Abstract

In this paper, we examine competing arguments in the choice between geographically concentrated or dispersed, related or unrelated internationalization of born-global firms with a franchising business model. On the one hand, organizational ecology’s legitimacy arguments recommend concentrated and related internationalization as helping reduce legitimacy costs. On the other hand, organizational ecology’s density arguments advise the opposite since enhanced concentration and reliance on similar markets could increase intra-network competition in a limited space for sustainable growth. We develop a moderated mediation model and test how these factors influence born-global firm’s sales units’ (franchisees’) and its own (franchisor’s) business growth.

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