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Retail Contracting and Organizational Form: Alternatives to Chain Affiliation in the Motel Industry

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  • Michael J. Mazzeo

Abstract

Most of the existing empirical literature on franchising investigates the share of company‐owned versus franchised establishments within large retail firms. This literature typically has not considered the decision of a business owner to operate an independent business or to become a franchisee. This paper empirically analyzes what determines whether independent ownership or affiliation is observed, using data on the affiliation status of 2,293 motel establishments located throughout the United States. Heterogeneity in the underlying economic environment helps explain affiliation choices at the establishment level. The results also suggest that failure to consider independent establishments may explain the puzzling negative correlation between risk and vertical integration commonly found in the empirical franchising literature.

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  • Michael J. Mazzeo, 2004. "Retail Contracting and Organizational Form: Alternatives to Chain Affiliation in the Motel Industry," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(4), pages 599-615, December.
    • Handle: RePEc:bla:jemstr:v:13:y:2004:i:4:p:599-615
    DOI: 10.1111/j.1430-9134.2004.00024.x
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    References listed on IDEAS

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    Cited by:

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    3. Muriel Fadairo & Cintya Lanchimba & Josef Windsperger, 2015. "Network Form and Performance. The Case of Multi-Unit Franchising," Working Papers 1502, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    4. Roger Bate & Ginger Zhe Jin & Aparna Mathur, 2012. "Counterfeit or Substandard? Assessing Price and Non-Price Signals of Drug Quality," NBER Working Papers 18073, National Bureau of Economic Research, Inc.
    5. Jung Hwan Koh & Christian Rojas, 2022. "Multi‐unit ownership and market power: A study of the lodging industry in Texas," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 4087-4105, December.
    6. Muriel Fadairo & Cintya Lanchimba, 2012. "Performance in distribution systems : What is the influence of the upstream firm's organizational choices ?," Working Papers halshs-00727382, HAL.
    7. Ahlin, Christian & Kim, In Kyung & Kim, Kyoo il, 2021. "Who commits fraud? evidence from korean gas stations," International Journal of Industrial Organization, Elsevier, vol. 76(C).
    8. Francine Lafontaine & Marek Zapletal & Xu Zhang, 2019. "Brighter prospects? Assessing the franchise advantage using census data," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 28(2), pages 175-197, April.
    9. Arturs Kalnins, 2017. "Pricing Variation Within Dual-Distribution Chains: The Different Implications of Externalities and Signaling for High- and Low-Quality Brands," Management Science, INFORMS, vol. 63(1), pages 139-152, January.
    10. Brian Wu & Anne Marie Knott, 2006. "Entrepreneurial Risk and Market Entry," Management Science, INFORMS, vol. 52(9), pages 1315-1330, September.
    11. Pavić Lazar & Veljković Božidar & Sešel Bojan, 2018. "Discriminant Analysis - Useful Tool for Predicting Demand in Serbian Motels," Economic Themes, Sciendo, vol. 56(4), pages 503-517, December.
    12. Muriel Fadairo & Cintya Lanchimba Lopez, 2012. "Performance in distribution systems : What is the influence of the upstream firm’s organizational choices ?," Working Papers 1224, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    13. Steven C. Michael, 2022. "Investing in entrepreneurs: The case of franchising," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 3785-3794, December.
    14. Muriel Fadairo & Cintya Lanchimba & Josef Windsperger, 2015. "Network Form and Performance. The Case of Multi-Unit Franchising," Working Papers halshs-01128075, HAL.
    15. Hung‐Hao Chang & D. Daniel Sokol, 2022. "How incumbents respond to competition from innovative disruptors in the sharing economy—The impact of Airbnb on hotel performance," Strategic Management Journal, Wiley Blackwell, vol. 43(3), pages 425-446, March.
    16. Aleix Calveras & Francina Orfila, 2014. "Intermediaries and Quality Uncertainty: Evidence from the Hotel Industry," Tourism Economics, , vol. 20(4), pages 727-756, August.
    17. John Morgan & Henrik Orzen & Martin Sefton & Dana Sisak, 2016. "Strategic and Natural Risk in Entrepreneurship: An Experimental Study," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 25(2), pages 420-454, April.

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