The Choice of Governance Modes of International Franchise Firms — Development of an Integrative Model Maria Jell-Ojobor a, ⁎, Josef Windsperger b a Vienna University of Economics and Business, Welthandelsplatz 1, 1020 Vienna, Austria b Department of Business Administration, University of Vienna, Oskar-Morgenstern-Platz 1, A-1090 Vienna, Austria article info abstract Article history: Received 21 December 2012 Received in revised form 9 September 2013 Accepted 10 September 2013 Available online 5 October 2013 This paper examines the evolution of the international franchise research with special focus on the governance modes of the international franchise firm and develops a new model for the franchisor's choice of the international governance modes. International governance modes in franchising refer to wholly-owned subsidiaries, joint venture franchising, area development franchising and master franchising. Although many studies on the governance modes of the international franchise firm have been published in the last two decades, no prior study develops an integrative framework that investigates the determinants of the international governance modes by combining organizational economics and strategic management perspec- tives. Specifically, this study explains the governance modes of the international franchise firm by applying transaction cost theory, agency theory, resource-based and organizational capabilities theory and property rights theory. © 2013 Elsevier Inc. All rights reserved. Keywords: International franchising Governance modes Integrative model Literature review 1. Introduction In the past two decades, researchers have tried to explain international franchising from different theoretical angles. International franchise studies can be classified into five research streams: studies that focus on franchise internationalisation compared to domestic operations (e.g. Alon et al., 2012; Elango, 2007; Eroglu, 1992; Fladmoe-Lindquist, 1996; Huszagh et al., 1992; Julian and Castrogiovanni, 1995; Kedia et al., 1994; Mariz-Pérez and García-Álvarez, 2009; Quinn and Alexander, 2002; Shane, 1996b), the host country conditions and the impact of international franchising (e.g. Aliouche and Schlentrich, 2011; Alon, 2006a; Alon and Banai, 2000; Alon and McKee, 1999a; Baena, 2012; Castrogiovanni and Vozikis, 2000; Grünhagen et al., 2010; Hoffman and Preble, 2001, 2004; Preble, 1995; Sanghavi, 1998; Welsh et al., 2006), the propensity to franchise internationally (e.g. Castrogiovanni et al., 2006; Contractor and Kundu, 1998a,b; Doherty, 2007; Dunning et al., 2007; Erramilli et al., 2002; Fladmoe-Lindquist and Jacque, 1995; Pak, 2002; Petersen and Welch, 2000; Picot-Coupey, 2006, 2009; Sashi and Karuppur, 2002), the cross-border franchisor–franchisee relationship (e.g. Altinay and Miles, 2006; Choo, 2005; Dant and Nasr, 1998; Doherty, 2009; Doherty and Alexander, 2004; Grewal et al., 2011; Kalnins, 2005; Lafontaine and Oxley, 2004; Paik and Choi, 2007; Pizanti and Lerner, 2003; Quinn, 1999; Quinn and Doherty, 2000; Szulanski and Jensen, 2006, 2008), and the choice of international franchise governance modes (e.g. Alon, 2006b; Brookes and Roper, 2011; Burton et al., 2000; Chan and Justis, 1990, 1992; Chen, 2010; Choo et al., 2007; Frazer, 2003; Garg and Rasheed, 2006; Hackett, 1976; Hoffman and Preble, 2003; Jones, 2003; Konigsberg and Rosenstein, 1991; Preble and Hoffman, 2006; Preble et al., 2000; Ryans et al., 1999; Walker and Etzel, 1973; Zietlow, 1995). The aim of this study is to review the international franchise literature and develop an integrative model to explain the franchisor's choice of international governance mode. According to Konigsberg (2008), the most important governance modes of international franchise firms are wholly-owned subsidiary, joint venture franchising, area development franchising and master Journal of International Management 20 (2014) 153–187 ⁎ Corresponding author. E-mail addresses: maria.jell@gmail.com (M. Jell-Ojobor), josef.windsperger@univie.ac.at (J. Windsperger). 1075-4253/$ – see front matter © 2013 Elsevier Inc. All rights reserved. http://dx.doi.org/10.1016/j.intman.2013.09.001 Contents lists available at ScienceDirect Journal of International Management