Insights on International Franchising: Entry Mode Decision

Abstract

Despite the substantive importance of Latin America for foreign investors, the academic attention paid to this region continues to be limited. To cover this gap, this study examines how a number of franchise chain characteristics and market conditions may have an influence on the entry options that global franchisors have when seeking to expand their business in Latin America. Results conclude that the level of a host's country uncertainty avoidance, masculinity, economic development, economic potential, corruption, and the efficiency of contract enforcement are all drivers of the entry mode. The franchisor's international experience also determines the above choice. RESUMEN.A pesar de la importancia que Latinoamérica tiene para los inversores extranjeros, todavía son escasos los trabajos académicos que han prestado atención a esta región. Para cubrir este vacío, este trabajo analiza cómo determinadas características de las cadenas franquiciadoras y del mercado receptor de la inversión pueden afectar a la forma de entrada elegida por los franquiciadores que pretendan expandir su negocio hacia Latinoamérica. Los resultados muestras que el grado de aversión al riesgo, masculinidad, desarrollo económico, potencial económico, corrupción y eficiencia en la resolución de conflictos del país receptor de la inversión determinan la forma de entrada en dicho mercado. Igualmente, la experiencia internacional de la cadena franquiciadora influye en dicha decisión. RESUMO. A pesar da importância da América Latina para os investidores estrangeiros, são ainda escasos os trabalhos académi-cos que prestaram atenção a esta região. Para preencheer este vazio, o presente trabalho analisa de que modo determinadas características das cadeias de franquias e do mercado receptor do investimento podem afetar a forma de entrada escolhida pelos franqueadores que pretendam expandir seus negócios na América Latina. Os resultados demonstram que o grau de aversão ao risco, a masculinidade, o desenvolvimento económico, potencial económico, corrupção e eficiencia na resolução de conflitos do país receptor do investimento determinam a forma de entrada nesse mercado. A experiência internacional da cadeia franqueadora influi também nessa decisão.

European franchise expansion into Latin America

“…In the past, this region has shown a high level of risk for investment because of great economic and political instability (Baena, 2013). Nowadays, however, even though there is still some risk, the long-term potential for growth and profitability is increasing.…”

The factors that determine franchising intensity: An analysis in an emerging economy

“…The usefulness of this magazine is that it annually reports data on Mexican franchises and has been used as a secondary source by other authors (Alba, 2010; Fable & Welch, 1998; Lafontaine & Oxley, 2001). Likewise, these sources of information have been used as a source of data for research in other countries (Alon, 2001; Baena, 2013; Castrogiovanni et al, 2006b; Shane, 1996b). Because the information reported in the Entrepreneur 500 franquicias magazine did not include data on franchised units, it was necessary to obtain these values by consulting the website of the Mexican Franchise Association, the website of each franchisor and the electronic specialized journals in franchising as top http://franquicias.com, comprafranquicia.mx, and http://100franquicias.com.mx.…”

Modes of governance for market entry by international franchisors: factors affecting the choice

“…The empirical literature on the choice of governance modes by franchisors is relatively small. A few studies (Alon, 2006;Baena, 2013;Brookes and Roper, 2011) have examined factors affecting the franchisor's choice of specific governance modes such as master franchising. Recent reviews of the literature (Jell-Ojobor and Windsperger, 2014;Rosado-Serrano et al, 2018) identified 18 studies pertaining to franchise governance modes.…”