The relationship between new venture entry mode and firm performance

Abstract

Grounded in the knowledge-based view of the firm, this paper compares the performance outcomes from different modes of new venture entry. Data from new hotels entering the United Kingdom between 2006-2010 was used to explore how entry mode (i.e., franchised or independent) impacts post-entry firm performance. Controlling for market demand and market segments, this study found that affiliation with a franchise made it easier for new owners to ramp up revenues in the first six months if the service had a high level of operational complexity (e.g., full-service hotels). After this initial benefit period no significant performance benefit accrued to branded frill-service hotels. In contrast, hotels that offered less complex services obtained higher levels of performance when relying on independent status vs. brand affiliation between six and twenty-four months after entry. Implications of the results are offered in the context of determining the value of explicit versus tacit knowledge obtained from external sources versus going it alone as an entrepreneur.

Is more better? The relationship between meeting space capacity and hotel operating performance

“…RevPAR is one of the most important performance measures in the hotel industry (Chung & Kalnins, 2001;Ismail, Dalbor, & Mills, 2002). This performance indicator is used by hotel managers as the basis for long-term business planning and is also of interest to investors, hotel owners, and propertylevel general managers (Enz, Canina, & Palacios-Marques, 2013). RevPAR is calculated on a monthly basis by dividing monthly revenues for a time period by the number of rooms available for sale in the same time period.…”

To affiliate, or not to affiliate. Transaction costs and governance choices in luxury hotels in Germany

“…The dependent variable of our research is the AFFILIATION. To measure this variable, we followed the methodology used by Enz et al. (2013).…”

“…Where once affiliation to a hotel chain was perceived as a reliable guarantor for the personalised and memorable experience, properties owners and investors see themselves confronted with the decision to either affiliate or not affiliate to a chain of hotels. In this light, a significant number of studies has been focused on the performance differences between affiliated and not affiliated hotels (Carlbäck, 2011; Carvell et al., 2016; Enz et al., 2013; Kim and Kim, 2005; O’Neill and Carlbäck, 2011; O’Neill and Mattila, 2010; Praporski, 2008).…”

How Fast Do New Hotels Ramp Up Performance?

“…Brand-managed hotels may bring a stronger commitment to operating procedures and more extensive know-how than franchisee-managed new businesses (Contractor and Sumit 1998). As we determine whether and how quickly new entrants reach the performance of incumbent hotels, we also compare the ramp-up times of franchising with independent and unaffiliated hotels because of the importance that operating form (i.e., brand managed, franchisee managed, and independent) may play in facilitating new venture success (Enz, Canina, and Palacios-Marques 2013).…”