How Firm Strategies Impact Size of Partner-Based Retail Networks: Evidence From Franchising

Abstract

How do firms' partnering strategies impact the size of their partner-based retail networks? We draw on agency theory to address this question in the context of franchising. Our econometric analyses (based on nine years of longitudinal balanced panel data) include assessment of data nonstationarity and estimation of a dynamic panel data model that accounts for unobserved heterogeneity and endogeneity. Our findings indicate that franchisee network size is driven more by franchisor strategies that mitigate agency costs than by strategies that simply lower entry and ongoing costs and barriers for franchisees.

Quality signaling through ex-ante voluntary information disclosure in entrepreneurial networks: evidence from franchising

“…Lafontaine (1993) offers the first empirical assessment of whether franchisors signal their quality by directly operating outlets and through contractual terms such as the royalty rate and franchise fee. Although she did not find empirical support for the use of franchise contract terms as a signal of profitability, Kacker, Dant, Emerson, and Coughlan (2016) and Shane, Shankar, and Aravindakshan (2006) subsequently find support for some previous signaling propositions. The latter claims that the lack of support for the signaling explanation in Lafontaine (1993) by the franchisor for disclosing an estimate of income -is a good example of voluntary information disclosure.…”

Redes de Franquias Estrangeiras e Domésticas em um Mercado Emergente: Análise Comparativa

“…A Teoria da Escassez de Recursos (Madanoglu & Karadag, 2016;Oxenfeld & Kelly, 1969) e a Teoria da Agência (Kacker et al, 2016;Lafontaine, 1992;Jensen & Meckling, 1976) são dois enfoques teóricos centrais para o entendimento do processo de constituição do modelo de franchising, a saber, as etapas de instalação, manutenção e expansão.…”

“…Será utilizada para prestação de serviços e benefícios contínuos oferecidos por parte do franqueador, para o desenvolvimento de produtos e serviços prestados pela rede de franquia (Alon & Mckee, 1999;Kacker et al, 2016).…”

“…Tais elementos estruturantes são representados por meio de proxies como: (a) a taxa de investimento (estágio de instalação) (Shane, 1996a(Shane, , 1998; (b) a taxa de manutenção (estágio de manutenção) (Kacker, Dant, Emerson, & Coughlan, 2016;Shane, 1996aShane, , 1998; (c) a capacidade de monitoramento (estágio de manutenção) (Doherty, Chen, & Alexander, 2014;Huszagh, Huszagh, & McIntyre, 1992;Lafontaine & Kaufmann, 1994); e (d) a capacidade de crescimento (estágio de expansão) (Elango, 2007;Kedia et al, 1995). São proxies que, em conjunto, representam o processo de constituição de uma rede de franquia (Greiner, 1972;Klann, Klann, Postai, & Ribeiro, 2012;Miller & Friesen, 1984), caracterizado pelas etapas de: (a) instalação das unidades, (b) manutenção das atividades existentes e a (c) expansão visando novas unidades.…”

Quality Signaling Through Ex-Ante Voluntary Information Disclosure in Entrepreneurial Networks: Evidence from Franchising

“…Lafontaine (1993) offers the first empirical assessment of whether franchisors signal their quality by directly operating outlets and through contractual terms such as the royalty rate and franchise fee. Although she did not find empirical support for the use of franchise contract terms as a signal of profitability, Kacker, Dant, Emerson, and Coughlan (2016) (Michael, 2009). Although the provision of an FPR is at the discretion of franchisors, they are forced by law to provide truthful information if they decided to provide it.…”