Demand-side attributes and resource reconfiguration in human asset intensive firms

Collaboration between individuals in firms has important implications for the development of relational and human capital and is thus of critical concern to individuals and firms alike. In knowledge-intensive contexts where collaborations are formed to deliver services to clients, collaboration decisions can involve non-trivial trade-offs between short-term and long-term collaboration performance. Individuals and firms must carefully manage the trade-offs between leveraging existing relational and human capital to realize predictable performance of repeat collaboration, and creating new relational and human capital through new collaboration which involves greater performance uncertainty. Building from the premise that serving clients is central to decision-making by autonomous individuals in human asset intensive firms, we examine how client-related factors shape collaboration choices among lawyers (partners) in UK law firms. We focus on three key client-related dimensions that we predict govern collaboration decisions: the depth of individual-and firm-level relationships with the focal client, key client attributes that reflect the client's status and the use of different firms to undertake its outsourced work, and individual-and firm-level resource constraint at the time of the focal deal due to the demand experienced from clients. Our empirical findings support our proposition that client-related factors influence the patterns of collaboration between individuals in firms. We also reveal how client-related factors at the individual level can have opposite effects on collaboration decisions than at the firm level. Overall, our findings contribute to the research literatures on relational capital, strategic human capital, and professional service firms