Abstract
This paper deals with the economic rationality underlying organizational innovations in franchising and the rationale behind them. Using Brazilian primary data, we obtain evidence that spatial distribution of microfranchised units is sensitive to the sector of activity. Our results suggest that labor-intensive activities are suitable for microfranchised units in less populated municipalities. In addition, we provide evidence that the spatial distribution of microfranchising reflects network growth. Indeed, larger networks, in terms of number of units as well as territorial extension, are more likely to be present in smaller markets than smaller networks. Older networks (incumbents) that had a business experience prior to franchising tend to concentrate their franchised units in densely populated areas, while entrants that adopted microfranchising from their foundation target unexplored markets in less populated municipalities.
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Notes
- 1.
The authors are grateful to editor Gérard Cliquet for his help in removing ambiguities and clarifying the concepts.
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Acknowledgement
We gratefully acknowledge the support of the University of São Paulo—Comité Français d’Evaluation de la Coopération Universitaire et Scientifique avec le Brésil Programme (USP-COFECUB 2017–2020) under grant agreement no. Uc Sh 165-17. We would like to thank Professor Gérard Cliquet for insightful comments. Additional thanks go to the Brazilian Franchising Association (Associação Brasileira de Franchising—ABF) for its collaboration in the data collection process. The usual caveats apply.
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Nunes, R., Silva, VL.S., Fadairo, M., Saes, M.S.M. (2019). Why Adopt Microfranchising? Evidence from Brazil on an Organizational Innovation Designed to Face New Challenges. In: Windsperger, J., Cliquet, G., Hendrikse, G., Srećković, M. (eds) Design and Management of Interfirm Networks. Contributions to Management Science. Springer, Cham. https://doi.org/10.1007/978-3-030-29245-4_5
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