Esther Sanchez-Peinado, Jose Pla-Barber, and Louis Hébert
Executive Summary
Despite the importance of the service sector in world markets and the growth of foreign investments in this area during the past decade, the research on services in an international context is still limited compared with research that focuses on the manufacturing sector. Moreover, in the current dynamic and competitive environment, entry mode choice is not a decision based only on efficiency and value-based considerations but on other aspects as well, such as strategic motives of internationalization or the firm’s competitive position in the global environment. In addition, the high costs of integration stipulated by economic theories may not be strictly true for many service firms.
Sanchez-Peinado, Pla-Barber, and Hébert examine these issues by introducing these new considerations in the entry mode analysis with the aim to provide evidence of which of the underlying principles observed in the manufacturing sector are directly applicable to the service sector and which can be modified to the specific characteristics of services. The study provides guidelines for management about how to match control and resource requirements not only with host-country conditions and firms’ existing capabilities but also with strategic objectives, firms’ international approaches, and the specific characteristics of the sector in which they operate. Specifically, managers of service firms should evaluate the characteristics of the service that will be offered in international markets and assess the international potential they present. Therefore, industrial characteristics should be viewed as facilitators of or as restrictions to international commerce. In addition, managers should take into account that for many service firms, the switching costs may be comparatively small because valuable assets rest more on human capital than in physical assets. Therefore, their entry mode decisions should be guided by considerations other than only cost minimization reasons.
The article emphasizes the importance of industry context for entry mode decisions. Managers should consider the effects of strategic issues and characteristics of services to attain success in their foreign operations.
Biography
Esther Sanchez-Peinado is an assistant professor in the Department of Management at the University of Valencia. She received her PhD in Economics from the University of Valencia. Her areas of marketing expertise and interest include international marketing of services, particularly entry and expansion modes and internationalization of services. In addition to Journal of International Marketing, she has recently published in International Business Review, International Management, and European Business Review. Her research topics focus on the internationalization process of service firms, determinant factors of entry mode choice, and banks’ international strategies and behavior patterns.
Jose Pla-Barber is an associate professor in the Department of Management at the University of Valencia. He received his PhD in Economics from University of Valencia. His areas of marketing expertise and interest include foreign market entry mode and choice. He has been a consultant on strategic management and for in-house executive training with various firms and organizations in both private and public sectors. In addition to Journal of International Marketing, he has recently published in International Business Review, International Management, International Marketing Review, and Management International Review. His research topics focus on the internationalization process of firms and determinant factors of entry mode choice.
Louis Hébert is an associate professor in the Department of Strategic Management at HEC-Montreal. He received his PhD in Strategy from the Richard Ivey School of Business at the University of Western Ontario (1994). Hébert’s areas of marketing expertise and interest include foreign market entry mode and choice. He has been a consultant on strategic management and for in-house executive training with various firms and organizations in both private and public sectors. In addition to Journal of International Marketing, he has recently published in Journal of International Business Studies, Journal of Business Research, Organization Studies, Management International Review, Management Internacional, and Advances in International Management. His research interests focus on the internationalization of the firm, the management of strategic alliances, and the postacquisition integration process.
Journal of International Marketing, Vol. 15, No. 1, March 2007
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