Governance of international franchise networks: Combining value creation and value appropriation perspectives

Maria Jell-Ojobor, Ilir Hajdini and Josef Windsperger

Journal of Business Research, 2022, vol. 139, issue C, 267-279

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.

Keywords: International governance mode; Franchising; Equity versus non-equity mode; Value appropriation perspective; Value creation perspective (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:139:y:2022:i:c:p:267-279

DOI: 10.1016/j.jbusres.2021.09.001

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