Abstract
Many studies have examined the choice between different types of equity and non-equity modes; however, none has focused on the choice between different types of non-equity modes that service firms employ routinely. This study develops a theoretical framework based on the “organizational capability” perspective to explain the choice between two non-equity modes— franchising and management-service contracts. While previous studies are based on the premise that foreign market entrants choose a mode—equity or non-equity—that offers them most control given their particular circumstances, the premise of this study is that foreign entrants choose a non-equity mode that, in addition, offers effective transfer of the firm's capabilities to the host-country venture.
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*M. Krishna Erramilli is Associate Professor and Head of Marketing and International Business Division, Nanyang Business School, Nanyang Technological University, Singapore.
**Sanjeev Agarwal is Associate Professor, Department of Marketing, Iowa State University, Ames, IA.
***Chekitan S. Dev is Associate Professor, School of Hotel Administration, Cornell University, Ithaca, NY.
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Krishna Erramilli, M., Agarwal, S. & Dev, C. Choice Between Non-Equity Entry Modes: An Organizational Capability Perspective. J Int Bus Stud 33, 223–242 (2002). https://doi.org/10.1057/palgrave.jibs.8491014
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DOI: https://doi.org/10.1057/palgrave.jibs.8491014