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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. Copyright Blackwell Publishing 2004.

Suggested Citation

  • 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
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    Cited by:

    1. 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.
    2. 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.
    3. 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.
    4. Muriel Fadairo & Cintya Lanchimba & Josef Windsperger, 2015. "Network Form and Performance. The Case of Multi-Unit Franchising," Working Papers halshs-01128075, HAL.
    5. Brian Wu & Anne Marie Knott, 2006. "Entrepreneurial Risk and Market Entry," Management Science, INFORMS, vol. 52(9), pages 1315-1330, September.
    6. 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.
    7. Francine Lafontaine & Marek Zapletal & Xu Zhang, 2017. "Brighter Prospects? Assessing the Franchise Advantage using Census Data," Working Papers 17-21, Center for Economic Studies, U.S. Census Bureau.

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