International Franchising in the Context of Competitive Strategy and the Theory of the Firm

Suggests that the strategic advantages of experience, scale economies, product differentiation, capital requirements, and location are important determinants of international franchise expansion, but are slowly being diminished by technological and capital market innovations. Explores this theme from the perspectives of competitive strategy and economic theory of the firm. Based on these perspectives, hypotheses are developed and tested with a large sample of US franchisors at two points in time. Results show that franchise firms′ strategic advantages derived from experience, scale economies and location differ for more international firms compared to nationally‐focused firms. Results also provide insights to the extent to which these differences are moderated by technological and capital market innovations occurring over time.