module.exports cannot be set when passed in as argument

I am building my bundle using Browserify.

I have the following service.js:

(function (exports, require) {

     // ...
     var Service = function (name, region) {
         this.name = name;
         this.region = region;
         // ...
     }

     exports = Service;

})(module.exports, require);

Whenever I try to require('./service') on another module, I get an empty object as if the exports object was never set.

If I use module.exports without the argument encapsulation, everything works fine:

(function (require) {

   // ...
     var Service = function (name, region) {
         this.name = name;
         this.region = region;
         // ...
     }

     module.exports = Service;

})(require);

Why does this happen and why is this required?