Expanding Operations in Fast-Food Industry under Uncertain Market Conditions

Sipahi, Seyhan

doi:10.7763/ijtef.2010.v1.14

Cited by 6 publications

(1 citation statement)

References 18 publications

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“…limited-service) restaurant firm is a relatively more suitable type for internationalization compared to a full-service restaurant firm, as standardized systems and services could mitigate uncertainty in international markets. In addition, the limited-service restaurant firms often operate based upon a franchise model; thus, expansion into emerging markets has been relatively low-risk in financial terms (Sipahi, 2010). Lee et al (2016) found the degree of franchising to be an important attribute that can affect decisions on internationalization because risk can be shared by the two parties, franchisees and franchisers, when investing resources such as buildings and equipment in uncertain international markets.…”

Section: Discussionmentioning

confidence: 99%

Internationalization as a determinant of systematic risk: the role of restaurant type

Jung

Dalbor

Lee³

2018

IJCHM

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Purpose The purpose of this study is twofold: to investigate the relationship between restaurant firms’ internationalization and systematic risk, and to further examine the relationship between internationalization and systematic risk based on the type of restaurant firm (i.e. limited-service vs full-service restaurants). Design/methodology/approach This study analyzes data from US-based publicly traded restaurant firms by estimating systematic risk based on the Carhart four-factor model and by performing a two-way random-effects model. Findings Findings support not only the risk-reduction effect of internationalization on systematic risk but also the moderating effect of the role of restaurant type on the relationship between internationalization and systematic risk. More specifically, the risk-reduction effect of internationalization on systematic risk is greater for limited-service than full-service restaurants. Practical implications The findings of this study can provide restaurant executives with more confidence in pursuing internationalization as part of their risk management strategy, acknowledging that more international operations could mitigate restaurant firms’ systematic risk. More specifically, limited-service restaurants can more significantly enjoy the risk-reduction benefits by increasing their international operations than full-service restaurants based on the findings of this study. Furthermore, risk-averse investors could consider purchasing shares of limited-service multinational restaurants’ stocks to enjoy more risk-reduction benefits. Originality/value By focusing on the restaurant industry with consideration for the restaurant type, this study provides more tailored recommendations for implementing internationalization strategies with regard to risk management.

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Section: Discussionmentioning

confidence: 99%