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2008 | Buch

Introducing “Strategy and Governance of Networks” Kapitel lesen Erstes Kapitel lesen

Strategy and Governance of Networks

Cooperatives, Franchising, and Strategic Alliances

herausgegeben von: Prof. Dr. George Hendrikse, Docent Dr. Mika Tuunanen, Prof. Dr. Josef Windsperger, Prof. Dr. Gérard Cliquet

Verlag: Physica-Verlag HD

Buchreihe : Contributions to Management Science

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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SUCHEN

Über dieses Buch

The book emphasizes research in economics and management of networks as an interdisciplinary field by offering new theoretical perspectives and presenting new empirical results on strategic and governance structure issues in cooperatives, franchising networks, alliances, joint ventures and venture capital relations. The authors apply different theoretical views on networks, such as transaction cost theory, property rights theory, resource- and knowledge-based theory, evolutionary theory, information richness theory and social exchange theory.

Inhaltsverzeichnis

Frontmatter

Cooperatives

Introducing “Strategy and Governance of Networks”
There are many types of enterprises, like investor owned enterprises, consumer retail cooperatives, mutual insurance companies, mutual banking institutions, wholesale and supply cooperatives, public utility cooperatives, worker-owned firms, agricultural processing and marketing cooperatives, family owned enterprises, and nonprofit firms (Hansmann 1996). This raises the issue of the relative efficiency of the strategy and governance of an enterprise. Most research attention has been dedicated to enterprises collectively owned by investors of capital. The third international conference on economics and management of networks (EMNet) was dedicated to developments in organizational economics and management of networks, especially cooperatives, franchises, and strategic alliances. It took place at the Rotterdam School of Management, Erasmus University Rotterdam, from June 28 to June 30, 2007.
The strategy and governance of enterprises has to address problems of conflicting interests between its stakeholders, problems of joint interests, as well as problems of bounded cognition. Situations with conflicting interests require alignment of incentives (by allocating ownership, control, and income rights) to a certain extent. Situations with a joint interest problem require coordination by some mechanism, while the organization of the stakeholders has the potential to handle bounded cognition in ways to produce results impossible to achieve for one person. Successful strategy and governance of enterprises will contribute to accomplishing the three goals of limiting activities outside the interest of the network, coordinating the optimal combination of productive resources across parties, and to deal with the cognitive limitations of individual network parties. The large majority of enterprise studies address the first problem, with a focus on mitigating the risks of opportunistic behavior.
George Hendrikse, Josef Windsperger
On the Nature of a Cooperative: A System of Attributes Perspective
Abstract
In the 1950s and 1960s there was a debate about the nature of an agricultural cooperative: the cooperative as extension of the farm, the cooperative as vertical integration or the cooperative as a firm. We revisit this debate with various concepts from the theory of the firm that have been formulated since 1990. Two concepts shed light on this debate: the enterprise as a system of attributes and the delineation of a governance structure in terms of ownership rights, control rights and income rights. We argue that viewing the cooperative as a system of attributes integrates these three views. It emphasizes that a cooperative is a firm in itself, with many input suppliers as owners. The feature of many input suppliers as owners implies that the behavioral differences between a cooperative and an investor owned firm have to be addressed by highlighting the unique aspects of the stakeholder owning the enterprise.
Li Feng, George Hendrikse
Determinants of Successful Cooperation in Agricultural Markets: Evidence from Producer Groups in Poland
Abstract
The main question posed in the paper is why some cooperative arrangements in agricultural markets survive and succeed while others fail. Data were collected from 62 Polish farmer cooperative organizations called producer groups. The main aim of those organizations was to organize joint sales of output produced individually by their members. Some of the groups were functioning effectively while others had disbanded or were no longer performing their essential functions. Variables such as the leader’s strength, previous business acquaintances, initial selection of members, and number of members have a significant positive impact on the likelihood of success of the researched organizations.
Ilona Banaszak
Innovation Processes in Cooperative Organizations: Results of a Case Study Research
Abstract
One of the main problems of cooperative decision-making, when it comes to the implementation of innovations, is the involvement of multiple levels — the cooperative’s and member’s level. From an evolutionary economic viewpoint this raises the question of how the creation of novelty and the dissemination of knowledge within a cooperative enterprise works. This study investigates a cooperative of bakers. The idealised innovation process together with the findings of our study allows us to differentiate four forms of knowledge communication (promoter, source, recipient, feedback process). Our three cases show that, depending on the type of innovation (product, process or systemic), the different stages of the model process deviate from one another. Lastly, we will identify the different types of knowledge communication that we found in our three cases.
Daniel Brunner, Tim Voigt
Structure and Governance of Networks: Cases of Franchising and Co-operative Chains
Abstract
A variety of inter-organizational networks have emerged between hierarchy and market. They are either internal networks in the same industries such as franchising and co-operatives, or external networks among organizations operating in the supply chain such as alliances. In the distribution industry, a strong tendency towards hierarchic corporate chains is observed as shown by the Swedish cases, but successful franchise chains and co-operative federations also exist. These networks are not necessarily regulated by top–down authority and require specific coordination mechanisms to solve inherent governance problems. This paper concludes the loosely connected networks are coordinated by specific collaboration mechanisms but have to solve the governance problems in the internal and external networks.
Akira Kurimoto

Franchising

Plural Form and Ownership

Stable Plural Forms in Franchise Systems: An Examination of the Evolution of Ownership Redirection Research
Abstract
The ownership redirection thesis within franchising governance research stream, originally proposed by Oxenfeldt and Kelly (1968), argued that successful, resource-flush franchise systems will ultimately tend toward becoming wholly company-owned systems due to opportunistic reacquisition activity by the powerful franchisors. For nearly 40 years this dark prophecy has precipitated an intense research dialog between the supporters and detractors of this thesis. More recently, the plural forms thesis, nested in seminal work by Harrigan (1984) has been advanced, which argues that since each type of ownership structure provides its own unique governance benefits, franchise systems are likely to continue to simultaneously invest in both, company-owned and franchised outlets. This paper attempts to provide a detailed review of nearly four decades of related literature and its transition from the ownership redirection thesis to the contemporary stable plural forms thesis.
Brent L. Baker, Rajiv P. Dant
A Comparison of Company Owned and Franchised Fast Food Outlet Performance: Insights from Health Inspection Scores
Abstract
The paper compares the performance of franchised and company owned fast food outlets located within the same region in the USA. These outlets are inspected by the same team of health inspectors who use a standardized 44 item scale derived from Federal Drug Administration guidelines. Analysis of the health inspection scores received by the fast food outlets over approximately two and a half years shows that franchised stores receive significantly better ratings. The inspection scores of franchised outlets also have a lower standard deviation than that of company owned stores. The results support the view that the incentives provided in the franchise contract as well as the additional layer of supervision by the franchisee are likely to lead to better and more consistent outlet performance. At the same time, there are a few chains where company owned stores get higher scores than theirfranchised counterparts. This suggests that there are inter chain differences in the operational efficiencies of the two organizational formats.
Roy L. Beheler, Seth W. Norton, Kabir C. Sen
New Challenges for Store Location in a Plural Form Network: An Exploratory Study
Abstract
The development of retail and service networks implies new location models that explicitly include store ownership issues. The implementation of plural form networks has changed the dimensions of the store location problem. Traditional store location models do not take into account the ownership form choice as it emerges in a plural form network, considering either a strictly franchised or a strictly company-owned chain. Only one model has dealt with the problem of plurality or dual ownership in earlier research, nearly 20 years ago when knowledge of plural form networks was very limited. In a modeling process of store location involving the ownership choice, two main research questions should be solved, which indeed do constitute real challenges: (1) Is this modeling process identical for any kind of network? (2) How can ownership issues be integrated in a location model, and in what kind of model? This paper is an attempt to answer the first question by means of an exploratory survey of eighteen network development managers. Moreover, I investigate the store location decision process and emphasize the variables believed to influence it. I propose a typology of the location processes and make some suggestions relating to the choice of a location model, depending on the location decision process and the strategy of the chain.
Gérard Cliquet
Plural Form and the Internationalization of Franchising Networks: Exploring the Potential Relationship
Abstract
Two important topics often explored in the franchising literature are network internationalization and plural form. Yet up until now, these two research streams have not converged. The purpose of this paper therefore is to explore the potential significance in the link between plural form and franchising network internationalization and to determine whether the influence of plural form on network internationalization is positive or negative. An empirical study involving 493 French networks, of which 28.2% are international, reveals the existence of major differences between international networks and purely-domestic networks in terms of the plural form: the average plural form rate for networks with operations abroad equals 34.6%, in comparison with 43.3% for purely-domestic networks. Moreover, logistic regression results underscore the significant and negative impact of the plural form on internationalization. A number of explanatory elements inherent in these surprising findings will also be presented.
Rozenn Perrigot

Knowledge Management, Trust and Strategic Management Issues

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.
Josef Windsperger, Nina Gorovaia
Trust and Fairness in Franchise Relationships
Abstract
Very few studies have investigated the key dimensions and consequences of trust and fairness in franchise relationships. Trust and fairness become especially important when a drastic change in the context of a relationship occurs. This paper therefore aims at generating theory about how franchisees’ perceptions of trust and fairness influence their responses toward their franchisors during franchisorled strategic change processes. On the basis of case studies regarding eight change processes in four Dutch drugstore franchise systems, the paper distinguishes a new level of trust in a franchise context: “franchise system trust” and discusses five instruments that franchisors can “institutionalize” in their franchise systems to influence their franchisees’ perceptions of franchise system trust. The results also demonstrate that franchisees’ perceptions of distrust and unfairness result in destructive responses toward the franchisor.
Evelien Croonen
Concept Uniformity: Control Versus Freedom in Business Format Franchising
Abstract
Developed on a model of uniformity, business-format franchises are likely to experience growing individualization of demand, from franchisees and final customers. Franchisors may need to carefully evaluate trade-offs between standardization and adaptation of the business concept in order to satisfy their customers. The purpose of this paper is to identify potential guidelines for franchisors who are trying to conciliate brand uniformity and adaptation to customer demand. More specifically the cases of McDonald’s and Great Harvest will be examined using the Kaufmann and Eroglu’s (1998) hierarchy of components framework and the categories of customization developed by Gilmore and Pine (1997).
Odile Streed, Gérard Cliquet

Entrepreneurship and Franchising

Franchisee Discontinuance and Failure Empirical Findings from Finland
Abstract
The present study focuses on franchisee discontinuances and failures during 1999–2001. The paper deals with notions relating to discontinuance and failure. Franchising is approached from entrepreneurs hip viewpoint and taken as a form of starting and conducting entrepreneurship and business. The study was carried out in 2002 in Finland. The 46 member franchisors of the Finnish Franchising Association (FFA) were surveyed. Altogether 33 responses were received, adding up to a response rate of 72%. The results were parallel with the findings of the previous international studies. The results indicate that the average annual franchisee turnover rate was 11% in 1999–2001 in the studied franchises. In proportion to the average number of franchisee owned outlets (1,027) per year in 1999–2001 the figures gave an average annual franchisee failure rate of 1.66%. The risk of bankruptcy for franchised businesses (0.78%) seemed to be around half of the risk for stand-alone businesses (1.32%). Every fourth (24%) franchisor reported facing unexpected franchisee turnover where franchisee ceased operations before his/her franchise contract expired. Furthermore, every third (32%) franchisor saw unexpected franchisee turnover as detrimental to the franchise. It is worth mentioning that only part of the failure and turnover related disadvantages and problems cause evident and easily measurable expenses. If the whole extent of direct and indirect expenses and financial losses resulting from franchisee turnover and failures were known, franchisors might pay more attention to the issue and try to prevent and control it vigorously. Franchisee discontinuances and failures can be and should be prevented, since they erode the earnings of both franchisees and franchisors.
Mika Tuunanen, Jenni Torikka

Strategic Alliances

Governance Structure Issues

A Model to Analyse Governance Structures in Technological Networks
Abstract
This paper provides an analysis of governance structures in networks. The transaction cost theory provides a description of which variables affect governance forms but it does not explain how they are affected and what variables have a great influence. Taking this departure point, our study proposes a model for analysing the governance structure of a network which allows us to study the variability of governance forms and their efficiency, and also provides an answer to three questions: How is the governance form structured in networks? What factors influence the variability of governance forms in networks? What is the most efficient or suitable governance form of networks? In this study, we used data collected from a large sample of technological networks developed under the V Framework Programmes (1998–2002) retrieved from the publicly available CORDIS (Community Research Development Information Service) projects database.
Nieves Arranz, J. Carlos Fdez de Arroyabe
Inter-Firm Relations and Innovative Activity: A Cluster Analysis Based on Subcontracting Firms in the French Sillon Alpin
Abstract
In this paper we investigate the relationship between the different types of firms in the subcontracting industry and their innovative activities. The main objective is to explain how the ability to innovate of these firms is to be found in the nature of their inter-firm relationships. Firstly, we draw on the two conceptual approaches to the firm (contractual and competence perspectives) to differentiate three types of subcontracting firms and to indicate how these approaches can be linked with their ability to innovate. Secondly, we complete the framework by introducing firm-specific determinants derived from the neo-Schumpeterian approach to innovation. The empirical test is based on a cluster analysis. It confirms that the nature of inter-firm relationships is a main source of inter-firm differences in their ability to innovate. It also provides evidence that, apart from their inter-firm relationships, the most innovative firms are able to develop an autonomous capacity to innovate. Finally, we give evidence that some small firms are innovative in the subcontracting industry.
Rachel Bocquet
Conflict Resolution Mechanisms in Alliance Networks
Abstract
Recent literature on interorganisational relations has adopted a dynamic approach for understanding the performance of alliance networks. However, it focuses mainly on the comprehension of the causes (why) rather than the functioning (how). This article explores conflict resolution mechanisms and evaluates the consequential satisfaction among participating organisations. We demonstrate the necessity to acknowledge moderating variables in order to understand the conflict resolution mechanisms used by alliance network organisations and members. The aim of this study is to analyse the moderating role of the advancement phase of innovation projects (from invention to development; from development to production; from production to diffusion) with regard to conflict resolution mechanisms. This research is of an exploratory nature as the existing literature has not yet developed a definitive hypothesis on the relationship between conflict resolution mechanisms, project advancement phase and the type of organisation (partner/supplier; financial/technical/industrial/commercial).
Elodie Gardet
Intermediary Institutions and Embeddedness in Technology Networks
Abstract
A wide literature in strategic management is dedicated to the study of technology networks as a locus of innovation. They shape an organizational field in which strategic alliances leverage firm capabilities to generate new knowledge and access complementary assets. Much less attention, however, has been focused on the role played by other particular players – that we label ‘intermediary institutions’ – in the institutional foundation of those networks. In the present paper, our intent is to highlight the choice made by alliance partners, members of a same technology network, to have recourse to services proposed by ‘intermediary institutions’ in order to ease their alliance relationships. We propose an analysis of the impact of this choice on the institutional design of the network as a whole. We argue that by backing up a firm’s alliance activities, ‘intermediary institutions’ deepen the relational, structural and cognitive embeddedness of the firm within its network. In turn, reinforced embeddedness helps go beyond the conflict between ‘trying to learn’ and ‘trying to protect’, typical of technology networks, and so enhances the viability of the network as a whole.
Régis Coeurderoy, Valérie Duplat

Performance and Strategy of Networks

Governing for Success: The Host Country Uncertainty and the Design of Foreign Parent Control in International Joint Ventures
Abstract
In this paper we develop a model of the international joint venture (IJV) control which deals with the level of uncertainty of the host country. The host country uncertainty is characterized by cultural, environmental, and competitive uncertainty. Following Geringer and Hebert (1989); Buckley et al. (2005), we conceptualized foreign parent control across three dimensions including mechanism, focus, and extent. Our empirical evidence is based on the survey of Finnish firms that established IJVs with local firms in the 1990s. The results show that foreign parent firms tend to exercise more formal, broad, and tight control over their IJVs when they perceived high cultural uncertainty and high competitive uncertainty in the host countries. On the other hand, they prefer formal, narrow, and loose control over their IJVs in cases of high environmental uncertainty. In addition, the firms that exercise broad, formal, and tight control in high uncertainty countries and narrow, social, and loose control in low uncertainty countries were more satisfied with their IJV performance. Finally, we conclude the paper by discussing the implications of our findings and directions for further research on IJVs.
Huu Le Nguyen, Jorma Larimo
Performance Implications of Network Structure, Resource Investment, and Competition in the German Motion Picture Industry
Abstract
This study offers a new framework for organizing a motion picture in such a way that chances for box-office success are enhanced. We combine and expand two strands of research for the moviemaking industry: the economic approach and the social network perspective. Therefore, we integrate the product-inherent categories of creative sphere and financial resources as well as the product-induced categories of marketing support and competition with concepts from social network analysis (i.e., connectivity and density). We test our hypotheses on a sample of each year’s top ten German movies as to box-office admissions for the period 1990–2004. In particular, we find that extensive care and industry knowledge are required when organizing the economic and social framework in which a film project is undertaken, since ultimately, movie success does not depend on individual star power. On the contrary: The real star is the team.
Brinja Meiseberg, Thomas Ehrmann
Syndication Strategies in Venture Capital Networks
Abstract
Empirical evidence shows that venture capitalists syndicate to finance start-ups. This paper focuses on the role of the social network generated by these syndication operations. We consider the links developed between venture capitalists, through co-investment rounds, and we study their relationships both through network and econometric analyses. We first demonstrate that the syndication network is not random. Secondly, we show that the different assortativities (degree, spatial, industrial) are positive, suggesting that venture capitalists tend to co-invest with their peers. Thirdly, we measure the influence of different proximities (spatial, national and industrial) on the collaborations between the different players. National and industrial proximity have a strong impact on the determination of links. Finally, we provide evidence that past partners are preferred for future syndication, even if new links do appear regularly.
David Mas, Annick Vignes, Gérard Weisbuch
Metadaten
Titel
Strategy and Governance of Networks
herausgegeben von
Prof. Dr. George Hendrikse
Docent Dr. Mika Tuunanen
Prof. Dr. Josef Windsperger
Prof. Dr. Gérard Cliquet
Copyright-Jahr
2008
Verlag
Physica-Verlag HD
Electronic ISBN
978-3-7908-2058-4
Print ISBN
978-3-7908-2057-7
DOI
https://doi.org/10.1007/978-3-7908-2058-4

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