Veronica Baena
Associate Professor, European University of Madrid, Spain.
Julio Cervino
University Carlos III of Madrid, Spain.How Market Environment May Constrain Global
Franchising in Emerging Markets
Purpose: Although emerging markets are some of the fastest
growing economies in the world and represent countries that are
experiencing a substantial economic transformation, little is known
about the factors influencing country selection for expansion in those
markets. In an attempt to enhance the knowledge that managers and
scholars have on franchising expansion, the present study examines
how market conditions may constrain international diffusion of
franchising in emerging markets. They are: i) geographical distance; ii)
cultural distance; iii) uncertainty avoidance; iv) individualism; v)
unemployment rate; vi) political stability, vii) corruption, and viii) gross
domestic product.
Design/methodology/approach: This study uses a quantitative
approach applied to a sample of 63 Spanish franchisers with 3,899
franchised outlets operating in a total of 27 emerging countries.
Findings: Results conclude that political stability and gross
domestic product are positively associated with franchising spread. In
contrast, geographical distance and individualism show a negative
relationship with franchising spread in emerging nations.
Research implications/limitations: Overall, this study provides
readers with an overview of the current state of global franchising
diffusion overseas. Moreover, results obtained in this study can be
useful to understand and predict the demand for franchising across
countries.
Practical implications: The present paper develops and tests a
model that can be useful not only to academics wishing to enhance their
knowledge about global franchising, but also to firm managers wishing
to establish new outlets in emerging nations. Thus, franchisers may use
the results of this study as a starting point for identifying regions whose
characteristics best meet their needs of expansion.
Originality/value: This paper explores how certain market
conditions may favor international diffusion of franchising in emerging
markets. The scant theoretical or empirical attention given to this topic
has usually been examined from a U.S. base and focusing on developed
markets. To fill this gap, the present study analyzes the international
spread of the Spanish franchise system, which since 2008 has occupied