International Cooperation and Innovation in the Service Sectors: Evidence from Norway

Abstract

In recent years the service sectors have experienced a tremendous expansion in their growth and international activities. Research on service internationalization has started to attract more scholarly attention. However, most of the recent studies have focused on traditional modes of internationalization - such as trade and FDI – and commonly neglected other channels that could be relevant for the internationalization process of service firms. Thereby there is an important gap in the literature related to identifying different relevant channels of internationalization, and the related set of explanatory factors. In particular, there exist very few studies addressing the topic of international cooperation of firms in the service sectors, and few studies try to understand the factors that may explain this type of international activities.

The objective and main focus of this thesis is to contribute to the literature by analyzing the main explanatory factors of international cooperation among service firms in Norway. Besides focusing on firm-level factors that may be of interest – such as innovation, firm size and internationalization barriers – the thesis argues that there exists important sectoral differences in cooperation and patterns, and points this out as a key explanatory factor in the empirical analysis.

In order to address these aspects the thesis applies both quantitative and qualitative methods. The statistical analysis is based on a survey conducted by the Norwegian Institute of International Affairs (NUPI) which includes data on 814 Norwegian firms in all service industries. Furthermore, there were conducted seven interviews with firms located in different sectors of the economy to supplement the statistical analysis and further illustrate the sectoral differences related to international cooperation activities.

The main findings of the thesis are that innovative and smaller firms are more likely to engage in international cooperation. Furthermore, enterprises who engage in international cooperation view physical infrastructure and network building costs the two most important barriers to their process of internationalization. By contrast, geographical distance was found to be a less important barrier. The empirical analysis confirms the existence of substantial sectoral differences related to these results. Enterprises in different service sectors have different propensities to engage in international cooperation and different strategies and motives to do so.