Organizational Ability and Performance in U.S. Legal Services Firms

Tracie Sloop Frost, rajiv banker, muktak tripathi

Research output: Journal article publicationJournal articleAcademic researchpeer-review

Abstract

We quantify organizational ability for U.S. legal services firms using the two-stage data envelopment analysis (DEA) method of Demerjian et al. (2013). In the first stage, we estimate the DEA-based, technical efficiency of legal services firms following the production frontier approach. In the second stage, we measure organizational ability as the residual from the DEA + OLS model after controlling for efficiency determinants. We validate the measure by showing the persistence of organizational ability and the predictability of firms' future financial performance. Furthermore, we contribute to the literature examining professional service firms and organizational ability by identifying the determinants of ability through different classes of human resources and experience.
Original languageEnglish
Article number2
Pages (from-to)83-113
Number of pages30
JournalData Envelopment Analysis Journal
Publication statusPublished - 22 Jun 2021

Keywords

  • U.S. professional (legal) services
  • experience
  • strategic choices
  • human resources
  • American Lawyer (AM LAW) Top 100
  • performance
  • organizational ability
  • DEA efficiency

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