How Firm Strategies Impact Size of Partner-Based Retail Networks:  Evidence from Franchising

How do firms’ partnering strategies impact the size of their partner-based retail networks? We draw on agency theory to address this question in the context of franchising. Our econometric analyses, (based on nine years of longitudinal balanced panel data), include assessment of data non-stationarity and estimation of a dynamic panel data model that accounts for unobserved heterogeneity and endogeneity. Our findings indicate that franchisee network size is driven more by franchisor strategies that mitigate agency costs, than by strategies that simply lower entry and ongoing costs and barriers for franchisees.

Keywords: franchising, distribution channels, partnering strategies, retailing, agency theory, organizational performance, econometric analysis, dual distribution

JEL Classification: C33, D23, L14, L22, L81, M31, M30, M13

Suggested Citation: Suggested Citation

Kacker, Manish and Dant, Rajiv P. and Emerson, Jamie and Coughlan, Anne T., How Firm Strategies Impact Size of Partner-Based Retail Networks: Evidence from Franchising (June 30, 2013). Journal of Small Business Management, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2287507