A Cointegration Analysis of the Correlates of Performance in Franchised Channels

ECONOMICS AND MANAGEMENT OF NETWORKS: FRANCHISING NETWORKS, COOPERATIVES, JOINT VENTURES AND ALL, Gerard Cliquet et. al., eds., 2007

22 Pages Posted: 27 May 2006 Last revised: 18 May 2018

See all articles by Rajiv P. Dant

Rajiv P. Dant

Michael F Price College of Business, University of Oklahoma

Manish Kacker

McMaster University - Michael G. DeGroote School of Business

Anne T. Coughlan

Kellogg School, Northwestern University

Jamie Emerson

Salisbury University - Franklin P. Perdue School of Business

Date Written: May 1, 2006

Abstract

Not much is known about the primary drivers of performance in franchising systems. With some notable exceptions, much of the franchising literature on performance related issues has focused on either contrasting failure rates of independent small businesses and entrepreneurs with those of franchises and/or system survival issues. The existing literature on franchising performance displays at least three other characteristic patterns. First, most studies have restricted themselves to a single sector, usually, the fast food restaurant industry, since it is often perceived and portrayed as the archetypical franchise sector. Second, existing investigations have tended to focus on a single measure of performance. Finally, with the exception of survival articles, empirical studies have typically confined themselves to cross-sectional examination of the evidence. In other words, we know very little about what fosters long term performance.

Our investigation of the correlates of performance, then, contributes to the extant literature in three specific ways. Foremost, we attempt a systematic assessment of the relative effects of a series of firm decision variables on performance. Specifically, we evaluate the impact of four categories of drivers of performance. Besides three covariates, a total of eleven hypotheses focused on drivers of performance are investigated. Second, we utilize three different operationalizations of our dependent variable, performance, in our investigation. Third and finally, we estimate our empirical models using nine years of longitudinal panel data aimed at deciphering the effects associated with our set of predictor variables using cointegration analysis, a relatively new and advanced approach to modeling equilibrium or long term relationships between economic variables in panel data.

The results show that seven out of eleven hypotheses were supported by the data using the system size operationalization of performance.

Keywords: Franchising, Performance, Panel Data, Cointegration Analysis

JEL Classification: M10, M13, M30, M31

Suggested Citation

Dant, Rajiv P. and Kacker, Manish and Coughlan, Anne T. and Emerson, Jamie, A Cointegration Analysis of the Correlates of Performance in Franchised Channels (May 1, 2006). ECONOMICS AND MANAGEMENT OF NETWORKS: FRANCHISING NETWORKS, COOPERATIVES, JOINT VENTURES AND ALL, Gerard Cliquet et. al., eds., 2007, Available at SSRN: https://ssrn.com/abstract=904655

Rajiv P. Dant (Contact Author)

Michael F Price College of Business, University of Oklahoma ( email )

Price College of Business
307 West Brooks
Norman, OK 73019
United States

Manish Kacker

McMaster University - Michael G. DeGroote School of Business ( email )

1280 Main Street West
Hamilton, Ontario L8S 4M4
Canada

Anne T. Coughlan

Kellogg School, Northwestern University ( email )

2211 Campus Drive
Evanston, IL 60208
United States
847-491-3522 (Phone)

HOME PAGE: http://www.kellogg.nwu.edu/faculty/bio/Coughlan.htm

Jamie Emerson

Salisbury University - Franklin P. Perdue School of Business ( email )

1101 Camden Avenue
Salisbury, MD 21801
United States

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