Guest editorial

Citation

Ndubisi, N.O. and Nataraajan, R. (2015), "Guest editorial", Journal of Service Management, Vol. 26 No. 4. https://doi.org/10.1108/JOSM-04-2015-0121

Guest editorial

Article Type: Editorial From: Journal of Service Management, Volume 26, Issue 4.

Internationalization and International Service Management

Introduction

Extant literature is replete with discussions on internationalization of firms, internationalization process, mode of foreign market entry, gains from internationalization and the role of globalization and liberalization. Others discuss the push and pull factors of internationalization, internationalization strategies and how firms manage the process of internationalization and international activities and relationships. Compelling evidence exists of a rapidly growing number of firms changing their orientation from a domestic to a global market focus, in the hope of reaping the benefits of cross-border exchange. It has been argued that international and global business activities have been inspired by globalization, the opening of previously closed economies (e.g. China); the formation of regional blocs (namely, Association of South East Asia, Economic Cooperation of West African States, European Union and North American Free Trade Area); the creation of market economics; improvements in information and communication technologies; improvements in production techniques and advances in transportation (Ndubisi et al., 2008). In the new millennium, internationalization of firms have been fuelled by greater efficiency of global logistics, increased cross-border movement of people, information and resources, international collaborations and networks, proliferation of online communities and social network sites, and burgeoning attractive emerging markets of Africa, Asia and South America.

International business research has also addressed the processes of internationalization and entry mode strategies such as, exporting, licensing, franchising, joint ventures and wholly owned subsidiaries and strategic alliances. There are discussions of several theories relating to internationalization of firms namely, the internationalization theory; the market imperfections theory; the strategic behaviour theory; the resource advantage theory, the theory of IPLC; the network theory and the eclectic theory of international production. Although detailed discussion of these theories and concepts are beyond the scope of this introductory paper, nonetheless, interested readers can consult the following sources for a fuller discussion, Cateora and Graham (2002), Dunning (1995, 2000), Fletcher and Brown (2005), Johanson and Vahlne (1990), Kotabe and Helsen (2001), Malhotra et al. (2003), Moon (1997), Ndubisi et al. (2008). However, most of these writings focus on manufacturing entities, resulting in a wide research gap in the field of service. This development is paradoxical, given the growing global importance of the service sector (according to WTO (2010) the service sector accounted for over 70 per cent of global gross domestic product (GDP) in 2010 and has been expanding at a quicker rate than its competitors – the agricultural and the manufacturing sectors).

Internationalization of services has grown rapidly since the turn of the century, as organizations and governments try to exploit the opportunities presented by globalization and cooperation among nations and organizations, the internet and cloud computing. The international activities of service organizations contribute considerably to their growth, the development of their home economies and the global economy as a whole, and will continue to do so if well managed. Yet managing service at the international level is particularly complex due to its nature, disparate needs across cultures and markets, difficulty of service consumer and producer collaboration for value co-creation at the international level, and complexity of managing customer experience in interconnected global markets. Such complexity is underscored in a new book (Kandampully, 2014) highlighting the importance and challenges of customer experience management. The author assents that as a result of its importance and challenges, customer experience management has become a key research and management topic in today’s interconnected world.

Impetus and focus

Given the acceptance and extensive use of technology, the internet and social media by consumers and firms alike, one could argue that all firms today are global in reach. Customers are no longer confined within national boundaries; their voices, both positive and negative, echo around the world. Thus today, customers think, act and behave within a global perspective. While some management limitations of the past exist, many have been transformed into new opportunities and challenges.

The need for more understanding of how service organizations can better manage their international identity/image, marketing strategy, market relationships and global competition and competitiveness is a key impetus for this Special Issue. Consequently, the editors issued a call for submissions in the form of conceptual, case-based, or empirical papers offering new insights into the international context of (but not limited to) the following topics: transformative service; service design and service engineering; service in emerging economies; complex service systems; corporate social responsibility; service driven manufacturing; internationalization strategies for service; international markets and mode of entry for service; the role of the internet in the internationalization of service; technology and e-services in international markets; international service consumer relationship management; building capabilities and resources through international networks; internationalization of service and competitive advantage; ethical issues in international service delivery; international service innovation; impact of culture on international service diffusion/acceptance; power a/symmetry and impact on the relationship between international service firms; servitization and service infusion; cross-cultural collaboration in service delivery; conflict management in international service setting; off-shoring/international outsourcing and franchising; born global service firms, small and medium-size international service enterprises; relationship between international service organizations and host communities; technology implementation and management in service context; cross-cultural management of customer relationships; international not-for-profit service; managing brands and the customer experience in online brand communities; use of social media in international service; social word of mouth and social listening in online communities; and leveraging research tools and new sources of data for international firms.

Process and outcomes

The Special Issue continues with JOSM’s standard of publishing cutting-edge, relevant and rigorous scholarship in trying to bridge the above research gaps. The result of a rigorous process of selection from many quality submissions from many experts in the field, this special edition pushes back the frontier of knowledge in the field. We would like to congratulate all the authors who have contributed to the Special Issue and also thank all the reviewers for their hard work and for meticulously reading and appraising the submissions and resubmissions. Unsurprisingly, the collection of papers in the issue have addressed recent developments in the field or revisited some past questions/issues through a different theoretical lens leading to some fresh insights and ideas. For example, the authors ask: in a global context, what drives the recent growth of services? What are the factors driving internationalization and international service firms’ performance? What are the effects of organization-level variables (e.g. innovation strategy, autonomy, staff turnover and internal processes), and country-specific variables on performance of international service organizations? How is value co-created or co-produced in international service settings? Why is it beneficial for firms to outsource services in addition, or as an alternative, to their own operations? Do existing theories adequately help in our understanding of international service outsourcing/offshoring? In the past similar questions have led to several research streams within the wider field of the theory such as the property rights theory, the resource dependency theory and the resource-based view, the entrepreneurial theory of the firm, and the agency theory (see e.g. Barney, 1991; Barthélemy, 2003; Boyd, 1990; Ndubisi 2012, 2013), but research findings till date remain inconclusive. This Special Issue pushes back the frontier of knowledge in international business services. In the following sections, we present a summary of each of the papers accepted for the Special Issue after a rigorous double blind review process.

Following this introductory paper is the research on outcome of service innovation in international technology services ventures by Ndubisi, Capel and Ndubisi. The authors examine the role of innovation strategies of international technology services ventures on firm performance. Data were collected from 200 firms serving markets outside their country of origin, and analyzed using standard procedures. Some of the findings of the study include a significant relationship between innovation strategy (namely, service innovation, process innovation and administrative innovation) and performance of the sample firms. Moreover, the study’s outcome further shows that structural autonomy moderates the relationship of process and administrative innovations with firm performance; but does not moderate the association of service innovation with performance. The research suggests that autonomy of subsidiaries, units, groups or individuals can encourage innovation, and that innovation strategy can enhance an organization’s performance; thereby throwing more light on the contingent nature of the innovation-performance link, as well as on the counter-argument that autonomy potentially hinders exploitation and performance of innovations.

Next is the research on global business services by Wirtz, Tuzovic and Ehret. In laying the foundation of their study, the authors ask the following key questions that would help in understanding how global business services drive economic growth by increasing specialization and integration of the world economy: what drives the emergence of new ways to organize an industry’s value chain? And in a global context, what drives the recent growth of services offshoring? The authors stress that majority of the theories suggest that firms can develop capabilities to measure and govern the performance of routine activities, which enable them to reduce the costs of ownership by shifting routine activities to specialized service providers. Services can enhance the value of a business by reducing costs of asset-ownership, freeing management capacity to focus on entrepreneurial opportunities, sharing uncertainties between firms and divesting activities with low value creation opportunities. By so doing, services create value and drive economic growth through increasing the specialization of economies. Since modern service economies thrive on networks of specialized firms, where businesses can hire almost any conceivable business activity, resource or asset as a service, as such, global business services should no longer be viewed as peripheral activities supporting the manufacturing sector but as the backbone of our global post-industrial economies, they conclude.

In the next paper, Elango and Wieland take a look at firm performance from a different lens. The authors investigate the effects of country and country-specific variables on the performance of service firms. Using hierarchical linear models, the authors estimate the proportion of variation in firm performance driven by country effects, based on estimates obtained from a data panel of 16,051 units from 3,345 service firms across 32 countries over a seven-year time frame (2001-2007). The results of their study show that home country explains approximately 11 per cent of the variance in performance. Additionally, the study unveils six country-specific variables, namely, quality of governance, openness to trade, wealth, growth rate, uncertainty avoidance and individualism, which collectively explain 10 per cent of variation in performance or 26.8 per cent relative variation of performance. An understanding of the impact of the six specific country-variables investigated in their research allows service firms to better predict and improve the performance of subsidiaries, the authors conclude.

The goal of the next study by Forman, Thelen and Shapiro is to determine the likelihood of consumers choosing a domestic vs an offshore service provider if asked to pay more, wait longer or sacrifice service quality. In the study, cost, time to wait and quality of (two different) services provided were varied to determine respondents’ likelihood to choose a domestic as opposed to an offshore service provider when asked to pay more, wait longer or sacrifice the quality of the service in return for access to a domestic service provider. Data were collected via survey research, using an internet panel. The outcomes of repeated measures analysis indicate that customer loyalty to the domestic service provider significantly decreased as the cost or time to interact with a domestic service provider increased or the quality of service provided by the offshore service provider increased. The study extends knowledge with regard to consumer reaction to service offshoring and provides insight into the trade-offs consumers might be willing to incur in return for access to domestic service providers.

The dynamics of value co-creation or co-production remains an important topic in service research, more so for international service researchers and practitioners. Sampson and Money recognize this gap in their paper which investigates modes of customer co-production in international service offerings. The authors adopt and extend the Unified Service Theory to international service contexts by developing a taxonomy of international service based on the “four modes of service supply” provided in the General Agreement on Trade and Services (GATS) instituted by the World Trade Organization (WTO). Based on data from the WTO and World Bank, they test six hypotheses for predicting service exporting focus corresponding to the co-production taxonomy. The researchers found more service exporting focus in small, growing, high-wage economies that have a significant service base and focus in merchandise exporting. They further show that the strength of these effects differs for different modes of service supply.

Moving the discussion to the logistics sector, Sersland and Nataraajan’s research investigates the critical issue of “driver turnover” in the US long-haul trucking environment and its world-wide implications. This exploratory study employs a qualitative research methodology via in-depth interviews of a select sample of drivers in a field setting followed by content analysis of the responses. Content analysis of the perceptions of drivers reveals several important reasons (or causes) for driver-turnover, leading to the following remedial recommendations: emphasis on customer-oriented driver skills (such as mechanics of operating communications and tracking equipment, knowledge of safety procedures, and interpersonal skills for customer negotiation); and fair driver compensation and benefits (through seeking balanced traffic lanes, increasing intermodal utilization of equipment, involving operations personnel in driver training, and avoiding deception and schemes detrimental to the driver and concentrate on open dissemination of information regarding driver pay). These customer-centric solutions to alleviate the plight of the driver and improve overall performance in the trucking sector are elaborated and implications for international trucking industry highlighted.

The final paper by Al-Jabri, Sohail and Ndubisi reports the findings of their study of social networking sites (SNS) usage in the Arab world. The researchers evaluate the relationship between personal and social factors and usage of Twitter, and the moderating effects of gender and user experience. Their findings include direct and moderating effects. Enjoyment and freedom of expression were found to be direct predictors of SNS usage. Gender has a moderating effect in the relationship between freedom of expression and usage; and user experience moderates the relationship between enjoyment and usage. The proposed framework contributes to global (technology) services management and marketing research by integrating personal and social factors, and demographics as direct and contingent factors in understanding user acceptance of social network technologies in the Arab region.

Concluding remarks

It is our hope that the collection of papers in this special edition will add to the body of knowledge in the field of international service and also accelerate the momentum that internationalization of service research has gained in the literature. An international service orientation has the potential to augment an organization’s financial and non-financial performance, and to protect the firm from the snags associated with reliance on often limited domestic market (Ndubisi et al., 2008). This is great news for practitioners, but we also urge researchers to pay closer attention to trends in the field of international service to uncover the potential of developing new theories or advancing existing ones.

Professor Nelson Oly Ndubisi

Department of Management and Marketing, King Fahd University of Petroleum and Minerals, Dhahran, Saudi Arabia, and

Professor Rajan Nataraajan

Auburn University, Auburn, Alabama, USA

References

Barney, J. (1991), “Firm resources and sustained competitive advantage”, Journal of Management, Vol. 17 No. 1, pp. 99-120

Barthélemy, J. (2003), “The hard and soft sides of IT outsourcing management”, European Management Journal, Vol. 21 No. 5, pp. 539-548

Boyd, B. (1990), “Corporate linkages and the organizational environment: a test of the resource dependence model”, Strategic Management Journal, Vol. 11 No. 6, pp. 419-430

Cateora, P.R. and Graham, J.L. (2002), International Marketing, 11th ed., McGraw-Hill, New York, NY

Dunning, J.H. (1995), “Reappraising the eclectic paradigm in an age of alliance capitalism”, Journal of International Business Studies, Vol. 26 No. 3, pp. 461-491

Dunning, J.H. (2000), “The eclectic paradigm as an envelope for economic and business theories of MNE activity”, International Business Review, Vol. 9 No. 2, pp. 163-190

Fletcher, R. and Brown, L. (2005), International Marketing: An Asia-Pacific Perspective, 3rd ed., Prentice Hall, Sydney

Johanson, J. and Vahlne, J.-E. (1990), “The mechanism of internationalization”, International Marketing Review, Vol. 7 No. 4, pp. 11-24

Kandampully, J. (Ed.) (2014), Customer Experience Management: Enhancing Experience and Value through Service Management, Kendall Hunt Publishing Company, Dubuque, Iowa

Kotabe, M. and Helsen, K. (2001), Global Marketing Management, 2nd ed., John Wiley & Sons, New York, NY

Malhotra, N.K., Agarwal, J. and Ulgado, F.M. (2003), “Internationalization and entry modes: A multitheoretical framework and research propositions”, Journal of International Marketing, Vol. 11, No. 4, pp. 1-31

Moon, H.C. (1997), “The choice of entry modes and theories of foreign direct investment”, Journal of Global Marketing, Vol. 11 No. 2, pp. 43-64

Ndubisi, N.O. (2013), “Role of gender in conflict handling in the context of outsourcing service marketing”, Psychology & Marketing, Vol. 30 No. 1, pp. 26-35

Ndubisi, N.O., Capel C.M. and Hamid, S.A. (2008), “Review of key concepts and theories of internationalization”, in Ndubisi, N.O. (Ed.), International Business, Theory & Strategy, Large and Small Firms Perspectives, Arah Publications, Kuala Lumpur, pp. 1-16

WTO (2010), Measuring Trade in Services, A training module produced by WTO/OMC, World Trade Organization, Geneva

Further reading

Ndubisi, N.O. (2011), “Conflict handling, trust and commitment in outsourcing relationship: a Chinese and Indian study”, Industrial Marketing Management, Vol. 40 No. 1, pp. 109-117