Determinants of Internationalisation – Do they Differ among Sectors and Business Functions? Evidence from Firm-level Data
AbstractThe relevance of services FDI strongly increased over the last two decades. As goods and services differ with respect to important characteristics, one may expect that the determinants of internationalisation are not identical in manufacturing and the service sector. However, there is practically no firm-level research contrasting the two sectors in this respect. In order to fill this gap, we seek to identify for manufacturing and services, firstly, the determinants of a firm’s propensity to go international (exports and/or foreign direct investment) and, secondly, the factors determining the complexity of a firm’s direct foreign activities in terms of business functions. We find that an OLI-based model can be used to explain not only the propensity to go intenational but also differences between two specific forms of direct foreign investment for both the manufacturing and the service sector.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by KOF Swiss Economic Institute, ETH Zurich in its series KOF Working papers with number 13-348.
Length: 34 pages
Date of creation: Dec 2013
Date of revision:
Manufacturing vs. services internationalisation; offshoring vs. exports; internationalisation of business functions; multinational companies; international business strategy;
Find related papers by JEL classification:
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-12-15 (All new papers)
- NEP-BEC-2013-12-15 (Business Economics)
- NEP-CSE-2013-12-15 (Economics of Strategic Management)
- NEP-INT-2013-12-15 (International Trade)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sumit K. Kundu & Vikas Kumar & Susan D. Peters, 2008. "Impact of ownership and location factors on service multinationals' internalisation," The Service Industries Journal, Taylor & Francis Journals, Taylor & Francis Journals, vol. 28(5), pages 567-580, June.
- Benjamin Nefussi & Cyrille Schwellnus, 2010.
"Does FDI in manufacturing cause FDI in business services? Evidence from French firm-level data,"
Canadian Journal of Economics, Canadian Economics Association,
Canadian Economics Association, vol. 43(1), pages 180-203, February.
- Benjamin Nefussi & Cyrille Schwellnus, 2007. "Does FDI in Manufacturing Cause FDI in Business Services? Evidence from French Firm-Level Data," Working Papers 2007-21, CEPII research center.
- Anna Lejpras, 2009. "Determinants of Internationalization: Differences between Service and Manufacturing SMEs," Discussion Papers of DIW Berlin 886, DIW Berlin, German Institute for Economic Research.
- Lin, Feng-Jyh, 2010. "The determinants of foreign direct investment in China: The case of Taiwanese firms in the IT industry," Journal of Business Research, Elsevier, Elsevier, vol. 63(5), pages 479-485, May.
- A. JakliÄ & J. Ä†irjakoviÄ‡ & A. Chidlow, 2012. "Exploring the effects of international sourcing on manufacturing versus service firms," The Service Industries Journal, Taylor & Francis Journals, Taylor & Francis Journals, vol. 32(7), pages 1193-1207, January.
- J J Boddewyn & Marsha Baldwin Halbrich & A C Perry, 1986. "Service Multinationals: Conceptualization, Measurement and Theory," Journal of International Business Studies, Palgrave Macmillan, vol. 17(3), pages 41-57, September.
- Heinz Hollenstein, 2005. "Determinants of International Activities: Are SMEs Different?," Small Business Economics, Springer, Springer, vol. 24(5), pages 431-450, 06.
- Ursacki, Terry & Vertinsky, Ilan, 1992. "Choice of entry timing and scale by foreign banks in Japan and Korea," Journal of Banking & Finance, Elsevier, Elsevier, vol. 16(2), pages 405-421, April.
- Farok J Contractor & Sumit K Kundu, 1998. "Modal Choice in a World of Alliances: Analyzing Organizational Forms in the International Hotel Sector," Journal of International Business Studies, Palgrave Macmillan, vol. 29(2), pages 325-356, June.
- Bruce Kogut & Udo Zander, 1993. "Knowledge of the Firm and the Evolutionary Theory of the Multinational Corporation," Journal of International Business Studies, Palgrave Macmillan, vol. 24(4), pages 625-645, December.
- Helpman, Elhanan, 1984.
"A Simple Theory of International Trade with Multinational Corporations,"
3445092, Harvard University Department of Economics.
- Helpman, Elhanan, 1984. "A Simple Theory of International Trade with Multinational Corporations," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 92(3), pages 451-71, June.
- Guerrieri, Paolo & Meliciani, Valentina, 2005. "Technology and international competitiveness: The interdependence between manufacturing and producer services," Structural Change and Economic Dynamics, Elsevier, Elsevier, vol. 16(4), pages 489-502, December.
- Castellacci, Fulvio, 2010. "The internationalization of firms in the service industries: channels, determinants and sectoral patterns," MPRA Paper 26548, University Library of Munich, Germany.
- J R Brown & C S Dev & Z Zhou, 2003. "Broadening the foreign market entry mode decision: separating ownership and control," Journal of International Business Studies, Palgrave Macmillan, vol. 34(5), pages 473-488, September.
- Farok J Contractor & Sumit K Kundu & Chin-Chun Hsu, 2003. "A three-stage theory of international expansion: the link between multinationality and performance in the service sector," Journal of International Business Studies, Palgrave Macmillan, vol. 34(1), pages 5-18, January.
- Keith D. Brouthers & Lance Eliot Brouthers, 2003. "Why Service and Manufacturing Entry Mode Choices Differ: The Influence of Transaction Cost Factors, Risk and Trust," Journal of Management Studies, Wiley Blackwell, Wiley Blackwell, vol. 40(5), pages 1179-1204, 07.
- Cristina Villar & JosÃ© Pla-Barber & Fidel Leï¿½n-Darder, 2012. "Service characteristics as moderators of the entry mode choice: empirical evidence in the hotel industry," The Service Industries Journal, Taylor & Francis Journals, Taylor & Francis Journals, vol. 32(7), pages 1137-1148, January.
- Fidel Leï¿½n-Darder & Cristina Villar-GarcÃa & JosÃ© Pla-Barber, 2010. "Entry mode choice in the internationalisation of the hotel industry: a holistic approach," The Service Industries Journal, Taylor & Francis Journals, Taylor & Francis Journals, vol. 31(1), pages 107-122, April.
- Fabrice Hatem & Loriane Py, 2009. "Internationalisation et localisation des services : une analyse sectorielle et fonctionnelle appliquÃ©e aux firmes multinationales en Europe," Ã‰conomie et Statistique, Programme National PersÃ©e, Programme National PersÃ©e, vol. 426(1), pages 67-95.
- Vern Terpstra & Chwo-Ming Yu, 1988. "Determinants of Foreign Investment of U.S. Advertising Agencies," Journal of International Business Studies, Palgrave Macmillan, vol. 19(1), pages 33-46, March.
- Anthony Goerzen & Shige Makino, 2007. "Multinational corporation internationalization in the service sector: a study of Japanese trading companies," Journal of International Business Studies, Palgrave Macmillan, vol. 38(7), pages 1149-1169, December.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.