The impact of professional service firms’ expansion challenges on internationalization processes and performance

Abstract

In making the distinctions in the internationalization of capital-intensive service firms (CISFs) vs . knowledge-intensive service firms (KIFs), KIFs were found to realize financial gains in earlier stages of internationalization than CISFs. Should not this make them more likely to internationalize? Still, service firms are significantly more ‘home oriented’ than manufacturing firms. This paper explains why professional service firms (PSFs), a subcategory of KIFs, are likely to follow a more cautious internationalization process and proposes a spider web-like expansion process. Then, it explains how PSFs’ characteristics of (1) clients’ dependence (2) knowledge commoditization, and (3) executives’ hubris moderate the internationalization to performance relationship.