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The present paper scrutinizes the extant literature on the internationalization process of service providers. It provides an overview of current insights and unresolved issues. The findings of over 100 published studies are structured and summarized under four headings: internationalization motives, country/market selection, entry mode choice, and the profile of service exporters. Although literature is closing the gap with reality, this paper concludes that (empirical) work still lacks sound theoretical bases, and – partially as a consequence – it is largely fragmented and exploratory. Per heading we formulate specific suggestion for better and more focused future research endeavors.

Today, services officially represent more than 22% (or about USD 3 trillion) of world trade and are the fastest growing sector of world trade for the last two decades (OECD, 2004; WTO, 2001). Optimist analysts believe that services will reach 50% of world trade by 2020 (Hibbert, 2003). Nearly half of the 100 biggest multinationals are service firms with an average revenue of over USD 50 million in 1997 (Hibbert, 2003; Keillor, Hult & Kandemir, 2004). The American McKinsey and Company in management consulting, the Danish ISS in facility management and the Dutch VNU in business information illustrate how service firms may succeed in gaining and holding a global dominant position. On top of the official service economy, the (hidden) service component of product markets is responsible for a major and increasing part of the total value of the world merchandise trade (Brown et al., 2001; Grönroos, 1990). Illustrative in this respect is the critical role of the global service systems of the Swedish/Swiss ABB in automation technology and of the American Caterpillar in construction and mining equipment.