The International Competitiveness of Business Service Firms: The Case of Germany

Abstract

The internationalisation of the business service sector is an area of rapid development. Foreign direct investment is the preferred manner of internationalisation whereas international trade is less important. The process of internationalisation can be explained by a combination of trade, investment and organisational theory. In applying these theories, the particular characteristics of services and the imperfections of markets for services must be taken into account. If this is done, the factors responsible for the international competitiveness of business service firms can be determined. The major determinants identified were examined empirically and then used as a basis for a survey based on questionnaires, followed up by interviews in the business service sector. The findings explain the low international competitiveness of German business service firms.