Governance of international franchise networks: Combining value creation and value appropriation perspectives
Jell-Ojobor, Maria
Hajdini, Ilir Windsperger, Josef
Hajdini, Ilir
Windsperger, Josef
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Abstract
This study develops a new perspective on the franchisor’s choice of international governance modes as a value creation and value appropriation mechanism. Value creation refers to knowledge creation from the joint use of the franchisor’s intangible system-specific knowhow and foreign partners’ intangible local market knowhow; value appropriation refers to efficient knowledge exploitation based on transaction cost savings under conditions of uncertainty and transaction-specific investments. Based on primary data from 162 international franchise systems headquartered in eight countries, the results highlight the importance of intangible knowledge-based resources (franchisor’s system-specific knowhow and franchise partners’ local market knowhow) and transaction cost factors (transaction-specific investments, environmental uncertainty, and cultural uncertainty) for the franchisor’s choice between equity modes, such as wholly-owned subsidiaries, and joint venture franchising, and non-equity modes, such as single-unit franchising, area development franchising, and master franchising.
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2022
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Keywords
International governance mode, Franchising, Equity versus non-equity mode, Value appropriation perspective, Value creation perspective
Citation
Jell-Ojobor, Maria, Ilir Hajdini, and Josef Windsperger. “Governance of International Franchise Networks: Combining Value Creation and Value Appropriation Perspectives.” Journal of Business Research 139 (February):267–79. 2022.