Modelling the level of franchising in Taiwan : a test of resource-scarcity theory and agency theory

Franchising is a popular method for achieving rapid growth by providing access to capital, markets, and local expertise (Kalnins & Mayer, 2004). The cost of such access to resources is possible loss of control. This study extends the results of a study, currently under review with the Journal of Asia Pacific Marketing and Logistics. Results showed the proportion of franchised outlets amongst Taiwanese firms is directly related to the size of the franchise, age of the firm, and the level of capital investment for a franchisee. These results were in the opposite direction hypothesised from resource-scarcity theory and agency theory and found in Western economies (Alon, 2001; Combs & Ketchen, 1999a). The implication is that Taiwanese franchisers adapt Western-style systems to develop a uniquely Taiwanese style of franchising. The successful experience of the Taiwan franchising system can be a good example for other countries to invest in China and shows Taiwanese enterprise has an entrepreneurial personality. By expanding in Taiwan, many international franchisers use this as a platform to expand into China (Hoffman & Preble, 2004).13 page(s