SU Management and Marketing Department
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Browsing SU Management and Marketing Department by Subject "Institutional theory"
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Item International franchise expansion: The role of institutions and transaction costs(2016-06) Hoffman, Richard C.; Munemo, Jonathan; Watson, Sharon; Management and MarketingIn this study, we examine how a country’s institutional environment affects the international expansion activities of U.S. franchise companies. We draw on institutional and transaction cost theories to develop a model and a set of hypotheses regarding the effect of political, regulatory and infrastructural institutions, as well as economic instability, on international franchise expansion. Using a sample of U.S. franchise firms and data from a combination of secondary sources, we test these hypotheses by estimating a panel regression model. Our results demonstrate for the first time that, in addition to favorable political governance, a country’s business climate, including entry regulations, taxes, and communications infrastructure, is an important predictor of foreign franchise firms’ expansion into that country. Implications for practice and future research also are discussed.