Factors Influencing the Internationalization of Services Firms: The Case of Design, Engineering and Architecture Consulting Firms

Abstract

Globalization has created countless opportunities for the internationalization of a wide range of services. Recent technological innovations associated with the reduction or elimination of trade barriers, resulted in an exponential expansion of service firms. This paper analyzes the internal and external factors that influence the decision to operate internationally. The hypotheses are empirically examined through a survey sent to 322 firms from the design, architecture and engineering sector. Multivariate analysis is used to ascertain the main determinants of internationalization in these firms. The findings indicate that the main reasons underlying the internationalization of these service firms are the size of the firm, the competitive environment and the staff's degree of international experience. These factors, which influence the management's attitudes toward operating internationally, determine the firm's degree of internationalization. Moreover, firms that have a high number of senior managers with a graduate course and higher skills in foreign languages are more prone to internationalize. Some practical implications are presented for service firms that are in the process of internationalizing.