How do ESG factors influence the internationalization of Brazilian franchise chains? A comparative study of developed and emerging economies
Rosmary Cardoso Saad, Pedro Lucas de Resende Melo, Thelma Valéria Rocha RodriguesPurpose
This study aims to investigate how ESG (environmental, social and governance) practices influence the internationalization of Brazilian franchise chains by comparing developed and emerging economies. It examines whether ESG performance and ESG-related risks affect market attractiveness and how these effects are conditioned by institutional context and moderated by gross domestic product (GDP) per capita.
Design/methodology/approach
A quantitative approach was used using secondary data from 131 Brazilian franchise chains operating in 80 countries, totaling 1,515 franchised units. ESG performance indicators were obtained from Robeco, and ESG risk scores from Global Risk Profile. Multiple linear regression models and interaction terms were applied to test five hypotheses, distinguishing between developed and emerging economies.
Findings
In developed economies, ESG performance alone is not positively associated with internationalization; however, when moderated by GDP per capita, it enhances market attractiveness, whereas higher ESG risks reduce internationalization, particularly in high-income contexts. In emerging economies, ESG governance emerges as the most relevant driver of international expansion, reflecting its role in mitigating institutional uncertainty. Overall, the results confirm that ESG effects vary across institutional maturity and economic development.
Practical implications
The findings can guide franchise chains in adapting ESG strategies to institutional contexts, highlighting the need for differentiated approaches across developed and emerging economies to optimize international expansion choices.
Social implications
By promoting context-sensitive ESG practices, the study supports responsible business conduct and sustainable development in host markets.
Originality/value
This study is among the first to incorporate both ESG performance and ESG-related risks into the analysis of franchise internationalization. It advances theoretical insights by integrating institutional theory, stakeholder theory, internalization theory and resource dependence theory, offering a comprehensive framework for understanding international strategies in heterogeneous markets.