VS US AND UK TOTAL ……….………...77 APPENDIX U:MAIN VP ELEMENTS OF LAW FIRMS THAT PAY ATTENTION TO
STAKEHOLDERS: EUROPE (EXCL. UK) VS US AND UK ……….……….78 APPENDIX V: MAIN VP ELEMENTS EUROPE (EXCL. UK): NORTHERN COUNTRIES ….…….79 APPENDIX W: MAIN VP ELEMENTS EUROPE (EXCL. UK): CENTRAL/ SOUTHERN
COUNTRIES ……….80 APPENDIX X: MAIN VP ELEMENTS NORTHERN EUROPE VS CENTRAL/SOUTHERN
EUROPE ………81 APPENDIX Y: ATTENTION FOR STAKEHOLDERS ON WEBSITE, NUMBER OF FIRMS
EUROPE VS US/UK ……….………….82 APPENDIX Z: VP- ELEMENTS: FIRMS WITH ATTENTION FOR STAKEHOLDERS
DISPLAYED ON WEBSITE VERSUS ALL OTHER FIRMS ………..………83 APPENDIX AA: VP ELEMENTS OF EUROPEAN FIRMS THAT DISPLAY ATTENTION
TO STAKEHOLDERS ON WEBSITE ……….……….84 APPENDIX AB: VP ELEMENTS OF US/UK FIRMS THAT DISPLAY ATTENTION TO
STAKEHOLDERS ON WEBSITE ……….………...85 APPENDIX AC: VP ELEMENTS OF TOP 10 EUROPEAN LAW FIRMS …………..……….86 APPENDIX AD: VP ELEMENTS OF TOP 10 US/UK LAW FIRMS ………..………..87
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LIST OF TABLES
TABLE
1. General features of the 50 largest law firms in terms of revenue from
both Europe (excl. UK) and US/UK ……….………13
2. Subdivision of top 50 European law firms in terms of countries: Northern and Central/Southern Europe ……….………17
3. Generic strategies ………..21
4. Design elements of the activity system (Zott & Amit, 2010) ……….………...22
5. Design themes of the activity system (Zott & Amit, 2010) ……….………..24
6. Value proposition elements with description ……….….………….…...28
7. Combined total (both absolute and percentage) of VP elements from top 50 law firms in Europe (excl. UK) and US/UK. Two VP elements per law firm have been appointed, making for a total of 200 VP elements ………..……….31
8. Examples of three firms that have the VP element geographical presence as one of its most important VP elements. For a complete list of all firms (both from Europe and US/UK), see Appendices J and K ………32
9. Dominant VP Elements- a comparison between Europe (excl. UK) vs. US and UK. 50 law firms from Europe and 50 law firms from US/UK. Per law firm, 2 VP elements have been appointed, making it a total of 100 elements for Europe and 100 elements for US/UK for a total of 200 elements ………..……….33
10. Subdivision of law firms: Northern and Central/Southern European countries ….…………...34
11. Dominant VP Elements- a comparison between law firms from Northern European countries vs. Central/Southern European countries. Two VP elements per law firm have been appointed, making it a total of 100 elements for 50 European law firms ………..………….34
12. Findings of the analysis of 100 websites with regard to the communication of the attention for stakeholders ……….………...35
13. Comparison of Europe and US with regard of the communication of the attention for Stakeholders ……….36
14. Combined total (both absolute and percentage) of VP elements from law firms in Europe (excl. UK) and US/UK that communicate their attention for stakeholders. Two VP elements for 16 law firms have been appointed, making for a total of 32 VP elements ……….36
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15. VP elements of firms in US/UK that pay attention to stakeholders vs. all other law firms from US/UK. Two VP elements per law firm have
been appointed, making it a total of 100 elements for 50 law firms ………37 16. VP elements of firms in Europe that pay attention to stakeholders vs. all
other law firms from Europe. Two VP elements per law firm have
been appointed, making it a total of 100 elements for 50 law firms ………38 17. VP elements of firms in both Europe and US/UK that pay attention to
stakeholders vs. all other law firms. Two VP elements per law firm
have been appointed, making it a total of 200 elements for 100 law firms ………….39 18. Dominant VP Elements of European law firms (excl. UK) linked with
generic strategies via business model design themes ………...41 19. Dominant VP Elements of US/UK based law firms linked with generic
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LIST OF FIGURES
FIGURE
1. Links between content (design elements), themes (design themes) and
strategies (generic strategies) ………...25 2. Links between content (design elements- value proposition elements),
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ABSTRACT
In this research, I examined, from a stakeholder perspective, the communication of the value propositions of the 50 largest law firms in terms of revenue in Europe (excluding UK) and the 50 largest law firms in terms of revenue in the US/UK. For this, I studied the website of these law firms for 1) the communication of the value proposition and 2) the communication of the attention for stakeholders. For each firm I collected two dominant value proposition elements. I used the data to further develop a model for linking the business model with strategy. The results indicate that the most communicated element of the value proposition is the
geographical positioning of the law firms; more than half of the law firms that I examined communicated this value to their customers. I found that a value proposition element in itself may have different ways for delivering the same value. In terms of differences between European (excl. UK) and US/UK based law firms I found that European based law firms communicate the value “customization” significantly more than US/UK based law firms, while the US/UK based law firms communicate the value “newness”, which is associated with innovation significantly more. Regarding stakeholder theory I confirmed that
“customization” is significantly more associated with law firms with attention to stakeholders than with respect to law firms without communication of this attention. I did not find support for the assumption that innovation is more associated with firms that communicate their attention for stakeholders vs. firms that do not communicate attention for stakeholders. Finally, I have shown that it is possible to create a link between the value proposition and generic strategies by using and expanding the activity system. This link is needed because, in order for business models to be sustainable, there must be a fit between business model (content) and strategy.
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INTRODUCTION
A key question in strategic management research is why some firms perform better than others. There are several ways to answering this question. These ways can have, from a company perspective, external factors like governmental issues, industry features and (state of) technologies and internal factors including the non-imitability and non-substitutability of firm resources and capabilities and the importance of (firm) knowledge and innovativeness (Barney, 1991; Eisenhardt & Martin, 2000; Ethiraj et al., 2004; Hawawini et al., 2003; Jacobides et al., 2012; Nelson, 1991; Porter et al., 1996). In recent years there has also been an increasing interest in business models and how having a superior business model and constantly innovate that business model can be of value to a firm in order to outperform the competition (Malone et al. 2006; Mitchell et al., 2003; Lai et al., 2006). Indeed, according to Lai et al. (2006), different business models are a significant source of overall performance differences between firms. This is confirmed by a study of Malone et al. (2006) into the business models of more than 10.000 publicly traded firms in the US, in which business models are found that indeed (financially) perform better than others.
Determining what a good business model for a certain firm is, has several dimensions. Inspiration can be found by studying firms that are particularly successful. These so called flagship firms (Rugman et al., 1997; Pavitt, 1991) are sometimes, but not always, firms that are the largest in a particular industry. Although learning from successful or large firms can be useful, it is no key to success for other firms as well. The practices and business models of a successful firm contribute to the competitive advantage, but only under particular conditions at a particular time (Christensen, 2001). Often these practices and business models are hard or even impossible to copy, due to path dependency, causal ambiguity, culture, routines and the absorptive capacity of the company that is trying to imitate the strategy of a successful company (Breton-Miller & Miller, 2015; King & Zeithaml, 2001; Nelson, 1991; Peteraf, 1993). Nonetheless, it can be valuable to look at the ways other firms and in particular the largest firms in an industry do their business (Kolk et al., 2001; Pavitt, 1991; Rugman et al., 1997), because this can be seen as a part of the institutional or organizational learning of a firm (De Geus, 1988, Thomas et al., 2001).
Within a business model the central element is the value proposition (Zott and Amit, 2010; Morris et al., 2005; Chandler et al., 2014). The value proposition is mainly about creating and delivering value to customers and solving problems that customers have or are going to have (Johnson et al., 2008). A value proposition can consist of different elements or a mix of
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elements (Osterwalder et al., 2010). A firm has to match its value proposition with the needs and wants of their (target segment) customers.
The purpose of this study is to determine, from a stakeholder theory perspective on the business models of law firms, how value is communicated to customers, what the actual contents of value propositions are and why it is important to have a fit between strategy, business models and the content of business models.
The first contribution of this research is expanding the existing literature on business models. The business model and value proposition concept is relatively new and therefore additional research into several aspects and components of it is required (Chandler et al., 2014; Frow & Payne, 2011; Morris et al., 2005; Payne & Frow, 2014). I use a stakeholder theory perspective in order to examine various components of the value proposition and to find differences between firms with (communicated) attention for stakeholders and firms without the
communication of this attention. According to stakeholder theory (Jones, 1995; Smith, 2003; Freeman, 1999), a firm has to have attention for customers, but it is also necessary to consider all other stakeholders as well (Smith, 2003), in this case with regard to the value proposition. The second contribution this research makes is by confirming some predictions of stakeholder theory, while other predictions on the basis of the findings are not confirmed. The third topic of interest in this study is the communication of the value proposition (Anderson et al., 2006; Chandler et al., 2014). Communication of the value proposition can actually be (a part of) the value proposition itself and can provide a firm with a competitive advantage (Chandler et al., 2014). These days, websites are the first touch points of a firm with its customers and other stakeholders (Chandler et al., 2014). I use company websites from 100 firms as the focus for data collection. The unit of analysis in this study is large law firms. Large law firms are organizations that practice law on behalf of (large) clients, including private clients and (large) corporations (Sherer & Lee, 2002). The structure of this research is as follows. First, I review the existing literature on stakeholder theory and business models. From the business model concept I zoom in on the value proposition and the communication of the value
proposition. Then I describe a link between business models and strategy by using the activity system model (Zott & Amit, 2010). Second, I describe the research design and method for data collection, including broadening and further developing the model for linking business models with strategy. Third, I present the results of the research, including the handling and answering of the propositions. I close with a discussion, including implications for
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LITERATURE REVIEW
The business model area is relatively new compared with strategic theories like agency theory or transaction costs theory, but there has already been done research in to it. The majority of the research so far has gone into defining what the business model is (Shafer, 2005; Zott and Amit, 2011), business model design (Zott and Amit, 2007; 2010; Johnson et al., 2008), connecting business models with strategy (Teece, 2010; Zott and Amit, 2008, Abraham, 2013), an entrepreneurial view on the business model (Morris, 2005) and how business models can be important in relationship to innovation (Chesbrough et al., 2002; 2010). Because it is a relatively new area of research, there remains research to be done into specific elements of the business model (Chandler et al., 2014; Frow & Payne, 2011; Morris et al, 2005; Payne & Frow, 2014). The focus of this study is the value proposition. Existing research on the value proposition consists of looking at the subject from a marketing perspective (Keeney, 1999; Arnould et al., 2009) and with regard to communication (Ballantynea et al., 2011). Further research on the value proposition has been done into specific industries like information technology (IT) and e-business (Levina et al., 2003; Amit and Zott, 2001), human resources (HR) (Ulrich et al., 2005) and the spacecraft manufacturing industry (Brown et al., 2006). There is also research been done on the value propositions of high-growth firms in declining industries (Chandler et al., 2014). There has, however, not been done any research, as far as to my knowledge, on the value propositions of the largest law firms industry globally or in Europe, nor has there been done research on the largest firms in any industry for that matter. Communicating the value proposition clearly is important (Chandler et al., 2014) and also, from a stakeholder perspective, is attention for stakeholders with regard to the value proposition. The focus of this research is on four subjects; 1) the value proposition 2) differences with regard to the value proposition as it is communicated via company websites, between the world’s largest law firms (which consist of US and UK firms) and the European largest law firms (excluding the UK) 3) the attention of these companies for stakeholders 4) differences with regard to the attention for stakeholders as it is communicated between the world’s largest law firms and the European largest law firms (excluding the UK). This results in the following research question;
Research question
How do the largest European and global law firms position themselves with regard to their value proposition?
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I expand this research question in three ways; 1) through examining the communication of the value proposition via company websites; 2) into stakeholder theory, by taking into account the attention for stakeholders of these firms and; 3) by building a bridge between existing models from theories of strategy and business models/ value proposition.
The way that this is achieved is by 1) qualitatively analysing websites of the respective firms for the communication of the attention for stakeholders and the positioning in terms of the dominant elements of the value proposition, 2) combining both qualitative and quantitative methodologies in order to find differences or similarities between different groups of firms and 3) building a bridge between existing models and literature in order to advance the topic of value proposition and business models.
Law firms
If one looks at the business models of law firms, it becomes clear that they are under some debate. A simple Google search (early 2015) on the key words: “business model law firms” gives results like: “Dawn of a New Business Model” (Vandenack, n.d.), “Law Firm 2.0: The
New Business Model of the Legal Industry” (Lawvibe.com, n.d.) and “Law Firm Business Models. The traditional law firm business model is dying” (Lander, n.d.)
There is apparently room for a closer look at the business model of law firms. With regard to the total size of the global top 50 law firms in terms of revenue, this was more than fifty one ($50.342) billion dollar in 2010 (Business and Company Info, n.d.; Americanlawyer.com, 2010). The total revenue of the European law firms (excluding firms from the UK) was more than six ($6.854) billion dollar in 2014 (Thelawyer.com, n.d.).
See table 1 and also Appendix A for general features of the 50 largest law firms from the US/UK and the 50 largest law firms from Europe (excl. UK), both in terms of revenue.
Table 1. General features of the 50 largest law firms in terms of revenue from both Europe (excl. UK) and US/UK
General features of the 50 largest law firms in terms of revenue of Europe (excl. UK) (2014 ranking) Total revenue in $m 6.854,58
Average revenue in $m / firm 137,09
General features of the 50 largest law firms in terms of revenue of US and UK (2010 ranking) Total revenue in $m 50.342,00
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Stakeholder theory
The traditional view on firms from an agency theory perspective is that the interests of shareholders (and shareholders alone) have to be served as well as possible. The purpose of the firm, according to agency theory, is to maximize shareholder value/ wealth (Fontrodona et al., 2006). Agency theory comes with assumptions with regard to the agents, (self- interest, limited rationality and risk aversion) organizations, (conflicting goals) and information (asymmetry of information distribution) (Fontrodona et al., 2006).
Stakeholder theory has a different view on serving interests. Instead of serving the interest of shareholders alone, stakeholder theory demands that interests of all stakeholders are
considered even if it reduces company profitability in the short term (Freeman, 2010; Parmar et al., 2010). Even though the ultimate objective of stakeholder theory is the firms’ continued existence, according to stakeholder theory this must be achieved by balancing and attending to the interests of all stakeholders, including, but not limited to, shareholders (Smith, 2003). Stakeholder theory focusses on mutual trust between firm and stakeholders and cooperation between them (Jones, 1995). According to Donaldson and Preston (1995) there are several stakeholders that need to be considered. Different stakeholders can include: the government, investors, political groups, suppliers, customers, trade associations, employees and
communities, this list is not limited and sometimes even competitors are included (Donaldson & Preston, 1995; Jones, 1995, McWilliams & Siegel, 2001).
A question that can arise is why a firm would consider the interests of all these stakeholders, instead of only the interests of shareholders. According to Jones (1995) this is because “it
follows that firms that contract (through their managers) with their stakeholders on the basis of mutual trust and cooperation will have a competitive advantage over firms that do not.”
Although stakeholder theory has similarities with corporate social responsibility, namely a similar view on the environment of a firm, these two issues are not the same (Brown & Forster, 2012). Stakeholder theory, in the end, has to do with a competitive advantage and/ or financial gain and has therewith a company perspective (Brown & Forster, 2012), while corporate social responsibility is about economic, legal, and ethical obligations of a firm (Schwartz & Caroll, 2003).
I use stakeholder theory in order to find out whether the studied firms do have attention for their stakeholders with regard to their business model and in particular the value proposition. These firms are at the top of the law industry in terms of revenue and they may have gotten their top position, at least for some part, because of their attention for stakeholders as well as shareholders.
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The business model
A business model and a strategy are not the same. The are differences between a business model and strategy including; a business model “explains who your customers are and how you plan to make money by providing them with value”, while strategy is concerned with “how you will beat competitors by being different” (Abraham, 2013; Magretta, 2002). There are also differences between two processes which both are required to achieve competitive advantage; the process of value creation (innovating, producing, and delivering products and services to markets) and appropriating value (extracting profits in the
marketplace) (Jacobides et al., 2006; Mizik et al., 2003). The business model can be placed under the value creation process; it is an important locus of innovation and a business model can be a crucial source of value creation for the firm and its stakeholders (Amit and Zott, 2001; Chesbrough et al., 2002). According to Amit and Zott (2001) a business model depicts the content, structure, and governance of transactions designed so as to create value through the exploitation of business opportunities. In the book of Osterwalder et al. (2010: p14), the following broad definition of a business model is used; “a business model describes the
rationale of how an organization creates, delivers and captures value”, including creating,
delivering and capturing of value to its customers. A business model consist of several components, such as design mechanisms to capture value, identification of market segments to be targeted, confirmation of available revenue streams, key activities, key resources, key partners and value propositions that are compelling to customers (Osterwalder et al., 2010; Teece, 2010). The central component of the business model is the value proposition (VP) (Chandler et al., 2014; Morris et al., 2005; Zott and Amit, 2010).
The value proposition
According to Johnson et al. (2008) a successful company is one that has found a way to create value for its targeted customers. The value proposition (VP) is about the value that a company delivers to its customers, or in other words; to get an important job done for them (Johnson et al., 2008). The VP is also proposed to be the core of a firm’s entrepreneurial identity, while considering the question ‘Why would customers buy our product rather than a competing alternative?’ (Chandler et al., 2014). The VP can therefore be considered a possible source of competitive advantage (Boons & Lüdeke-Freund, 2013; Chandler et al., 2014; Chesbrough, 2010; Johnson, 2010; Slater, 1997) or market advantage (Ballantynea et al., 2011).
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A VP creates value for the customer through a specific element or, more often, a distinct mix of elements (Osterwalder et al., 2010). In this study I focused on the two dominant
communicated VP elements of each firm that can be found on the respective firms’ website. Examples (non- exhaustive) of these elements are price, speed of service, brand/ status and accessibility. Furthermore it is important that business models are flexible and can “morph over time” (Teece, 2010). The ability of a firm to be flexible and to learn from experience and environment in order to adjust the business model provides a more likely successful business model (Teece, 2010). The need to adjust or change the business model over time can be caused by several things; technological changes, product substitutes, new competitors, shifting customer needs, shifting customer wants etc. (Boons & Lüdeke-Freund, 2013). The VP is at the intersection of the value a firm delivers and the value the customer wants to be delivered. There are several types of customers, which can be divided into different customer segments (Osterwalder et al., 2010). The firm has to choose the elements of the VP carefully in order to reach and satisfy its target customers so they can benefit from the products and services the firm offers. If this is done better than other companies, the VP can provide a firm with a competitive advantage (Boons & Lüdeke-Freund, 2013; Chandler et al., 2014;
Chesbrough, 2010; Johnson, 2010).
Communication
Only having a VP that benefits customers greater than those of other firms is not enough. Communicating the VP clearly to customers is necessary to (Anderson et al., 2006; Chandler et al., 2014), in order to achieve competitive advantage. Customers have to know what value they can expect to get from firm or what problems the firm is going to solve for them. Today, websites are more and more the first touch points a customer has with a firm (Chandler et al., 2014), so communicating the VP clearly via a website is important. Successful firms use the VP to reach the customers who will benefit mostly from using the firm’s services and products (Chandler et al., 2014). In the existing literature little information can be found with regard to geographical differences on the subject of the value proposition. Surprisingly, in general there is little information that can be found about differences between firms in Europe and the US. Ritter (2003) provides a study that examines differences between European and American IPO (initial public offering) Markets, while some older studies try to answer general questions about differences between US and European firms. Other
researchers provide differences between the US and Europe in terms of innovation (Crescenzi et al., 2007; Dosi et al., 2006). These studies show that US firms are generally more
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innovative than European firms. Regarding law firms it is exemplary that there is an annual list for the US, published by the Financial Times (FT.com, 2014), of the 50 most innovative law firms. This list does not exist for European law firms, though there is a combined list of law firms from both US and Europe (including UK based law firms). The majority of law firms on this combined list are from the US and UK (23 law firms from US, 13 from UK and 15 from Europe excl. UK) and the top 6 of this list consists solely of US law firms. The communication of the VP may reflect this difference in innovativeness of law firms in US/UK and Europe. There is, to my knowledge, not been done much further comparative research between the European and US markets. Because I expect some more differences, except for the communication of innovativeness, between these two markets, I will try to discover and expose these differences as well by investigating the value propositions of the leading law firms in the world (US and UK) versus the leading law firms in Europe (excluding UK). I therefore propose the following:
Proposition 1
I expect to find value propositions that are concerned with innovativeness more with the 50 largest US/UK law firms than with the 50 largest European law firms in terms of revenue
In addition to the first proposition, there may be differences between European countries themselves. One way to look at possible differences is to compare law firms from Northern European countries to law firms from Central/ South European countries. For the purpose of this study I use a subdivision of countries as shown in Table 2.
Table 2. Subdivision of top 50 European law firms in terms of countries: Northern and Central/Southern Europe
Northern Countries
Germany, Netherlands, Denmark, Norway, Sweden and Luxembourg
Total revenue in $m 3.589,46
Relative revenue compared to total in Europe 52,79%
Total firms 28
Southern Countries
Spain, France, Ireland, Italy, Switzerland, Austria and Russia
Total revenue in $m 3.209,87
Relative revenue compared to total in Europe 47,21%
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The distribution of law firms in Northern and Central/Southern European firms is fairly equal with 28 law firms from Northern Europe and 22 from Central/ Southern Europe. The
distribution is also fairly equal in terms of share of total revenue, with 52,79% revenue share for law firms of Northern counties and 47,21% for law firms from Central/ Southern Europe. Besides obvious geographical differences, there are also other differences between firms form the Northern and Central/ Southern countries (Di Pietro, 2014; Petrakis, 2011). The study by Petrakis (2011) of cultural differences between firms from north and south Europe shows that northerly countries are generally more entrepreneurial and innovative compared to southern countries. This result is also found by Capello and Lenzi (2013), in a study that designate more innovative centres in Northern Europe compared with Central and Southern Europe. This may mean that similar differences regarding the communication VP exist.
I therefore propose the following:
Proposition 2
I expect to find value propositions that are concerned with innovativeness more with the largest Northern European law firms than with the largest Central/Southern European law firms in terms of revenue
As mentioned earlier, there can be different sources of competitive advantage. These sources can be the business model of a firm (Lai et al., 2006; Mitchell et al., 2003), the value
proposition (Chandler et al., 2014; Chesbrough, 2010; Slater, 1997) and the communication of the value proposition (Anderson et al., 2006; Chandler et al., 2014). A fourth source of
possible competitive advantage, from a stakeholder theory perspective, is attention for stakeholders (Freeman, 2010; Jones, 1995). If a firm has not only attention for its customers, but all other stakeholders as well, it provides the firm with an advantage over competitors. According to research (Maignan and Ralston, 2002), there is a difference between USA and Europe with regard to the communication of the attention for stakeholders via websites. Researchers found that firms in European countries (like France and The Netherlands) did communicate in fewer cases attention for stakeholders and corporate social responsibility than the firms based in US. Another study into ethical perceptions of senior executives from both the US and Europe shows that US firms are more concerned about relationships with
stakeholders such as employees and government than European firms (Schlegelmilch & Robertson, 1995). Although, in this research I only look at attention for stakeholders -and not so much for corporate social responsibility- I expect, based on this previous research, that the
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biggest law firms in the US communicate their attention for stakeholders more than the largest European firms do.
I therefore propose the following:
Proposition 3
The largest law firms in the US, in terms of their revenue, communicate their attention for stakeholders via their websites more often than the largest law firms in Europe do
Proposition 3 focusses on the communication of attention for stakeholders via company websites. In order to deepen the relationship between the VP and stakeholder theory, it is useful to examine the VP’s of firms that do communicate their attention for stakeholders and to compare them with the VP’s of firms that do not. According to research (Bunn et al., 2002; McVea & Freeman, 2005), it is typical for firms that have a focus on stakeholders to create value for their customers through innovative strategies and through mass- customization. McVea and Freeman (2005) argue that, particularly in innovative and entrepreneurial fields, stakeholder theory is especially relevant. Although they do not examine traditional industries, they do argue that “the stakeholder approach is unique in its emphasis on the relationships
that make up the networks from which new value creation ideas are generated” (McVea &
Freeman, 2005). Other researchers go even further by stating that sustainable innovation is not possible without a stakeholder perspective (Ayuso et al., 2006). McVea and Freeman (2005) also elaborate on the important role of customization and mass- customization and how this is exemplary and important for firms that have a stakeholder perspective on doing business. Mass customization is a win-win strategy for all stakeholders of the firm for several reasons, including 1) it has a more individualized approach for customers, 2) it brings greater
satisfaction to customers and that leads to higher prices for manufacturers and 3) there is less wasted effort and materials because a manufacturer makes each product with only the
attributes the specific customized product requires (McVea & Freeman, 2005). The fact that customization and mass customization has a strong link with stakeholders and stakeholder theory is confirmed by Treiblmaier et al. (2004) in a study in which they compare
personalization with customization from a stakeholder perspective. Minoja (2012) adds to this that mass customization is not the same as “simultaneously meeting all stakeholders’ demands
in a tailored manner” (Minoja, 2012), although he agrees with the strong link between the
stakeholder perspective and customization/ mass customization. Based on these two associations between value creation and stakeholder theory, when considering the VP
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elements of law firms that do communicate their attention for stakeholders, innovativeness and customization/ mass communication could be elements that reflect the value that these firms offer to their customers.
I therefore propose the following:
Proposition 4
I expect to find value propositions that are concerned with innovativeness and customization more with the largest US/UK law firms that pay attention to stakeholders than the other largest US/UK law firms in terms of revenue do, that do not communicate their attention to stakeholders
and
Proposition 5
I expect to find value propositions that are concerned with innovativeness and customization more with the largest European law firms that pay attention to stakeholders than the other largest European law firms do in terms of revenue do, that do not communicate their attention to stakeholders
and
Proposition 6
I expect to find value propositions that are concerned with innovativeness and customization more with the largest law firms from both Europe and US/UK that pay attention to
stakeholders than the other largest law firms from both Europe and US/UK in terms of revenue do, that do not communicate their attention to stakeholders
Business model and business strategy
Although the business model and value proposition are still relatively new subjects in
strategic management literature, these subjects are beginning to mature in terms of definition and also in terms of volume of publications. Still, longer existing subjects like agency theory and transaction costs theory are more developed. A part of this development is because these theories are extensively studied in itself, in relationship to each other and in the perspective of various related topics (Bahli & Rivard, 2003; Kim & Mahoney, 2005; Kochhar, 1996).
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Business models and value propositions are not isolated topics when it comes to assuring competitive advantage. They should be seen in a broader perspective of business strategy and related topics. According to Teece (2010), in order to achieve competitive advantage,
strategies and business models should be coupled. This coupling is necessary for fine-tuning different aspects of a firm, such as setting up ways to deliver value to customers and figuring out ways to make the business model less transparent, as well as for protection against imitation of the business model by competitors (Teece, 2010). Only having an innovative or efficient business model is not enough, strategic analysis is also an essential step. Both business model design and strategic analysis must go together in order for the business model to be sustainable (Casadesus-Masanell & Ricart 2010; Teece, 2010; Zott & Amit, 2008). With regard to strategic analysis, there are many different theories and perspectives on how to do a concerted analysis.
Generic strategies
One of the most well-known theories on the subject of strategy is that of the generic strategies by M. Porter (1980). The generic strategies are about achieving competitive advantage by looking at the scope of activities and the distinctive features of the firm. The choices with the generic strategies are limited to either having the focus on (low) costs vs. uniqueness and the scope of a particular segment vs. an industrywide perspective. This results in the following four generic strategies of which the concepts were first described by M. Porter (1980), 1) differentiation: uniqueness with an industrywide perspective, 2) cost leadership: a low cost position with an industrywide perspective, 3) cost focus: a low cost position for a particular segment and 4) differentiation focus: uniqueness for a particular segment. See Table 3 for a graphic overview of the generic strategies.
Table 3. Generic strategies Scope Focus Uniqueness (low) Costs Industrywide Differentiation (1) Cost leadership (2) Particular segment Differentiation focus (4) Cost focus (3)
Business model design
From a business model perspective there are less models and theories available that can be used for business model analysis or business model design. Zott and Amit (2010) however
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provide a toolbox for business model design called activity system, which they define as “a
set of interdependent organizational activities centered on a focal firm, including those conducted by the focal firm, it’s partners, vendors or customers etc.”
The activity system is concerned with creating and delivering value together with partners for customers and thus is stakeholder oriented. There are two parameters on which the activity system is based; 1) design elements and 2) design themes.
Design elements
The design elements are divided into three categories (Zott & Amit, 2010), which are about; 1) the content and the question of, what activities should be performed? 2) the structure and the question of how activities of the firm should be linked and sequenced? and 3) the
governance which is about who should perform the activities and where?. See Table 4 for an overview of the design elements.
Table 4. Design elements of the activity system (Zott & Amit, 2010) Element
Content
Concerned with
What activities should be performed?
Linked to
The value proposition Structure How should these activities be linked and sequenced?
Governance Who should perform these activities, and where?
The VP is about value creation and the value a firm delivers to its customers. The VP is therefore closely linked to “content” from the design elements (Zott & Amit, 2010). Activity system content is described by “the selection of activities and the activities that are performed by the firm” (Zott & Amit, 2010). For the purpose of this study the design element “content” consist of the VP elements of the respective firm.
Design themes
The second parameter of the activity system is the design themes. Design themes consist of different configurations of design elements. Performing a certain activity, or delivering a certain value to the customer (content element) can be done with different structures and governance. Conversely, it can also be that a certain structure is in place, but different value is delivered with a different governance (Zott & Amit, 2010). A certain design theme, however, is not a substitute, but a complement for a (generic) strategy (Zott & Amit, 2008).
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There are four general configurations of design elements; 1) novelty, which is concerned with adopting innovative content, structure and/ or governance, 2) lock-in, which is concerned with retaining business model stakeholders, 3) complementarities, which is concerned with
bundling activities and 4) efficiency, reorganizing activities (Amit and Zott, 2001; Zott and Amit, 2008; 2010).
In order to be able to link the activity system with the generic strategies of Porter, I will provide a description of the four elements in more detail. Zott and Amit (2008; 2010) already link “novelty” and “efficiency” with generic strategies; respective (focus) differentiation and cost focus/ cost leadership strategies.
Novelty
According to Zott and Amit (2008; 2010), the essence of the novelty theme with regard to the content element is “the adoption of new activities”. A firm that uses the novelty theme has a focus on innovation and providing the customer with new and innovative products and
services. In terms of the generic strategies the novelty theme has the most in common with the differentiation and differentiation focus- strategies (Zott & Amit, 2008). These strategies have a focus on uniqueness, be it for a particular (customer) segment or industrywide.
Lock-In
The lock-in theme is concerned with keeping third parties attracted to the business model, service or product (Zott & Amit, 2010). Firms can do this by creating barriers for leaving the business model. These barriers can be anything from switching costs to a unique and superior value proposition. In contrast to the novelty theme, the lock-in theme is not so much
concerned with innovation and new offerings, as it is with providing a unique value
proposition that is difficult to leave. Nevertheless, in terms of the generic strategies the lock-in theme has also the most lock-in common with the differentiation and differentiation focus- strategies, be it from a different point of view.
Complementarities
The complementarities theme is about bundling activities in a firm, in order to provide more value than when all the activities would operate separately (Zott & Amit, 2010). This
definition is consistent with a broad range of operations and corresponds to both the generic strategy differentiation and cost leadership. The difference between these two strategies of course being the focus on uniqueness versus a focus on (low) costs.
24 Efficiency
The essence of the efficiency theme is achieving greater efficiency through reducing transaction costs (Zott & Amit, 2010). Although, in an earlier study by Zott & Amit (2008) there are no significant correlations found between efficiency and (low) cost strategies, they do not rule out that there is a connection there. For the purpose of this study, this theme is therefore linked to the (low) cost strategies; cost leadership and cost focus strategies.
Note that Zott and Amit (2008) indicate that there may be various combinations of strategies and accordingly different outcomes of links between design themes and generic strategies.
Table 5 shows the different design themes with the respective links to the appropriate generic strategy.
Table 5. Design themes of the activity system (Zott & Amit, 2010) Theme
Novelty
Concerned with
Adopting innovative content (and/or structure/ governance)
Linked to (generic strategy) Differentiation and Differentiation Focus strategies
Lock-In Retaining business model stakeholders Differentiation and Differentiation Focus strategies
Complementarities Bundling activities Differentiation and Cost Leadership strategies
Efficiency Reorganizing activities Cost leadership and Cost Focus strategies
Now, as soon as the dominant VP elements of a firm are known, these elements can be used to predict the matching design theme and the generic strategy and vice-versa, using the links between design themes and generic strategies. The VP elements can be used as the content from the design elements, which can be linked to one of the themes. Figure 1 provides an overview of this model. When we relate this model to law firms I expect to find mostly differentiated law firms, as for large service firms often have differentiation strategies (Nayyar, 1992).
In terms of design themes this corresponds to three themes: 1) novelty design theme, 2) lock-in design theme and 3) complementarities design theme. The efficiency theme is more associated with cost leadership and cost focus strategies, which I expect to find less among the largest law firms.
25 Proposition 7
I expect to find value proposition elements with the largest law firms from both Europe and the US/UK that most closely match design themes that are linked to a differentiation strategy or a differentiation focus strategy
Figure 1. Links between content (design elements), themes (design themes) and strategies (generic strategies) Design element Design theme Generic Strategy
In order to be able to research this proposition I first have to identify the possible VP elements and link them to the design theme. In the method section I provide this linkage.
RESEARCH DESIGN
In order to examine the research question I used a two-part study. Firstly, I qualitatively analysed the websites of the 50 largest law firms in the US and UK as well as the websites of the 50 largest law firms in Europe. Today, websites are the first touch point a customer has with a company; it is in some way the modern day equivalent of the former office building (Chandler et al., 2014). Secondly, I quantified the data of the websites with regard to 1) attention for stakeholders mentioned on the firms’ websites and 2) the dominant VP elements. This did make it possible to compare different groups (i.e. US/UK vs. Europe) on different parameters. The research is an embedded case study, with multiple cases as the unit of analysis. The aim of the research is exploratory, because I coupled the value proposition theme (which is a relatively new and unexplored research area) with the generic strategies of Porter (which is an existing and well researched theory) by expanding he activity system introduced by Zott and Amit (2010). The choice for the largest law firms comes from the fact that it can be valuable to look at the ways other firms and in particular the largest firms in an industry do their business (Rugman et al., 1997; Pavitt, 1991). This can be seen as a part of the institutional or organizational learning of a firm (de Geus, 1988).
Content Differentiation Cost Focus Cost Leadership Differentiation Focus Novelty Efficiency Complementarities Lock-In
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Access to the data was non-restricted; all law firms did have a website, and the VP could be found, to a greater or lesser extent, on the website. The research method I used is that of text/ document analysis and specifically that of website analysis. I described the words or
indicators that make a certain value proposition and attention for stakeholders, then examined the websites and revisited and reviewed them if new words or indicators did come up.
A strength of this research design is that it provides data on a topic that is not yet looked into. In terms of reliability, the data that I used is publicly available and I provided some examples of how attention for stakeholders was examined as well as how VP elements were searched for. This has also provided both construct and external validity. For external validity, -referring to the organizational learning of a firm (de Geus, 1988)-, other (large) law firms could actually learn from the positioning of the largest law firms in Europe or the world in terms of attention for stakeholders and the dominant VP elements. One of the limitations of the research design is the lack of the so called triangulation of data, which contributes to the validity of the research (Yin, 2003). I used effectively only data from websites and even if this involves more than 100 websites, it is still only data from websites. Another limitation is that I have only looked for the communication of the attention for stakeholders and the value proposition, not the actual attention for stakeholders, nor the actual value proposition.
Therefore it is possible that some firms communicate attention for stakeholders, while in fact they have no real attention for stakeholders and vice- versa. This is the same for the value proposition; some firms will communicate a certain value proposition while they in fact have a different one.
METHOD
In order to research the statements of law firms for their attention for stakeholders I looked at the websites of the top 50 European law firms as well as the top 50 US/UK law firms. As I expected to find a statement about stakeholders on the “about us” or “corporate social responsibility” sections, that is the place that I searched first. If I could not find a statement there, I looked for a company brochure and via the search bar that a lot of websites offer. I first looked for an explicit statement of the respective firms’ attention for stakeholders. For example, the “about the firm” section of the website of Gariggues, the largest European law firm in terms of revenue, gives a clear statement about the attention for stakeholders. See Appendix D for a screenshot of the respective website.
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Mentioning attention for stakeholders literally is the most clear statement. But there are also other ways to describe the attention for stakeholders, without using the term itself.
According to Donaldson and Preston (1995), stakeholders are parties such as government, investors, political groups, suppliers, customers, trade associations, employees and
communities, but this is not limited and sometimes even competitors are included. So, besides looking for the actual use of the term stakeholders, I also looked for an indirect expression of attention for stakeholders. If a firm did not state the attention for stakeholders literally, but did express attention for minimal three stakeholders, I marked that also as attention for
stakeholders, but with a listing that it is not a literal statement. The Corporate Social
Responsibility section of the website from Loyens & Loeff, Europe’s third largest law firm in terms of revenue, states that the firm not only have the best interests of their customers at heart, but also those of their employees, society as a whole and certain communities in it. See Appendix E for a screenshot of the respective website.
Some firms do not express, direct or in direct, attention for stakeholders. I listed that as no attention. An example of a firm that doesn’t mention attention for stakeholders on their website is Matheson, one of the largest law firms from Ireland. The communication of Matheson is primarily aimed at serving customers in the best way possible, but no further attention for other business partners, government, employees etc. See Appendix F for a screenshot of the respective website.
I then quantified all information regarding attention for stakeholders, so that a comparison of the positioning of US/UK and Europe could be made. To make sure that differences could be qualified as either significant or not, I conducted an independent samples t-test with a 5% significance level, for each comparison table to determine whether significant differences between the two studied groups exist, in this case with regard to the attention for stakeholders. Appendices B and C contain a complete overview of all 100 websites of law firms that were analysed for its communication of attention for stakeholders.
I further used the data from the analysis of websites for stakeholder attention for input for the second part of the analysis, that of the value propositions.
Defining different value propositions
The main subject of this research is the positioning of the largest law firms from Europe and US/UK with regard to the value proposition and to find differences between the firms that are based in the US and UK versus those based in Europe. In order to do this in a way that is structured, it is useful to use some form of general definitions for different value propositions.
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Value propositions can have different forms and elements though (Osterwalder et al., 2010) and therefore there are no set definitions for value propositions. Nonetheless, in order to compare, classify and interpret value propositions I started to use all the VP elements described by Osterwalder et al. (2010, p23) and ended up with five of the VP elements actually being found as one of the dominant VP elements, namely; 1) newness, 2)
performance, 3) customization, 4) brand/ status and 5) price. I also added to these elements 1) the element of geographical positioning, 2) the element of experience and 3) the element of specific knowledge and expertise. These new VP elements emerged when studying the websites. Once I discovered that a firm very clearly communicated a VP element that did not corresponded to one of the existing VP elements, I defined them and started over again with studying all the websites, in order to make sure that no VP elements were left out with the websites that were already studied.
Added elements
Several law firms that I examined are internationally or even globally active, and this international presence could be a key element in the value proposition of some firms, therefore I included geographical presence as a new VP element. Experience over long periods of time, on the other hand, can for some law firms be a distinctive element of the value the firm delivers to its customers, so I added the VP element “experience”. Certain specific knowledge and displaying certain expertise in specific parts of the legal system is also a value that some law firms provide their customers with. Therefore I added the VP element “expertise”. See Table 6 for the main elements including a short description, with which I determined the dominant VP elements of the respective firms.
Table 6. Value proposition elements with description
Element Description
Newness Satisfying a new set of needs. Often technology related. Innovation. Performance Improving the performance of the service that is offered
Customization Tailoring services to very specific needs of customers. Includes mass customization Brand/ status Value through superior brand positioning
Price Value through similar offering but lower price Geographical presence Value through international or global presence Experience Value through company and employee experience
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In Appendices G, H and I, screenshots can be found of websites which display examples of different VP elements. Appendices J and K provide an overview of all 100 websites of law firms that were examined with regard to the main elements of the VP. Appendices M to AD display tables of all data with regard to the dominant elements of the VP. These tables include comparisons between US/UK and Europe as well as comparisons between top 10 firms and other firms, firms that do communicate their attention for stakeholders and firms that do not, and comparisons within countries in Europe. For each comparison, all differences are again tested by means of an independent samples t-test with a 5% significance level.
Linking content with strategy
In Figure 1, I provided the basis for a link between the design element “content” with generic strategies via design themes. According to Teece (2010) strategy and business models should be coupled, or competitive advantage cannot be achieved. With the basis of figure 1 and the exact descriptions of the VP elements, it is possible to develop the model of predicting appropriate generic strategies via design themes. Below I will describe the connecting VP elements per design theme.
Novelty
For novelty the connecting VP elements are newness and customization. Both have to do with innovation and serving new and specific needs.
Lock-In
The lock-in theme has connections with brand/ status, experience and expertise. These three VP elements are all sources of attractiveness for third parties and can even act as barriers for leaving the firm.
Complementarities
Geographical presence is a VP element that links with complementarities. Complementarities are about bundling activities and geographical presence is a form of that; offices and activities all around the world, bundled under the same “parent firm”.
Efficiency
The VP elements price and performance are connected with the design theme efficiency. Either offering the same value for less, or improving the performance of the service that is offered is some sort of efficiency.
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Figure 2 provides an overview of the links between content, design themes and generic strategies.
Figure 2. Links between content (design elements- value proposition elements), themes (design themes) and strategies (generic strategies)
Value Proposition Element Design theme Generic Strategy
RESULTS
The first part of the analysis is the dominant VP elements per law firm. I examined each of the 100 websites for the two most dominant VP elements. As I added new elements while
analysing, I started again for every time that happened, in order to make sure that every website was analysed in the same way.
Value proposition elements
The first region I analysed in terms of the dominant VP elements was Europe and after that US/UK. Appendices J and K provide a complete overview of all the dominant VP elements per firm. For the US/UK based law firms, two firms of the top 50 list were left out because of bankruptcy (Dewey & LeBoeuf) and merger (Bingham McCutchen) of the respective firm. Two other firms (UK based DLA Piper International and Lovells) were left out because they because they are part of another company which also appear in the list. In order to avoid that the last two firms would in fact be counted twice, they are not taken into account. For this reason, I added the next four firms to the list, making it in fact 50 firms of the top 54 firms list
Differentiation Cost Focus Cost Leadership Differentiation Focus Novelty Efficiency Complementarities Lock-In Geographical Presence Price Brand/ Status Customization Performance Newness Experience Expertise
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of 2010. Because I identified two dominant VP elements per firm, this means that there are a total of 200 VP elements I worked with. With regard to the positioning of law firms in both region’s (Europe and US/UK) combined, the most important VP element is that of
geographical presence. Of all 100 law firms, 55 communicate geographical presence as one of the firms´ most important value offerings. This is somewhat surprising because this element did not previously emerge as a distinctive or key VP element of law firms. Table 7 shows the combined total of the VP elements that I have found with both US/UK law firms and
European law firms (excl. UK).
Table 7. Combined total (both absolute and percentage) of VP elements from top 50 law firms in Europe (excl. UK) and US/UK. Two VP elements per law firm have been appointed, making for a total of 200 VP elements
Element Absolute Percentage
Geogr. pres. 55 27,5% Brand/ status 34 17,0% Experience 28 14,0% Newness 26 13,0% Expertise 24 12,0% Customization 20 10,0% Price 7 3,5% Performance 6 3,0%
Table 8 shows the input for the identification of the VP element geographical presence for three law firms; 1) Netherlands based Loyens & Loeff (number 3 ranked law firm in Europe in terms of revenue (2014)), 2) UK based Freshfields Bruckhaus Deringer (number 6 ranked law firm in US/UK (list of 2010) in terms of revenue) and 3) US based White & Case (number 11 ranked law firm in US/UK (list of 2010) in terms of revenue). These companies emphasize all three of them international presence as a key value for their customers, although all in a slightly different way. Loyens & Loeff for example, focuses on a “local” international presence, by naming the time zone of which they are based in as their “area of operations”. Freshfields Bruckhaus Deringer on the other hand emphasize that they “work seamlessly across borders”. They are not bounded to where they have offices. This firm has to rely on its international presence and if not present in terms of offices, on cooperation with other law firms in their network. Finally, White & Case, a US based, but international active law firm attaches great importance to their actual presence in various countries. They have offices in the US, Asia and Europe. The three different ways these firms approach their geographical presence, are typical for how this element is constructed. Overall, the value of geographical presence can come from 1) the international, but still local/ regional presence, 2) the global
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presence through either offices or cooperation via a network and alliances and 3) truly international presence through a variety of offices in key regions. The top law firms of both Europe and US/UK position themselves with regard to the value proposition the most as international active firms, with value through one of the three aforementioned variations on the “geographical presence” element.
Table 8. Examples of three firms that have the VP element geographical presence as one of its most important VP elements. For a complete list of all firms (both from Europe and US/UK), see Appendices J and K
Firm Examples of VP element geographical presence found on website Loyens & Loeff Under “Our strengths” in the “about us” section of the website
(see also appendix L) - Independent with an international scope Further found in the “about us” section
- As a leading firm, Loyens & Loeff is the natural choice for a legal and tax partner if you do business in or from the Netherlands, Belgium, Luxembourg and Switzerland, our home markets. You can count on personal advice from any of our 900 advisers based in one of our offices in the Benelux and Switzerland or in key financial centres around the world.
- Our pragmatic approach and drive to devise innovative solutions allow us to effectively address the demands of our clients’ domestic and international businesses - we can offer you top-level advice, locally and internationally
Found in a special section in the “about us” site: Independent and international
- As a fully independent law firm, Loyens & Loeff is excellently positioned to coordinate international tax and legal matters. We have our own network of offices in major financial centres, staffed with specialists in Dutch, Belgian, Luxembourg and Swiss law. Through these offices, our clients have access to Loyens & Loeff’s full-service legal expertise in their own time zone. Our office network is
complemented by our several country desks all of which are experienced in
structuring investments all over the world. It’s a winning combination that enables us to assist international clients in a very effective way. Moreover, we are on excellent terms with other leading independent law firms and tax consultants. That way, we can guarantee you top-level advice in every part of the world.
Freshfields Bruckhaus Deringer
Found in the “about us” section
- To succeed, we must be widely recognised as standing apart from other firms because our people are exceptional and because we are international and integrated in the way we work
- We don’t just say we are one firm; we act like one firm right across the world. - We work seamlessly across borders
- We work wherever our clients need us. This is how we define ourselves, not by reference to where we have offices. Crossborder work isn’t just what we do, it is what we excel at. We understand what it really takes to work across different legal systems and commercial environments and to bridge language and cultural gaps. - We are one partnership across the world, sharing the risk and rewards of our business
and with an overriding duty to bequeath the firm in better shape than we inherited it. White & Case Found in the “about us” – “our firm” section
- Supporting our clients around the globe
- White & Case is a truly global law firm, uniquely positioned to help our clients achieve their ambitions in today's G20 world.
- As a pioneering international law firm, our cross-border experience and diverse team of local, US and English-qualified lawyers consistently deliver results for our clients. - In both established and emerging markets, our lawyers are integral, long-standing
members of the community, giving our clients insights into the local business environment alongside our experience in multiple jurisdictions.
- We work with some of the world's most respected and well-established banks and businesses, as well as start-up visionaries, governments and state-owned entities.
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The first comparison I have made is that of the dominant VP elements in Europe versus those in US/UK. Appendices M and N provide an overview of the dominant VP elements per region. In Table 9 the two regions and their differences are compared with each other. This table can also be found in Appendix O.
Table 9. Dominant VP Elements- a comparison between Europe (excl. UK) vs. US and UK. 50 law firms from Europe and 50 law firms from US/UK. Per law firm, 2 VP elements have been appointed, making it a total of 100 elements for Europe and 100 elements for US/UK for a total of 200 elements.
Element
Absolute Europe Absolute US/UK T-test for significant difference between Europe and US/UK α=0.05 n=100 n=100 Significance: t> 1,9720 < -1,720 Geogr. pres. 24 31 -1,109 Brand/ status 19 15 0,753 Customization 17 3 3,300 Expertise 16 8 1,741 Experience 14 14 0,000 Newness 5 21 -3,364 Price 3 4 -0,385 Performance 2 4 -0,829
In terms of the dominant VP element, in both Europe and US/UK, geographical presence is the dominant factor, with 24 firms in Europe with this element as one of the two most important values for their customers and 31 firms in US/UK. In order to find out if there are significant differences between the two regions, I performed an independent samples T-test. Again, Table 9 shows the output of this test and shows statistical significant differences for two VP elements; 1) customization (t= 3,300, p< 0,001) and 2) newness (t= -3,364, p< 0,001). In fact, customization is the third dominant element in Europe with 17 European firms
displaying this value for their customers as one of the most important, opposite only 3 US/UK firms, ranking it actually the least found VP element with US/UK law firms. The relative differences between Europe and US/UK is even greater with the VP element newness. Only 5 firms in Europe have this element as the most dominant VP element while almost half (21 firms) of the 50 law firms in the US/UK communicate this VP element as one of their most important values for customers. Proposition 1 suggested that I would find VP elements concerned with innovativeness more with law firms from the US/UK than with European law firms. I therefore find support for proposition 1. There is a significant difference between European and US/UK based law firms with regard to the VP element newness (which is associated with innovation).
