User:Osetiawan1/Consulting firm

Mexico
In 2013, there was a randomised trial in Mexico where 432 small and medium enterprises were allowed access to management consulting services for one year. As a result of this trial, there were many positive impacts. Such positive impacts include: increase in entrepreneurial spirit, increases in employment and higher wages for employees. Even after 5 years after the trial, positive impacts are still active. These results were achieved by advertising a consulting program to 432 enterprises and recorded data on the positive effects.

Money Laundering in Consulting Firms
A consulting firm is a suitable instrument for money laundering. Illegally obtained are laundered by the employment of consulting companies. The reason consulting firms are so effective at laundering money is because consulting services are immaterial, therefore, pricing is non-transparent.

Another reason consulting firms are effective at laundering money is because sometimes consultants regularly leverage their clients into charging higher prices. When a client of the consulting firm is satisfied, the consultant can charger higher fees through more leverage while setting prices through the contracting prices. Therefore, when auditors inspect financial statements provided by the consulting firm, the consulting firm can state that a certain consulting project costed an 'x' amount of money and auditors are unable to detect fraud, thus allowing money laundering to occur.

Negative Impacts
The impact of consulting firms on local businesses in emerging economies do not always have positive effects. One reason for this is that firms in emerging economies suffer from the inferiority of their technologies and innovation capabilities, thus although they have access to consulting firms, they cannot make the most of the advice given. Advice given by consulting firms to clients may not be used efficiently as clients firms in emerging markets tend to suffer due to a lack of infrastructure, organisation, and education. Another reason firms in emerging economies struggle to effectively use consulting services is that innovation is very costly and risky.

Positive Impacts
As noted above (Add link to Mexico CASE), consulting firms in emerging economies do also have positive impacts. Positive impacts include: increases in employment, increase in entrepreneurial spirit and higher wages for employees.

Impact of Consulting Firms in Developed Economies
One study shows that there is a significant difference between efficiency between consulting firms in America (Developed Economy) and consulting firms in Asia Pacific regions (Emerging Economy). Efficiency scores of consulting firms in America were significantly higher than consulting firms in Asia Pacific regions. This is because firms in developed economies have better infrastructure, organisation and education, thus advice given by consulting firms is used efficiently.