Control and Performance in Franchising Networks

The aim of the study is to examine the determinants of franchisor performance by focusing on the moderating role of control as transaction cost savings and value-creating mechanism. In line with resource-based view, we argue that intangible resources of the franchisor (brand name) and the intangible resources of the franchisees (local market knowledge, human resource management, quality control, and administrative capabilities) will positively impact franchisor performance. Based on the transaction cost view, we show that environmental uncertainty is negatively related to franchisor performance. Although the resource-based view and transaction cost economics have been extensively used in previous literature, no study examined the moderating role of control on the impact of resource-based and transaction cost variables on franchisor performance. We use cross-sectional data from the franchise sector in Germany to empirically test the hypotheses.