Determinants of restaurant internationalization: an upper echelons theory perspective

Abstract

Purpose The purpose of this research is to account for the internationalization of restaurants. The conceptual framework of upper echelons theory is applied to identify the demographic determinants of internationalization among chief executive officers (CEOs). Design/methodology/approach Data from 30 restaurant firms for the period 1999-2013 were collected from a variety of sources, primarily Compustat and Execucomp, based on Standard Industrial Classification (SIC) code 5812, the annual 10-K and public information. A panel feasible generalized least squares model was used as the main instrument of analysis. Findings The findings indicate that the CEO gender and share ownership negatively affect the internationalization of restaurant companies, whereas size, the extent of franchising, the type of restaurant and stock options positively affect the degree of internationalization. Additionally, an inverted U-shaped relation exists between CEO tenure and the degree of internationalization. Practical implications The presented information may provide shareholders and boards of directors with valuable guidelines regarding the assignment of appropriate managers depending on the extent to which their companies are pursuing internationalization strategies. Originality/value Most studies in hospitality sectors have focused only on accounting-based measures to explain strategic decision-making, although proponents of upper echelons theory have argued that CEO attributes influence strategic decisions/changes. This study contributes to the literature on hospitality by identifying the effects of CEO characteristics on internationalization decisions.

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