Knowledge management and franchise systems

Knowledge management is generally recognized as a resource for sustainable competitive advantage. Many organizations have approached knowledge management through the use of information technology. However, results are mixed, primarily because (1) information is merely one aspect of knowledge management, (2) some types of knowledge are difficult to transfer effectively and (3) the structure and culture of organizations may inhibit knowledge transfer. In this study, we examine knowledge management in a franchising context because franchisors and franchisees are independent entities linked together in a contractual (some even use the word hybrid) relationship. In addition, the ’product or service’ offered by a franchise organization is an outcome of knowledge resources and the success of a franchise system depends on how well the parties involved in a franchise system leverage their knowledge resource. Specifically, we explicate types of knowledge, discuss the differences between traditional and network franchise organizations and develop a framework for knowledge management in franchise systems.     

Negotiating agency in mitigating franchisee failure: A critical discourse analysis

This study examines how asymmetries of agential power in franchisor-franchisee relationships contribute to franchisee failure, and how franchisees can negotiate agential power to mitigate failure. Based on a critical discourse analysis, the research findings establish that franchisor dominance during three core stages of the franchisee lifecycle – notably at the pre-launch, inauguration and operation phases – influences franchisee failure. Supporting a theorization based on the agencing framework, this paper presents a nuanced understanding of how agential power is attributed and negotiated in franchise relationships, and portrays franchisees as proactive actors capable of negotiating a stronger, counteractive, agential power position. We introduce the agencing framework as an important governance mechanism for franchise relations and raise implications for managing power-imbalances in franchise relationships.     

Opportunistic behaviors in franchise chains: the role of cohesion among franchisees

This paper explores social processes between franchisees as a way to control franchisee opportunism. Based on the literature of socio‐psychological and interorganizational relationships, we argue that cohesion among franchisees is negatively associated with opportunistic behaviors that are potentially harmful to the whole chain. We use multilevel and multisource data to show that perceptions of cohesion among franchisees relate both to a) how franchisees apply know‐how from franchisors (i.e., deviation from chains standards), and b) whether they transfer or withhold information that could be useful to the franchise system (i.e., information withholding). Our results underscore the importance of relationships among franchisees, an underexplored component of franchising. Copyright © 2010 John Wiley & Sons, Ltd.     

Micro-processes of public good social innovation in the Australian social impact investment market

Social impact bonds (SIBs) are strategic alliances aiming to generate financial profit through social innovation in the delivery of public social services. SIBs are also a product on the social impact investment market. There is little evidence for SIBs' effectiveness, and their ongoing international popularity partly rests on a theoretical premise that market mechanisms can effectively generate and diffuse social innovation. However, the literature contains no empirical consideration of whether and how this premise applies to public good social innovations. Our empirical study fills this gap by finding that public good social innovations are stimulated by market mechanisms, and markets are in turn shaped by these innovations. Despite this, public good social innovations eventually break away from markets in a micro-process we term ‘schisming’. Through describing how and why schisming occurs, we make a unique contribution to existing knowledge of the micro-processes of concerned market shaping, and the extent to which economic markets and a concerned society are embedded within each other. Implications for practitioners seeking to bridge social innovation and economic markets include the need to be cognisant of how contextual, socially constructed concerns affect the potential and process of diffusing social innovations.     

A capabilities perspective on membership management in franchise networks

This study explores the membership management process in a franchise network. Via an in-depth case study of a German tire retail franchising network, we develop a four-stage process model of membership management in such a network, and find that the different membership management stages of selection, integration, stewardship and evaluation are based on a variety of underlying routines, such as bonding, embracing and assessing. We conceptualize the synergistic interplay of these routines as the franchise network's membership management capability, explaining how the franchisor effectively manages its diverse set of members over time. Our findings bridge research on franchising, and organizational as well as inter-organizational management capabilities, to contribute towards a more holistic understanding of how franchise networks, as collectives of organizations, are maintained and managed.     

Formal control influence on franchisee trust and brand-supportive behavior within franchise networks

Although management scholars recognize that intention of formalization influences the manner in which formal controls are applied within organizations, this issue has been largely overlooked in research on strategic alliances including franchise networks. We investigate formalization intent (the way in which controls are initiated and executed) by asking: How do franchisor formal controls promote trust and brand-supportive behavior among franchisees? On the basis of case study research involving retail franchises, we develop a framework that explains how formal controls counter-intuitively promote franchisee brand-supportive behavior via trust-building. Our study contributes to understanding the complementary relationship between formal and social control on promoting partner trust and co-operation. These insights move research beyond the present preoccupation with the complementary influence of formalization degree and content.     

Franchising brand benefits: An integrative perspective

Despite significant advances in the study of B2B branding, including several contributions and special issues in this journal, the specificities of franchising, a subfield of B2B relationships, dictate further investigation. In effect, the franchise branding literature remains largely fragmented and dependent on data from a single stakeholder source. This paper attempts an integrative view of franchise branding by examining brand benefits from three theoretical perspectives (brand as a resource, brand as knowledge, and brand as a relationship fulcrum) and data from two stakeholders. Specifically, the objective of this paper is threefold: to offer a comprehensive view of brand benefits for franchisees, as perceived by both franchisees and franchisors, and considering their evolution throughout the franchise relationship lifecycle. 37 interviews with franchisees (n = 22) and franchisors (n = 15) reveal diverse brand benefits, including new insights related, for instance, to experiential benefits which have received very limited attention in B2B branding. The study also unveils significant perceptual gaps, with franchisors having a much narrower view of brand benefits than franchisees, which could potentially be detrimental for this subtype of B2B brands. Based on the findings, we also develop a tool that helps franchisors manage their brand benefits (i.e. deploy, emphasize or downplay individual benefits) over the lifecycle of their relationship with each franchisee.     

The effects of geographic and network ties on exploitative and exploratory product innovation

Addressing the inconsistent findings in the literature, we first distinguish the type of innovation and study the relationship of industrial clusters with exploitative and exploratory product innovation. Furthermore, we study how focal cluster firms' network ties with their suppliers and buyers in their clusters might moderate these relationships. Our empirical study showed that, while cluster membership enhanced firms' exploitative product innovation, it hindered their exploratory product innovation. Moreover, the results showed that focal cluster firms' network ties with their suppliers and buyers in their clusters strengthened the effects of cluster membership on exploitative product innovation. They also showed that focal cluster firms' network ties with their buyers but not suppliers in their clusters reduced the negative effects of cluster membership on exploratory product innovation. Copyright © 2014 John Wiley & Sons, Ltd.     

The ‘visible hand’ behind cooperation in franchising: A model of franchisor practices that influence cooperation within social networks

Although scholars recognise that social networks within marketing channels can enhance cooperation (the implementation of joint goals), research provides a deficient understanding of how suppliers can efficiently manage them. Our study investigates the ‘visible hand’ behind franchising cooperation by asking: How do franchisors build cooperation within franchise systems? Using multiple case study research on retail franchises recognised for high-quality cooperation, our study builds a model of how franchisor practices maintain and increase cohesive ties that foster cooperation within the franchising community; a type of social network nested within the franchise system. This model is underpinned by social capital theory, self-categorisation theory, and the constructs relational norms and behaviour from research on marketing channels. Our study provides insight into the key organisational, social network, and individual agency drivers of cooperation within branding marketing channels. This provides an understanding of: 1) how centralised organisational practices interact with individual agency to maintain efficient cooperation, and 2) heterarchical processes to improve cooperation efficiency.     

Controlling and combining resources in networks — from Uppsala to Stanford, and back again: The case of a biotech innovation

This paper explores how resources are controlled and combined in a biotech network that spans from Uppsala, Sweden, to Stanford, USA. A case study is reported that describes and analyses how the original discovery, developed at the Department of Genetics and Pathology at Uppsala University, Sweden, was combined with other innovations at Stanford University, California, and under the influence and control of several different actors, including venture capitalists, were exploited within a newly founded company, ParAllele.The paper analyzes the resources that are created, combined and controlled in the network around these scientific discoveries and the company hosting them. This analysis shows how actors are using and are exposed to different control mechanisms, such as action, results and personnel controls, in the innovation process. Our discussion emphasizes how the involved actors apply various types of controls on resources in order to reach their objectives. Forms of control that both entail mobilizing other actors and preventing actions in the emerging network are of importance. We conclude the paper by pointing out the features of control in innovation processes as well as obstacles to control in a business network setting.     

Innovation in business networks: The role of leveraging resources

This study investigates how companies innovate in their business networks. We examine the role of leveraging resources in the context of retail brand paints within the do-it-yourself (DIY) paint industry, where the role of innovation is pertinent to achieve differentiation and create value. The study investigates innovation as a process of leveraging resources within business relationships. Research findings demonstrate that manufacturers and retailers jointly leverage resources to develop and launch innovative retail brands. Companies need to carefully address these resource-leveraging processes and assess their options in developing innovations that enable sustainable growth.     

Effects of innovation on employment: A dynamic panel analysis

This paper estimates the effect of innovation on employment at the firm level. Our uniquely long innovation panel data set of German manufacturing firms covers more than 20 years and allows us to use various innovation measures. We can distinguish between product and process innovations as well as between innovation input and innovation output measures. Using dynamic panel GMM system estimation we find positive effects of innovation on employment. This is true for innovation input as well as for innovation output variables. Innovations show their positive effect on employment with a time lag and process innovations have higher effects than product innovations.     

A service science perspective on business model innovation

Using four basic principles of service science, we systematically explore value-proposition design as one type of business model innovation. Service science combines organization and human understanding with business and technological understanding to categorize and explain service systems, including how they interact and evolve to cocreate value. Our goal is to apply a scientific approach to advance design and innovation in service systems. Our foundation is service-dominant logic, which provides perspective, vocabulary, and assumptions on which to build a theory. Our basic theoretical construct is the service system, entities that are dynamic configurations of four kinds of resources. Our core principles center on the way value is computed within and among entities, how interaction is based on access to resources and their capabilities, and on how value computation and interaction depend on symbol processing and language guided by mutually agreed-to value propositions. In this context, service science can inform and accelerate value-proposition design by systematizing the search for adaptive advantages that improve existing offerings, create new offerings, or reconfigure the value-creating ecosystem.     

How to manage innovation processes in extensive networks: A longitudinal study

In this paper, we examine the managing of the full innovation process, from visioning to commercialization, in extensive networks. By drawing on the IMP, strategic network, and innovation network literatures, we develop a comprehensive picture of the management activities when ‘mobilizing’, ‘orchestrating’, and ‘involving’ actors in working towards the innovation aim in such network settings. Through using two longitudinal case studies – the one pursuing radical and the other incremental innovation - we provide an empirically refined understanding of seven key management activities (motivating, resourcing, goal setting/refining, consolidating, coordinating, controlling, and leveraging), which are needed throughout the innovation process to turn the diversity of an innovation network into an opportunity rather than an obstacle. We demonstrate how actor diversity and the type of innovation (radical or incremental) shape the management activities, and map a dynamic actor composition that evolves alongside the innovation process. The longitudinal data highlights the consequences of the presence or lack of management activities, and the interlinkages between activities throughout the process. Our findings also provide insights for practitioners on how to cope with the increasing tendency to involve diverse stakeholders in innovation by pinpointing the critical management activities that can be employed.     

Complementing open innovation in multi-business firms: practices for promoting knowledge flows across internal units

Over the past decades open innovation (OI) practices have gained prominence among both scholars and practitioners as a mean to accelerate time-to-market and reduce development costs of innovations. Thereby scholars have nearly exclusively focused on cross-boundary knowledge flows between the focal firm and (its) external collaborators. This paper argues that such a focus limits our understanding of how multi-business firms with a diverse knowledge base profit from internally applied open innovation practices that in turn provide complementary benefits to OI. We build on the current literature by investigating and describing OI activities that are conducted within the boundaries of the multi-business firm. Based on a multiple case study of 23 collaboration practices conducted across 14 firms, our findings reveal 5 archetypal forms of internally applied open innovation activities. We draw on the literature of cross-divisional innovation and crowdsourcing to highlight how these archetypes differ in terms of their purpose and underlying managerial processes. Multi-business firms regularly rely on internal practices due to lower transaction costs and for stimulating a collaborative culture. We conclude that internally applied OI practices are effectively stimulated by a combination of non-monetary reward systems and purposive integration mechanisms.     

Change processes in open innovation networks – Exploring living labs

Examining change in business networks can illuminate how time, temporality and process unfold and engage different stakeholders in open innovation. Living labs are increasingly popular open innovation networks that provide a fruitful area in which to study change processes and their influencing factors in network dynamics. We adopt a longitudinal process perspective to analyze eight living labs focused on urban development in a Northern European city. Our analysis reveals six pertinent processes: (i) expansion, (ii) reinforcement, (iii) focusing, (iv) unification, (v) termination, and (vi) recurrence. These processes reflect change in networks characterized by diverse actors, the coexistence of individual and shared motives, a high degree of openness, and user involvement. The identified change processes are a result of living labs disclosing their needs, data, and operations to their stakeholders. We propose a theoretical concept, which we describe as “network boosters”, to illustrate the factors that foster change processes. Scholars and practitioners of innovation management can learn from these findings that understanding change in open innovation networks may help to depict and predict short- and long-term relationships, and it may assist them in managing innovation in open environments.     

The field of radical innovation: Making sense of organizational cultures and radical innovation

Organic organizational structures and cultures facilitate innovation because they allow organizations to shift their understanding of what a product, service or technology means. Yet, organic organizations may have to instill mechanistic structures and bureaucratic processes if they produce successful radical innovations. Thus, the basis of innovation can be undermined by its consequences. To explore this issue, this paper analyzes data from an ongoing longitudinal case study of a SME digital-design agency that developed a radical innovation for the market research industry. The paper observes that founders of the organization shifted their position to become managers as a result of their radical innovation and that other members of the organization have, consequently, re-evaluated their attitude toward the organization. To conceptualize our findings we turn to the work of Pierre Bourdieu. His notion of fields—which structure experiences and are, themselves, structured by experiences—offers a framework to understand the dynamics within an organization that occur as a result of a successful radical innovation. The contribution of our paper is: theoretically, we relate the discussion of innovation to wider social theories of practice and, thus, introduce temporal and cultural dynamics into the account of radical innovation; methodologically, we provide an example of a longitudinal study; and, in managerial terms, we indicate where divisions occur within an organization concerning the construction of meaning between managers and employees after a radical innovation.     

Complementary innovation and network neutrality

One of the central goals of network neutrality policies is to safeguard Internet-based innovation. Historically, entrepreneurial activities in applications and services were a main driver of innovation and stimulated complementary advances in networking. With the increasing heterogeneity of services, this virtuous cycle of complementary innovation is changing. Building on evolutionary theories of innovation and the notion of general-purpose technologies, we examine how these changes affect Internet-based innovation. In this framework, we analyze the effects of network neutrality policies on innovation dynamics. Our analysis reveals that network neutrality regulations as currently implemented may impede and delay innovation experiments that require a differentiated quality of service arrangements. To overcome such undesirable effects on innovation, we propose an approach that allows safeguarding important goals of network neutrality while permitting a differentiation of network services in support of next-generation innovation.     

Corporate Innovation and Entrepreneurship: A Canadian Study

In his study of 112 corporate innovations, Russell Knight describes how 100 large Canadian corporations identified innovative ideas, evaluated them, and allocated resources to support their development. These innovations ranged from new product introductions to new processes or systems within these firms. He conducted a series of interviews with managers to explore both the role of corporate entrepreneurs and top management in creating a favorable environment for innovation within the firms, examining the roles of marketing research, research and development, production planning and finance in the process. The article reports several general conclusions regarding the practices of the more successful firms and presents several recommendations concerning how firms should organize to explore, develop and produce new innovative ventures within the corporation. These results are also contrasted with those of an earlier article Knight published in this Journal.