- Research Article
- Published:
A study on the key factors influencing international franchisors’ choice of entry modes into China
Frontiers of Business Research in China volume 5, pages 3–22 (2011)
Abstract
This paper examines factors associated with international franchising firms’ entry modes when they enter the Chinese market. To this end, a survey was conducted to investigate the linkage between entry modes and characteristics of franchising firms. The logit model and regression analysis were used to test the hypotheses. Findings reveal four factors that significantly influence international franchisors’ entry mode choices including cultural and geographic distance, international market experience, risk spreading, and maturity of the franchising system.
References
Alexander, N. 1990. Retailers and international markets: Motives for expansion. International Marketing Review, 7(4): 5–85.
Alon, I., & Mckee, D. 1999. Towards a macro environmental model of international franchising. Multinational Business Review, 7(1): 76–82.
Anderson, E. 1984. The growth and performance of franchise system company versus franchise ownership. Journal of Economics and Business, 36: 421–431.
Anderson, E., & Coughlan, A. 1987. International market entry and expansion via independent or integrated channel of distribution. Journal of Marketing, 51: 71–82.
Anderson, E., & Gatigon, H. 1986. Modes of foreign entry: A transaction cost analysis and proposition. Journal of international Business Studies, 17(3): 1–26.
Brouthers, D., Lance, E., & Werner, S. 1996. Dunning’s eclectic theory and the small firm: The impact of ownership and location advantages on choice of entry-modes in the computer software industry. Journal of International Business Studies, 5(4): 377–394.
Carney, M., & Gedajlovic, E. 1991. Vertical integration in franchise systems: Agency theory and resource explanations. Strategic Management Journal, 12: 607–629.
Casseres, B. 1990. Firm ownership preferences and host government restrictions: An integrated approach. Journal of International Business Studies, 21: 1–22.
Castrogiovanni, G. J., & Justis, R. T. 1998. Franchising configurations and transitions. Journal of Consumer Marketing, 15(2): 70–90.
China Chain Store and Franchise Association. 2005. The development of franchising in China. Available at: http://www.ccfa.org.cn
China Chain Store and Franchise Association. 2006. Annual Report: 30–40.
Czinkota, M. R., & Ronkainen, I. A. 1997. International business and trade in the next decade: Report from a Delphi study. Journal of International Business Studies, 28(4): 827–844.
Dunning, J. 1988. The eclectic paradigm of international production: A restatement and some possible extensions. Journal of International Business Studies, 19(1): 1–31.
Elango, B. 2007. Are franchisors with international operations different from those who are domestic market oriented? Journal of Small Business Management, 45(2): 179–193.
Eroglu, S. 1992. The Internationalizing process of franchise system: A conceptual model. International Marketing Review, 9: 19–30.
Fernie, J., & Fernie, S. I. 1997. The development of an U.S. retail format in Europe: The case of factory outlet centres. International Journal of Retail & Distribution Management, 25: 342–351.
Fladmoe-Lindquist, K. 2000. International franchising: A network approach to FDI. In Aharoni, Y., & Nachum, L. (Eds.), Globalization of services: Some implications for theory and practice: 197–216. London: Rutledge.
Castrogiovanni, G. J., Justis, R. T., & Julian, S. 1993. Franchise failure rates: An assessment of magnitude and influencing factors. Journal of Small Business Management, 31(2): 105–114.
Goodnow, D., & Hansz, E. J. 1972. Environmental determinants of overseas market entry strategies. Journal of International Business Studies, 3(1): 33–50.
Grow, R. F. 1986. Japanese and American firms in China: Lessons of a new market. Columbia Journal of World Business, 21(1): 49–56.
Hackett, D. W. 1976. The international expansion of U.S. franchise systems: Status and strategies. Journal of International Business, 7(1): 65–75.
Harriagn, K. R. 1988. Joint ventures and competitive strategy. Strategic Management Journal, 9: 141–189.
Herrmann, P., & Datta, D. K. 2002. CEO successor characteristics and the choice of foreign market entry mode: An empirical study. Journal of International Business Studies, 33(3): 551–569.
Hill, C. W., Hwang, W., & Kim, W. C. 1990. An eclectic theory of the choice of international entry mode. Strategy Management Journal, 11(2): 117–128.
Hoffman, R., & Preble, J. F. 1993. Franchising into the twenty-first century. Business Horizons, 36: 35–43.
Hofstede, G. 1980. Culture’s consequences: International differences in work-related values. Beverly Hills, CA: Sage Publications.
Hopkins, D. M. 1996. International franchising: Standardization and adaptation to cultural differences. Franchising Research: An International Journal, 1(1): 15–24.
Jagersma, P. K., & Gorp, D. M. 2003. Still searching for the pot of gold: Doing business in today’s China. Journal of Business Strategy, 24: 27–35.
Jensen, M. G., & Meckling, W. 1976. Theory of the firm: Management behaviour, agency costs, and ownership structure. The Journal of Financial Economics, 3: 305–360.
Johanson, J., & Vahlne, J. E. 1990. The international process of the firm—A mode of knowledge development and increasing foreign market commitments. Journal of International Business Studies, 7(4): 23–32.
Kedia, B. L., Ackerman, D. J., Bush, D. E., & Justis, R. T. 1994. Determinants of internationalization of franchise operations by U.S. franchisors. International Marketing Review, 11(4): 56–68.
Kedia, B. L., Ackerman, D. J., & Justis, R. T. 1995. Changing barriers to the internationalization of franchising operations, perceptions of domestic and international franchisors. International executive, 37(4): 329–348.
Klein, S., & Roth, V. J. 1990. Determinants of export channel structure: The effects of experience and psychic distance reconsidered. International Marketing Review, 7(5): 27–38.
Koch, A. J. 2001. Factors influencing market and entry mode selection: Developing the MEMS model. Journal of Marketing Intelligence and Planning, 19(5): 351–361.
Konigsberg, A. S. 1991. International franchising. NY: Juris Publications, Inc.
Lafontaine, F. 1992. Agency theory and franchising: Some empirical results. Journal of Economics, 23(2): 263–283.
Lillis, C. M., Narayana, C. I., & Gilman, I. L. 1976. Competitive advantage variation over the life cycle of a franchise. Journal of Marketing, 40(4): 77–80.
McIntyre, F. S., & Huszagh, S. M. 1995. Internationalization of franchise systems. Journal of International Marketing, 3(4): 39–56.
Myers, H. 1995. The changing process of internationalization in the European Union. The Service Industries Journal, 15(4): 42–56.
Nair, S. R. 2001. Franchising opportunities in China from the perspective of a franchisee. In Alon, I., & Welsh, D. H. B. (Eds.), International franchising in emerging markets: China, India, and other Asian countries: 109–121. Chicago: CCH Inc.
Osland, G., & Cavusgil, E. 1996. Performance issues in the U.S.-China joint ventures. California Management Review, 38(2): 106–130.
Ramaseshan, B., & Patton, M. A. 1994. Factors influencing international channel choice of small business exporters. International Marketing Review, 11(4): 19–34.
Root, F. R. 1987. Foreign market entry strategies. New York: Amacom.
Shama, A. 1995. Entry strategies of U.S. firms to the newly independent states, Baltic States, and Eastern European countries. California Management Review, 37(3): 245–253.
Song, P. 2006. China foreign trade and foreign investment. Beijing: University of International Business and Economics Press.
Sun, H. 1999. Entry modes of multinational corporations into China’s market: A social economic analysis. International Journal of Social Economics, 26(5): 642–660.
Taylor, C. R., Zhou, S., & Gregory, E. 2000. Foreign market entry strategies of Japanese MNCs. International Marketing Review, 17: 2–3.
Tes, D. K., & Pan, Y. 1997. How MNCs choose entry modes and form alliances: The China experience. Journal of International Business Studies, 23(4): 201–209.
Trankheim, L. 1979. International franchising: A way to capture foreign markets. Los Angeles Business and Economics, 4(4): 26–30.
Wang, J., Andral, T., & Mingxia, Z. 2008. The development of franchising in China. Journal of Marketing Channels, 15(2/3): 167–184.
Welch, L. S. 1992. Developments in international franchising. Journal of Global Marketing, 6(1/2): 81–96.
Welsh, D. H. B., & Alon, I. 2001. International franchising in emerging markets: A review and summary. Paper presented at the International Society of Franchising Conference, Las Vegas, Nevada, February 2001.
Welsh, D. H. B., Alon, I., & Falbe, C. M. 2006. An examination of international retails franchising in emerging markets. Journal of Small Business Management, 44(1): 130–149.
Whitelock, J. 2002. Influence of competitors and source of information in market entry and choice of entry mode. European Journal of Marketing, 29(5): 75–76.
Young, S., Hood, N., & Hamill, J. 1988. Foreign multinationals and the British economy. London: Croom Helm.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Zhu, M., Wang, Z.J. & Quan, H.R. A study on the key factors influencing international franchisors’ choice of entry modes into China. Front. Bus. Res. China 5, 3–22 (2011). https://doi.org/10.1007/s11782-011-0118-3
Received:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11782-011-0118-3