Market Intelligence and International Franchise Attraction: Evidence From A Regional Panel Analysis in an Emerging Economy

Attracting international franchise brands has become an increasingly important strategy for fostering investment inflows and regional economic development in emerging economies. Previous studies have highlighted that market size, institutional quality, and infrastructure are crucial. However, there is little information on how market intelligence, as a specific source of information, might affect franchise location decisions. This research examines the impact of international franchise attraction on market intelligence. Regional panel data from an emerging economy marks the first step ahead. Using a panel estimation approach for regional data within the years 2016-2023, we measure international franchise attraction through both in-migration and out-migration indicators. For market intelligence, we have developed an index taking into account information accessibility and institutionalization as well as availability (see Appendix A). Fixed-effect and random-effect estimators are applied to accommodate unobserved regional heterogeneity, and various tests confirmed the robustness of our results. The results show a significant and positive relationship between market intelligence and international franchise attraction. That is to say, strong market information systems attract larger amounts of foreign enterprises. These conclusions are confirmed under different model specifications and definitions of variables. From the nationwide studies of franchising, this study brings further evidence in econometric analysis to show that market intelligence is an important determinant of international franchise attraction within a country. In addition, the conclusions also have policy relevance. The importance of accelerating institutional market intelligence systems is apparent: the above findings not only have significance for local and regional policy makers seeking to attract franchises from abroad.