Modal choice in a world of alliances: Analyzing organizational forms in the international hotel sector

In the new management landscape, where interfirm collaborations are common, international companies today have fully owned operations and equity joint ventures, as well as non-equity alliances, which in the service sector include franchising and management service agreements. What determines the optimum choice of organizational mode? The new syncretic theory developed in this paper combines concepts from transaction costs theory, agency theory, corporate knowledge and organizational capability theories to answer this question. The paper then tests these concepts to explain the incidence of these modes in the international hotel business, using canonical discriminant analysis, as well as logistical regression using a generalized LOGIT model. The choice of "entry mode" is shown to be determined by both country or environmental variables, as well as firm-specific variables.