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

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Constellations—alliances among multiple firms—are used to perform complex, customized work in professional service. We examine two tensions inherent in multi-party collaborative work: managing hybrid systems, which are composed of individual and group tasks and outcomes, and aligning partners' logics of action. These two tensions provide firms the strategic choice with emphasizing individual or collective advantage. When constellation members pursue an individualist strategy, they employ an entrepreneurial logic. Constellations are a vehicle for honing their firm-distinctive expertise and enhancing their own opportunities. Given these firms' need for exposure to new learning and new markets from different partners and clients, the stability of the constellation is not of primary importance. This strategy promotes membership shifts in constellations and requires governance mechanisms for coordinating interactions among relative strangers. When constellation members pursue a collectivist strategy, they focus on their mutual benefits and employ a relational logic. Given these firms' need for intensifying relations with partners and clients, constellation members restrict interactions to certain select partners and clients and intensify their interactions. This strategy promotes stability in constellation membership and allows governance mechanisms specific to partners to develop. Due to positive feedback, these strategies develop certain capabilities and create specific relational patterns, which reinforce prior choices.

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