Internationalization of service firms in the less developed world: a study of Ugandan Service Organizations.

Abstract

This study is on the relationship between Network Competence, Network relationship Intensity, Information Technology Adoption and Internationalization of service firms in the least developed world, taking a study of service firms in Uganda. The study was prompted by the fact that despite the growth of services on the global trade, research done in the area of internationalization has tended to concentrate on manufacturing firms. The few studies conducted in internationalization of services have been limited to developed economies. While services in the developed economies have responded to the global services opportunity, least developed economies still lag behind, thus Ugandan service firms have been slow at taking advantage of the internationalization opportunities. The study took a more service-specific approach and adopted the network competence theory to explain internationalization of service firms. A conceptual framework, study objectives and hypotheses were developed and tested. Cross-sectional, correlational, quantitative and qualitative designs were adopted for this study, with some methodological triangulations. The study population comprised of all professional service firms in Uganda involved in, or whose actions indicated intentions to internationalize. A cross-industry sample of 162 firms were drawn using the snowballing technique, of which 107 (66%) responded. Data was collected using interview guides and a pre-tested self administered five point questionnaire. The interview guide helped collect the qualitative interviews to get a deeper insight into the study variables. The instruments were tested for validity and reliability before they were administered for the full study. Data was analyzed using SPSS V17 and LISREL 8.7s. The study established low levels of internationalization of service firms in Uganda, and the firms mainly targeted the East African and the COMESA regional markets. The firms exhibited low levels of network competence, network relationship intensity and I.T adoption. Network competence correlated with I.T adoption, network relationship intensity and internationalization. Network relationship intensity mediated the relationship between network competence and internationalization. I.T adoption correlated strongly and positively with network relationship intensity and internationalization. The network competence, network relationship intensity and information technology significantly predicted internationalization, with a total prediction potential of 58%. The measurement and structural equation models fit the data, with all the fit indexes satisfying the recommended cut-offs. Thus the network competence model provides a better explanation to internationalization of service firms in the least developed world. The study gives theoretical, methodological and managerial implications, and recommends service firms in the least developed world to build network competences, strengthen the intensity of their network relationships and adopt the relevant information technologies if they are to take advantage of internationalization opportunities. The government as well as the relevant regulatory bodies need to create awareness of the service sector capacity and internationalization opportunities.