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Small Business Economics

, Volume 50, Issue 4, pp 717–727 | Cite as

An organizational capability perspective on multi-unit franchising

Evidence from Germany and Switzerland
  • Dildar Hussain
  • Marijana Sreckovic
  • Josef Windsperger
Article

Abstract

Previous research on multi-unit franchising (MUF) has primarily focused on agency and transaction cost perspectives. The present study develops and tests an organizational capability (OC) model of the franchisor’s choice of MUF. According to the OC view, the franchisor gains a competitive advantage by exploration and exploitation of firm-specific resources and capabilities. We hypothesize that, if the franchisor expects to obtain a competitive advantage resulting from higher exploration and exploitation capabilities when using MUF as opposed to single-unit franchising, the franchisor will more likely choose MUF as a governance mode of the franchise system. Based on empirical data from the German and Swiss franchise sectors, the results of the regression analysis support these hypotheses. Our main contribution to the franchise literature is the development of an OC model of the franchisor’s choice of MUF that complements the existing organizational economics explanation of MUF.

Keywords

Multi-unit franchising Organizational capabilities Exploration capabilities Exploitation capabilities Transaction costs 

JEL classification

L14 M21 D23 

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Copyright information

© Springer Science+Business Media New York 2017

Authors and Affiliations

  • Dildar Hussain
    • 1
  • Marijana Sreckovic
    • 2
  • Josef Windsperger
    • 3
  1. 1.Rennes School of BusinessRennesFrance
  2. 2.Vienna University of TechnologyViennaAustria
  3. 3.Department of Business AdministrationUniversity of ViennaViennaAustria

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