Altinay, L. and Roper, A. (2007), "Guest editorial", International Journal of Service Industry Management, Vol. 18 No. 2. https://doi.org/10.1108/ijsim.2007.08518baa.001
Emerald Group Publishing Limited
Copyright © 2007, Emerald Group Publishing Limited
Levent Altinay is a Reader in Strategic Management in the Service Industry in the Department of HLTM, Business School, Oxford Brookes University.
Angela Roper is Savoy Educational Trust Senior Lecturer in Hospitality Management in the School of Management, University of Surrey.
Globalisation is a major trend for today's organisations. The services sector is also undoubtedly becoming increasingly international in scope. Accelerated by a desire for growth and profit, incentives provided by the host governments, and a freer flow of capital throughout the world, service firms have discovered that their future survival and growth depend upon extending their services around the world. Globalization has also considerably affected the production, ownership and trade of service activities.
Most of the conceptual development in the field of internationalization has originated from studies of manufacturing firms. However, research into the internationalization of service sector firms is fast developing. The implication of the latter is that theories of internationalization and, at the very fundamental level, the concept of the multinational enterprise, are now being redefined. Research into the service sector is even more worthwhile due to the fact that service firms, in themselves, are highly diffuse and organizational strategies and structures, ownership structures and modes of growth vary greatly. This special issue was designed to incorporate both conceptual and empirical research into the internationalization of firms in the service sector and to contribute further to the body of knowledge about internationalization issues in service industries. It is fortunate in featuring six very different papers about the internationalization of firms in various sectors, namely banking, retailing, law firms, professional services and hotels.
In the first paper, ul-Haq and Howcroft provide new insights into the role of strategic alliances, in the form of clubs and consortia, in the emergence of international banking. The paper utilizes an innovative, longitudinal methodological approach to identify broad structural changes in the markets in which banks operate and to relate these to major events, such as the creation of strategic alliances. It argues that a “fit” can be seen between the environment in the mid to late 1960s and the creation by banks of clubs and consortia; in doing so the paper contributes to the wider corporate strategy literature.
In their conceptual paper, Reihlen and Apel apply a constructivist theory of learning to the internationalization of professional service firms, providing a unique application of this conceptualization. In doing so, they contribute a new socio-cognitive framework according to which learning occurs at the interplay between the social context and the cognizing decision-maker, thus complementing and refining the Uppsala and network models. They suggest that empirical research, in the form of case studies, should be undertaken to investigate learning processes as they take shape in different regional settings.
The internationalization of Australian professional service firms in Asia; is the focus of the paper by Freeman, Cray and Sandwell. This paper explores the role of networks in gaining entry into newly emerging markets and analyses how three large professional service firms (providing legal, financial and media consulting services) were assisted in this process by prior, established networks. Network theory is forwarded as a key theoretical underpinning of strategy formulation and implementation by professional service firms entering newly emerging markets.
The topic of the conceptual paper by Litteljohn, Roper and Altinay is of importance for two reasons:
hotels were one of the first service businesses to internationalize; and
due to its intrinsic locational and service characteristics the hotel sector has pursued very different models of internationalization than those found in other sectors.
The paper reviews work over the last ten years and categories this into those taking external and internal perspectives. The review confirms that modal choice literature has developed and now provides a greater depth of understanding relationships between choice and organizational capabilities and that there has been a welcome shift towards more internalized, qualitative research.
Doherty's paper presents findings from six major UK-based international fashion retailers whose prime mode for growth is franchising. Doherty takes a holistic approach for her analysis and combines organizational and environmental factors to examine the factors that motivate international retail companies to choose franchising as a method for entering international markets. The paper adds to the growing body of qualitative research on international services franchising and highlights the importance of understanding the motivating factors which influence a particular service sector to choose franchising.
In their paper, Segal-Horn and Dean evaluate the organizational changes arising from the creation of very large global law firms and their internal integration across national legal jurisdictions. Focusing on interview data drawn from three UK City law firms, they are able to conclude that law firms have become less distinctive and more like other global service businesses. The paper extends global strategy literature into the service domain and illustrates the importance of managerial issues, post-acquisition integration and the operationalization of global practices for law firms as they internationalize.
Three of the papers are about the professional service firms, which parallels the growing importance of professional services in the service industries. In addition, as one of the first service industries to internationalize, it is fitting that there is a paper on hotels. The papers on the financial and retailing sectors complement further the findings from the other sectors.
The international scope of service industry operations can be witnessed in the fact that papers reflect research into different geographical areas, for example, the UK, the USA, Australia, and Asia. Whilst four papers report on empirical findings, two are conceptual. The papers for this special issue reflect a stream of academic enquiry which has long been neglected by international business studies, that being an evaluation of the implementation of internationalization strategies. Therefore, we see the importance of elements such as integration, organizational learning, and the use of prior networks to enable service firms to operate as international businesses. Out of necessity, these types of enquiries have required new insight into the internal workings of the sample service firms, hence qualitative research approaches have dominated the studies reported. The use of the case study research strategy in three of the papers has also enhanced contextual understanding.
The theoretical findings of the papers in this issue point to the fact that generic theories do require a certain degree of adaptation and sometimes broadening in order to take into account the specific experiences of service firms as they internationalize. Particularly due to the fact, and unlike other organizational settings, service firms have the ability to separate firm-specific advantages from actual ownership. Therefore, it is hoped that this special issue has made a further contribution to the development of those theories originating from a study of the manufacturing sector and will subsequently inform knowledge in the wider generic internationalization field.
There are clearly a great many opportunities for further research culminating from the papers featured here and it is hoped that this issue stimulates further discussions and research studies on the interface between internationalization and strategic alliances, organizational learning, networks, market entry modes and organizational strategies in service industry management. The issue for managers and researchers continues to be a need to focus on, and look to better understand, different service firm and country contexts. This requires putting different learning mechanisms and processes into place. Whilst the contributors in this issue have investigated a diverse range of service firms in different cultural settings, any future research agenda must include more comparative service industry studies and research undertaken from those originating from a wider world. In other words, there needs to be increased dialogue between service industry researchers.
Finally, the guest editors would like to thank all of the authors and reviewers for making this special issue possible. The following is a list of reviewers and the people who have assisted in making everything happen:
Dr Andrew Alexander
Professor Paul Bells
Dr Alan Blackburn
Dr Susan Bridewater
Dr Glauco De Vita
Dr Vikas Kumar
Professor Conrad Lashley
Professor David Litteljohn
Dr Sharon Loane
Professor Andrew Lockwood
Dr C. Jayachandra
Professor Peter Jones
Professor Carla Millar
Dr T Morrow
Professor Michael Olsen
Dr Fevzi Okumus
Dr Luke Pittaway
Dr Barry Quinn
Dr Joanne Roberts
Professor Mark Saunders
Dr Catherine Wang
Dr Anna Watson
Levent Altinay and Angela RoperGuest Editors