Scale, Scope, Ownership Changes, and Performance
50 Pages Posted: 20 Sep 2011
Date Written: September 20, 2011
Abstract
Estimating how scale and scope affect the performance of multi-product firms has been a challenge. We argue that because franchised chains are fundamentally single-product entities, we can use data on franchised chains and their parents to clearly distinguish scale and scope, and assess their effects, and those of ownership changes, on chain performance. Controlling for chain fixed effects and other factors; we find positive scale effects within chains. For parent company scope (the number of other chains of the parent) we find a negative rather than positive effect. We also find a reduction in the chain’s number of outlets, but no change in sales per outlet, after a chain is acquired by a new parent. Overall, our results suggest that acquisitions are disruptive, as multi-chain parents try to reduce competition among their chains/products.
Keywords: multi-product firms, production organization, franchising, services, acquisitions, market power
JEL Classification: L1, L2, L8, M21
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Multi-Product Firms and Product Switching
By Andrew B. Bernard, Stephen J. Redding, ...
-
Multi-Product Firms and Product Switching
By Andrew B. Bernard, Stephen J. Redding, ...
-
Multi-Product Firms and Product Switching
By Stephen J. Redding, Andrew B. Bernard, ...
-
Multi-Product Firms and Product Switching
By Andrew B. Bernard, Stephen J. Redding, ...
-
Multi-Product Firms and Trade Liberalization
By Andrew B. Bernard, Stephen J. Redding, ...
-
Multi-Product Firms and Trade Liberalization
By Andrew B. Bernard, Stephen J. Redding, ...
-
Multi-Product Firms and Trade Liberalization
By Andrew B. Bernard, Stephen J. Redding, ...
-
Comparative Advantage and Heterogeneous Firms
By Andrew B. Bernard, Stephen J. Redding, ...
-
Comparative Advantage and Heterogeneous Firms
By Andrew B. Bernard, Stephen J. Redding, ...
-
Comparative Advantage and Heterogenous Firms
By Andrew B. Bernard, Stephen J. Redding, ...