Key Factors That Determine the Internationalization of E-service Firms

The rapidly changing business world due to developments in ICT has given rise to entirely new types of firms and internationalization processes. In the context of service firms their internationalization pattern differs from those of multinational enterprises which traditional internationalization theories have been based upon and questions whether traditional theories can explain the internationalization process of service firms. To answer this question the present study used the case study approach to study two Estonian service SMEs (Nortal and Bolt) that had internationalized. The findings revealed that the service firms follow different internationalization patters both inline and in contrast to what had been proposed in traditional internationalization theories. The study also presents evidence to show that the choice for a particular market is based on firm specific selection criteria. The study also revealed that psychic distance and a firm’s value creation competence influence the choice of markets at the initial stages of internationalization. Finally the study makes specific recommendations for policy makers and managerial practices.