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Journal ArticleDOI

Franchising and country development: evidence from 49 countries

TL;DR: In this paper, the authors used a fixed-effects model on a panel dataset for 2006-2015 from 49 countries to test the hypothesis that franchising positively influences various dimensions of country development such as economic social institutional and infrastructural development.
Abstract: Although previous research has examined the role of franchising for the economic development of countries, no empirical study to date has investigated the importance of franchising for social, infrastructural, and institutional development. The authors address this research gap by applying research results from the field of sustainable entrepreneurship and highlight that franchising has a positive impact on economic, social, institutional and infrastructural development.,This study uses a fixed-effects model on a panel dataset for 2006–2015 from 49 countries to test the hypothesis that franchising positively influences various dimensions of country development such as economic social institutional and infrastructural development.,The findings highlight that franchising has a positive impact on the economic, social, infrastructural, and institutional development of a country. Specifically, the results show that the earlier and the more franchising systems enter a country, the stronger the positive impact of franchising on the country's economic, social, institutional, and infrastructural development.,This study has several limitations that provide directions for further research. First, the empirical investigation is limited by the characteristics of the data, which are composed of information from 49 countries (covering a period of 10 years). Because franchising is not recognized as a form of entrepreneurial governance in many emerging and developing countries, the available information is mainly provided by the franchise associations in the various countries. Hence, there is a need to collect additional data in each country and to include additional countries. Second, although the authors included developed and developing countries in the analysis, the authors could not differentiate between developed and developing countries when testing the hypotheses, because the database was not sufficiently complete. Third, future studies should analyze the causality issue between franchising and development more closely. The role of franchising in development may be changing depending on different unobserved country factors, economic sector characteristics, or development stages.,What are the practical implications of this study for the role of franchising in the development of emerging and developing economies? Because public policy in emerging and developing countries suffers from a lack of financial resources to improve the social, infrastructural and institutional environment, entrepreneurs, such as franchisors who expand into these countries, play an important role for these countries' development. In addition to their entrepreneurial role of exploring and exploiting profit opportunities, they are social, institutional, and political entrepreneurs who may positively influence country development (Schaltegger and Wagner, 2011; Shepard and Patzelt, 2011). Specifically, the findings highlight that countries with an older franchise sector (more years of franchise experience) may realize first-mover advantages and hence larger positive spillover effects on their economic, social, institutional and infrastructural development than countries with a younger franchise sector. Hence, governments of emerging and developing countries have the opportunity and responsibility to reduce potential market entry barriers and provide additional incentives for franchise systems in order to trigger these positive spillover effects. The authors expect that the spillover effects from the franchise sector on the economic, institutional, social and infrastructural development of a country are stronger in emerging and developing countries than in developed countries.,Previous research has focused on the impact of franchising on the economic development of a country, such as its growth of gross domestic product (GDP), employment, business skills, innovation and technology transfer. This study extends the existing literature by going beyond the impact of franchising on economic development: the results show that franchising as an entrepreneurial activity offers opportunities for economic, social, institutional, and infrastructural development, all of which are particularly important for emerging and developing economies. The findings of this study contribute to the international franchise and development economics literature by offering a better understanding of the impact of franchising on country development.

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TL;DR: In this paper , the authors examined the influence of market opportunity, risk, and distance on the choice of destination country for Mexican franchises and found that a larger market size, a greater level of economic freedom, and a smaller geographic distance are determining factors in the choice this paper .
Abstract: PurposeThis article examines the influence of market opportunity, risk, and distance on the choice of destination country for Mexican franchises.Design/methodology/approachThe research hypotheses are developed under the theoretical approaches of institutional theory, agency theory, and transaction costs theory and were contrasted on the data obtained from 52 Mexican international franchisors operating in 37 countries as of 2016. This study uses linear regression with ordinary minimums using the STATA 13.1 software.FindingsThe results reveal that a larger market size, a greater level of economic freedom, and a smaller geographic distance are determining factors in the choice of destination country. No statistical significance was found in the variables GDP per capita, level of democracy and cultural distance.Originality/valueThis research contributes to the theoretical and practical field. On the theoretical side, this study integrates institutional theory, agency theory, and transaction cost theory to evaluate the factors of the destination country that influence the internationalization process of the franchise. Another contribution of this study is to apply theories and models of developed economies to the process of internationalization of franchises in an emerging economy. Additionally, this study is based on a model that considers the distance, opportunities and risks that are considered by Mexican franchisors in the selection of the international markets in which they maintain operations. This study contains important practical implications that can serve as relevant information for decision-making in the franchise sector and its internationalization. This data is valuable for new models of Mexican franchises that decide to start their internationalization process.
Journal ArticleDOI
TL;DR: In this article , the authors examined the disclosure of SDG-related information on websites of 69 social franchise chains operating in Africa and found that social goals disclosed by social franchisors are aligned with certain SDGs that are general in nature and not just sector-dependent, except in the case of education.
Abstract: PurposeSocial franchise chains have social goals rather than – or in addition to – commercial or profit-making goals. But are these social goals, disclosed by social franchisors, aligned with the Sustainable Development Goals (SDGs) and, if so, which ones?Design/methodology/approachThe authors examine the disclosure of SDG-related information on websites of 69 social franchise chains operating in Africa.FindingsThe authors' main findings show that social goals disclosed by social franchisors are aligned with certain SDGs that are general in nature and not just sector-dependent, except in the case of education.Practical implicationsThe authors' paper contributes to the practice by providing examples of the types and varieties of social goals social franchisors can pursue. Moreover, entrepreneurs might be encouraged to launch their franchise concept as franchisors who contribute to SDGs at an international, national or regional level or to join franchise chains as franchisees who contribute to SDGs at the local level.Social implicationsThe authors' findings show the potential for social franchise chains in developing countries to target and contribute to achieving SDGs.Originality/valueThe authors' paper adds to the limited literature on SDGs and, more specifically, on the role of the private sector, in particular social franchisors, in targeting and achieving SDGs.
References
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Journal ArticleDOI
TL;DR: The generalized least squares approach of Parks produces standard errors that lead to extreme overconfidence, often underestimating variability by 50% or more, and a new method is offered that is both easier to implement and produces accurate standard errors.
Abstract: We examine some issues in the estimation of time-series cross-section models, calling into question the conclusions of many published studies, particularly in the field of comparative political economy. We show that the generalized least squares approach of Parks produces standard errors that lead to extreme overconfidence, often underestimating variability by 50% or more. We also provide an alternative estimator of the standard errors that is correct when the error structures show complications found in this type of model. Monte Carlo analysis shows that these “panel-corrected standard errors” perform well. The utility of our approach is demonstrated via a reanalysis of one “social democratic corporatist” model.

5,670 citations

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TL;DR: This article examined the nature of formative indicators and discussed ways in which the quality of the formative measures can be assessed, and illustrated the proposed procedures with empirical data, with the aim to enhance researchers' understanding of the forms and assist them in their index construction efforts.
Abstract: Although the methodological literature is replete with advice regarding the development and validation of multi-item scales based on reflective measures, the issue of index construction using formative measures has received little attention. The authors seek to address this gap by (1) examining the nature of formative indicators, (2) discussing ways in which the quality of formative measures can be assessed, and (3) illustrating the proposed procedures with empirical data. The aim is to enhance researchers’ understanding of formative measures and assist them in their index construction efforts.

4,302 citations

Journal ArticleDOI
TL;DR: In this paper, the applicability of five conventional guidelines for construct measurement is critically examined: (a) Construct indicators should be internally consistent for valid measures, (b) there are optimal magnitudes of correlations between items, (c) the validity of measures depends on the adequacy with which a specified domain is sampled, within-construct correlations must be greater than between construct correlations, and (e) linear composites of indicators can replace latent variables.
Abstract: The applicability of 5 conventional guidelines for construct measurement is critically examined: (a) Construct indicators should be internally consistent for valid measures, (b) there are optimal magnitudes of correlations between items, (c) the validity of measures depends on the adequacy with which a specified domain is sampled, (d) within-construct correlations must be greater than between-construct correlations, and (e) linear composites of indicators can replace latent variables. A structural equation perspective is used, showing that without an explicit measurement model relating indicators to latent variables and measurement errors, none of these conventional beliefs hold without qualifications. Moreover, a "causal" indicator model is presented that sometimes better corresponds to the relation of indicators to a construct than does the classical test theory "effect" indicator model.

3,268 citations

Journal ArticleDOI
TL;DR: In this article, the authors synthesize disparate strands of literature to link entrepreneurship to economic growth by investigating the relationship between entrepreneurship and economic growth using elements of various fields: historical views on entrepreneurship, macroeconomic growth theory, industrial economics (Porter's competitive advantage of nations), evolutionary economics, history of economic growth (rise and fall of nations) and the management literature on large corporate organizations.
Abstract: In the 1980s stagflation and high unemployment caused a renewed interest in supply side economics and in factors determining economic growth. Simultaneously, the 1980s and 1990s have seen a reevaluation of the role of small firms and a renewed attention for entrepreneurship. The goal of this survey is to synthesize disparate strands of literature to link entrepreneurship to economic growth. This will be done by investigating the relationship between entrepreneurship and economic growth using elements of various fields: historical views on entrepreneurship, macro-economic growth theory, industrial economics (Porter's competitive advantage of nations), evolutionary economics, history of economic growth (rise and fall of nations) and the management literature on large corporate organizations. Understanding the role of entrepreneurship in the process of economic growth requires the decomposition of the concept of entrepreneurship. A first part of our synthesis is to contribute to the understanding of the dimensions involved, while paying attention to the level of analysis (individual, firm and aggregate level). A second part is to gain insight in the causal links between these entrepreneurial dimensions and economic growth. A third part is to make suggestions for future empirical research into the relationship between (dimensions of) entrepreneurship and economic growth.

2,395 citations

Journal ArticleDOI
TL;DR: In this article, the authors present theoretical and definitional issues associated with the concept and propose a conceptual account of institutional entrepreneurship that helps to accommodate them, and highlight future directions for research on institutional entrepreneurship, and conclude with a discussion of its role in strengthening institutional theory as well as in the field of organization studies.
Abstract: As well as review the literature on the notion of institutional entrepreneurship introduced by Paul DiMaggio in 1988, we propose a model of the process of institutional entrepreneurship We first present theoretical and definitional issues associated with the concept and propose a conceptual account of institutional entrepreneurship that helps to accommodate them We then present the different phases of the process of institutional entrepreneurship from the emergence of institutional entrepreneurs to their implementation of change Finally, we highlight future directions for research on institutional entrepreneurship, and conclude with a discussion of its role in strengthening institutional theory as well as, more broadly, the field of organization studies

1,827 citations

Trending Questions (2)
What are the impact of franchising?

The impact of franchising on country development includes positive effects on economic, social, institutional, and infrastructural development.

How do Filipino franchising businesses contribute to the country's economy?

The provided paper does not specifically mention the contribution of Filipino franchising businesses to the country's economy.