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Institutional environment and internationalization of franchise chains: a regional and global analysis

Author

Listed:
  • Andrea Lanfranchi
  • Pedro Lucas de Resende Melo
  • Felipe Mendes Borini
  • Renato Telles

Abstract

Purpose - In this study, the authors identify how formal institutional environments in destination countries matter to franchise chains as they internationalize. The institutional environment of the destination countries of franchise chains is characterized according to three institutional dimensions necessary to attract international investment – public governance, ease of doing business and legal processes – and analyzed in the context of regional and global franchise expansion. Design/methodology/approach - The descriptive quantitative study involved 625 franchise chains from Australia, Brazil, Germany, India, Russia, South Africa and the United States, with a total of 2,939 observations. Findings - Results suggest that franchise chains from emerging markets are guided by the institutional conditions of ease of doing business and the quality of legal processes in global expansion and guided by ease of doing business, quality of legal processes and governance in regional expansion. On the other hand, franchise chains from developed markets are guided by the ease of doing business, quality of legal processes and governance in global expansion and governance and ease of doing business in regional expansion. Research limitations/implications - The sample included only franchise chains associated with organizations that represent franchises in their countries of origin, and the study does not analyze the effect of institutional distance between countries of origin and destination. Originality/value - This study identifies the formal institutional characteristics that explain selection and commitment in international markets by franchise chains from different countries. The contribution is in analyzing the phenomenon through the lens of institutional theory and showing, through a global sample, that institutions matter to franchise chains from different types of countries (developed and emerging) and with different strategies for internationalization (global and regional).

Suggested Citation

  • Andrea Lanfranchi & Pedro Lucas de Resende Melo & Felipe Mendes Borini & Renato Telles, 2020. "Institutional environment and internationalization of franchise chains: a regional and global analysis," International Journal of Emerging Markets, Emerald Group Publishing Limited, vol. 16(4), pages 726-744, April.
    • Handle: RePEc:eme:ijoemp:ijoem-03-2019-0188
    DOI: 10.1108/IJOEM-03-2019-0188
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    Cited by:

    1. Khatua, Apalak & Ranjan Kumar, Rajeev & Kumar De, Supriya, 2023. "Institutional enablers of electric vehicle market: Evidence from 30 countries," Transportation Research Part A: Policy and Practice, Elsevier, vol. 170(C).

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