Professional service firms entering emerging markets: the role of network relationships

Abstract

Purpose – The purpose of this paper is to identify key barriers to internationalisation in emerging markets (EMs) for professional service firms (PSFs) from developed markets and to explain how PSFs use social networks to participate within EMs of Asia and overcome these barriers. The paper aims to provide a framework of this process. Design/methodology/approach – A case-based research design is used to explore key professional service industries (legal, media consulting and financial), providing three case studies, in a developed market (Australia) that are expanding rapidly into EMs (Thailand, Malaysia, and Vietnam) of Asia. Findings – The elements of orientating, positioning and timing were identified as critical in the context of foreign entry, with the network perspective providing a useful theoretical explanation of this process and underpinning the conceptual framework. Key barriers to internationalisation in EMs for PSFs from developed markets are identified: face-to-face communication, language, cultural, work practices and government regulations. How PSFs use social networks to participate within EMs of Asia to overcome these barriers reveal that social network elements are critical to FME specifically into EMs: orientation, positioning and time. Research limitations/implications – While the conceptual framework of key barriers and how PSF overcame them is theoretically supported by the findings, the framework could be tested more appropriately through an extended number of cases prior to a survey to provide generalizability. Practical implications – Social networks were used by managers of PSFs to secure market knowledge and to act as a basis for strategic decision making, with foreign network actors a key influence in the foreign market entry process. Originality/value – The paper provides a framework for identifying key barriers to internationalisation in EMs for PSFs.