Choice of International Entry Mode in the Service Industry: A Multiple-Theoretical Perspective

Drawing on multiple theoretical perspectives, this study explores how external, strategic and internal factors affect the service industry’s choice of entry. This study surveyed 576 international service firms in Taiwan; 64 valid sample firms were included (45.3% of respondents were CEOs or chairs; 10.9% were vice presidents). Using logistic regression and nonparametric statistics for analysis, this study finds that (1) the factors affecting the service industry are different from those affecting the manufacturing industry; (2) external factors have no significant effect on entry mode choice, but corporate strategy and internal factors do; (3) only capability exploitation has positive effect on entry mode choice; client-following motivation, market-seeking motivation and capability exploration would not influence the entry mode; (4) high value of specific assets, such as brand reputation, and knowledge-intensive service firm are more suitable to take wholly own model; (5) a low-control mode is more likely to ensure service quality and innovation advantages. We also conclude that the definition of asset specificity in the literature is too broad. Asset specificity and the value of specific assets will have different effects on the choice of entry mode. This study makes several important theoretical contributions and has managerial implications for service firms in newly industrialized international economics that are designing their international entry strategies.