The choice of master international franchising – A modified transaction cost model
Jell-Ojobor, Maria
Alon, Ilan Windsperger, Josef
Alon, Ilan
Windsperger, Josef
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Abstract
This study develops and tests a novel transaction cost model of master international franchising. Based on data from international franchise firms headquartered in six countries, we show that master international franchising is the franchisor’s preferred governance mode under the following conditions: large bilateral franchisor’s and franchisees’ transaction-specific investments, high institutional uncertainty and high behavioral uncertainty. Our model extends the literature by presenting a modified transaction cost model of master international franchising that investigates the bonding effect of bilateral transaction-specific investments and environmental uncertainty as determinants of the franchisor’s choice of international governance mode. In addition, by using primary data from international franchise companies, our study contributes to the transaction cost literature in international business and international franchising that is mainly based on secondary data.
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Date
2022
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Keywords
Governance modes, Indirect control, International franchising, Master franchising, Transaction cost theory
Citation
Jell-Ojobor, Maria, Ilan Alon, and Josef Windsperger. “The Choice of Master International Franchising – A Modified Transaction Cost Model.” International Business Review 31 (2): 101942. 2022.