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.
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.
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.
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.
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).
This study was financed in part by the Coordenação de Aperfeiçoamento de Pessoal de Nível Superior – Brasil (CAPES) – Finance Code 001.
Lanfranchi, A., Melo, P.L.d.R., Borini, F.M. and Telles, R. (2021), "Institutional environment and internationalization of franchise chains: a regional and global analysis", International Journal of Emerging Markets, Vol. 16 No. 4, pp. 726-744. https://doi.org/10.1108/IJOEM-03-2019-0188
Emerald Publishing Limited
Copyright © 2020, Emerald Publishing Limited