How can service firms from emerging economies expand abroad without superior resources and capabilities prior to internationalization? In fact, the FSA/CSA framework (Rugman and Verbeke, 2008) explains why firms internationalize when either firm-specific advantages (FSAs); i.e., “knowledge bundles that can take the form of intangible assets, learning capabilities and even privileged relationships with outside actors” (Rugman and Verbeke, 2003, p. 127), or country-specific advantages (CSAs); i.e., production factors, such as competitive wages, costs of capital or land and natural resources (Rugman, 2005; Rugman and Verbeke, 1992) are strong. However, this does not explain internationalization when FSAs and CSAs are both weak or absent, a situation commonly ignored in the current literature (Rugman et al., 2011, pp. 766–۸). The underlying problem is that weak FSAs are the rule rather than the exception in regard to the internationalization of service firms from emerging economies.

In disagreement with Rugman (2010), prior research has argued that emerging market firms seek access, frequently by mergers and acquisitions (M&A), to strategic assets (e.g., brands and operational and R&D resources), mainly in developed economies (Luo and Tung, 2007; Mathews, 2006; Yamakawa et al., 2013). However, this does not explain the internationalization of service firms without the means to implement expensive M&A strategies. While the internationalization of manufacturing MNCs from emerging economies has been explained by CSAs, such as low labor costs or an abundance of natural resources (Ramamurti, 2009; Rugman, 2010), we have yet to provide a theoretical explanation for the success of service firms from emerging markets that lack notable CSAs.

Seeking to address this gap in internalization theory, we draw on three streams of research: the theory of competence building in multinational enterprises (Rugman and Verbeke, 2001); research on internationalization strategies of emerging market multinationals (EMMs) (Cuervo-Cazurra, 2012) and research on the internationalization of service firms (e.g., Boddewyn et al., 1986; Rugman, 1981; Williams, 1997), due to the choice of service firms as the research subject. This combination is particular relevant in addressing simultaneously weak FSAs and CSAs.