| Abstract | There are three shortcomings in previous studies: the assumption of firm homogeneity, service sector and multinationals themselves were neglected. In order to overcome the aboved shortcomings, the panel data in 1999-2012 on service firms of 135 countries from the World Bank are used to systematically analyze, which based on the perspective of firm heterogeneity, the FDI motivation and its productivity premium, and then compare with the manufacturing enterprises. The results are as follows: (1) service firms have strong heterogeneity, which stronger in lower income countries; the stronger heterogeneous of traditional service sectors and knowledge-intensive sectors are existed respectively in low-income countries and high-income countries; (2) the FDI motivation of service firms is mainly seeking market, but the efficiency-seeking motivation is more significant in the higher income countries; (3) the productivity premium of efficiency-seeking FDI is significantly existed both in the level of general, country and sector; (4) the FDI motivation of service firms is mainly seeking efficiency, but service firms have more stronger firm heterogeneity, higher intensity of efficiency-seeking motivation and productivity premium. The aboved conclusions imply rich policy implications for a country’s FDI inflows and outflows, and our research make up the existing research gaps of FDI motivation of service firms in some extent. |