Franchising, brand name capital, and the entrepreneurial capacity problem

Seth Norton

Strategic Management Journal, 1988, vol. 9, issue S1, 105-114

Abstract: One consequence of vertical integration is increased firm size with the related problem of monitoring employees in a large enterprise. Writers on the theory of the firm suggest that this phenomenon is part of the entrepreneurial capacity problem. This paper argues that quasi‐vertical integration via franchising can circumvent the problem and lead to larger‐scale retail outlets. Using U.S. Census data from the eating place and motel industries, the empirical evidence in this paper suggests that physical dispersion of outlets and the value of brand name capital increase the entrepreneurial capacity problem, but that franchising offsets these forces and permits somewhat larger local outlets than using nonfranchised operations.

Date: 1988
References: Add references at CitEc
Citations: View citations in EconPapers (44)

Downloads: (external link)
https://doi.org/10.1002/smj.4250090711

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:stratm:v:9:y:1988:i:s1:p:105-114

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0143-2095

Access Statistics for this article

More articles in Strategic Management Journal from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().