Transcript Draft AIB presentation paper

Accessing International Markets: how professional service
firms internationalise
(Reading UNCTAD Conference 2013, Track 4 Issues in Internationalisation)
Researcher:
Deirdre Canavan, PhD Researcher, Dublin Institute of Technology
Email: [email protected]; Mob: 085 147 8972
Supervising team:
Dr. Pamela Sharkey Scott, Dublin Institute of Technology
Prof. Vincent Mangematin, Grenoble Ecole de Management
Why Professional Service Firms?
• 75% of GDP from high income countries comes from
services (World Bank 2011)
– Up to 20% of GDP cross border trade in services (WB2011)
– Knowledge intensive service industries cornerstone of
policy considerations for mature nations (European
Competitiveness Report 2010).
– Particular consideration for Creative PSFs (eg. UK Creative
Britain Strategy 2008)
• Theoretical Gaps in IB
– Idiosyncrasies of internationalisation process for PSFs
– Networks, relationship and reputation building processes
– Role of reputation
Why is PSF internationalisation different?
• PSFs provide specialised and customised knowledge
solutions, however
– Their service is assignment oriented (Gummesson, 1981)
– May have a high degree of local embeddedness with
strongly rooted institutional traditions (Faulconbridge,
2008)
– Have a distinctive client interaction process to ensure trust
and guarantee standards of delivery (Segal-Horn and Dean,
2007)
• Thus, the pre-engagement phase (Leonidou, 2003) has
particular importance yet receives little attention in
literature.
Theoretical Background
• Uppsala Internationalisation Process (Johanson & Vahlne,
2009)
– Opportunity exploration based on various forms of
learning and ‘short cuts’ (Huber, 1991)
– Opportunity development and exploitation through
mutual relationship specific learning developed through
interaction between partners, lubricated by trust from the
process and resource commitment.
• Entrepreneurial Frameworks
– Internationalisation process influenced by entrepreneurial
characteristics (Knight & Cavusgil, 1996; Oviatt &
McDougall, 1994)
Theoretical Background
• PSF Internationalisation Theory
– Reputation (Cooper et al, 2000; Grosse, 2000; Hitt
et al, 2006a) and relationships (Hitt et al, 2006;
Lindsay et al, 2003; Freeman et al, 2007)
recognised as critical for PSF internationalisation
– but:
• how are relationships developed
• what about the boundaries of reputation
Theoretical Background
Existing studies suggest that relationship building
for the PSF is about
– complex knowledge transfer (Lindsay et al 2003;
Thakor and Kumar 2000)
– Sharing of resources (Eriksson et al, 1999)
Little insight into how international reputations are
built
Theoretical Background
But, without knowing the PSF, a client will look
for signals which will come from:
• perceptions of quality relating to reputation
(Washington and Zajac, 2005); and / or
• actors of status (Benjamin and Podolny, 1999;
Sauder et al., 2012)
Research Question
• We suggest that existing theory does not address
the unique challenges relating to how PSFs
internationalise so we seek to understand:
• How do PSFs access international networks ?
Methodology – setting and data
collection (face to face interviews and archival data)
Informants
Domain
Number of Firms
Internal Informants
Data Source
-
Irish Architecture Firms
10 Irish Architecture Firms (8 included in this paper)
General Manager / CEO / Founder(s)
Senior Level Partners
Architects experienced on international projects
1 Founder
1-2 senior level partners
1-2 lower echelon architects experienced on international projects
Industry Body and Government Agency Executives
Academics within architecture field
Number of Internal
Informant Interviews
-
40 (23 included in this paper)
Number of External
Informant Interviews
-
7
Archival Data
Pre and post interview data collection at firm, industry, economy level together
with field notes from interviews
Number of Interviewees
Per Case Firm
External Informants
Multiple Case Study – Qualitative Research Design
Methodology – data analysis
• Aggregate Dimensions
– Artistic Oriented PSFs
– Engineering Oriented PSFs
– Opportunity Development
• 8 second order codes (theoretical categories)
• 25 lower order codes (empirical observations)
Findings: Actors in the Process
Actors
The Professional
Network
Industry bodies,
teachers,
The Client
Network
collaborative
service partners.
The Public
Network
The ‘Engineering’ The ‘Artistic’ PSF
PSF
Media, arts
councils, art and “we benchmark
design
all of our
exhibitions
,
“we are working
projects. That
“you could
public
on a project at
would be
advertise
representatives
something that
yourself as being the moment for a
semi state body
“both [P1] and
we could go to
part of that”
which is through [P2] were invited
anyone with”
(Epsilon)
one of our good onto the National
(Gamma)
partners up
Arts Council of
there” (Delta)
Ireland” (Beta)
“that is why we
get out of bed in
the morning.
That is the
interesting thing
about
architecture is
that it spans
between
business and art”
(Beta)
Opportunity Exploration
(Experiential learning,
scanning and ‘Short Cuts’)
Training
Market research
On the ground learning
Mergers and acquisitions
Reputation and/or Status
Strengthening Possibilities
- Formation of local partnership combining
design expertise with local expertise
Making Contact
- Knocking on doors
- Warm calling
- Invite
Inter-Network Reputation
Signals
- ISO Certifications
- Portfolio of international
credibility
Reputation
Contextualising
- On the ground visibility
and client interfacing
- Marketing documents
High Status Client Signals
- Home network client following
Opportunity Exploitation
- Mutual Exchanges
- New Opportunity Creating
- Network positioning
Engineering Oriented PSF Internationalisation Process
Opportunity Exploration
Scanning
Reputation and/or Status
Strengthening Possibilities
- Formation of informal alliance with
equally high status consultant
Opportunity Exploitation
- Mutual Exchange
Professional Network Status
Arts and industry council invites
Teaching assignment invites
Exhibition invites
High Status Signalling
Signals of Quality
Global Reputation Signals
Awards
Landmark buildings
Public (rep) network Status
Relations with pubic
representatives
Media profile
Artistic Oriented PSF Internationalisation Process
Theoretical Contributions
• While in some circumstances the traditional models
continue to apply even in knowledge intensive industries,
we provide an alternative model (IB theory contribution)
• Develops status literature by showing how the structures of
the hierarchies or status systems influence the behaviour of
the firms within the systems. Artistic and Engineering firms
play different rules of the game in alternative hierarchies
(status theory contribution)
• Different patterns of behaviour between two types of firms
to achieve distinctiveness in one industry. Also reputation
and status insights (PSF theory contribution)
Managerial Implications
• Addresses process of internationalisation for
SMEs that are PSFs
• Understanding how opportunities can be
accessed
• Insights on relevant relationships and reputation
• How signals can be recognised and developed
Questions?