Service Embeddedness: A Determinant Of Product Composition And Firm Internationalisation: Some Evidence From The UK

The extant literature on internationalisation has largely been concerned with analysing firm internationalisation strategy and entry mode choice from the perspective of a manufacturing firm. Over the last decade the growth of services, and their internationalisation, has attracted considerable attention from academics, with the focus being on particular characteristics that distinguish services from goods. However, as the composition of a firm's product usually contains both good and service characteristics, this paper argues that it is misleading to categorise a product simply as a `good' and/or a 'service'. Rather, it is important to understand the extent of service components that embody, or are embedded in, a product offering. Such embeddedness often impacts on the manner in which a firm internationalises. It is argued that the higher the degree of service embeddedness in a product the greater the possibility of a direct market entry and vice versa. Based on a number of case studies the paper examines the impact of service embeddedness on the entry mode choice of Australian manufacturers in the UK.