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Using Resource–Based Theory to Help Explain Plural Form Franchising

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  • William E. Gillis
  • James G. Combs
  • David J. Ketchen Jr.

Abstract

Agency theory is the dominant explanation for entrepreneurs’ decisions about how much to grow through franchising vis–à –vis company ownership. We introduce a resource–based explanation and submit that the proportion franchised is influenced by efforts to organize franchisor–owned and relational strategic assets so that their value can be best leveraged to meet key strategic goals. Using data from 168 franchisors, we found that relational (i.e., interfirm trust and knowledge–sharing routines), but not franchisor–owned (i.e., brand reputation and operating routines), strategic assets influence the proportion franchised. The study offers preliminary evidence that resource–based theory has merit as a complementary explanation for franchising.

Suggested Citation

  • William E. Gillis & James G. Combs & David J. Ketchen Jr., 2014. "Using Resource–Based Theory to Help Explain Plural Form Franchising," Entrepreneurship Theory and Practice, , vol. 38(3), pages 449-472, May.
    • Handle: RePEc:sae:entthe:v:38:y:2014:i:3:p:449-472
    DOI: 10.1111/etap.12008
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    3. Pushpinder Gill & Stephen K. Kim, 2021. "From franchisee experience to customer experience: their effects on franchisee performance," Journal of the Academy of Marketing Science, Springer, vol. 49(6), pages 1175-1200, November.
    4. Bretas, Vanessa P.G. & Alon, Ilan & Rocha, Thelma Valéria & Galetti, Jefferson R.B., 2021. "International governance mode choice: Evidence from Brazilian franchisors," Journal of International Management, Elsevier, vol. 27(2).
    5. Stanković, Milica, 2014. "Agricultural Franchising And Contribution To Achieving Objectives Of The Eu Common Agricultural Policy," Economics of Agriculture, Institute of Agricultural Economics, vol. 61(4), pages 1-15, December.
    6. Griessmair, Michele & Hussain, Dildar & Windsperger, Josef, 2014. "Trust and the tendency towards multi-unit franchising: A relational governance view," Journal of Business Research, Elsevier, vol. 67(11), pages 2337-2345.
    7. Gillis, William E. & Combs, James G. & Yin, Xiaoli, 2020. "Franchise management capabilities and franchisor performance under alternative franchise ownership strategies," Journal of Business Venturing, Elsevier, vol. 35(1).
    8. Francesco Chirico & Dianne H. B. Welsh & R. Duane Ireland & Philipp Sieger, 2021. "Family versus Non‐Family Firm Franchisors: Behavioural and Performance Differences," Journal of Management Studies, Wiley Blackwell, vol. 58(1), pages 165-200, January.
    9. Dildar Hussain & Marijana Sreckovic & Josef Windsperger, 2018. "An organizational capability perspective on multi-unit franchising," Small Business Economics, Springer, vol. 50(4), pages 717-727, April.
    10. Ghantous, Nabil & Das, Shobha S. & Chameroy, Fabienne, 2018. "Governance capabilities and relationship performance in international franchising," Journal of Retailing and Consumer Services, Elsevier, vol. 40(C), pages 19-30.

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