The impact of client-overlap hiring on PSF client embeddedness

Abstract

Abstract Professional service firms (PSFs) are commonly perceived to attain success through the acquisition of new clients. However, these firms are not solely reliant on this strategy as PSFs may also achieve competitive advantage by improving their relationships with existing clients. Despite the significance of these established client relationships, limited information exists regarding how PSFs can effectively enhance and utilize them. This study examines how a PSF’s client-related knowledge can be obtained and developed through its hiring practices in order to strengthen relationships with existing clients. Results reveal that when hiring from other PSFs who share similar clients (i.e., client-overlapping PSFs), that this has a positive impact on the firm’s overall relationships with its clients, with the effect being impacted by the firm’s level of practice overlap with the new hires and the degree of co-mobility of the hires.