Publication Details
Abstract
This study examines the evolution of governance structures within international service franchising networks. By integrating transaction cost economics (TCE) and the resource-based view of the firm (RBV), the paper develops a conceptual frame-work of strategic fit, arguing that firm performance depends on the alignment between formal governance mechanisms and the degree of local adaptation required by the host market. Using panel data from leading international service brands covering the period 2018–2025, the study applies fixed-effects regression analysis to investigate the inter-action between administrative control and local adaptation capabilities. The empirical findings indicate that hybrid governance models achieve superior performance by combining formal standardization of operational routines and technical capabilities with informal mechanisms based on relational trust, social capital, and knowledge ex-change. The results suggest that such governance configurations are particularly effective in reducing institutional uncertainty, limiting opportunistic behavior, and supporting the cross-border transfer of organizational knowledge. Rather than relying exclusively on centralized control or extensive decentralization, successful international service franchises appear to benefit from maintaining a dynamic balance between global con-sistency and local responsiveness.