Internationalization process and progression of international service firms in Australia

© 2010 Dr. Abhishek ShuklaThis study aims to get a better understanding of progression of internationalizing service firms within a host market after the initial entry. Utilizing the Uppsala model which is the most dominant internationalization process model in international business as the base explanatory model, this study contributes to the debate of the applicability of the Uppsala process model to service firms. It investigates the aspect of market commitment into the host market. Besides answering several calls for studies focusing on service firm internationalization and the often neglected market commitment aspect, this thesis further develops the idea of irreversibility index by incorporating financial economics literature. After splitting service firms into capital intensive service firms and knowledge intensive service firms, three key research themes are identified. First, the resource commitment of these two types of service firms at the time of entry into the host market is compared. Adopting a case study approach, the results indicate that capital intensive service firms enter a new overseas market with relatively lower resource commitment than knowledge intensive service firms and hence follow the Uppsala process model more closely. In the second theme, the pace of resource commitment of service firms in the host market was analysed to better understand the internationalization of these two types of service firms. A quantitative longitudinal research design was employed and fixed effects panel regression suggests that knowledge intensive service firms increase their commitment into the host market at almost double the pace of capital intensive service firms. The third research theme covers the nature of change in the resource commitment. Through optimal scaling categorical regression, it is noted that knowledge intensive service firms change their resource commitment frequently but with lesser degree (evolutionary) as compared to capital intensive service firms which tend to have few but more significant changes (revolutionary)