The Experience Factor in Foreign Market Entry Behavior of Service Firms

The paper examines the effect of international experience on service firms' selection of foreign markets and entry modes. The investigation utilizes survey date from 151 United States-based service firms. Results on market selection suggest that, as their experience increases and becomes geographically more diversified, service firms tend to choose markets that are culturally less similar to their home country. On entry mode choice, the paper departs from traditional linear conceptualizations and hypothesizes a U-shaped relationship between experience and propensity for integrated entry modes. Results generally support the hypothesis. The paper explains these findings and describes how service firms resemble and differ from manufacturing firms in their foreign market entry behavior.