An Empirical Investigation of the Relationships among Climate, Capabilities, and Unit Performance

For the current study, the authors examined the relationships among two dimensions of organizational climate and several indices of individual- and unit-level effectiveness. Specifically, the article proposes that an organization ’s service and training climate would be related to employee capabilities—operationalized in terms of frontline service capabilities and managerial support capabilities—and that such capabilities would be related to unit- level measures of employee turnover and sales growth. Using survey and operational data from 201 management and frontline staff members in 22 units of a national restaurant chain, the results from correlation and regression analyses generally supported the proposed relationships. This study replicates and extends previous research and provides a foundation for future conceptual development and empirical work in this research area.

An Empirical Analysis of Performance Impacts Resulting From Conversion to Franchise Operations

Franchising is an important form of organizational control. Possible benefits of franchising include its ability to reduce agency costs that increase with costly monitoring, and provide incentives for the use of local information by onsite managers. However, these benefits may come at a cost, as franchisees may reduce quality by choosing to free ride. While many studies have investigated the reasons for franchising, few studies have documented the impacts of franchising on unit level operating performance. Using time-series data from a number of lodging properties that were converted to franchisee control from company control, this study documents the performance impacts of franchising. The analysis reveals that conversion results in a modest decline in financial performance and an immediate sharp decline in quality.