The Lexus and the Olive Tree: a rising mode of internationalisation

The paper discusses networking through brand affiliation/endorsement as an increasing mode of internationalisation. Brand affiliation or brand endorsement involves a form of franchising, whereby local services take on a global reach. Whereas conventional theories on the internationalisation process explicitly or implicitly assume that internationalisation is a matter of tapping a new geographical market, mired with risk and uncertainty due to its “foreignness”, brand affiliation means that the offerings of a local business take on the global features associated with the global brand. The global brand endorses or vouches for the locally bound business, thereby providing it with a global recognition and reach. In spite of the global explosion in the practice of affiliation and franchising, there has been little concern with this form of internationalisation, or with the issues and the challenges posed for the franchisees, which are most often SMEs, in managing two brands, two identities and two cultures. The present paper seeks to explore this business relationship and its inherent contradictions, mainly from the franchisee's perspective, and asks whether the dictates of global requirements for efficiency, functionality and consistency can be reconciled with social and cultural values associated with localisation, and what the theoretical and practical implications of this internationalisation process are.