Journal of the Operational Research Society

, Volume 65, Issue 11, pp 1692–1699 | Cite as

Impact of the industry on franchise chain efficiency: a meta-DEA and context-dependent DEA approach

  • Isabelle Piot-Lepetit
  • Rozenn Perrigot
  • Gérard Cliquet
General Paper

Abstract

A meta-DEA (Data Envelopment Analysis) approach is used to analyse the impact of the industry in which the franchisor operates its business on its chain efficiency by comparing chain efficiency between and across industries (retail versus services). To provide realistic short-term and long-term objectives to inefficient chains, a level-by-level benchmarking path is developed with the context-dependent DEA approach. Furthermore, the joint implementation of both approaches enables an identification of chains for which the industry influences their efficiency, an evaluation of the efficiency share that results from industry-specific factors rather than factors common to the franchise sector as a whole, and the characterization of an implementable and achievable benchmarking defining level-by-level improvements of chain efficiency and taking into account chain characteristics. Such an analysis can help franchisors to define their future strategic and managerial orientations.

Keywords

Data Envelopment Analysis franchising meta-DEA analysis context-dependent DEA analysis benchmarking 

References

  1. Anderson RI, Fok R, Zumpano LV and Elder HW (1998). The efficiency of franchising in the residential real estate brokerage market. Journal of Consumer Marketing 15 (4): 386–396.CrossRefGoogle Scholar
  2. Anderson RI, Fok R and Scott J (2000). Hotel industry efficiency: An advanced linear programming examination. American Business Review 18 (1): 40–48.Google Scholar
  3. Banker RD and Morey RC (1986). Efficiency analysis for exogenously fixed inputs and outputs. Operations Research 34 (4): 513–521.CrossRefGoogle Scholar
  4. Barros CP and Perrigot R (2007). Franchised network efficiency: A DEA application to US networks. In: Cliquet G, Hendrikse G, Tuunanen M and Windsperger J (eds). Economics and Management of Networks: Franchising Networks, Cooperatives, Joint Ventures and Strategic Alliances. Physica-Verlag: Heidelberg, pp 191–212.CrossRefGoogle Scholar
  5. Barthélemy J (2008). Opportunism, knowledge, and the performance of franchise chains. Strategic Management Journal 29 (13): 1451–1463.CrossRefGoogle Scholar
  6. Blair RD and Kaserman DL (1982). Optimal franchising. Southern Economic Journal 49 (2): 494–504.CrossRefGoogle Scholar
  7. Botti L, Briec W and Cliquet G (2009). Plural forms versus franchise and company-owned systems: A DEA approach of hotel chain performance. Omega 37 (3): 566–578.CrossRefGoogle Scholar
  8. Bradach JL (1997). Using the plural form in the management of restaurant chains. Administrative Science Quarterly 42 (2): 276–303.CrossRefGoogle Scholar
  9. Bradach JL (1998). Franchise Organizations. Harvard Business School Press: Boston, MA.Google Scholar
  10. Charnes AW, Cooper WW and Rhodes E (1978). Measuring the efficiency of decision making units. European Journal of Operational Research 2 (6): 429–444.CrossRefGoogle Scholar
  11. Cliquet G and Pénard T (2012). Plural form franchise networks: A test of Bradach’s model. Journal of Retailing and Consumer Services 19 (1): 159–167.CrossRefGoogle Scholar
  12. Combs JG, Michael SC and Castrogiovanni GJ (2004a). Franchising: A review and avenues to greater theoretical diversity. Journal of Management 30 (6): 907–931.CrossRefGoogle Scholar
  13. Combs JG, Ketchen DJ, Shook CL and Short JC (2011). Antecedents and consequences of franchising: Past accomplishments and future challenges. Journal of Management 37 (1): 99–126.CrossRefGoogle Scholar
  14. Combs JG, Ketchen DJ and Hoover VL (2004b). A strategic groups approach to the franchising–performance relationship. Journal of Business Venturing 19 (6): 877–897.CrossRefGoogle Scholar
  15. Cooper WW, Park KS and Yu G (2001). IDEA (Imprecise Data Envelopment Analysis) with CMDs (Column Maximum Decision Making Units). Journal of the Operational Research Society 52 (2): 176–181.CrossRefGoogle Scholar
  16. Dant RP and Kaufmann PJ (2003). Structural and strategic dynamics in franchising. Journal of Retailing 79 (2): 63–75.CrossRefGoogle Scholar
  17. Dant RP, Perrigot R and Cliquet G (2008). A cross-cultural comparison of the plural forms in franchise networks: United States, France, and Brazil. Journal of Small Business Management 46 (2): 286–311.CrossRefGoogle Scholar
  18. Ehrmann T and Spranger G (2004). Successful franchising using the plural form. In: Windsperger J, Cliquet G, Hendrikse G and Tuunanen M (eds). Economics and Management of Franchising Networks. Physica-Verlag: Heidelberg, pp 89–108.CrossRefGoogle Scholar
  19. Färe R, Grosskopf S and Lovell CAK (1994). Production Frontiers. Cambridge University Press: Cambridge, UK.Google Scholar
  20. Hwang S-N and Chang T-Y (2003). Using data envelopment analysis to measure hotel managerial efficiency change in Taiwan. Tourism Management 24 (4): 357–369.CrossRefGoogle Scholar
  21. Johns N, Howcroft B and Drake L (1997). The use of data envelopment analysis to monitor hotel productivity. Progress in Tourism and Hospitality Research 3 (2): 119–127.CrossRefGoogle Scholar
  22. Morey RC and Dittman DA (1995). Evaluating a hotel GM’s performance: A case study in benchmarking. Cornell Hotel and Restaurant Administration Quarterly 36 (2): 18–32.CrossRefGoogle Scholar
  23. Morita H and Zhu J (2007). Context-dependent data envelopment analysis and its use. In: Zhu J and Cook WD (eds). Modelling Data Irregularities and Structural Complexities in Data Envelopment Analysis. Springer: New-York.Google Scholar
  24. O’Donnell CJ, Prasada Rao DS and Battese GE (2008). Metafrontier frameworks for the study of firm-level efficiencies and technology ratios. Empirical Economics 34 (2): 231–255.CrossRefGoogle Scholar
  25. Perrigot R (2006). Service vs. retail chains: Are there any differences? Evidence from the French franchising industry. International Journal of Retail and Distribution Management 34 (12): 918–930.CrossRefGoogle Scholar
  26. Perrigot R, Cliquet G and Piot-Lepetit I (2009). Plural form chain and efficiency: Insights from the French hotel chains and the DEA methodology. European Management Journal 27 (4): 268–280.CrossRefGoogle Scholar
  27. Shane SA (2001). Organizational incentives and organizational mortality. Organization Science 12 (2): 136–160.CrossRefGoogle Scholar
  28. Sorenson O and Sørensen JB (2001). Finding the right mix: Franchising, organizational learning, and chain performance. Strategic Management Journal 22 (6–7): 713–724.CrossRefGoogle Scholar
  29. Tsaur SH (2000). The operating efficiency of international tourist hotels in Taïwan. Asia Pacific Journal of Tourism Research 6 (1): 29–37.Google Scholar
  30. Watson A, Stanworth J, Healeas S, Purdy D and Stanworth C (2005). Retail franchising: An intellectual capital perspective. Journal of Retailing and Consumer Services 12 (1): 25–34.CrossRefGoogle Scholar
  31. Yin X and Zajac EJ (2004). The strategy/governance structure fit relationship: Theory and evidence in franchising arrangements. Strategic Management Journal 25 (4): 365–383.CrossRefGoogle Scholar
  32. Yoo B, Donthu N and Pilling BK (1998). Channel efficiency: Franchise vs. non-franchise systems. Journal of Marketing Channels 6 (3/4): 1–15.CrossRefGoogle Scholar
  33. Zhu J (2004). Quantitative Models for Performance Evaluation and Benchmarking-Data Envelopment Analysis with Spreadsheets and DEA Excel Solver. Kluwer Academic Publishers: Boston.Google Scholar

Copyright information

© Operational Research Society Ltd. 2013

Authors and Affiliations

  • Isabelle Piot-Lepetit
    • 1
  • Rozenn Perrigot
    • 2
    • 3
    • 4
  • Gérard Cliquet
    • 2
    • 4
  1. 1.INRA UMR 1110 MOISAMontpellierFrance
  2. 2.Graduate School of Management, University of Rennes 1RennesFrance
  3. 3.ESC Rennes School of BusinessRennesFrance
  4. 4.Center for Research in Economics and Management (CREM UMR CNRS 6211), University of Rennes 1RennesFrance

Personalised recommendations