Service embeddedness and its impact on the value chain and firm internationalisation: In search of a framework

Internationalisation theory has largely been concerned with analysing firm internationalisation strategy and entry mode choice from a manufacturing firm's perspective. Nonetheless, as the composition of a firm's product usually contains both tangible and service characteristics, it is important to understand the extent of service components that embody, or are embedded in, a product. This paper introduces the concept of service embeddedness, which is defined as the service characteristics existing in all products and are usually incorporated to add value to a product offering. From this perspective, the paper continues to outline a value chain that shows how value is created through a series of activities similar, but somewhat distinguishable, from the value chain generally applied to manufactured goods. A conceptual model is introduced to determine the likely impact that service embeddedness may have on a firm's value-creating activities and its choice of foreign market entry mode.