T Ehrmann

Successful Franchising Using the Plural Form

Many successful franchise companies consist — other than their name might suggest — of more than just the system’s headquarter and its associated franchisees. Besides independent franchise outlets, the majority of chains operates a significant number of company-owned stores run by employed store managers. The evolution and constant existence of these hybrid organizational forms cannot be explained along a pure principal-agent-view and deserves further analysis. As this article explores, plurally organized franchisors may benefit from effects of cost reduction, quality enhancement, growth stimulation and optimized risk control in contrast to pure franchise chains. Within our sample of 240 franchise systems we found strong empirical support for the quality argument of the Plural Form. Compared to pure franchise companies, plurally organized chains are superior in sending out positive signals to any external community containing internal information and thus in reducing costly agent uncertainty. By running company owned stores as well as independent franchise outlets, chains force themselves successfully into cooperational and less opportunistic behavior towards their franchisees.1

Reporting Biases in Empirical Management Research The Example of Win-Win Corporate Social Responsibility

Reporting biases refer to a truncated pool of published studies with the resulting suppression or omission of some empirical findings. Such biases can occur in positive research paradigms that try to uncover correlations and causal relationships in the social world by using the empirical methods of (natural) science. Furthermore, reporting biases can come about because of authors who do not write papers that report unfavorable results despite strong efforts made to find previously accepted evidence and because of a higher rejection rate of studies documenting contradictory evidence. Reporting biases are a serious concern because the conclusions of systematic reviews and meta-analyses can be misleading. The authors show that published evidence in win-win corporate social responsibility (CSR) research tends to overestimate efficiency. The research field expects to find a positive association between corporate social performance (CSP) and corporate financial performance (CFP), and findings meet that expectation. The authors explain how this pattern may reflect reporting bias. The empirical results show strong tentative evidence for a positive reporting bias in the CSP–CFP literature but only weak tentative evidence for CSP efficiency. The study also examines which factors, such as time trends, publication outlet, and study characteristics, are associated with higher reporting biases within this literature.

Lost in Translation? The Prevalence and Performance Impact of Corporate Social Responsibility in Franchising

Corporate social responsibility (CSR) is much discussed by researchers and executives and often occupies a prominent position on corporate Internet sites. Yet, little is known about CSR initiatives in franchising, although there are significant organizational differences between corporate firms and franchised chains. Building on the strategic view of CSR and using data from 76 franchise systems, this study explores the prevalence and performance outcomes of CSR in franchising. We focus on system�?specific, industry, and competitive factors that determine the degree to which franchise systems behave in a socially responsible manner and on performance effects of CSR initiatives targeted toward various stakeholder groups.

Why do Franchisors Combine Franchises and Company-Owned Units?

This work explores the strategic motivation of franchisors to combine franchised and company-owned stores when structuring their distribution networks. In the United States, such plurally organized chains have already outnumbered purely franchised competitors. Based on a review of existing research work, we explain how plural franchise chains theoretically outperform purely franchised or wholly company-owned systems through realizing cost reduction, quality enhancement, growth stimulation and optimized control of business risk. We then challenge these theoretical explanations with the historic data of 925 US-franchise systems, covering almost twenty years of franchise development. While we find little or no support for those strategies - cost, growth and risk improvement - that tend to benefit the franchisor at the expense of franchisees, our data reveal strong support for the quality arguments. By combining a plural form structure with high franchise fees and low royalty rates, franchisors signal outsiders how to be a reliable and cooperative principal. By simultaneously operating company-owned stores and independent franchise outlets, chains successfully force themselves into cooperational and less opportunistic behavior towards their franchisees and (thus) manage to attract more and better members to join the system.

We Don't Need Another Hero - Implications from Network Structure and Resource Commitment for Movie Performance

This study offers a new framework for organizing a motion picture in such a way that enhances its chances for box-office success. We combine and expand two strands of research for the moviemaking industry: the economic approach and the social network perspective. Specifically, we integrate the product-inherent categories of the creative sphere and financial resources and the product-induced categories of marketing support and competition with concepts from social network analysis (i.e., connectivity and density). We test our hypotheses on a sample of top ten German movies as to box-office admissions for the period 1990–2004. We find that extensive care and industry knowledge are required when organizing the economic and social framework in which a film project is undertaken, since ultimately, movie success does not depend on individual star power. On the contrary, the real star is the team.

Firm-level entrepreneurship and performance for German Gazelles

The selection of an effective approach to strategy impacts significantly on firm performance. Firm-level entrepreneurship is such an approach, that is either characterised as a tendency for proactive, innovative and risk-taking behaviour (entrepreneurial orientation; EO) or as an approach that focuses on opportunities rather than on existing resources (entrepreneurial management; EM). In this paper, we discuss how these two types of firm-level entrepreneurship differentially affect organisational performance (growth) and operational performance, more specifically innovativeness. Results of a quantitative study based on 65 German Gazelles indicate that both EO and EM impact more strongly on growth than on innovativeness. These findings underscore the importance of matching strategy to intended goals and question some of the taken-for-granted assumptions concerning the beneficial effects of firm-level entrepreneurship.

Buying without using – biases of German BahnCard buyers

We use a large data set of German railway travellers to analyse the purchasing decision for fare-reducing BahnCards. We expect that this tariff choice is neither completely rational nor irrational, but bounded-rational in a meaningful way. Actually we predict a flat-rate bias, i.e. an under-use of their BahnCards by many customers. However, we estimate that this bias is not too large. The empirical results approve our hypotheses for the most part, especially for the more expensive BahnCard50 (BC50), whereas the under-use of the cheaper BahnCard25 (BC25) is so extensive that it is not worthwhile on average.

Franchisee Versus Company Ownership — An Empirical Analysis of Franchisor Profit

In this paper, we examine ownership structures of franchise chains and evaluate their impact on franchisor profit. Specifically we compare pure forms of franchising with those that use both company-owned and franchised outlets within one chain — a phenomenon termed the plural form. Theoretically such plural arrangements are supposed to provide franchisors with lower costs, higher growth, greater total-quality, and reduced business risk.

Benefits of Inner Strength for Franchise System Expansion

For every franchise system, making the leap from the unknown to the common place requires a strategic plan for growth. The exogenous market perspective holds that evaluating market conditions is central to defining promising outlet locations as there are direct economic effects on performance. The endogenous firm perspective and the social network approach together provide an inner strength perspective on interconnected firms; this perspective holds that access to resources offered at a certain spot determines site attractiveness, rather than location-specific market factors. Using a sample of 201 German franchisees, this study tests hypotheses that explore which perspective dominates location decisions in practice and clarify the relevance of the decisive criteria for outlet performance. Results show that location decisions rely on both perspectives, yet franchisee performance depends more on inner strength factors. We also find that expansion is better served by following a geographically dispersed cluster approach than by growing steadily from a baseline site.

Performance Implications of Network Structure, Resource Investment, and Competition in the German Motion Picture Industry

This study offers a new framework for organizing a motion picture in such a way that chances for box-office success are enhanced. We combine and expand two strands of research for the moviemaking industry: the economic approach and the social network perspective. Therefore, we integrate the product-inherent categories of creative sphere and financial resources as well as the product-induced categories of marketing support and competition with concepts from social network analysis (i.e., connectivity and density). We test our hypotheses on a sample of each year’s top ten German movies as to box-office admissions for the period 1990–2004. In particular, we find that extensive care and industry knowledge are required when organizing the economic and social framework in which a film project is undertaken, since ultimately, movie success does not depend on individual star power. On the contrary: The real star is the team.