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The Organizational Choice Decision in Business Format Franchising: An Empirical Test

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Economics and Management of Franchising Networks

Part of the book series: Contributions to Management Science ((MANAGEMENT SC.))

Abstract

This paper empirically investigates the franchising make-or-buy decision providing a comprehensive test of the economizing perspective of organizational choice while controlling for the potential influence of resource scarcity factors. The study reported here extends the extant empirical franchising literature in three ways. First, this study takes the outlet as the unit of analysis and explores organizational choice within the franchise system. Second, the analysis is more inclusive, simultaneously accounting for both of the component elements of the free-riding hazard. And third, this study provides one of the rare empirical investigations of the adoption of multi-unit franchising — the ownership of two or more outlets by a single franchisee. The econometric analysis, using discrete choice methods, provides strong support for the hypothesis that ownership mode of individual outlets (single-unit franchise, multi-unit franchise or company-owned outlet) turns on the relative levels of the contracting hazards present.

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Author information

Authors and Affiliations

  1. The Fuqua School of Business Duke University, Box 90120, Durham, NC, 27708 0120, USA

    Janet E. L. Bercovitz

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  1. Janet E. L. Bercovitz
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Editors and Affiliations

  1. Center for Business Studies, University of Vienna, Brünner Straße 72, 1210, Vienna, Austria

    Josef Windsperger

  2. Center for Research on Economics and Management, University of Rennes 1, 11 rue Jean Macé, CS 70803, 35708, Rennes Cedex, France

    Gérard Cliquet

  3. Erasmus University Rotterdam, Rotterdam School of Management, Office F3-51 Burg. Oudlaan 50, 3000 DR, Rotterdam, The Netherlands

    George Hendrikse

  4. School of Business & Economics, University of Jyväskylä, P.O. Box 35 (MaE), 40351, Jyväskylä, Finland

    Mika Tuunanen (Research Fellow) (Research Fellow)

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© 2004 Springer-Verlag Berlin Heidelberg

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Bercovitz, J.E.L. (2004). The Organizational Choice Decision in Business Format Franchising: An Empirical Test. In: Windsperger, J., Cliquet, G., Hendrikse, G., Tuunanen, M. (eds) Economics and Management of Franchising Networks. Contributions to Management Science. Physica, Heidelberg. https://doi.org/10.1007/978-3-7908-2662-3_3

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  • DOI: https://doi.org/10.1007/978-3-7908-2662-3_3

  • Publisher Name: Physica, Heidelberg

  • Print ISBN: 978-3-7908-0202-3

  • Online ISBN: 978-3-7908-2662-3

  • eBook Packages: Springer Book Archive

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