INTERNATIONAL BUSINESS CONSULTING: EVOLUTION OF ITS THEORY AND PRACTICE

Author
, professor, Kharkiv, Pushinska, 77

In heading

 Economic theory;

Signed print

 21.02.2020

Issues number

 2020 - № 1 (40)

Page

 58-73

Type of articles

 Scientific article

Code UDK

 33.01:339.92

ISSN print

 2411-5584

Abstract

 Problem setting. The active entry of Ukrainian businesspersons into foreign markets encourages them to appeal to the international consultants who rely on scientific positions in their advice. Analysis of the origins of international business consulting, the factors of its formation helps to determine the content, logic and vector of modern development.
Recent research and publication analysis. Domestic scientists usually extend the analysis of consulting in the domestic market to the world level, without focusing on the features of the evolution of international business consulting. Some scholars refer to it only for use in TNCs, ignoring the need for advice from international consultants of other firms entering the foreign market. In such a way the relationship between business development in the context of globalization and the science and practice of consulting has broken.
Paper objective is to determine the main stages of the development of international business consulting as a science and practical activity, and investigate its factors and current state.
Paper main body. The development of international business consulting is the result of the improvement of business practice and at the same time the symbiosis of such sciences as General Theory of Consulting, International Economics, International Business, and Global Management. Among the preconditions for the formation of international business consulting it is necessary to emphasize first of all rapid development of foreign trade in European countries in the sixteenth and seventeenth centuries as well as Industrial Revolution in England in the eighteenth century. Experts-consultants of business at that time were scientists, researchers of foreign trade and entrepreneurship. The industrialization of the economy, the foreign trade growth, the concentration of capital and its export had created the need for consulting businessmen who sought to enter the foreign market. The profession of consultants started to form, firstly in certain countries and then in the process of international exchange of knowledge and thoughts in a big variety of states.
The further evolution of international business consulting was linked to names of Arthur D. Little, Harrington Emerson, Edwin G. Booz, who offered many ideas on consulting development, including home country and abroad, and their practical implementation. The Great Depression had accelerated the growth of entrepreneurs’ demand for consulting on upgrading of their businesses. After completion of that period, consulting companies started to spread widely, but mostly large industrial companies as well as the public and military sectors of the economies of developed countries used their services.
Active recovery of the economy after the Second World War, transition of leading countries to post-industrial development, acceleration of scientific and technological progress, internationalization of industry, trade and finances, merger of large audit companies, all these changes meant the transition to the international phase of business consulting development.
The First Management Consultant World Conference (1987) became the final evidence that the consulting ran up to the international level and the rapid development of this industry could be observed in the last third of the twentieth century up to the nowadays. The growth rate of international business consulting is well ahead of the growth rate of the world real GDP and the merchandise trade volume. Globalization and internationalization of economy and business, integration and formation of regional markets, development of global management, predominance of FDI over portfolio assets, business process digitization, all of them influence this process. Big Four companies make a major contribution to the modern development of international business consulting, accounting for almost 37.4% of the global consulting market in 2018. Many of the top managers at the same time are international consultants.
Geographically, the largest consulting markets are the US and Western European ones, especially the DACH region, which covers German-speaking countries. At the same time, the market of Eastern Europe, especially Poland, as well as regions of Asia, Africa, and the Middle East, develops rapidly. New segments of the global business consulting market are emerging and competitive pressure on existing players is increasing. Management consulting is dominant. Public sector consulting and public relations services are becoming attractive and profitable for post-industrial professionals. However, in Eastern Europe, the public sector shows relatively high levels of corruption and unnecessary government intervention into business development. Therefore, the private sector of these countries is still a major customer of consulting services.
Conclusions of the research. The long evolution of international business consulting in developed countries contributes to the gradual maturation of its new quality, modern types and trends. Post-socialist countries receive examples, guide and universal technologies of modern consulting. At the same time, this sector is fraught with risks associated with unnecessary governmental bureaucracy and corruption, which needs the time to create new institutional environment for the consulting market. The support of international institutions is needed, because it can contribute to the internationalization of the domestic consulting business and the attraction of foreign consulting companies to the Ukrainian market.
Short Abstract for an article
Abstract. The article is devoted to the main stages of the development of international business consulting as a science and practical activity, its factors and current state. The main achievements and ideas of scientists and practitioners who investigated this issue at various times are also presented. Structural and geographical changes that are taking place nowadays in the global consulting market are analyzed.

Keywords

 international business consulting, management, globalization, multinational corporations.

Reviewer

External reviewer

Article in PDF

 58-73

Bibliography

 1. Okhrimenko, O. O., & Kukharuk, A. D. (2016). Mizhnarodnyi konsaltynh [International consulting]. Kyiv: NTUU «KPI». Retrieved from https://ela.kpi.ua/bitstream/123456789/16543/1/International%20Consulting_Tutorial.doc [in Ukrainian].
2. Anikin, A. V. (1985). Yunost nauki: Zhizn i idei myisliteley-ekonomistov do Marksa [The youth of science: The life and ideas of thinkers-economists before Marx]. Moskva: Politizdat [in Russian].
3. Mazareanu, E. (2018, May 31). Consulting services industry in the U. S. – Statistics & Facts. Retrieved from https://www.statista.com/topics/2247/consulting-services-industry-in-the-us.
4. Consulting Industry. Europe. (n.d.). Retrieved January 23, 2020, from https://www.consultancy.eu/consulting-industry.
5. Harrington, E. (1913). The Twelve Principles of Efficiency. New York: The Eng Ineering Magazine CO. Copyright. Retrieved from https://www.forgottenbooks.com/download_pdf/The_Twelve_Principles_of_Efficiency_1000897031.pdf.
6. The ICMCI. 25 Years of Achievement. 1987–2012. (n.d.). Retrieved January 23, 2020, from https://www.cmc-global.org/sites/default/files/public/icmci_-_25_years_of_achievement_1.pdf
7. World Trade Organization. (2019). Highlights of world trade in 2018. World Trade Statistical Review 2019. Retrieved from https://www.wto.org/english/res_e/statis_e/wts2019_e/wts2019chapter02_e.pdf
8. Vandenbussche, H. (2019, June). Sector-Level Analysis of the Impact of Brexit on the EU-28. BELGIUM, Leuven: University of Leuven. Retrieved from https://www.fdfa.be/sites/default/files/atoms/files/Brexit%20impact%20study%202019.pdf
9. PwC Ukraina (2018). Vsesvitnie doslidzhennia ekonomichnykh zlochyniv ta shakhraistva 2018: rezultaty opytuvannia ukrainskykh orhanizatsii [All-Union State Economic and that Shahraism 2018: results of a feasibility study of Ukrainian organizations]. Retrieved from https://www.pwc.com/ua/uk/survey/2018/economic-crime-survey.html [in Ukrainian].

Code DOI

 10.31359/2411-5584-2020-40-1-58

21.02.2020