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Organizational Form and Performance: Evidence from the Hotel Industry

Author

Listed:
  • Renáta Kosová

    (Cornell University)

  • Francine Lafontaine

    (University of Michigan)

  • Rozenn Perrigot

    (Graduate School of Management, University of Rennes 1 and ESC Rennes)

Abstract

We use a unique proprietary panel data set from a large hotel company to study how organizational form affects hotel pricing and performance. Aggregate data patterns suggest sizable performance differences between franchised and company-operated hotels. However, after controlling for other factors, we find that if significant at all, such differences are economically small. Moreover, once we endogenize the choice of organizational form, the differences become insignificant. We conclude that the company chooses which hotels to franchise and operate corporately such that, conditional on hotel and market characteristics, it obtains consistent outcomes across organizational forms. © 2013 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • Renáta Kosová & Francine Lafontaine & Rozenn Perrigot, 2013. "Organizational Form and Performance: Evidence from the Hotel Industry," The Review of Economics and Statistics, MIT Press, vol. 95(4), pages 1303-1323, October.
  • Handle: RePEc:tpr:restat:v:95:y:2013:i:4:p:1303-1323
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    Cited by:

    1. Christopher Hansman & Jonas Hjort & Gianmarco León & Matthieu Teachout, 2017. "Vertical Integration, Supplier Behavior, and Quality Upgrading among Exporters," NBER Working Papers 23949, National Bureau of Economic Research, Inc.
    2. Thierry Pénard & Rozenn Perrigot, 2015. "Search Online – Purchase Online in Franchising: An Empirical Analysis of Franchisor Website Functionality," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201517, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    3. repec:eee:joreco:v:39:y:2017:i:c:p:164-172 is not listed on IDEAS
    4. repec:eee:jbrese:v:79:y:2017:i:c:p:23-30 is not listed on IDEAS
    5. repec:eee:joreco:v:43:y:2018:i:c:p:209-217 is not listed on IDEAS
    6. Yulia Chikish & Brad R. Humphreys & Crocker H. Liu & Adam Nowak, 2017. "Professional Sports Events, Concerts, and Urban Place Based Policy: Evidence from the Staples Center," Working Papers 17-32, Department of Economics, West Virginia University.
    7. Nathan E. Wilson, 2016. "For-profit status and industry evolution in health care markets: evidence from the dialysis industry," International Journal of Health Economics and Management, Springer, vol. 16(4), pages 297-319, December.
    8. 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.
    9. Hansman, Christopher & Hjort, Jonas & Le�n, Gianmarco & Teachout, Matthieu, 2017. "Vertical Integration, Supplier Behavior, and Quality Upgrading among Exporters," CEPR Discussion Papers 12518, C.E.P.R. Discussion Papers.
    10. Jaedo Choi & Yun Jeong Choi & Minki Kim, 2017. "Vertical Foreclosure with Product Choice and Allocation: Evidence from the Movie Industry," Working papers 2017rwp-107, Yonsei University, Yonsei Economics Research Institute.
    11. 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.
    12. Koch, Thomas G. & Wendling, Brett W. & Wilson, Nathan E., 2017. "How vertical integration affects the quantity and cost of care for Medicare beneficiaries," Journal of Health Economics, Elsevier, vol. 52(C), pages 19-32.
    13. repec:eee:jbrese:v:76:y:2017:i:c:p:108-117 is not listed on IDEAS
    14. 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.
    15. 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.
    16. 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.
    17. Kang, Bohyeon & Jindal, Rupinder P., 2015. "Opportunism in buyer–seller relationships: Some unexplored antecedents," Journal of Business Research, Elsevier, vol. 68(3), pages 735-742.
    18. Nathan E. Wilson, 2015. "Local Market Structure and Strategic Organizational Form Choices: Evidence from Gasoline Stations," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 22(1), pages 119-140, February.
    19. Olena Senyuta, 2013. "Delegation and Performance," CERGE-EI Working Papers wp497, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    20. Rozenn Perrigot, & Isabelle Piot-Lepetit & Gérard Cliquet, 2012. "Plural Form and Franchise Chains Efficency: A Dea Meta-Frontier Approach applied to French Chains," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201210, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    21. Ricard Gil, 2015. "Does Vertical Integration Decrease Prices? Evidence from the Paramount Antitrust Case of 1948," American Economic Journal: Economic Policy, American Economic Association, vol. 7(2), pages 162-191, May.

    More about this item

    Keywords

    hotel pricing; hotel performance; organizational form;

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L8 - Industrial Organization - - Industry Studies: Services
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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