Performance implications of centrality in franchisee advice networks

Abstract

Although the literature has provided ample evidence for the decisiveness of the franchisor–franchisee relationship in explaining organizational success or failure, performance effects of franchisee–franchisee relationships remain largely unexplored. Yet a growing body of research indicates that by building interfranchisee relationships, franchisees can form advice networks in the chain. Such networks offer privileged access to resources such as knowledge, information, and best practices that help individual franchisees to become more productive. In this context, we study linkages between a franchisee's centrality in franchisee relationships and various individual performance outcomes, using comprehensive data from franchisees in 3 different chains in the largest European franchise market, France. We find that conditional on the specific governance structure of each chain, the results document a strong impact of centrality in advice networks on franchisee performance. Accordingly, we offer theoretical contributions concerning knowledge‐sharing processes in franchise chains, and managerial implications as regards more effective cooperation management in practice, from the perspective of both a franchisee and a franchisor.