Is Public Ownership Bad for Professional Service Firms? Ad Agency Ownership, Performance, and Creativity

Abstract

Does public ownership create negative consequences for professional service firms by reducing employee incentives? This question was addressed with a panel of advertising agencies. Public ownership was associated with inferior performance for small agencies but not for large agencies, and there was no association between ownership and agency creativity, indicating that public ownership did not preclude agencies from competing with strategies requiring highly skilled professionals. The results challenge existing theories about the ownership of professional service firms.

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