Date of Award

1-1-2010

Language

English

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Program

Organizational Studies

Content Description

1 online resource (xi, 101 pages) : PDF file, illustrations (some color)

Dissertation/Thesis Chair

Cecilia M Falbe

Committee Members

Raymond K Van Ness, Paul Miesing

Keywords

Franchising, Innovation, Organizational ambidexterity, Plural organizational forms, Franchises (Retail trade), Business enterprises, Organizational effectiveness, Chain restaurants, Chain stores

Subject Categories

Business Administration, Management, and Operations | Entrepreneurial and Small Business Operations

Abstract

This dissertation was motivated to answer the following questions: (1) Why are the plural organizational forms (company-owned units and franchised units) used in a chain, what is the effect of the plural organizational form on chain performance, and what factors influence the optimal combination of the plural organizational forms? Drawing on the organizational ambidexterity theory, I argue the plural organizational forms enable chains to maintain standardization across multiple units and facilitate innovation for the adaptation to changing environment simultaneously. Thus, the plural organizational forms can contribute to chain performance by reconciling and harnessing these conflicting demands. I suggest that there is an optimal combination of two organizational forms that maximizes the synergistic effects. I predict that there will be an inverted U-shaped relationship between the proportion of franchised units and chain performance. Second, I suggest that organizational and industrial contexts such as chain size, chain age, industry uncertainty, and industry competitiveness can influence the optimal combination. of the plural organizational forms. I argue that as organization size and age increase, chains have more difficulties in generating and implementing innovative ideas. Chains can address this problem by increasing franchised units which generate more innovations. Thus, I predict that as organization size and age increase, the optimal level of combination will be found at a higher proportion of franchised units. I also suggest as industry uncertainty increases, franchisees can contribute to chain performance by identifying customer's new demands and preferences. I propose two conflicting hypotheses regarding industry competitiveness. Chains can survive high competition either by facilitating innovation through franchised units or by enhancing efficiency through company-owned units. I test these hypotheses with longitudinal data from restaurant chains. The results show the proportion of franchised units has an inverted U-shaped relationship with chain performance. The results also reveal that as organization size and industry uncertainty increase, the optimal combination of plural organizational forms is found at a higher proportion of franchised units. With the increase of industry competitiveness, chain performance is maximized at a lower proportion of franchised units. This dissertation concludes with a discussion of implications, limitations, and further research.

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