An organizational capability perspective on multi-unit franchising

Previous research on multi-unit franchising (MUF) has primarily focused on agency and transaction cost perspectives. The present study develops and tests an organizational capability (OC) model of the franchisor’s choice of MUF. According to the OC view, the franchisor gains a competitive advantage...

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Bibliographic Details
Published in:Small business economics 2018-04, Vol.50 (4), p.717-727
Main Authors: Hussain, Dildar, Sreckovic, Marijana, Windsperger, Josef
Format: Article
Language:English
Subjects:
Business administration
Competitive advantage
Exploitation
Franchising
Governance
Humanities and Social Sciences
Regression analysis
Studies
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Summary:Previous research on multi-unit franchising (MUF) has primarily focused on agency and transaction cost perspectives. The present study develops and tests an organizational capability (OC) model of the franchisor’s choice of MUF. According to the OC view, the franchisor gains a competitive advantage by exploration and exploitation of firm-specific resources and capabilities. We hypothesize that, if the franchisor expects to obtain a competitive advantage resulting from higher exploration and exploitation capabilities when using MUF as opposed to single-unit franchising, the franchisor will more likely choose MUF as a governance mode of the franchise system. Based on empirical data from the German and Swiss franchise sectors, the results of the regression analysis support these hypotheses. Our main contribution to the franchise literature is the development of an OC model of the franchisor’s choice of MUF that complements the existing organizational economics explanation of MUF.
ISSN:0921-898X
1573-0913
DOI:10.1007/s11187-017-9891-5