Electronic Communication Channels in Franchise Organizations.

Abstract

The virtual organization has emerged as a result of the availability of information technology. One business model well suited to the virtual form is franchising. Since the success of franchise organizations is highly dependent on communication effectiveness, these organizations are beginning to adopt technology---namely, private corporate networks called intranets and extranets---to support electronic communication. This research study examines the effects of electronic communication channels on communication patterns within franchise organizations. First, the study addresses how electronic communication channels affect communication frequency within the franchise organization. Second, the effect of electronic communication channels on strategic outcomes, specifically, innovation, franchisee satisfaction, and franchisee compliance, is explored. Finally, the moderating effects of the franchisor-franchisee relationship on communication frequency are assessed. Data were collected via a mail survey of franchisees and interviews of both franchisor and franchisee personnel. All respondents were members of franchise organizations in the food service industry. Electronic communication channels do affect communication frequency in franchise organizations. Channel convenience was found to increase downward (franchisor to franchisee) and lateral (franchisee to franchisee) communication frequency, which results in increases in organizational efficiency. Upward (franchisee to franchisor) communication frequency did not increase with the existence of an upward electronic communication channel. Upward frequency may depend on the longevity of the franchisee in the organization, and upon the existence of an organizational culture that encourages sharing among franchisees. The franchisor-franchisee relationship did not appear to moderate communication frequency. Of the three strategic outcomes studied, differences due to electronic communication channels were found only for franchisee compliance. Organization innovation culture may be an antecedent of technology implementation as opposed to innovation being an outcome of the implementation of electronic communication channels. Franchisee satisfaction did not appear to be related to either communication frequency or electronic communication channel existence. Franchisee compliance also appeared to be unrelated to communication frequency; however, lateral communication channel existence is related to lower levels of franchisee compliance. The study assesses the current state of communication technology usage in franchise organizations, and illustrates how technology is changing organizational communication patterns. This research also contributes a measure of franchisee compliance.