The effect of corruption on global franchising in emerging markets

Abstract

Although emerging markets are some of the fastest growing economies and represent countries that are experiencing a substantial economic transformation, little is known about the factors influencing choices of foreign entry mode in those markets. In an attempt to expand our knowledge of this topic, this paper presents an empirical assessment of the relationship between corruption and the four possible modes of entry that franchiser companies can adopt overseas: direct franchising, master franchising, joint venture and direct investments. Besides country corruption, other variables – political stability, per-capita income, cultural distance, geographical distance and international experience – were also controlled.