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Internationalization of services: The service exporting decision
Abstract
Services represent the fastest growing portion of the world economy, yet they are still vastly under-represented in the export packages of most countries. Services present unique challenges that make exporting potentially more difficult and riskier than for goods industries, yet they also offer huge untapped potential with very little research done in this area. This study develops hypotheses regarding the exporting decisions of services companies using qualitative interviews and the exporting literature. These are then tested through a survey of nearly 700 consulting engineering firms. Nearly 90 per cent of the exporting firms in the sample are happy with the performance of their exporting programs, yet nearly three-quarters of the firms are not exporting. Overcoming limitations in know-how and resources, developing positive attitudes about exporting, recognizing foreign opportunities and fostering management commitment to exporting are found to be the most important determinants of exporting behavior for professional services firms.
... In addition, an extra question was included in the survey to reveal if the participants have undergone financial education. The questionnaire was designed in a simplified and a straightforward manner to ensure participants won't be discouraged from participating due to the length of the questionnaire (Frazer Winsted and Patterson, 1998 on a five-point Likert scale from "strongly disagree" to "strongly agree," with "neutral" being the middle option. ...
The Saudi consumer, being the focus of this study, is driven by multiple forces and motivations that impact their consumption behavior, where the gender of consumer is another major determinant of those behaviors. While recent macroenvironmental changes were observed to justify the shifts in consumer behaviors, the cultural dimension and gender of consumer are the focus of our research. The purpose of this study is to explore the relationship between cultural context level and tipping motivations, and the moderating role of gender on this relationship. To assess this research, an SEM model is presented along six hypotheses to uncover the nature of relations among the said variables. With a sample size of 351 participants, respondent’s data confirmed that majority of sample do represent features of a high context culture, and the results are only similar with previous findings when assessing service as a dimension for tipping motivation. Social norms and peer pressure were not significant indicators of tipping behaviors for consumers in high context cultures. Furthermore, gender differences were clearly spotted, where females showed higher motivation to tip following motives of social norms and peer pressure. This study adds to the literature of cultural consumer behavior, and the findings represent handful information that can be applied by international managers to better understand and serve their global agenda.
... This approach ensured a geographically dispersed sample without requiring direct respondent contact. A structured, closed-ended questionnaire was employed for easy completion, fostering greater participation (Winsted & Patterson, 1998). ...
This study explores the influence of consumer emotions, specifically pleasure and arousal, on the intention to use retail service robots. Through a survey of 323 people using an online snowball sampling technique and analysis via the PLS-SEM method, it finds that subjective norms, technological self-efficacy, habitual behavior, and attitudes significantly affect users' intentions. The research notably reveals that pleasure plays a more crucial role than arousal in mediating how consumers' perceptions impact their willingness to interact with these robots. By integrating the Theory of Reasoned Action, self-efficacy theory, and the PAD model (pleasure, arousal, dominance), the study enhances the understanding of human-robot interaction. It provides actionable insights for businesses , suggesting that emphasizing emotional aspects, particularly pleasure, can be a strategic approach to encourage the adoption of service robots. These insights are valuable for designing marketing strategies and service experiences that effectively increase consumer engagement with robotic technology.
... Given the growth of service exports in recent years (Chen et al., 2016), it would be interesting to examine career imprinting in service industries. Services present unique features that make exporting potentially more challenging and riskier than goods (Winsted and Patterson, 1998). For example, services cannot be stocked, and even in today's digital economy, service exporters might require a local presence in foreign markets. ...
Integrating the cognition literature in entrepreneurship and strategy with the career imprinting literature, we propose that the geographic diversification of export sales in international new ventures (INVs) resembles that of their founders' most recent (geographically diversified) employer because founders bear a repertoire of the ‘logics of action’ from their employers regarding how to diversify geographically. We then propose two boundary conditions that influence the relationship between the geographic diversification of export sales of founders' most recent employers and that of their INVs: length of exposure and time since last exposure to their most recent geographically diversified employer. We test these hypotheses using longitudinal data on a sample of 3420 INVs. Our findings broadly support our theoretical propositions except for the moderating role of founders' length of exposure.
... Finally, several authors recognise the importance of networks for the internationalisation of firms in general (discussed below) and particularly in relation to services (Ball et al., 2008;Post, 1996;Xue et al., 2013). Studies often refer to networks being important for the selection of markets for internationalisation as well as motivations for internationalisation, and many cite the 'follow the client' strategy (Ball et al., 2008;Winsted and Patterson, 1998). Follow-the-client offers an opportunity to exploit overseas markets with less risk and less need for commercial efforts (Ball et al., 2008). ...
This study analyses the internationalisation process of Carlson
Gracie’s Brazilian jiu-jitsu gym from the perspective of behavioural theories of internationalisation applied to services. Using the case study method, it sought to understand the drivers of internationalisation, factors influencing internationalisation, market selection process, and mode of entry to assess the explanatory power of such theories. With this empirical, unique, and interesting
case, we hope to contribute, both academically and managerially, by corroborating the important link between the network theory of
internationalisation, international entrepreneurship, and the soft services literature. Our findings indicate that forming and exploring entrepreneurial international network relationships can be an essential component for developing an embodied-person soft service abroad, defining market selection and entry modes.
... The ability of professionals to deliver on their "credible promise" depends on their ability to communicate effectively with their clients and partners (Løwendahl, 2005). Language and cultural differences are key to this communication and are considered a barrier to PSF internationalisation (Alon and McKee, 1999;Pflanz, 2013;Winsted and Patterson, 1998). As discussed in the following section, language and cultural differences were also identified as causes for other challenges. ...
Purpose
This paper aims to identify what international management challenges professional service firms (PSFs) face and why they face them.
Design/methodology/approach
This study carries a focussed thematic literature review of 102 empirical articles. This paper uses content analysis to extract and aggregate challenges identified by researchers in their fieldwork and then analysed this data using qualitative and quantitative methods.
Findings
This study identifies 10 international management challenges that PSFs face and a number of causes for these challenges. The analysis also suggests that the distinctive characteristics of PSFs generate some of the international management challenges for PSFs.
Practical implications
This study helps PSF managers understand the international management challenges they may face depending on the specifics of their company, thus helping them better prepare their internationalisation.
Originality/value
This study contributes to providing a greater understanding of what is holding PSFs back in their internationalisation and why. It demonstrates that distinctive characteristics of PSFs may predict the challenges that PSFs will face, thus paving the way for further research on international management in PSFs and for the development of the diagnostic tool for practitioners that could help them to identify which challenges they should prepare for most.
This chapter addresses the internationalization case of an ICT (information and communication technology) company in the services sector. After an initial review of the theoretical framework on the internationalization of SMEs, where it is found that the subject is still under-researched, and an analysis of the criteria these companies follow to select markets to be addressed, the case of a company whose internationalization efforts were based on the anticipation of an internal market shock and on the leveraging of serendipitous network connections, with very relevant business impact and financial results, is analyzed. The case study ends with a “what-if” approach, where the taken approach is confronted with a more structured “textbook-like” theoretical scenario of market selection, with significant differences arising from the comparisons made.
La problemática de esta investigación es de qué manera la digitalización contribuye a la internacionalización de los servicios peruanos. Así, el estudio abarca dos ejes principales: la digitalización y la internacionalización de los servicios. El Índice de VW RCA ha sido utilizado para destacar las categorías de servicios mejor situadas para la internacionalización, señalando aquellas categorías de servicios débiles y que, por lo tanto, requieren de mayor atención. Los resultados muestran que los servicios financieros y del transporte son los sectores de servicios con mejor ventaja comparativa, aunque los bienes y servicios públicos, y los servicios de seguros y pensiones tienen una baja ventaja comparativa. Los factores directos que más afectan la internacionalización de los servicios son la intensidad de informaciones y el contacto con el consumidor. Servicios con una alta intensidad de informaciones como los servicios de telecomunicaciones, informáticos y de información necesitan una economía digital sólida para responder a la demanda. Servicios con más contacto con el consumidor como los seguros y las pensiones, y los servicios de viajes y turismo requieren un nivel de inglés adecuado. En consecuencia, el Perú no obtiene una buena puntuación. La digitalización influye en la internacionalización de los servicios de varias maneras, pero las más importantes son la infraestructura digital, el capital humano y las políticas públicas. En lo que concierne a la infraestructura digital, indicadores como la penetración digital en el hogar, la disponibilidad y uso de Internet y la brecha entre la economía digital en áreas urbanas y rurales demuestran que la infraestructura digital en el país está mejorando, pero tiene carencias. En segundo lugar, el desarrollo del capital humano cualificado es un elemento central para el desarrollo de la capacidad de investigación científica y tecnológica de un país para conseguir los vínculos entre la ciencia, la competitividad y el desarrollo de los servicios en un escenario mundial. Las políticas públicas desempeñan un papel muy importante en la digitalización para la internacionalización de los servicios peruanos. El apoyo gubernamental continuo a la investigación y desarrollo (I+D) empresarial podría animar a las empresas a invertir en innovación que puedan dar lugar a nuevas innovaciones.
Learning outcomes
The case is meant as a way for students to develop ideas related to the challenges facing environmental eco-friendly social enterprises that sell their products in a country like Egypt where consumers are way behind considering the value of their products. In response to these challenges, students learn to evaluate the company status quo by analyzing its weaknesses, strengths and opportunities to grow and expand geographically to a new market. Students also learn about the growth expansion strategies and internationalization modes, options and associated barriers. Accordingly, they can plan the marketing strategies associated with entering this new market for up-cycled products. Objective 1: Analyze the international geographical growth alternative for an enterprise that improves its scalability applying weaknesses, strengths, threats and opportunities analysis. Objective 2: Propose a strategic plan for growth and scalability. Objective 3: Discuss the various modes of doing business in foreign countries. Recommend an internationalization mode for a social enterprise to explore in a new market. Objective 4: Assess the possible barriers associated with internationalization modes and how to overcome them. Objective 5: Propose marketing strategies for an eco-friendly enterprise to enhance its efficiency and effectiveness in the international host market. Other topics that might be discussed in this case include consumer behavior toward environmentally friendly products. Pricing challenges faced by ecologically friendly firms in developing countries.
Case overview/synopsis
Rania and Yara were inspired by Germany’s approach to waste reduction, particularly plastic bags. In 2017, after winning several competitions and awards, Up-Fuse was officially established as a social enterprise. The entrepreneurs faced great challenges selling sustainable products made of plastic waste to Egyptian consumers. Egyptian consumers were not fully aware of the value of eco-friendly products which presented a great challenge for Up-Fuse to grow and sell their products in Egypt. After shifting its pricing strategy and expanding beyond the local recycled product markets, Up-Fuse further faced fierce competition from well-established local and international brands with larger market shares. Thus, most of Up-Fuse’s sales were generated from expats and foreigners. In response to local obstacles and limitations, Rania began to consider targeting international markets. Rania thought it was the opportune time to drive growth through geographic expansion. After all, in 2020, Up-Fuse had some minor success when the co-founders experimented with exporting their products to the US market. Rania’s co-founder Yara, on the other hand, felt that the enterprise was not yet ready to enter a new market and it would be wiser to emphasize growth in the local Egyptian market. The co-founders were torn between two growth strategies. On one hand, they faced intense local competition for their products. On the other, expanding by entering a new market came with many challenges. Which growth strategy should Up-Fuse adopt? How could Up-Fuse determine which market to penetrate? What were the possible scalability challenges they faced by entering a new market? How could Up-Fuse reach and increase their international customer base abroad? What was the best marketing strategy for their products?
Complexity academic level
This case would be appropriate for graduate students enrolled in marketing, consumer behavior, international marketing, international business and social entrepreneurship courses. This case is written at a graduate level and would also be appropriate for use in customized or short programs.
Supplementary materials
Teaching notes are available for educators only.
Subject code
CCS 5: International Business.
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