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Internationalisation by Business Service Firms: Towards a New Regionally Based Conceptual Framework

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  • P N O'Farrell

    (Department of Economics, Heriot-Watt University, Riccarton, Edinburgh EH 14 4AS, England)

  • P A Wood

    (Department of Geography, University College London, 26 Bedford Way, London WC1H OAP, England)

Abstract

In this paper we critically review the applicability of the dominant paradigm of international production theory, internalisation theory, and the eclectic paradigm, concluding that they are of very limited utility in analysing the process of internationalisation by business service firms. The principal aim is to conceptualise the influence of three key dimensions of business service activity on internationalisation: the external relations and patterns of interfirm networking adopted by business service firms; their close relationships with clients; and the significance of these relationships in home-region markets, affording regional externalities which also strongly influence their propensity to export. Evidence from Scotland and the South East of England shows a regional influence on the mode of foreign-market entry, although few firms explicitly choose particular foreign markets to enter. The most common entry mechanism involves responding to particular orders. Similarly, the entry-mode decisions of 70% of the firms were made without consideration of any alternative modes. The evident importance of interfirm, including client corporate networks, and the influence of regional conditions upon internationalisation, leads to a conclusion in which we draw on a recent socially based interpretation of business behaviour.

Suggested Citation

  • P N O'Farrell & P A Wood, 1998. "Internationalisation by Business Service Firms: Towards a New Regionally Based Conceptual Framework," Environment and Planning A, , vol. 30(1), pages 109-128, January.
    • Handle: RePEc:sae:envira:v:30:y:1998:i:1:p:109-128
    DOI: 10.1068/a300109
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    References listed on IDEAS

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    1. P. N. O'Farrell & P. A. Wood & J. Zheng, 1998. "Regional Influences on Foreign Market Development by Business Service Companies: Elements of a Strategic Context Explanation," Regional Studies, Taylor & Francis Journals, vol. 32(1), pages 31-48.
    2. William B. Beyers & David P. Lindahl, 1998. "Services and the new economic landscape," ERSA conference papers ersa98p391, European Regional Science Association.
    3. Nachum, L. & Rolle, J. D., 1999. "Home country and firm-specific ownership advantages: A study of US, UK and French advertising agencies," International Business Review, Elsevier, vol. 8(5-6), pages 633-660, October.
    4. José A. Camacho & Mercedes Rodriguez, 2010. "How Important are Knowledge-Intensive Services for their Client Industries? An Assessment of their Impact on Productivity and Innovation," Chapters, in: Faïz Gallouj & Faridah Djellal (ed.), The Handbook of Innovation and Services, chapter 18, Edward Elgar Publishing.
    5. Jardon Carlos & Molodchik A. Mariya, 2015. "Endowment of Intangible Resources and Phases of Internationalization in Emerging Economies. The Case of Russia," HSE Working papers WP BRP 22/IR/2015, National Research University Higher School of Economics.

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