The Knowledge Transfer Strategy of Franchising Firms: Evidence from the Austrian Franchise Sector

Abstract

The paper provides a property rights view on the knowledge transfer strategy of franchising firms. Starting from the information richness theory, we argue that the degree of contractibility of system knowledge determines the information richness of the knowledge transfer mechanism of franchising firms. The lower the contractibility of knowledge, the more knowledge transfer mechanisms with a high degree of information richness are used, such as training, visits and meetings. We examine the following hypotheses: (1) If the franchisor’s knowledge is contractible/explicit, knowledge transfer mechanisms with a lower degree of information richness are used. (2) If the franchisor’s knowledge is noncontractible/tacit, knowledge transfer mechanisms with a higher degree of information richness are used. (3) If the franchisor’s knowledge is partly contractible and partly noncontractible, knowledge transfer mechanisms with a high and low degree of information richness are used. We test these hypotheses by using data from 83 franchising firms in the Austrian franchise sector. The data provide support for the hypotheses.