A comparison between advertising agencies’ and PR agencies’ internationalization motives and entry modes - Eight cases from Sweden
The firm internationalization literature is extensive, but dominated by studies of technical, often large, firms. The service firm internationalization literature is slowly growing. Few international contributions are found investigating the advertising industry and no such studies focus on the Swedish market. The PR industry has been internationally neglected. This study investigates four advertising agencies and four PR agencies in the Swedish market. The eight case agencies confirm traditional internationalization motives, but also new motives are found, such as the foreign customer-following motive. All firms when internationalizing are using high-commitment entry modes. No relationship between type of motive and entry mode is found in either industry. Both industries are supporting the internationalization patterns of the Uppsala model to varying degrees. Contacts as enablers of internationalization as the Network theory states are confirmed by all firms. The partner network is further added with two new sub groups, competitor networks and owner networks. These networks are found to be the most common in the PR industry. The advertising industry and the PR industry are similar, but not the same. Keywords: Advertising, PR, internationalization, internationalization motives, entry modes, eight cases, Sweden, Uppsala model, network theory
Firm internationalization as subject has attracted the attention of many authors over the years. Studies regarding this topic started to emerge in the 1960s and the focus was mainly large manufacturing firms for several decades (Johanson and Vahlne 1977, 1990; Reid 1981; Vernon 1966). During the 1970s another group of firms gained increased interest from researchers, namely the service firms (Brimmer and Dahl 1975; Gaedeke 1973; Weinstein 1977). The service firm internationalization literature rose in numbers over time (Coviello and Martin 1999; Engwall and Wallenstål 1988; Welch 2004), although not to the same extent as the literature on manufacturing firms (Grönroos 1999; Sanchez-Peinado et al. 2007). Much of the research aimed at comparing manufacturing firms and service firms (Welch and Luostarinen 1993; Zeithaml et al. 1985). Most service firms were found to be small or medium-sized (Björkman and Kock 1997). According to the World Trade Organization, WTO, the global service sector contributed to more than two thirds of the world GDP in 2006. Furthermore, the service sector in the period 1990-2001 was accounting for more than half of the employment in most countries under WTO review (Measuring Trade in Services, 2006). The service globalization has been driven by for example decreasing barriers to trade and the advancements of technology (Winstead and Patterson 1998). According to Almega, a Swedish umbrella organization for the service industry, the service industry contributed with 62 percent to the Swedish GDP and with 75 percent of the employment in Sweden in 2008. These high numbers were achieved simultaneously as the world faced the evolving financial crisis. The advertising industry has been studied in the past, by for example Gaedeke (1973), Terpestra and Yu (1988) and Weinstein (1977), but only in terms of US agencies. These studies were mostly interested in the motivations for internationalizing of the advertising industry, although entry modes were briefly addressed by Weinstein (1977). A possible relationship between motivation and entry mode was researched by Erramilli (1990) in terms of US advertising agencies, and other industries. The impact of the psychic distance concept (Johanson and Vahlne 1977; Johanson and Wiedersheim-Paul 1975), which is explained in the next section, when deciding what countries to enter was discussed by both Terpesta and Yu (1988) and Weinstein (1977). Only Erramilli (1990),...
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