Deploying Individual-Level Resources Under Constraints: Evidence from the UK M&A Legal Advisory Market

Abstract

In this paper, we develop and test a framework to better understand how firms strategically deploy their individual-level resources to opportunities. We analyze the allocation of individual-level resources (lawyers) to projects (M&A mandates) in the UK corporate M&A legal market. We find evidence that firms adapt their allocation decisions to deal with the constraints on resource deployment associated with resource scarcity and congestion. Specifically, firms appear to adopt five strategies to manage their constrained resources: Load Equalization, Selective Stretching, Assortative Matching, Relationship Building, and Relational Capital Substitution. We also find suggestive evidence of firm level heterogeneity in the firm’s ability to appropriately deploy resources. Overall, this paper refines the understanding of the resource deployment process and of individuals as rent-generating assets.