Measuring the Productivity of Professional Services: A Case Study of Swedish Management Consulting Firms

Existing measures of productivity were designed to measure productivity in industries in which both inputs and outputs are tangible standardised quantities. They are inadequate for productivity measurement of professional services, where intangible and specialised factors of production are in use. This paper seeks to address the difficulties associated with the measurement of the productivity of professional service firms and to propose a more adequate measure of productivity in these industries. This measure is tested on a sample of Swedish management consulting firms, and is assessed in relation to several performance indicators of these firms. The findings illustrate the inadequacy of the manufacturing-based measurement procedures and demonstrate that a measure which acknowledges the unique characteristics of professional services correlates better with firms' performance. As this field of research is in its infancy, these findings are only suggested as indications for directions in which future research is needed.