Internationalization of Brazilian Franchisors: A Psychic Distance Perspective

Informações

Código: MKT1766
Divisão: MKT - Marketing
Tema de Interesse: Tema 07 - Varejo, Canais de Distribuição e Gestão de Preços

Autores

Patricia de Salles Vance, Thomas Brashear Alejandro, Daniela Motta Romeiro Khauaja

Resumo

Franchising has emerged as an important retailing and entrepreneurial venture on aglobal scale and represents one of the key entry methods commonly used by the retail sectorfor international expansion. Both theoretical and empirical papers have been published onmotives for international franchising and on the selection of the mode of entry. However, veryfew studies have attempted to fully address another important issue: the selection of the hostcountries by franchisors. Although recent research has been done on the expansion ofdeveloped countries franchisors to emerging markets, most studies on internationalfranchising are based on cases and data from countries where this industry is in a moreadvanced stage as compared to emerging countries. During the 1980s, franchisors fromdeveloped countries entered the Brazilian market and in the last decade a growing number ofBrazilian franchisors are expanding their operations abroad. Brazil is among the ten largestcountries by number of franchised brands and units. Thus, the purpose of this study is toinvestigate if the selection of host countries by Brazilian franchisors can be explained as afunction of lower measured psychic distance. This issue is addressed considering the Uppsalamodel as the theoretical framework as it has been developed and frequently applied toinvestigate the selection of target countries. One important aspect of this model is the psychicdistance construct, which advocates that companies will first expand abroad to markets withlower psychic distance in relation to the home country. Psychic distance is defined as afunction of similarities in language, political system and economic and educational levels asthose of the company’s country of origin. In this study, this construct is used to develophypotheses regarding the countries and regions chosen by Brazilian franchisors. A log-linearmodel is estimated using secondary data of all 68 companies reported by the BrazilianFranchising Association (ABF) in October 2010 to have units in foreign countries. Ordinaryleast squares (OLS) multiple regression estimation method was used to estimate theparameters of the regression. The results reveal that: (1) psychic distance measures such asgeographic distance, common language and market size are relevant factors to explain thenumber of franchisors found in a country; (2) the presence of a large Brazilian populationpresented a positive and significant coefficient signaling that these companies are followingthe path of their customers; (3) however, no relation was found with some frequently testedstimulus such as bordering countries, GDP per capita and Kogut and Singh’s cultural index.Furthermore, Brazilian franchisors with international operations, on average, have largernetworks, are older in years of operation and been franchising longer, than firms that are notinternationalized.

Abrir PDF