Chapter 5: Internationalization processes of professional service firms
The international business literature has developed several theoretical models to explain and predict patterns of internationalization. The stages model, for instance, proposes that firms move gradually from low-to high-control modes and from a neighboring market to more distant markets upon the incremental acquisition of experiential knowledge about foreign markets which gradually reduces perceptions of market risk (Johanson and Vahlne, 1977; Cavusgil, 1980; Andersen, 1993; Leonidou and Katsikeas, 1996). Scholars subsequently proposed a network approach suggesting that medium-control hybrid forms allow firms to internationalize more rapidly by leveraging existing networks in already internationalized markets (Johanson and Mattsson, 1988; Johanson and Vahlne, 2009). Finally, firms may also have an intrinsic ability to service multiple geographic markets almost from inception as in the case of the so-called International New Ventures/Born Global Firms (INV/BG) (Oviatt and McDougall, 1994; Madsen and Servais, 1997; Madsen, 2013). Such firms often use low-control modes or they service foreign customers from their domestic base (Rialp et al., 2005; Aspelund et al., 2007). Prior studies into the internationalization processes of service firms in general, but especially Professional Service Firms (hereafter PSF) remain scarce, despite their rapidly increasing importance in the share of cross-border trade and the idiosyncratic nature of their service offerings (notably, high degrees of intangibility and inseparability) which present special challenges regarding entry mode choice as well as general internationalization processes (Erramilli and Rao, 1993).
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