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International Franchise Expansion: Does Market Propinquity Matter?

Richard C. Hoffman (Interim dean and professor of management in the Perdue School of Business at Salisbury University)
Joel F. Kincaid (Associate professor of economics in the School of Business and Economics at Winston Salem State University)
John F. Preble (Associate professor in the Department of Business Administration at the University of Delaware)

Multinational Business Review

ISSN: 1525-383X

Article publication date: 1 April 2008

Abstract

Consistent with traditional internationalization theory, we argue that, when a firm chooses franchising to achieve market penetration, market propinquity/similarity matters. Using a modified gravity model, we examine six country characteristics believed to enhance the flow of franchise activity among 39 nations. Our findings support the notion that market propinquity facilitates the flow of franchises between nations. Franchise expansion is greatest when the home and host nations are similar in terms of geography, culture, media availability, and political risk. The management implications of these findings are discussed in detail.

Keywords

Citation

Hoffman, R.C., Kincaid, J.F. and Preble, J.F. (2008), "International Franchise Expansion: Does Market Propinquity Matter?", Multinational Business Review, Vol. 16 No. 4, pp. 25-52. https://doi.org/10.1108/1525383X200800017

Publisher

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Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited