Their statistical findings seem to be fairly similar across the 2 years of 1967 and 1988. Comparing purely domestic with internationally active franchisors, scale seems a predominant differentiator, with the internationally active franchisors much larger in terms of the number of units. This effect might reflect economies of scale but is also consistent with the common notion that international markets are an obvious and often necessary means of growth of franchising systems, especially more mature ones. Time in operation is another critical differentiator, with more experienced operators more likely to expand internationally. In contrast, market factors made little difference in distinguishing domestic from international operators. Equity capital and culturally based product categories were not statistically significant. Thus, Huszaghandcolleagues(1992)emphasizeinternalfactors rather than external factors as critical determinants of the decision to take a franchise international. Eroglu (1992) presents his work in the same issue of the International Marketing Review. His conceptual model is more elaborate, akin to marketing models in other knowledge domains. However, the paper is entirely conceptual, without any attempt or need to add an empirical component. The model, purported to be the first in international franchising, seeks to describe the underlying determinants and processes of the internationalization of (United States) franchise systems. His model explains the intention to internationalize as a balance between perceived benefits and perceived risk. Organizational factors, such as firm size, experience, and top management’s perception of the firm’s
TABLE 1 Evolution of International Franchising Theory
Authors Domain Critical Features
Phase 1: Foundation Theories 1. Huszagh et al. (1992) Theory of the firm; strategic marketing theory Competitive advantage; market entry barriers
2. Eroglu (1992) Franchisor intention to internationalize general model
Balance between perceived benefits and perceived risks
Phase 2: Deeper Explanations 3. Fladmoe-Lindquist (1996) Resource-based=capability theory Role of both international franchising capabilities and dynamic capabilities 4. Doherty and Quinn (1999) International retail franchising theory Information asymmetry; retailing dimensions
Phase 3: Extending the Theory in Six Directions 5. Quinn and Alexander (2002) Domestic and international retail franchising theory
Process-focus; contrasting domestic franchising options with international options 6. Doherty and Alexander (2004) International franchisor-franchisee relationships Relationship focus, starting with initial selection of international partner 7. Altinay and Miles (2006) International franchise stakeholder theory Extends the relationship approach to a broader stakeholder perspective 8. Cheng et al. (2007) Stage model of international franchising Process model for international expansion of franchising 9. Aliouche and Schlentrich (2011) Strategic model of global franchise expansion Emphasis on foreign market assessment; limited attention to entry mode choices 10. Jell-Ojobor and Windsperger (2013) Governance choice model based on transaction cost and agency theories Contract-framed (property rights); rare analysis of four-way governance mode choice
134 B. MERRILEES
competitive advantage, influence both perceived benefits and risks. Similarly, environmental (external) factors, such as domestic competitive pressures and perceived favorability of the external environment, mainly influence just perceived benefits.