Replicate or adapt? Franchising and organizational routines

Abstract

Purpose The purpose of this paper is to introduce strategy as a factor that explains when franchisors – through the franchisees they select – seek to replicate routines exactly versus allow local adaptation of routines. Design/methodology/approach Combined archival and survey data from 248 US and Canadian franchisors actively seeking franchisees were used to test hypotheses via structural equation modeling. The robustness of results was comprehensively explored. Findings As hypothesized, results suggest that franchisors pursuing plural form strategies select franchisees with traits that foster replication, such as prior managerial experience and the desire to become multi-outlet franchisees. Those franchisors pursuing turnkey strategies seek franchisees who exhibit a willingness to experiment and adapt. In contrast to expectations, plural form franchisors were more likely to seek franchisees with local market knowledge. Originality/value Strategy influences whether franchisors select franchisees who will replicate versus adapt organizational routines. The authors introduce strategy as a factor affecting the extent to which routines are replicated exactly versus adapted locally. For franchising research, they challenge prior theory by explaining why franchisors invest in franchisee selection rather than waiting for the best franchisees to self-select into franchising.

The effects of inter-organizational compatibility on knowledge transfer in cross-border M&As

“…Routine and knowledge compatibility serving as the flexible capability and resource may enhance absorptive capacity to improve knowledge transfer (Yildiz and Fey, 2010; Wang et al , 2017). Absorptive capacity has been widely proven to play a pivotal role in knowledge transfer in cross-border M&As (Yildiz et al , 2019; Maalouf et al , 2020; Zhou et al , 2020). Absorptive capacity is closely related to knowledge and routine compatibility (Eric, 2016).…”

“…Organizational routines can be seen as a part of tacit knowledge (Szulanski and Jensen, 2004). In addition, relevant knowledge is the basis of organizational routines, and previous knowledge may be encoded in them (Chen et al , 2016; Maalouf et al , 2020; Bloodgood, 2019). Obviously, routines are intertwined with knowledge.…”

Micro design in inter-organizational hybrid governance: a study on product adaptation, reverse knowledge transfer and integration mechanism

“…Therefore, instead of choosing between standardization or adaptation separately, some companies give autonomy to agents (subsidiaries) to initiate innovation independently (Evanschitzky et al , 2016; Maalouf et al , 2020; Miao et al , 2011). It allows hybrid governance to adopt a mixed strategy by allowing some marketing elements to be standardized by the principal and other elements to be adjusted according to local preferences at the agent location, such as product adaptation strategy.…”

A systematic review of international franchising

“…Questions related to the adaptation process over time (Jean et al, 2016;Maalouf et al, 2020) and to what areas of the firm should be standardized or adapted in international markets, in addition to other related questions, provide an important area for research. Furthermore, the study of standardization-adaptation marketing strategies and branding decisions in international franchise firms can be a potential arena for cross-disciplinary research.…”

“…There is a need for more longitudinal data on franchising (Maalouf et al, 2020), originating beyond the US (Perrigot et al, 2013). Moreover, the majority of IF studies assume the franchisor's perspective, in spite of the current availability of international franchising studies from the franchisee's perspective (Xiao et al, 2008;Yeung et al, 2016).…”