| Journal of Organizational Behavior
Chartering New Territory: Diversification, Legitimacy and Practice Area Creation in Professional Service Firms
Diversification into innovative domains through new practice area creation is a critical imperative for professional services firms. Using theories of organizational territoriality and corporate charters, we conceptualize professional firms as federations of distinct practice areas and argue that the chartering of a new practice is an inherently political act. New practice area founders need to engage in appropriate legitimacy-mobilizing efforts in order to sustain diversification efforts. Our analysis of 46 cases of new practice area creation attempts in consulting and law firms shows that the mix of legitimacy required for new practice areas created through radical diversification is very different from that required for incremental diversification efforts. Our findings have important implications for studying how innovation is structurally accomplished in professional firms.
Management Practices and Processes;
Innovation and Invention;
Management Analysis, Tools, and Techniques;