The internationalisation and firm performance of engineering services in Japan: a comparative study with manufacturing

Japan has the world’s second largest spending on engineering services. But surprisingly little is known about the internationalisation strategies of Japanese engineering service firms (ESFs). These firms heavily rely on theoretical insights developed from a manufacturing focused context to guide their international expansion, which is either inappropriate or risky as we have explored in this paper. Recognising that ESFs have business models that are fundamentally different from those of their manufacturing counterparts, we examine the internationalisation-firm performance (I-FP) relationship based on empirical data drawn from ESFs and manufacturing firms headquartered in Japan. Our analysis illustrates significant differences in the cycles and patterns of an S-shaped I-FP relationship between Japanese ESFs and manufacturing firms, specifically in light
of ESFs’ non-sequential international evolvement path and their project-following behaviours. This grounding work supports our further investigations to theorise decision boundaries for the international growth of ESFs and a broader range of service operations.