On The Endogenous Growth Of The Service Multinationals

After entering 21st century, the service multinationals presents many new characteristics increasingly, Such as the stock of service FDI runs up; the investments rely on the non-equity form still; the entry mode relies on M&A; the motive of investments is market-seeking, and so on. These new characteristics propose new problems for our research: Why does the service multinationals grows up faster than the manufacturing multinationals? Are the service firms apt to become the multinationals than the manufacturing firms? Why the entry mode of the service multinationals differs from the manufacturing multinationals?The theory of firm's endogenous growth thinks the factors inside firms—resource, competences and knowledge, is the source power of firms'growth. This paper find the resources, competences and knowledge in the service multinationals have larger promotion and litter confine than the manufacturing multinationals through comparative analysis. Therefore, he service multinationals grows up faster than the manufacturing multinationals.Neil Kay's had analyzed the relationship between resources'share and firm's direction of growth, and he thought the manufacturing firms'direction of growth is usually specialization—diversification—export—multinationals. But the service firms'direction of growth maybe is specialization—diversification—multinationals—export, or specialization—multinationals—diversification—export. That is to say, the service firms are apt to become the multinationals than the manufacturing firms. The entry mode of the service multinationals differs from the manufacturing multinationals because of the inseparability between the production and consumption. There are only four entry modes: Internalization-greenfield, Internalization-M&A, Licensing and International joint ventures.Finally, this paper has proposed some suggestions for the development of our country's service multinationals: The firms must do those best to decrease the"Penrose Effect"of firms'growth, cultivate, identify and apply the core competence, and accumulate tacit knowledge continuously, while the government must destroy the monopoly of the service industries.