Franchising is fast becoming one of the most popular entry mode strategies for international retail companies when moving into international markets. Academic research, however, has only recently begun to examine international franchising within the context of retailer internationalisation. A major gap in the literature is the nature of the international retail franchise relationship and, in particular, the mechanisms used to control and co-ordinate the international franchise network. This paper reports the findings from an in-depth, ethnographic study of the internationalisation activity of one retail franchise company and examines the extent to which the marketing channels and agency theory literatures can, in practice, explain power and control in international retail franchising.
Drawing on case study evidence, this article explores the reasons small specialist retailers internationalize and the facilitating factors that help them overcome the obstacles to internationalization. The authors employ qualitative research techniques and, to build theory from an unexplored area of research, adopt a multiple-case approach. The findings suggest that though a strong company brand identity is the most significant motive for expansion, other internal and external factors facilitate the international decision-making process.
The divestment of international retail operations is an under‐explored area of research. Conceptual and theoretical developments within retailing have tended to focus on those organisations that have sustained international development rather than on those organisations who have experienced market failure and strategic withdrawals from international markets. The paper discusses two prominent UK cases where market withdrawal has been a feature of international activity. A cross‐case analysis is then used to identify issues for further research activity. In particular, the cross‐case analysis uses the existing constructs that have emerged from the general literature to explain divestment activity while highlighting the limitations of using these constructs within the retail sector. The paper concludes by noting the limitations of existing frameworks that seek to explain the internationalisation process without due consideration of the divestment process.
A major gap in the international marketing literature is the nature of the international franchise relationship and, in particular, the mechanisms used to control and coordinate the international franchise network. Discusses the findings arising from an ethnographic study of the internationalisation activity of one franchise company. Explores how the company in question attempted to control and direct its international franchise network. Illustrates the importance of non-coercive sources of power, or the support function, in controlling international franchisee behaviour. Furthermore, it describes the development of the support function within the company over a longitudinal time period and highlights the impact of various organisational factors on the company's ability to provide effective support to its international franchisees.
International retailers are increasingly using franchising as a means of entering foreign markets. However, international retail franchising lacks a conceptual basis from which an explanation of the major elements of this activity can be generated. Agency theory and its major premises of information asymmetry, monitoring costs, moral hazard and opportunism, are introduced in an attempt to provide an initial effort at bridging this conceptual gap. The paper reviews international retailing and franchise research before explaining agency theory. A discussion follows on how agency theory can explain major elements of international franchise activity of retail firms such as the international retail franchise process and the operationalisation of the international retail franchise system.
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