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

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.