The European Yearbook of Business History

Volume 2

Wilfried Feldenkirchen, Terry Gourvish

• Publisher: Taylor & Francis
• Year: 2019
• Print ISBN: 9780367024482
• eBook ISBN: 9780429679797
• Edition: 1
• Topic: Social Sciences
• Subtopic: Business General
• Index: Social Sciences

First published in 1999, this volume aims to reflect on the changing structure, experience and aspirations of European business as it approaches the Millennium, including chapters in issues including business scandals in the Weimar Republic, the evolution of management consultancies in Portugal and Spain and the British Public Sector. The yearbook exploits these changes by serving as a forum for debate in Europe and aims to bring work on individual countries to a wider, European audience. Responding to the challenge of globalization, cooperation within a single European market and an increasing interest in corporate governance and environmental issues, the yearbook broadens to include socio-political issues along with stimulating new types of scholarship among European business historians and new preservation strategies by business archivists.

Catching-up? The Evolution of Management Consultancies in Portugal and Spain

Celeste Maria Dias Amorim

University of Reading¹

Introduction

Over the last two decades, great attention has been given to aspects of work organisation, firm strategies and organisational practices. There has been an increasing interest in the role of managerial know-how and on its transferability across national boundaries. Likewise, access to ‘soft’ aspects, such as organisation and management knowledge, are recognised as playing a paramount role in the innovation processes of firms.² Research in comparative management concluded that organisations are quite diverse in the way they solve similar problems and in the way they are organised. Much of modern organisational theory seeks to explain such variations.³ The common argument is that companies’ behaviour and organisation reflect country-level specificities. Without questioning the significance of national characteristics, there is a certain level of convergence among companies as far as management practices and work organisation are concerned.⁴ Although the evidence is scarce,⁵ some authors argue that there are a number of widely diffused management techniques and models.⁶ These phenomena may reflect managers’ searches for ‘best practices’, but they may also have harmful effects on organisations operating in contexts different from those where management ideas were created.

In this respect, consultants, and international consultancies in particular, are characterised as important ‘outsiders’⁷ contributing to the process of diffusing management knowledge. Moreover, there seems to be an increasing awareness of how they may advance and accelerate a country’s technological level and a firm’s competitiveness.⁸ Even those academics and practitioners who are critical regarding the consultant’s job have recognised the role of international consultancies in the dissemination of management innovations and ‘best practices’ across time and space. In this respect it can be argued that consultants are homogenisation agents.⁹ Not only do consultancies tend to apply the same practices to different companies, but they are also becoming more homogeneous among themselves.

However, there are considerable differences between countries concerning the evolution of consultancy businesses and the role of consultants as diffusers of new ideas and techniques over time.¹⁰ In this respect, some authors argue that the evolution and role of management consultancies as conduits of management principles may be limited by a country’s ‘systemic context’. Besides macroeconomic factors, the characteristics of the provision of consultancy (from private and public sector), the type of institutions offering consultancy services, domestic companies’ organisational structures, and management education appear to be among the most influential factors determining the evolution of consulting businesses: Kipping,¹¹ for example, has shown the relevance of these factors for the cases of Britain, France and Germany.

This view is particularly pertinent when dealing with issues of managerial change in countries like Portugal and Spain. Until the 1970s and even 1980s, these two countries were relatively insulated from mainstream management methods, such as scientific management, human resources management techniques, just-in-time and total quality management.¹² Portuguese and Spanish firms have, nevertheless, with variable time lags, adopted, management techniques, products and/or processes developed by other organisations. Moreover, the economic, social and political events that occurred in the last decade may have stimulated competition and created a new awareness of the importance of the efficiency of business operations, and thus the introduction of management innovations.¹³ At the same time, by the end of 1980s, there was evidence of an upswing in the consultancy business in Portugal and Spain. In the 1990s, this process intensified and the market structure changed significantly.¹⁴ Furthermore, there are signs that the lack of an appropriate network of business and technical services has been one of the weaknesses of the Portuguese and Spanish business system and a barrier to their further development.¹⁵

The two countries selected are therefore highly suitable locations for attempts to analyse the role of consultants as important agents of management modernisation. Thus, the aim of this article is to explore the role of consultants as conduits of management innovations. By adopting a comparative and evolutionary approach, the article attempts to demonstrate how the systemic context influenced the evolution of consultants’ activities in the two selected countries over time. This paper is subdivided into two main sections for each country. The first explains the development of the consultancy business, which appears to have reflected deep changes in each country’s business system. The second part focuses on current market structure. The paper draws upon forty interviews conducted in the period July to October 1998 with management consultants in both countries, as well as documentary materials from those organisations, and other relevant literature available.¹⁶

The Evolution of the Portuguese Consultancy Market

Three major phases can be distinguished in the evolution of the consultancy business in Portugal. In the first stage, from the 1940s up to the revolution of 1974, Portugal underwent deep changes. However, it lagged behind in terms of industrialisation processes.¹⁷ The second phase started with the end of the dictatorship in 1974 and lasted until the early 1980s. The revolution of 1974 and the subsequent nationalisation of the larger Portuguese firms had a powerful impact on the Portuguese business system. Until the early 1980s, socio-political instability and government intervention, combined with increasing economic liberalisation, undermined Portuguese economic development. The third phase began with European Community (EC) accession in 1986 which stimulated the Portuguese economy, and since then Portugal has undergone profound structural changes, at both economic and social levels.¹⁸ Thus, this article aims to investigate whether these changes had an important impact on the role of consultants and the evolution of the consultancy market.

It is worth noting that the Portuguese national statistics are scarce and do not allow a clear identification of the management consultancy business. Only in 1974 was the statistic categorisation for such activities created, and as late as 1993 management consultancies (MC) were included in the large category of business services. Since then the national statistical system has improved, but the group of management consultants still encompasses too large a number of activities. Furthermore, the national professional body for consultants, Associagáo Portuguesa de Projectistas e Consultores (APPC), founded in 1975, has low representation both in terms of its number of members and in the size of its members’ businesses. Moreover, only 19 per cent of APPC members in 1995-96 were providing management consultancy services.¹⁹

From 1940 TO 1974 - The Origins

The information on professional business services²⁰ suggests that management consultancy activity developed later in Portugal than in many other European countries and, indeed, appears to be a relatively recent activity. The consultancy and engineering businesses developed together as an independent sector only from the 1940s to 1950s, and empirical studies in 1993 found that about 90 per cent of the existing engineering and consulting firms had been created after 1974.²¹

The origins of the consulting business in Portugal can be traced to two types of consultants. First, to consulting centres founded by university professors some of which have developed strong connections with industry and public administration, and have evolved into medium-sized and large professional firms. Second, to the consulting departments of large economics groups which had been servicing group and non-group companies. In both cases, large structural investment in the public administration and industrial projects of the large industrial groups played an important role during the initial stages of their expansion.²²

Before 1974, the potential clients for management consulting firms were mainly in public administration and a few large diversified groups. Public administration demanded mainly engineering consultancy in large-scale and infrastructural projects. Moreover, public institutions have used consultants to monitor the massive infrastructural investments in the former colonies, thus furthering and hastening the demand for engineering consultancy in the 1960s. Later on, those institutions demanded complementary consulting, such as in management, processes organisation, and planning.²³

From the 1950s up to the early 1970s, Portuguese private industry was characterised by government intervention and a dualist structure. There were a few large, diversified, private groups²⁴ that were oriented mainly to the internal market and to the Portuguese colonies. In addition, there were a large number of small firms involved in labour-intensive, export-oriented industry. Apparently, few companies were concerned with professional management and ‘state-of-the-art’ management practices. Medium and small firms, in particular, lacked the capacity to develop their technological and managerial knowledge and their success was mainly based on low- quality products and cheap labour.²⁵ Within this context, the necessary conditions for stimulating the development of support business services, such as financial services and management consultancy, did not yet exist.

However, the large groups, most of them of family origin, showed a certain fascination for foreign management models, such as strategic planning techniques and human resources management.²⁶ Moreover, during the 1960s, steady economic growth, industrialisation plans and plant modernisation stimulated interest among large and medium-companies in scientific management and industrial engineering. Some of these companies contracted the services of consultancies specialised in the efficiency of shopfloor work processes. Because of the lesser development of the domestic supply, domestic firms looked to foreign consultancies. The interviews carried out in Portugal revealed that in the 1960s there was a particular interest in French techniques and, in fact, the French firms CORTE and Paul Plaunus (PP) were among the consultancies benefiting from this development. As stated by a former CORTE consultant, during the 1960s CORTE had assignments with multinational subsidiaries (e.g. IBM) and with the large Portuguese gro...

Table of contents

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Table of Contents
• Company History and Business History in the 1990s
• ‘The First Shall Be the Last’: Recent Developments in Belgian Business History. A First Introduction
• The Changing Nature of the Business – Government Relationship in Western Europe After 1945
• Italian Public Economic Sector: Sixty Years Between Managerial Approach and Political Constraint (1933–1993)
• Nation States as Providers of Organisational Capability: French Industry Overseas, 1950–65
• Chosen Instruments: The State and British Commercial Air Transport Since 1920
• Learning from Italy? The British Public Sector and IRI
• Steel and the State in Italy and the UK. The Public Sector of the Steel Industry in Comparative Perspective (1945–1996)
• Business Scandals in the Weimar Republic
• Catching-up? The Evolution of Management Consultancies in Portugal and Spain
• Relational Capital and Economic Success in Early Modern Institutions: The D’Este Courts in the Sixteenth Century
• The Convergence of History, Organisation and Networks: An Introductory Research Note