This study explores the impact of experiential knowledge on the cost of internationalization for service firms. Using a behavioral approach, the authors develop and test three hypotheses centered on the lack of knowledge in foreign business, institutions, and firm internationalization, and its effect on perceived cost. The study employs a structural model based on LISREL to analyze data from 362 service firms. The results show that the lack of internationalization knowledge significantly influences both business and institutional knowledge, which in turn affects the perceived cost of internationalization. However, there is no direct effect of the lack of internationalization knowledge on perceived cost. The study also examines the validity of the model across different firm sizes and industries, finding that the causal structure is robust. Managerial implications include the importance of developing structures and routines compatible with internal resources and the need for durable and repetitive interactions abroad to accumulate experiential knowledge.This study explores the impact of experiential knowledge on the cost of internationalization for service firms. Using a behavioral approach, the authors develop and test three hypotheses centered on the lack of knowledge in foreign business, institutions, and firm internationalization, and its effect on perceived cost. The study employs a structural model based on LISREL to analyze data from 362 service firms. The results show that the lack of internationalization knowledge significantly influences both business and institutional knowledge, which in turn affects the perceived cost of internationalization. However, there is no direct effect of the lack of internationalization knowledge on perceived cost. The study also examines the validity of the model across different firm sizes and industries, finding that the causal structure is robust. Managerial implications include the importance of developing structures and routines compatible with internal resources and the need for durable and repetitive interactions abroad to accumulate experiential knowledge.