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, foreign institutions, and firm internationalization, and its effect on managers' perceived cost. The study employs a LISREL-based structural model 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 the perceived cost. The study also examines the validity of the model across different firm sizes and types of international operations, finding that the causal structure is valid in both large and small firms, and across firms with varying levels of international experience. The findings highlight the importance of experiential knowledge in the internationalization process and suggest that firms must develop structures and routines that align with their internal resources and competence to effectively navigate the challenges of internationalization.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, foreign institutions, and firm internationalization, and its effect on managers' perceived cost. The study employs a LISREL-based structural model 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 the perceived cost. The study also examines the validity of the model across different firm sizes and types of international operations, finding that the causal structure is valid in both large and small firms, and across firms with varying levels of international experience. The findings highlight the importance of experiential knowledge in the internationalization process and suggest that firms must develop structures and routines that align with their internal resources and competence to effectively navigate the challenges of internationalization.