An organizational capability perspective on multi-unit franchising

Dildar Hussain (), Marijana Sreckovic and Josef Windsperger
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Dildar Hussain: Rennes School of Business
Marijana Sreckovic: Vienna University of Technology
Josef Windsperger: University of Vienna

Small Business Economics, 2018, vol. 50, issue 4, No 4, 717-727

Abstract: Abstract 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.

Keywords: Multi-unit franchising; Organizational capabilities; Exploration capabilities; Exploitation capabilities; Transaction costs (search for similar items in EconPapers)
JEL-codes: D23 L14 M21 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (4)

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DOI: 10.1007/s11187-017-9891-5

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