Dynamic Co-Existence of Company-Owned and Franchised Outlets Within a Company: A Framework of the Franchisor\u27s Perspective

Why and how do company-owned and franchised outlets simultaneously exist within the same organization? The purpose of this article is to integrate a variety of theories on this interesting retail phenomenon into a broader theoretical framework based on the political-economy paradigm. This paper attempts to integrate the perspectives of several theories that previously have been considered competing models of a single reality--the access-to-capital viewpoint, transaction cost analysis, the population ecology perspective, and power-dependence-conflict arguments--into a broader perspective that utilizes intra-firmfactors and the internal and external economies and polities of the political-economy paradigm. A model depicting this integration is set forth and nineteen research propositions stemming from this model are proposed

Contractual allocation of decision rights and incentives: The case of automobile distribution

We analyze empirically the allocation of rights and monetary incentives in automobile franchise contracts. These contracts substantially restrict the decision rights of dealers and grant manufacturers extensive contractual completion and enforcement powers, converting the manufacturers, de facto, in a sort of quasi-judiciary instance. Variation in the allocation of decision rights and incentive intensity is explained by the incidence of moral hazard in the relation. In particular, when the cost of dealer moral hazard is higher and the risk of manufacturer opportunism is lower, manufacturers enjoy more discretion in determining the performance required from their dealers and in using mechanisms such as monitoring, termination and monetary incentives to ensure such performance is provided. We also explore the existence of interdependencies between the different elements of the system. and find some complementarities between completion and termination rights, and between monitoring rights and the intensity of incentives.Franchising, contracts, self-enforcement, incentives, complementarities, automobiles

Research Agenda for Studying Open Source II: View Through the Lens of Referent Discipline Theories

In a companion paper [Niederman et al., 2006] we presented a multi-level research agenda for studying information systems using open source software. This paper examines open source in terms of MIS and referent discipline theories that are the base needed for rigorous study of the research agenda

There is more to contracts than incompleteness: a review and assessment of empirical research on inter-firm contract design

This paper aims at achieving a greater understanding of how contracts operate in practice through a review of recent empirical literature on inter-firm contract design. Our focus on the structure of contractual agreements differentiates this review from others that dedicated ample coverage also to the antecedents of the decision to contract and of the choice of contracting versus integration. Our framework develops Stinchcombe’s (1985) hypothesis that contracts are an organizational phenomenon. This allows us to uncover considerable but unevenly distributed evidence on a number of organizational processes formalized in relational contracts, which partially overlap with the processes that are observed in integrated organizations. It also enables us to describe contracts in terms of a larger number of dimensions than is commonly appreciated. The paper summarizes the evidence by proposing a general and tentative framework to guide the design of relational contracts, discusses a number of lingering issues, and outlines directions for further research on contracts as an organizational phenomenon

Contract Design in Inter-Organizational Relationships: Evidence from the U.S. Franchise Systems

This dissertation develops three essays about contract design in interfirm partnerships. Specifically, I develop the first essay, drawing on an asymmetric view of transactions, to understand the effects of asymmetric exchange hazards borne by different parties on contract design at a dyadic level. In the second essay, drawing from the logic of transaction cost economics and research on the “shadow of the future,” I develop hypotheses regarding the interplay between a firm’s transaction-specific factors and the predetermined contract duration that affect the need for complex dispute resolution provisions. In the third essay, going beyond the economic theoretical explanations regarding incentive alignment and safeguard mechanisms of contract design, I further examine how the CEO’s career experience may influence the contract design. The main empirical part of my dissertation relies on data from contracts and disclosed documents in franchise relationships in the U.S. restaurant industry. Taken together, the theoretical arguments and research settings in this dissertation contribute to a better understanding of contracting between firms

The Internalization of Advertising Services: An Inter-IndustryAnalysis

The common perception appears to be that vertical integration of advertising services is more the exception than the rule in the U.S. advertising industry. This study investigates the extent of such outsourcing and examines inter-industry variation in the use of in-house rather than independent advertising agencies by U.S. advertisers. While the vast majority of large advertisers employ outside agencies, it comes as a surprise to find that when advertisers of all sizes are considered, about half operate some form of in-house agency. Internalization of advertising services is much more widespread than has hitherto been appreciated and varies widely across industries. To explain this variation, we draw on concepts from research on scale economies and transaction costs to develop a set of hypotheses which we test in cross sectional analyses of data covering 69 two digit SIC industries at two points in time, 1991 and 1999. Across industries, we find that the likelihood of internalization of advertising services decreases as the size of advertising outlays increase but increases as advertising intensity and technological intensity increase and is greater for "creative" industries.Advertising Agencies, In-House, Vertical Integration, Make or Buy

The process of the new inter-organizational format of social franchising from a social network theory approach: Institutions, social entrepeneurship povile, innovation and the argument of embeddedness

This thesis was submitted for the degree of Doctor of Philosophy and awarded by Brunel UniversityThe inability of the public sector to satisfy social needs- like poverty alleviation, social inclusion of disadvantaged groups, unemployment, health and education - are redefining the relationship between the governments and their citizens by making the latter play an active role as the provider of the welfare state. Citizens through their entrepreneurial activity have been pulled to the third sector leading to the emergence of new organizational forms like social enterprises and social franchises. The main focus of this research study is the investigation of the new interorganizational format of social franchising which has received ‘scunt’ research attention up to now. The behaviour of actors and organizations in the social economy sector are influenced by the properties and dynamics of elements coming from the political, social, organizational and individual level. We have adopted a systems approach of social network theory. A grounded theory named Social Franchise Model (SoFraM) has been induced from an exploratory empirical mixed method study conducted at various stages and from different sources during a time frame of thirty months. Primary data were raised through six case studies in the UK and Greece, more than 143 interviews with social entrepreneurs and various stakeholders and three action research projects which were the subject of analytic induction supported by archival analysis of secondary data coming from governmental, European Commission, local authority and other sources. Our findings indicate that the formation, growth and success of social franchises is heavily shaped through: firstly, law, regulations, and incentives introduced by centralized or formal institutions- both supranational and national- as well as their driving logics; secondly, the relational and structural embeddedness of actors in networks and the social norms that subsequently emerge; thirdly, the characteristics of the individual social entrepreneurship profile; and finally elements of the social innovation model adopted. The properties of the system of informal or decentralised institutions of networks have been further explored through a pilot quantitative study on mainstream franchises in the UK and Greece. An online self-administered questionnaire has been created based on our conceptual framework of the Franchise Network Model (FNM) drawn from existing scales from literature. The findings indicate that relational and structural embeddedness of actors and organizations in networks determine choices of formation, partner selection, governance mode and the subsequent performance of franchise systems

The liberalisation of European railway markets - laissez faire versus interventionism: a comparative analysis of the approaches to railway privatisation in the United Kingdom and Germany.

This thesis comprises railway innovation in the 19th century, railway regulation, recent railway reforms across Europe and a theoretical analysis. The historical study is complemented by an investigation of the rationale for extensive regulations and eventual nationalisation of railway systems. The nationalisation schemes granted exclusive rights to public undertakings to provide a public railway and sometimes more extensive transport services. Notwithstanding subsidies and a protectionist railway policy, the railways could not compete successfully with other modes of transport; the railway industry's market share steadily declined across the European Community. As a result the European Community passed legislation to reverse the deteriorating trend. This legislation and its national interpretations are evaluated before proceeding to brief case studies of the railway liberalisation undertaken in France, the Netherlands and Sweden; the German and British approaches to railway reform are then analysed in greater detail. Arguing that liberalisation was often a watered down version of privatisation schemes that had been compromised in the political process, the thesis develops an alternative model of privatisation, centred on a concept of market-based integration and a competitive railway market. It is proposed that the current crisis on the British railways and the slow progress of railways in other countries could be resolved by means of this concept

The allocation of decision rights and the role of private enforcement in franchising:perspectives and empirical evidence

Gegenstand der Dissertation ist die empirische Analyse von außervertraglich wirkenden Mechanismen, die innerhalb der Organisationsform des Franchisings einer unkooperativen Ausübung von Entscheidungsrechten vorbeugen. Die damit explizit vorgenommene Betrachtung der Schnittstelle von Koordination (d.h. der Allokation von Entscheidungsrechten) und Motivation (d.h. der Durchsetzung partnerschaftlichen Verhaltens des Entscheidungsträgers) schließt eine Lücke in der Franchising-Literatur, da diese Elemente des organisatorischen Designs bislang nicht integriert betrachtet wurden. Die Ergebnisse der vier empirischen Studien der Arbeit bestätigen theoretische Vermutungen, wonach relationale Verträge und private Durchsetzungsmechanismen für die Funktionsweise hybrider Organisationsformen wesentlich sind