The impact of service tradability on the choice of entry mode : The case of computer-related service firms

Purpose – The purpose of this paper is to identify the factors influencing the choice of entry mode of computer-related (CR) service firms which are in a process of internationalization. The authors will focus on the characteristics of service defining its tradability. Design/methodology/approach – The objectives are achieved by first exploring the general drivers and the drivers specific to service firms via qualitative interviews and a literature review. Then, the model is tested empirically on CR service firms using structural equation modeling using partial least squares. Findings – Results show that the degree of tradability of the service influences the choice of entry mode. The higher the degree of tailor-made offer and face-to-face contact with the client, the more firms opt for an entry mode with high control, such as establishment abroad and/or joint-venture. Finally, firm size and international experience are also significant drivers behind the selection of entry mode. Research limitations/implications – As firms often choose several entry modes simultaneously, it is difficult to lead the research. Practical implications – In exports of digitalized and standardized services with little face-to-face contact, physical presence abroad is less important for success. It is more difficult to successfully market tailor-made services at the international level. Therefore, firms with limited capabilities should start exporting standardized services requiring limited face-to-face contact. Small firms wishing to become global players should preferably focus on exports of digitalized services and use internet, which is an attractive distribution channel. Moreover, when the confidentiality required for the service is an issue for the company, it is better to start with geographically near markets. Originality/value – In this research, service tradability came out as an original concept including service-specific characteristics leading to the selection of entry mode(s). The authors focussed on four characteristics of services which are on-line transmissibility, degree of confidentiality required, face-to-face contact, and finally the degree of customizability.