CENTER FOR INTERNATIONAL BUSINESS EDUCATION AND RESEARCH
(GT CIBER)
WORKING PAPER SERIES
95024

Explaning Why Franchise Companies Expand Overseas

by Scott A. Shane

Abstract

This paper reinforces previous research which finds that international expansion is the result of factors external to the firm (in particular, diminished domestic opportunity). More importantly, however, the paper shows that the external forces argument is incomplete. Internal firm capability plays a significant role in determining which firms facing the same environment will expand internationally. Interestingly, it finds that the capabilities linked with international expansion are different from those linked with domestic expansion.