It is all about Services: Disentangling the Nature of Service Firms and their Internationalization Process

Abstract

[eng] The development of service industries across the globe has triggered a rising interest in the management and business literature. The comprehension of services and their international expansion has increased notably in recent years (Coe, Johns & Ward, 2011). However, the interpretation of how and why service firms internationalize has posed many challenges due to the diverse nature of services and their distinction with manufacturing firms. In this sense, one of the main issues being questioned over the years is the exportability of services (Boddewyn, Halbrich & Perry, 1986; Erramilli & Rao, 1990; Jack, As-Saber & Edwards, 2015). Hence, many services businesses have chosen FDI in their international endeavors due to the inseparability of production and consumption in certain types of services. Nonetheless, “understanding the characteristics of the service activity assists in determining the most appropriate way to deliver it” (Jack, As-Saber & Edwards, 2015, p.350). In contrast, service firms also have the potential to import customers who would consume the service in the firm’s home country (Bjorkman & Kock, 1997); for instance, a foreigner’s visits to a country’s national landmarks. In this sense, internationalization of service businesses does not necessarily require businesses to cross national borders because in certain cases the consumer can move to the provider’s home country to benefit from the service. These types of services are location-bound, and this process is identified as “inward internationalization” (Bianchi, 2011). Hence, the variety of forms in which service firms internationalize require multidisciplinary and cross-sectorial perspectives for a deeper understanding of the industry’s reality. Overall, we need to carefully examine the factors that explain the differences in service firm’s behavior and evaluate if existing theoretical frameworks are adequate to assess these types of firms and their effects on the internationalization process.

A growing interest in the study of service firms has therefore taken place both at national and international levels and from a wide variety of perspectives and expertise areas, including international business, which is precisely the approach of this research. Previous literature in this area has not portrayed a unified approach towards the understanding of what services are, how service characteristics affect firm’s international strategy, and which are the main internationalization theories that best fit the study of the service industry. Moreover, empirical evidence of service firm’s internationalization is relatively dispersed and fragmented, leading to inconsistencies regarding the theoretical frameworks used in research and a diversity of views on how the service industry behaves as a whole. Thus, the main goal of this thesis is to fill this gap by providing clarity on the concept of service and assessing the practical implications of its main features for service internationalization.

To accomplish that, it is crucial to first reflect on service characteristics and classifications to understand how service firms internationalize. In that regard, our first goal is to identify commonalities between different types of services through a comprehensive analysis of what services are, how they are categorized, and how distinctive features affect their international behavior. Furthermore, a second objective is to shed light on the adequacy of traditional theories of the internationalization and business field to approach the service domain. Specifically, we aim to examine scholars’ perspectives regarding how these theories have been articulated so far and devise possible hints to address service businesses research in future. Finally, this thesis also seeks to provide some empirical evidence of the internationalization process of service firms in line with their development over time.

To accomplish our main goals, this thesis is structured based on three contributions. As a starting point, the foundation article focuses on the understanding of the service firm’s international behavior through a deeper understanding of its intrinsic nature. In this first paper, we aim to explore the various definitions of services, understand the core characteristics that distinguish them from goods and examine how those affect their internationalization process. Additionally, we unveil the existing approaches to service classification within the literature. An examination of the types of international services and their classification mechanisms is also provided. To fulfill the goals of this chapter, an integrative review of the literature is performed. This approach is suitable for the objectives of this article because it deals with a mature subject on which only a small amount of consensus has been formed over time. This methodology enables the identification of fresh viewpoints and conceptualizations (Torraco, 2005), in order to provide insight on the discrepancies and disputes between important concepts and defining features of a particular topic (Elsbach & van Knippenberg, 2020).

The second paper intends to understand the evolution of extant literature on the internationalization of service firms over the last four decades. It applies a systematic search and review to combine the advantages of a critical evaluation and a thorough search process (Grant & Booth, 2009). This methodology appears adequate for the purposes of the study which include an assessment of past research regarding the internationalization of service firms (i.e., bibliometric approach) and an exhaustive examination of current positionings on the adequacy of traditional internationalization theories to service businesses (i.e., content analysis). In particular, this article examines the evolution of research in the service internationalization domain, concentrating on the types of articles published, sectors covered and methodological approaches, among others. Additionally, it analyzes the suitability of conceptual frameworks to the study of internationalization of service firms over the years and provides a theory retrospective that determines the delay in the application of traditional theories to the field of services internationalization.

The third and last contribution examines the reality of a particular service firm with regards to its internationalization process by performing a qualitative study of a longitudinal case. In particular, this paper examines the transformation of the Catalan company Basi into a service business and the evolution of their internationalization strategies in the context of the changing environment of its industry. Furthermore, it explores the specific directions taken by the different businesses of the group (i.e., Basi, Armand Basi, Jatro, etc.) over the years. This methodological approach is particularly useful for researching long-term processes of change (Eisenhardt, 1989; Santos & Eisenhardt, 2005) and allows to provide a comprehensive analysis of a service business with regards to its internationalization strategies.