Human Capital Intangibles and Performance of Franchise Networks: A Complementary View between Agency and Critical Resource Perspectives

Abstract

International audienceThis article examines the impact of human capital intangibles on the governance structure of franchise networks (i.e., proportion of franchised outlets) and the joint impact of human capital intangibles and governance on the performance of franchisors. Agency theory focuses on the free-riding hazard and the costs associated with franchising in the context of high human capital intangibles. The critical resources theory highlights the weakness of company ownership and the advantages of using franchising in this context. Tests of the hypotheses derived from these theoretical Frameworks indicate that these complementarily explain the governance structure and financial performance of franchise networks

Performance implications of centrality in franchisee advice networks

“…Second, research on planning and management of networks, in particular in franchising, has widely treated personal relationships within the organizational design implicitly, although the superiority of networks to other organizational designs depends on individuals who convert organizational potential into reality (Clarkin & Rosa, 2005;Cumberland & Githens, 2012;Inkpen, 1996;Jarillo, 1988;Meiseberg & Ehrmann, 2011;Michael, 1996;Tallman, Jenkins, Henry, & Pinch, 2004;Tsai, 2001). Finally, research has addressed various aspects of relational governance for alleviating organizational problems (for example, Cochet et al, 2008;Perdreau, Le Nadant, & Cliquet, 2015), yet we provide evidence specifically on when relational governance can help organize knowledge-sharing processes in the context of interfranchisee communication.…”

The influence of entrepreneurial personality on franchisee performance: A cross-cultural analysis

“…Indeed, whilst several studies have considered system level performance (El Akremi et al, 2015;Gorovaia and Windsperger, 2013;Lanchimba et al, 2018;Perdreau et al, 2015), studies on franchisee performance (i.e., at unit level) are limited (Barthélemy, 2008). Franchisees are often portrayed as unitary actors who "follow predictable courses of action solely based on the logic of anticipatory consequences" (Dant et al, 2013, p. 280), in response to stimuli.…”

“…The importance of screening and recruiting franchisees has been acknowledged as critical to the success of the franchise system (Jambulingam and Nevin, 1999), but little attention has been devoted to identifying how franchisee personality impacts their behaviour and performance. Indeed, while several studies have considered system-level performance (El Akremi et al, 2015;Gorovaia and Windsperger, 2013;Lanchimba et al, 2018;Perdreau et al, 2015), studies on franchisee performance (i.e. at unit level) are limited (Barthélemy, 2008).…”

Performance in Franchise Systems : The Franchisee Perspective

“…Although in a franchise system, the franchisor sets the standard and policy, the performance of a franchisee is also explained by referring to the franchisees characteristics Combs, 2008, Marnburg et al, 2004). A significant amount of value of the firms is associated with the firm's resources and capabilities (Perdreau et al, 2015) and franchisors strive to select the best potential franchisee to enhance the network performance. Therefore, by taking the strategic management and entrepreneurship perspectives, as well as resource-based view, important factors in the franchisee's performance will be discussed and hypotheses proposed in each section.…”

“…It can also affect the firm's dynamic capabilities, improve them, and lead the franchisee to high performance (Perdreau et al, 2015, Florin et al, 2003. According to previous studies, there is a relation between human capital and success (e.g., Bosma et al, 2004, Van der Sluis et al, 2005.…”