What Does Consulting Do?
16 days ago
- #management consulting
- #productivity
- #organizational restructuring
- First systematic empirical study of management and strategy consulting using Belgian VAT-linked data (2002-2023).
- Consulting engagements are episodic (<1 year) with clients spending ~3% of payroll on average.
- Take-up concentrated among large, high-productivity firms; U-shaped pattern for TFP/profitability (both high & low performers hire consultants).
- Positive labor productivity effects (+3.6% over 5 years) via employment reductions with stable/growing revenue.
- Wages rise (+2.7%) without labor share decline, suggesting productivity gains don't come at workers' expense.
- Organizational restructuring observed: slight dismissal increases, higher services procurement, reduced labor outsourcing.
- Larger productivity gains for initially less productive firms, indicating allocative efficiency improvements.
- Findings align with practitioner-endorsed productivity-enhancing view over economists' rent-shifting perspective.