Advertisement

The Choice of Foreign Entry Mode by the Franchiser: Case Studies of Lithuanian Franchisers Entering Latvia

  • Regina Jarmalaite
  • Irina Sekundo
Conference paper
Part of the Contributions to Management Science book series (MANAGEMENT SC.)

Abstract

This paper is the first attempt in the Baltic market to explain the strategic motives behind and to find reasons for decision-making factors related to the expansion of franchise companies internationally via either ownership or contractual entry modes. On the basis of two case studies concerning Lithuanian franchisers that have entered the Latvian market in order to create a franchising network, motivating factors and their influences on a franchise’s choice of entry mode have been explored. Twelve factors have been identified and critically evaluated, and five propositions that reflect the decision-making considerations for Lithuanian franchisers concerning the choice of entry mode to Latvia have been put forward. The findings of this paper are expected to help future Baltic franchisers in choosing the best mode within which to enter the foreign market.

Keywords

Foreign Market Entry Mode International Expansion Equity Mode Foreign Market Entry 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. 1.
    Agarwal S, Ramaswami SN (1992) Choice of Foreign Market Entry Mode: Impact of Ownership, Location and Internalization Factors. Journal of International Business Studies First Quarter: 1–27Google Scholar
  2. 2.
    Anderson E, Gatignon H (1986) Modes of Foreign Entry: A Transaction Cost Analysis and Propositions. Journal of International Business Studies Fall: 1–26Google Scholar
  3. 3.
    Brennere J, Petrova A (2002) Critical Aspects for Franchise Business Development in Latvia. Bachelor thesis, Stockholm School of Economics in RigaGoogle Scholar
  4. 4.
    Brouthers KD (2002) Institutional, Cultural and Transaction Cost Influences on Entry Mode Choice and Performance. Journal of International Business Studies 33(2):203–221CrossRefGoogle Scholar
  5. 5.
    Brouthers KD, Nakos G (2002) Entry Mode Choice of SMEs in Central and Eastern Europe. Entrepreneurship Theory and Practice 27(l):47–63. Retrieved December 17, 2002, from EBSCO on-line database on the World Wide Web: http://search.epnet.com Google Scholar
  6. 6.
    Buckley PJ, Casson MC (1998) Analyzing Foreign Market Entry Strategies: Extending the Internalization Approach. Journal of International Business Studies 29(3):539–562CrossRefGoogle Scholar
  7. 7.
    Caves RE, Murphy II WF (1976) Franchising: Firms, Markets and Intangible Assets. Southern Economic Journal 42(4):572–587. Retrieved December 17, 2002, from EBSCO on-line database on the World Wide Web: http://search.epnet.comCrossRefGoogle Scholar
  8. 8.
    Contractor FJ, Kundu SK (1998) Franchising Versus Company Run Operations: Modal Choice in the Global Hotel Sector. Journal of International Marketing 6(2):28–53. Retrieved December 13, 2002, from EBSCO on-line database on the World Wide Web: http://search.epnet.com Google Scholar
  9. 9.
    Dienas Bizness Archive. Dienas Bizness Homepage. Retrieved September 3, 2003, from the World Wide Web: www.db.lv
  10. 10.
    Dunning JH (1993) Multinational Enterprises and the Global Economy. Addison-Wesley Publishing, New YorkGoogle Scholar
  11. 11.
    Dunning JH, McQueen M (1981) The Eclectic Theory of International Production: A Case Study of International Hotel Industry. Managerial and Decision Economics 2(4): 197–210. Retrieved December 18, 2002, from EBSCO on-line database on the World Wide Web: http://search.epnet.com CrossRefGoogle Scholar
  12. 12.
    Erramilli MK, Rao CP (1993) Service Firms’ International Entry-Mode Choice: A Modified Transaction-Cost Analysis Approach. Journal of Marketing 57:19–38CrossRefGoogle Scholar
  13. 13.
    Fladmoe — Lindquist K, Jacque LL (1995) Control modes in International service Operations: The Propensity to Franchise. Management Science 41(7): 1238–1249. Retrieved December 27, 2002, from EBSCO on-line database on the World Wide Web: http://search.epnet.com CrossRefGoogle Scholar
  14. 14.
    Hackett DW (1976) The International Expansion of US Franchise Systems: Status and Strategies. Journal of International Business Studies Spring: 65–75Google Scholar
  15. 15.
    Huszagh SM, Huszagh FW, Mclntyre FS (1992) International Franchising in the Context of Competitive Strategy and the Theory of the Firm. International Marketing Review 9(5):5–18CrossRefGoogle Scholar
  16. 16.
    Ingram P, Baum JA (1997) Opportunity and Constraint: Organizations’ learning from the operating and competitive experience of industries. Strategic Management Journal 18(summer special issue):75–98CrossRefGoogle Scholar
  17. 17.
    Johnson G, Scholes K (1999) Exploring Corporate Strategy. Prentice Hall Europe, Hemel HempsteadGoogle Scholar
  18. 18.
    Johanson J, Vahlne JE (1977) The Internationalization Process of the Firm-A Model of Knowledge Development and Increasing Foreign Market Commitments. Journal of International Business Studies 8(1):5–22. Retrieved December 5, 2002, from Journal of International Business Studies on-line database on the World Wide Web: http://copenhagen.jibs.net CrossRefGoogle Scholar
  19. 19.
    John G, Weitz BA (1988) Forward integration into distribution: Empirical test of transaction analysis. Journal of Law, Economics and Organization 4(2):337–355. Retrieved December 17, 2002, from EBSCO on-line database on the World Wide Web: http://search.epnet.com Google Scholar
  20. 20.
    Klein S, Frazier GL, Roth VJ (1990) A transaction cost analysis model of channel integration in international markets. Journal of Marketing Research 27:196–208CrossRefGoogle Scholar
  21. 21.
    Konigsberg AS (1996) International Franchising. Juris Publishing Inc., New YorkGoogle Scholar
  22. 22.
    Lafontaine F, Oxley J (2001) International Franchising: Evidence form US and Canadian Franchisers in Mexico. NBER Working Paper w8179. Retrieved December 15, 2002, from NBER on-line database on the World Wide Web: http://papers.nber.org
  23. 23.
    Pak YS (2002) The Effect of Strategic Motives of the Choice of Entry Modes: an Empirical Test of International Franchisers. Multinational Business Review 10(1):28–36. Retrieved December 17, 2002, from EBSCO on-line database on the World Wide Web: http://search.epnet.com Google Scholar
  24. 24.
    Porter ME (1980) Competitive Strategy. Techniques for analyzing Industries and Competitors. The Free Press, New YorkGoogle Scholar
  25. 25.
    Ramcharran H (2000) Foreign direct investments in central and eastern Europe: An analysis of regulatory and country risk factors. American Business Review 18:1–8Google Scholar
  26. 26.
    Register of Trademarks of the Republic of Lithuania. The State Patent Bureau of the Republic of Lithuania Database. Retrieved November 11, 2002, from the World Wide Web: http://www.vpb.lt/db/rezult2-n.php
  27. 27.
    Root FR (1994) Entry Strategy for International Markets. Lexington Books, LexingtonGoogle Scholar
  28. 28.
    Shane SA (1996) Why Franchise Companies Expand Overseas. Journal of Business Venturing 11:73–88CrossRefGoogle Scholar
  29. 29.
    State Enterprise Register. Lursoft Database. Retrieved October 24, 2002, from the World Wide Web: www.lursoft.lv
  30. 30.
    Statistical Yearbook of Latvia 1999 (1999). Riga, Latvia: Central Statistical Bureau of Latvia.Google Scholar
  31. 31.
    Statistical Yearbook of Latvia 2002 (2002). Riga, Latvia: Central Statistical Bureau of Latvia.Google Scholar
  32. 32.
    Statistical Yearbook of Lithuania 2002 (2002). Vilnius, Lithuania: Department of Statistics to the Government of the Republic of Lithuania.Google Scholar
  33. 33.
    Walker BJ, Etzel MJ (1973) The Internationalization of U.S. Franchise Systems: Progress and Procedures. Journal of Marketing 37:38–46CrossRefGoogle Scholar
  34. 34.
    Yin RK (1994) Case Study Research. Design and Methods. Thousand Oaks, CaliforniaGoogle Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2004

Authors and Affiliations

  • Regina Jarmalaite
    • 1
  • Irina Sekundo
    • 1
  1. 1.Stockholm School of Economics in RigaRigaLatvia

Personalised recommendations