Understanding Exploration and Exploitation in Franchising and Other Forms of Commercial Cooperation

  • Evelien Croonen
Conference paper
Part of the Contributions to Management Science book series (MANAGEMENT SC.)


The objective of this paper is to present and illustrate a framework for understanding how and why franchise partners and partners in other forms of commercial cooperation deal with the paradox of exploration and exploitation in their relationships through time. Two levels of analysis are distinguished: the level of strategic characteristics of the franchise system and the level of relationships between the franchisor and the franchisees that are part of the franchise system. For the level of the system, it is argued that franchise systems, as any other organizational form, have to balance exploration and exploitation in order to survive and prosper in their environment. The following five strategic characteristics of franchise systems reflect the franchisor’s exploration and exploitation objectives: the positioning of the franchise system, the “hardness” of the franchise system, the system’s entrepreneurial orientation, the degree of strategic participation of franchisees in the system and growth objectives for the system. On the relationship level, the franchise relationship between the franchisor and its franchisees is considered a specific form of strategic alliance. The following variables are distinguished for understanding both franchise partner’s response strategies towards each other: the degree of strategic compatibility between the franchise partners (depending on the above five system’s characteristics), the degree of operational compatibility, the evaluation of available alternatives, and switching costs. Both franchise partners’ response strategies can vary according to two dimensions: constructive versus destructive and active versus passive.


Switching Cost Entrepreneurial Orientation Response Strategy Strategic Alliance Business Format 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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Copyright information

© Springer-Verlag Berlin Heidelberg 2004

Authors and Affiliations

  • Evelien Croonen
    • 1
  1. 1.Faculty of Management and OrganizationUniversity of GroningenGroningenThe Netherlands

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