Entry Mode Choice in Service Industries

The article presents empirical evidence which indicates the immense diversity in entry mode choice patterns among various service industries. It attempts to explain this variation in terms of certain service attributes and motives for foreign market entry, using the transaction cost analysis as its theoretical basis. While entry mode choice associated with “hard” services (those that do not require the providers to be physically proximate to the receivers)resembles that in manufacturing firms, organisations providing“soft” services (characterised by inseparable production and consumption) enter world markets almost exclusively via foreign direct investment and contractual transfers. This diversity poses challenges to practitioners, policy makers and researchers in this field.