Growing through copying: the negative consequences of innovation on franchise network growth
Article Type: Abstracts From: Strategic Direction, Volume 25, Issue 6
Szulanski G., Jensen R.J.Research Policy, December 2008, Vol. 37 No. 10, Start page: 1732, No. of pages: 10
Purpose – studies the extent to which an innovation strategy of copying(replication) may be more efficacious in the cross-border transfer of knowledge to franchising companies through networks and how persistent it is. Design/methodology/approach – a review of the literature of innovation in franchise networks is presented. Reports the results of a case study of the transfer of franchising knowledge from the headquarters of Mail Boxes Etc (MBE),a US-based company and the world’s largest non-food multinational franchisor of retail postal and business services, to 23 of its foreign subsidiaries in 23 countries from 1989, when MBE opened its first international network, to 2003. Explains that measurements were made of the correlation between the degree to which master licensees (MLs), individuals owning the right to build a network in a country or region, follow a codified blueprint for network growth and the ensuing growth of their franchising networks. Findings– the results indicated a strong positive correlation between growth and how closely the blueprint is followed, implying a negative correlation between ML innovation and growth, an effect that persists for the first several years of a network’s existence. Research limitations/implications – the research was limited by the use of a single franchise company in each of the 23 countries. Notes that future research may address whether copy exactly applies as well to the growth of specific units or stores, or the performance of other types of transferred knowledge assets. Practical implications –franchisors who operate a master licensee system should control the incidence of innovation among MLs. Originality/value – explores the effect of active suppression of innovation on network growth within a context of franchising,finding that a policy of copy exactly increases network growth.ISSN:0048-7333Reference: 38AC616DOI: 10.1016/j.respol.2008.08.012
Keywords: Case studies, Franchising, Organizations, Research and development, Retailing, United States of America
