Internationalization of service firms : Case study of Swedbank and SEB Bank

Abstract: Rapid internationalization of economic activities takes an important place in the last decades in the world economy. Services make a huge contribution to the international trade and their expansion grows constantly. It is very important nowadays to investigate the internationalization process of business service firms, their motivations and modes of entering into the new unexplored market. Moreover, correct choice of entry mode and evaluation of the incentives can affect the firm’s performance and the duration of the presence in a foreign market. It is also very important to understand the implications of initial mode of operations for different kinds of services.The purpose of this thesis is to gain better understanding of internationalization process of service firms, their incentives to enter new market and choice of entry mode. This is gained by evaluating such service firms that provide financial services as Swedbank and SEB Bank and their international performance in Baltic countries and Ukraine. These chosen companies provide the study cases for this paper.For this study, deductive approach is used in order to observe the theory, empirical findings and then to draw specific conclusion. Empirical data consists of two study cases of Swedbank and SEB Bank. Through the literature review a theoretical framework is developed in order to help the authors evaluate the motives which influence bank´s decision in selecting an entry mode.The findings of this research are that the main incentive of SEB to internationalize is following its customers and increasing market power in order to become a leader in providing financial services. While for Swedbank customer following and profit incentives are identified as crucial ones when going international. The results show that acquisition is an identical entry mode for both banks and is chosen as most sufficient one.Key words: internationalization process of service firms, banks, incentives, entry modes and acquisition.