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Plural forms versus franchise and company-owned systems: A DEA approach of hotel chain performance

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  • Botti, Laurent
  • Briec, Walter
  • Cliquet, Gérard
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    Abstract

    Plural form tends to be the most popular organization form in retail and service networks compared to purely franchised or purely company-owned systems. In the first part, this paper exposes the evolution of researchers' state of mind from the way of thinking which considers franchising and ownership as substitutable organizational forms to theories which analyze the utilization of both franchise and company arrangements. The paper describes the main attempts to explain theoretically the superiority of plural forms. In the second part, the paper discusses the hypothesis which says that there is a relationship between the organizational form of the chain and its efficiency score. It is demonstrated through the application of a data envelopment analysis method on French hotel chains that plural form networks are in average more efficient than strictly franchised and wholly owned chains. The Kruskal-Wallis test which is a distribution-free rank-order statistic is used to statistically verify this relationship. The result does not permit the rejection of the null hypothesis regarding whether an organizational form is more efficient than another one. Hence, this paper opens prospects for researches aiming at testing the organizational form effect on different samples and with other methods.

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    Bibliographic Info

    Article provided by Elsevier in its journal Omega.

    Volume (Year): 37 (2009)
    Issue (Month): 3 (June)
    Pages: 566-578

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    Handle: RePEc:eee:jomega:v:37:y:2009:i:3:p:566-578

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    Related research

    Keywords: Franchise Company-owned system Plural form DEA Efficiency; Kruskal-Wallis;

    References

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    1. Li, Yongjun & Liang, Liang & Chen, Yao & Morita, Hiroshi, 2008. "Models for measuring and benchmarking olympics achievements," Omega, Elsevier, vol. 36(6), pages 933-940, December.
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    15. Sueyoshi, Toshiyuki & Aoki, Shingo, 2001. "A use of a nonparametric statistic for DEA frontier shift: the Kruskal and Wallis rank test," Omega, Elsevier, vol. 29(1), pages 1-18, February.
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    Citations

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    Cited by:
    1. Marco Corsino & Enrico Zaninotto, 2012. "Revealing the influence of managerial practices and entrepreneurs' characteristics on hotel efficiency," DISA Working Papers 2012/03, Department of Computer and Management Sciences, University of Trento, Italy, revised May 2012.
    2. Samoilenko, Sergey & Osei-Bryson, Kweku-Muata, 2013. "Using Data Envelopment Analysis (DEA) for monitoring efficiency-based performance of productivity-driven organizations: Design and implementation of a decision support system," Omega, Elsevier, vol. 41(1), pages 131-142.
    3. Paul Amadieu & Karine Picot-Coupey & Jean-Laurent Viviani, 2013. "Organizational choices and financial performance: the case of company-owned stores, franchisee-owned stores and stores-within-a-store among French fashion retailers," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201335, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    4. Rozenn Perrigot & Thierry Pénard, 2012. "Determinants of E-commerce adoption by franchisors: Insights from the U.S. market," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201206, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    5. Odeck, James, 2009. "Statistical precision of DEA and Malmquist indices: A bootstrap application to Norwegian grain producers," Omega, Elsevier, vol. 37(5), pages 1007-1017, October.
    6. Assaf, A. George & Barros, Carlos & Sellers-Rubio, Ricardo, 2011. "Efficiency determinants in retail stores: a Bayesian framework," Omega, Elsevier, vol. 39(3), pages 283-292, June.
    7. Santos, Sérgio P. & Amado, Carla A.F., 2014. "On the need for reform of the Portuguese judicial system – Does Data Envelopment Analysis assessment support it?," Omega, Elsevier, vol. 47(C), pages 1-16.
    8. Isabelle Piot-Lepetit & Rozenn Perrigot & Gérard Cliquet, 2014. "Organizational form and efficiency of franchise chains," Working Papers 264691, Institut National de la Recherche Agronomique, France.
    9. Du, Juan & Liang, Liang & Chen, Yao & Bi, Gong-bing, 2010. "DEA-based production planning," Omega, Elsevier, vol. 38(1-2), pages 105-112, February.
    10. Fukuyama, Hirofumi & Weber, William L., 2010. "A slacks-based inefficiency measure for a two-stage system with bad outputs," Omega, Elsevier, vol. 38(5), pages 398-409, October.
    11. Chia Sun, 2014. "A conceptual framework for R&D strategic alliance assessment for Taiwan’s biotechnology industry," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(1), pages 259-279, January.

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