Control Modes in International Service Operations: The Propensity to Franchise

摘要: What determines a service firm's organizational choice between equity-based control and franchising? This question, which has elicited some theoretical answers few empirical tests in domestic setting, never been addressed an international context before. study explains the mode of chosen terms framework borrows from agency theory transaction cost analysis. The propensity to franchise internationally was found be directly related i monitoring costs associated with geographical "cultural" distance principal franchisor its foreign agents franchisees, ii principal's experience, iii degree host countries' contextual uncertainty but inversely firm level brand name asset specificity.