Franchising and country development: evidence from 49 countries

Abstract

PurposeAlthough previous research has examined the role of franchising for the economic development of countries, no empirical study to date has investigated the importance of franchising for social, infrastructural, and institutional development. The authors address this research gap by applying research results from the field of sustainable entrepreneurship and highlight that franchising has a positive impact on economic, social, institutional and infrastructural development.Design/methodology/approachThis study uses a fixed-effects model on a panel dataset for 2006–2015 from 49 countries to test the hypothesis that franchising positively influences various dimensions of country development such as economic social institutional and infrastructural development.FindingsThe findings highlight that franchising has a positive impact on the economic, social, infrastructural, and institutional development of a country. Specifically, the results show that the earlier and the more franchising systems enter a country, the stronger the positive impact of franchising on the country's economic, social, institutional, and infrastructural development.Research limitations/implicationsThis study has several limitations that provide directions for further research. First, the empirical investigation is limited by the characteristics of the data, which are composed of information from 49 countries (covering a period of 10 years). Because franchising is not recognized as a form of entrepreneurial governance in many emerging and developing countries, the available information is mainly provided by the franchise associations in the various countries. Hence, there is a need to collect additional data in each country and to include additional countries. Second, although the authors included developed and developing countries in the analysis, the authors could not differentiate between developed and developing countries when testing the hypotheses, because the database was not sufficiently complete. Third, future studies should analyze the causality issue between franchising and development more closely. The role of franchising in development may be changing depending on different unobserved country factors, economic sector characteristics, or development stages.Practical implicationsWhat are the practical implications of this study for the role of franchising in the development of emerging and developing economies? Because public policy in emerging and developing countries suffers from a lack of financial resources to improve the social, infrastructural and institutional environment, entrepreneurs, such as franchisors who expand into these countries, play an important role for these countries' development. In addition to their entrepreneurial role of exploring and exploiting profit opportunities, they are social, institutional, and political entrepreneurs who may positively influence country development (Schaltegger and Wagner, 2011; Shepard and Patzelt, 2011). Specifically, the findings highlight that countries with an older franchise sector (more years of franchise experience) may realize first-mover advantages and hence larger positive spillover effects on their economic, social, institutional and infrastructural development than countries with a younger franchise sector. Hence, governments of emerging and developing countries have the opportunity and responsibility to reduce potential market entry barriers and provide additional incentives for franchise systems in order to trigger these positive spillover effects. The authors expect that the spillover effects from the franchise sector on the economic, institutional, social and infrastructural development of a country are stronger in emerging and developing countries than in developed countries.Originality/valuePrevious research has focused on the impact of franchising on the economic development of a country, such as its growth of gross domestic product (GDP), employment, business skills, innovation and technology transfer. This study extends the existing literature by going beyond the impact of franchising on economic development: the results show that franchising as an entrepreneurial activity offers opportunities for economic, social, institutional, and infrastructural development, all of which are particularly important for emerging and developing economies. The findings of this study contribute to the international franchise and development economics literature by offering a better understanding of the impact of franchising on country development.

Kemampuan informasi akuntansi dan nonakuntansi pada “Si Pencabut Ruko Kosong”: Bertahan atau mundur?

“…Franchise merupakan sebuah model bisnis yang banyak digunakan juga di berbagai dunia secara internasional (González-Márquez et al, 2023). Keberadaan waralaba sangat berperan penting bagi negara karena kemampuannya dalam memperkuat pondasi perkembangan perekonomian pada 49 negara maju dan berkembang (Lanchimba et al, 2021).…”

Sustainable Competitive Advantage for Multi-Unit Franchising: From the Taiwanese Franchise Market Perspectives

“…Finding franchisees for new locations requires less effort and resources [9]. Additionally, MUFees increase system efficiency by promoting system-wide adaptation, reducing the need for franchisors to persuade franchisees to make changes [32]. Furthermore, franchisors could obtain various benefits, such as system-wide uniformity and homogeneity support [10].…”

“…In this study, estates usually mean lands or houses with high value-added. Although the frequency of transactions for this kind of asset is relatively few, transaction security is slightly essential [32]. In the case of a buyer who wants to buy a house, the deposit from the buyer will be saved at the accredited bank, which cannot be withdrawn till the transaction is closed.…”

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“…"a promising approach aiming to solve complex social, environmental, and economic problems with innovative solutions" (Schaltegger et al, 2018). Lanchimba et al (2021), in link with sustainable entrepreneurship and through their study using panel data from 49 countries for the period 2006-2015, found that (commercial) franchising has a positive impact on economic, social, institutional and infrastructural development. Social franchising, as well, is part of sustainable entrepreneurship.…”

“…, 2018). Lanchimba et al. (2021), in link with sustainable entrepreneurship and through their study using panel data from 49 countries for the period 2006–2015, found that (commercial) franchising has a positive impact on economic, social, institutional and infrastructural development.…”