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An organizational capability perspective on multi-unit franchising

Author

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  • Dildar Hussain

    (Rennes School of Business)

  • Marijana Sreckovic

    (Vienna University of Technology)

  • Josef Windsperger

    (University of Vienna)

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.

Suggested Citation

  • Dildar Hussain & Marijana Sreckovic & Josef Windsperger, 2018. "An organizational capability perspective on multi-unit franchising," Small Business Economics, Springer, vol. 50(4), pages 717-727, April.
    • Handle: RePEc:kap:sbusec:v:50:y:2018:i:4:d:10.1007_s11187-017-9891-5
    DOI: 10.1007/s11187-017-9891-5
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    More about this item

    Keywords

    Multi-unit franchising; Organizational capabilities; Exploration capabilities; Exploitation capabilities; Transaction costs;
    All these keywords.

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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