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.

A Value Networks Approach to Implementing Integrated Cross-National Business Operations

The removal of trade impediments is expected to cause companies to integrate more of their operations among countries; however, experience shows that behavioral factors often impede the requisite cooperation and commitment among managers from different countries. This paper discusses these behavioral problems from a national perspective and examines an approach to integration, value networks, which is not bounded by nation-states and their differences or similarities.