Control Modes in International Service Operations: The Propensity to Franchise
Abstract
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.
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Electronic data processors' use is limited to outcomes rather than behaviors, which can be problematic if the intent is to control for quality, especially in services where the intangible aspect of the work is more important to monitor.
“However, their use is limited to the outcomes rather than the behaviors, and this can be problematic if the intent is to control for quality, especially in services where the intangible aspect of the work is more important to monitor (Fladmoe-Lindquist and Jacque 1995).”
From Control techniques and upward flow of information in franchising in distant markets: conceptualization and preliminary evidence (1998) · cites this paper as Fladmoe-Lindquist and Jacque 1995
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References 25 · Cited by 336
- Authors
- Fladmoe-Lindquist, K., & Jacque, L. L.
- Affiliations
- David Eccles School of Business, University of Utah, Salt Lake City, Utah 84112
- Tufts University (US)
- Venue
- Management Science
- Published
- 1995-07
- Volume
- 41
- Issue
- 7
- Pages
- 1238-1249
- ISSN
- 0025-1909 (ISSN-L)
- 1526-5501
- OpenAlex
- W2088481355
- Cited by
- 336
- References
- 25
- Citations by year
- 2026: 4 · 2025: 2 · 2024: 4 · 2023: 5 · 2022: 6 · 2021: 7 · 2020: 12 · 2019: 14 · 2018: 12 · 2017: 15 · 2016: 15 · 2015: 13 · 2014: 9 · 2013: 15 · 2012: 16
- FWCI
- 23.12
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- Management Science (publishedVersion)
- Topics
- Social Sciences › Business, Management and Accounting › Strategy and Management › Franchising Strategies and Performance
- Social Sciences › Business, Management and Accounting › Strategy and Management › International Business and FDI
- Social Sciences › Business, Management and Accounting › Management Information Systems › Outsourcing and Supply Chain Management
- Keywords
- franchising, agency theory, transaction cost analysis, monitoring costs, cultural distance, geographic distance, international experience, contextual uncertainty, foreign direct investment
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