Institutional Environments And The Internationalization Of Franchise Chains: The Contrasting Cases Of Three North African Countries

Abstract

Franchising has become a dominant model of retailing in the Western world and is rapidly expanding in emerging countries. This paper is an attempt to explain the significant differences in the development of franchising in three emerging countries: Morocco, Algeria and Tunisia. Explanations can be found in the general institutional environment in these countries, including the political and economic environments; governments' willingness to modernize the distribution structures; and the legal and regulatory environments specific to franchising. Our analytical framework is based on institutional theory (DiMaggio & Powell, 1983), a framework that provides further insights beyond the approaches based on economic efficiency (agency theory and the resource scarcity perspective). Based on an analysis of the documents in the major public databases in the three countries, supplemented with field research, we propose an analytical framework that helps explain the uneven developments of franchising in the three North African countries based on the specific institutional environment of each country. This study thus provides empirical evidence supporting the institutional theory of franchise expansion. It appears that institutional theory complements agency theory and resource scarcity theory in explaining the development of franchising in emerging markets: while agency theory and resource scarcity theory explain the motivation of firms to expand internationally through franchising, institutional theory helps explain the success or failure of these firms in the emerging markets they expand to.

Determinants of the governance structure of the international franchise firm

“…Finally, while our case study analysis uses organizational economics, strategic management and international business perspectives as the major approaches explaining the governance structure of international franchise firms, the inclusion of further theories may increase the explanatory power of the governance structure model. For instance, predictions derived from the cultural theory (Freeman et al , 2012), institutional theory (Combs et al , 2009; Doherty et al , 2014; Aliouche et al , 2015) as well as the stakeholder theory (Altinay and Miles, 2006) may account for critical aspects influencing the international franchisor’s choice of governance mode when expanding into foreign markets.…”

Fatores Relacionados a Internacionalização das Redes de Franquias Brasileiras: Dispersão Geográfica e Pertencimento a Grupos

“…Portanto, redes de franquias que fazem parte de grupos empresariais tendem a seguir caminhos e estratégias semelhantes entre si. Quando redes de franquias pertencentes a um grupo já operam em mercados internacionais, podem facilitar que outras redes do mesmo grupo compartilhem a estratégia de internacionalização (Combs et al, 2009;Aliouche et al, 2015).…”

“…As características do ambiente institucional também podem influenciar a expansão de redes de franquias para mercados internacionais (Aliouche et al, 2015). A experiência das franqueadoras de economias emergentes em seus mercados domésticos com instituições fracas pode ser um recurso valioso para operar em outros mercados similares.…”

Achieving Institutional Isomorphism in International Franchising through Knowledge Transfer: Evidence from the Food and Beverage Industry in Cambodia

“…Moreover, the theory also addresses knowledge-specific and partner-specific characteristics and factors to examine the possible impacts on knowledgetransfer effectiveness (Kogut & Zander, 1993;Simonin, 1999;Uygur, 2013). Such approaches generally focus more on the economic efficiency of the franchise system (Aliouche et al, 2015). According to Barthélemy (2011), it is therefore not surprising that agency theory explains franchising decisions; however, institutional theory, unexpectedly, plays an important role in explaining how franchisors and franchisees respond to uncertainty existing in a franchise network.…”