This study investigates the performance of franchise chains through the focus of the resource-based view theory. First, according to the resource-based view, this study expect that franchisor's the intangible resources impact positively with performan...
This study investigates the performance of franchise chains through the focus of the resource-based view theory. First, according to the resource-based view, this study expect that franchisor's the intangible resources impact positively with performance of the franchise chains. Franchisor's intangible resources refer to specific system know-how and brand name.
Second, this study expect that franchisee's the intangible resources have a positive impact on performance of the franchise chains. Franchisees intangible resources refer to can be divided in exploration(innovation and local market knowledge) and exploitation(quality control and administrative ability) capabilities. Third, the contract terms improves the performance of the franchise chains. This study test the hypotheses with questionnaire survey data from the franchise chains manager.
The results is summarized as follows: The specific system know-how and brand name of the franchisor's are positive and significantly associated with increased performance. Also the exploration and exploitation capabilities of the franchisees are positive and significant, providing support for hypothesis 3, 4.
This study makes the following contribution. Complementary to previous studies that mainly focus on performance consequences of governance structures, this study is the first one that tests a resource-based view and contract terms model of performance in franchise chains. Also this study has important implications for the franchisors and managers. The results indicate that the intangible resources of the franchisor are very important performance drivers in franchise chains. Therefore the franchisor has to invest in the development of the specific system know-how and the brand name in order to create competitive advantage of the franchise system. The franchisor has to include other incentive provisions in the franchise contract, in particular when the local market know-how of the franchisees is very important for the success of the franchise system.