The choice of master international franchising – A modified transaction cost model

Maria Jell-Ojobor, Ilan Alon, Josef Windsperger

Research output: Contribution to journalArticlepeer-review

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.

Original languageEnglish
Article number101942
JournalInternational Business Review
Volume31
Issue number2
DOIs
StatePublished - Apr 2022
Externally publishedYes

Keywords

  • Governance modes
  • Indirect control
  • International franchising
  • Master franchising
  • Transaction cost theory

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Finance
  • Marketing

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