ABSTRACT
This chapter explores the internationalization process, the motivation and entry modes of Producer Services (PS), the role of culture for PS internationalization, and how institutions affect PS. The Ownership Location Internalization concept combines firm-specific or ownership-specific advantages, location-specific advantages, and internalization advantages. Firms engage in foreign direct investment if internalization of operations or knowledge provides the firm with advantages in exploiting a firm-specific advantage by either protecting knowledge, ensuring quality, facilitating the flow of intermediaries, or reducing opportunistic behavior by high degrees of control. Motivations for internationalization can be active or passive. Passive forms include following clients, which is driven by internationally operating clients of a firm and the necessity to provide services abroad to prevent the loss of business to foreign or other domestic competitors. Active forms of internationalization are driven by strategic considerations of market exploitation, customer/market seeking, and asset acquisition, whereas the latter relates to human capital, knowledge, location, prestige, or network access.
