An exploration of architectural innovation in professional service firms

Abstract

Architectural innovation is achieved using architectural knowledge to reconfigure an established system to link together components in a new way that provides a competitive advantage. Components in professional service firms are the expertise areas in which the firms have developed proficiency or those in which they plan to develop it. Competitive advantage in professional service firms is related to the capacity of the firm to add continuing value to a dynamic set of clients and to itself. In order to add value, professional service firms, being knowledge intensive, must develop capabilities that enhance the knowledge capital they possess, which is valuable to both its clients and to the professionals they employ. This knowledge capital can be classified into Human Knowledge, Relational Knowledge and Structural Knowledge. The first two types are comprised mainly of tacit knowledge, while the third one consists of explicit knowledge. Architectural innovation modes result from the reconfiguration of these knowledge types in ways that enhance the value creation processes of professional service firms. This work explores the ways professional services firms achieve these reconfigurations and offers insights into the key characteristics of successful practices.