Resources and capabilities in the franchising system

"A franchising system can be understood as a group of assets. In our investigation we have divided these assets in resources of capabilities. The resources are the basic assets needed to compete in the franchising industry. The capabilities are the internal assets that allow a superior coordination and exploitation of those basic resources. The resources are the sine qua non condition to survive in an industry, they are assets required to achieve competitive parity. The capabilities are superior assets; they are the source of the competitive advantages enjoyed by the company. We have identified three types of basic resources in the franchising industry: physical resources, human resources, and organizational resources. We have also defined three types of capabilities in the franchising sector: systems, human abilities, and the franchisor-franchisee relationship. Finally we have evaluated the performance of the franchising companies in terms of economic results and service quality. Following the theory of Resource Based View of the Firm (RBV) we hypothesize that a superior endowment of basic resources enables the achievement of a superior set of capabilities that are the basis of the competitive advantage and the performance of a franchising company. So, our first research question is to check if there is a causal chain of effects from resources to capabilities to performance in the franchising system. Our second research question is a logical corollary of the first. Having established that there are some resources and capabilities that influence the results of a franchising system we then explore which of the resources and capabilities evaluated have more influence on the performance of the franchising companies. To empirically evaluate our research questions we developed a field survey of 187 Spanish franchisees. Using structural equation analysis we validated the 15 hypothesis derived from our two research questions through a structural model. The proposed model shows high reliability and validity, providing empirical support to our hypothesis that there is a causal relationship between resources, capabilities and performance in the franchising system. All the resources and capabilities analyzed have shown influence on performance, but one is remarkable influential: the quality of the franchisor-franchisee relationship. Our study shows that a good relationship between franchisor and franchisee has a positive and significative influence in the quality of the service to the customer and in the economic results of the system. A good relationship not only reduces the opportunistic behavior of the parts, but it also brings the opportunity to achieve superior results through a more effective combination of the resources contributed by the franchisor and the franchisee."