This study is focused on the offshoring behavior of service firms. It provides a decision-making model for service firms regarding their choice for captive offshoring or offshore outsourcing when relocating their activities to foreign locations. Service firms are taken as the focus of this study because of the unique features of their internationalization process in general and their offshoring behavior in particular compared to manufacturing firms. The model provided in this study can serve as a guideline for the decision-making process of service firms regarding the choice for a foreign entry mode when they split up various business processes and tasks belonging to value chains and locate them around the world.

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