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Determinants of E-commerce adoption by franchisors: Insights from the U.S. market

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Author Info

  • Rozenn Perrigot

    (Graduate School of Management (IGR-IAE), University of Rennes 1 & ESC Rennes School of Business - CREM-CNRS, France)

  • Thierry Pénard

    (University of Rennes 1 - CREM-CNRS, France)

Abstract

E-commerce has grown tremendously over the past decade. This paper focuses on E-commerce adoption within the franchising sector. We formulate various hypotheses on the factors that influence the adoption of an E-commerce strategy by franchisors, namely the percentage of company-owned stores in the network, network size and age, franchisor resources (franchising fees and franchising royalties), and the allocation of exclusive territories to franchisees. The empirical study relies on a sample of 486 franchise networks in the U.S. market. Our findings suggest that the percentage of company-owned stores and the brand image, as represented by network size, both exert a significant and positive impact on the adoption of an E-commerce strategy, whereas network age and franchising royalties exert a significant and negative impact on the adoption of such a strategy. These findings are discussed with respect to previous research results.

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Bibliographic Info

Paper provided by Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS in its series Economics Working Paper Archive (University of Rennes 1 & University of Caen) with number 201206.

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Date of creation: Jan 2012
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Handle: RePEc:tut:cremwp:201206

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Postal: CREM (UMR CNRS 6211) – Faculty of Economics, 7 place Hoche, 35065 RENNES Cedex
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Postal: CREM (UMR CNRS 6211) - Faculty of Economics, 7 place Hoche, 35065 Rennes Cedex - France
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Related research

Keywords: E-commerce; franchising; determinants; plural form; brand image; franchisors' resources;

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References

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  1. Francine Lafontaine, 1992. "Agency Theory and Franchising: Some Empirical Results," RAND Journal of Economics, The RAND Corporation, vol. 23(2), pages 263-283, Summer.
  2. Francine Lafontaine & Kathryn L. Shaw, 1996. "The Dynamics of Franchise Contracting: Evidence from Panel Data," NBER Working Papers 5585, National Bureau of Economic Research, Inc.
  3. Chris Forman, 2005. "The Corporate Digital Divide: Determinants of Internet Adoption," Management Science, INFORMS, vol. 51(4), pages 641-654, April.
  4. Blair,Roger D. & Lafontaine,Francine, 2005. "The Economics of Franchising," Cambridge Books, Cambridge University Press, number 9780521772525.
  5. Ruby Roy Dholakia & Nir Kshetri, 2004. "Factors Impacting the Adoption of the Internet among SMEs," Small Business Economics, Springer, vol. 23(4), pages 311-322, November.
  6. Arturs Kalnins, 2004. "An Empirical Analysis of Territorial Encroachment Within Franchised and Company-Owned Branded Chains," Marketing Science, INFORMS, vol. 23(4), pages 476-489, September.
  7. Michael, Steven C., 2003. "First mover advantage through franchising," Journal of Business Venturing, Elsevier, vol. 18(1), pages 61-80, January.
  8. Martin, Ludivine & Penard, Thierry, 2005. "Investing in a Website: A Top Dog or a Resource-Based Strategy for Firms?," MPRA Paper 2503, University Library of Munich, Germany.
  9. Pierre Azoulay & Scott Shane, 2001. "Entrepreneurs, Contracts, and the Failure of Young Firms," Management Science, INFORMS, vol. 47(3), pages 337-358, March.
  10. Francine Lafontaine & Joanne E. Oxley, 2004. "International Franchising Practices in Mexico: Do Franchisors Customize Their Contracts?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(1), pages 95-123, 03.
  11. Botti, Laurent & Briec, Walter & Cliquet, Gérard, 2009. "Plural forms versus franchise and company-owned systems: A DEA approach of hotel chain performance," Omega, Elsevier, vol. 37(3), pages 566-578, June.
  12. Forman, Chris & Goldfarb, Avi & Greenstein, Shane, 2005. "How did location affect adoption of the commercial Internet? Global village vs. urban leadership," Journal of Urban Economics, Elsevier, vol. 58(3), pages 389-420, November.
  13. Perrigot, Rozenn & Cliquet, Gérard & Piot-Lepetit, Isabelle, 2009. "Plural form chain and efficiency: Insights from the French hotel chains and the DEA methodology," European Management Journal, Elsevier, vol. 27(4), pages 268-280, August.
  14. Vincent, William Slater, 1998. "Encroachment: legal restrictions on retail franchise expansion," Journal of Business Venturing, Elsevier, vol. 13(1), pages 29-41, January.
  15. Dunning, John H. & Pak, Yong Suhk & Beldona, Sam, 2007. "Foreign ownership strategies of UK and US international franchisors: An exploratory application of Dunning's envelope paradigm," International Business Review, Elsevier, vol. 16(5), pages 531-548, October.
  16. Mathewson, G Frank & Winter, Ralph A, 1985. "The Economics of Franchise Contracts," Journal of Law and Economics, University of Chicago Press, vol. 28(3), pages 503-26, October.
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