We examine the choice of modes of delivery in services based on US data, including both cross‐border exports and sales through foreign affiliates. We focus on characteristics of destination markets and how this impacts on mode choice. We find that market size, distance and policy all play a role in where firms establish, and in how many markets firms enter. The importance of sales through affiliates relative to total foreign sales also depends on factors like market size, geographic and economic distance and the policy regime in place. Precisely, how important these factors are depends on the sector in question.