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Internationalization of Service SMEs: An Integrated Perspective from the Engineering Consulting Sector

Internationalization traditionally has been examined using a single theoretical framework in the context of large manufacturing firms. The authors argue that it is more relevant to examine foreign direct investment (FDI) theory (including transaction cost analysis), the stage models of internationalization, or network theory in an integrated and holistic manner. Using case studies of four New Zealand-based engineering consulting firms classified as small or medium-sized enterprises (SMEs), the study identifies and analyzes patterns and influences related to the smaller service firm's decision to internationalize, subsequent internationalization, market selection, and mode of entry. The findings show that SME internationalization in the engineering consulting sector is a complex process, and concepts inherent in FDI theory, the stage models, and the network perspective are all evident. These results support the argument that service internationalization is too broad a concept to be defined exclusively or examined by any one theoretical framework. Implications are drawn for research and practice.