Knowledge exploration in a franchise network as exemplified by advisory services

Transcription

1 Knowledge exploration in a franchise network as exemplified by advisory services Marcin Komańda University of Economics in Katowice Katowice 2010

2 Although the franchise network has been known for more than a century, in the last twenty/thirty years a rapid growth has been observed in terms of the number of newly established systems of this kind. The observation merits attention since franchise networks appear also in these fields of business, in which they had so far been regarded as unattractive for this kind of economic cooperation between enterprises. Meanwhile, contemporary tendencies in the shaping of principles of cooperation between franchise partners point also at popularization of particular regulations governing its operations, which make the whole system diverse when compared to traditional networks of this kind. The implementation of novel solutions within the scope of acquiring knowledge about environment may be pointed at in this respect. The key research problem related to this paper results from the overlapping of two major theoretical areas, namely knowledge management and network organisation, which are given expression to by the research hypotheses formulated in this paper: H1: It is supposed that organisational features of a network influence the exploration of knowledge by the franchisor. H2: It is supposed that the principal influences the process of knowledge exploration in a franchise system. Concentrating the attention on franchise networks in the paper is a deliberate choice which results from the following premises: franchise networks are highly formalised, which means that particular systems may be compared to one another (within one or more sectors); therefore, the population of franchise networks operating within the given branches of economy may also be distinguished; franchise networks constitute a formation which was established more than one hundred years ago when conditions were diametrically different from the contemporary market (which immediately leads to posing a question whether anything has changed since that time in the way they are operated). The choice of a sector of advisory services is also a deliberate decision. It is the sector where performance of the service for a customer entails generation of added value. In this

3 respect, it may be assumed that the franchise of advisory services is a critical case (which is representative for the issue of generating added value within interorganisational networks). On the basis of the catalogue of franchise networks and reports on the status of the franchise in Poland taken from websites connected with the subject matter (franczyzawpolsce.pl and franchising.pl), eleven entities running, by assumption, a franchise network in a chosen sector have been identified. However, confirmation of information led to striking several entitites off the list. Some of the reasons for striking them off were, as follows: the business profile of the given enterpises, as well as their networks, diverged from strictly advisory services (the possible elements of consulting were rendered only in a very narrow scope, which at the same time constituted the non-core network's operations); network operations which were different when compared to the franchise (within these networks the so called affiliate networks have been identified; the basic difference consists in the fact that a partner of the affiliate network does not perform services for a customer, but only wins them for the organizer of the network and this is what the partners receive remuneration for. Therefore, there is no question about realisation of added value in the context of customer service). Further actions aimed at compiling case studies of franchisors in the above mentioned sector led to the appearance of possibility to present four cases. The hypotheses formulated in this paper for the purpose of conducting quantitative analysis of empirical data were divided into the research questions. Thus, the first hypothesis (it is supposed that organisational features of the network influence the exploration of knowledge by the franchisor) was divided into the following questions: 1. How does mutual coordination of actions of entities in the network and their matching in terms of procedures and infrastructure influence the exploration of knowledge by the franchisor? 2. How does joint decision-making in the field of cooperation influence the exploration of knowledge by the franchisor? 3. How does repeatability of exchange between the franchisee and the franchisor influence the exploration of knowledge by the franchisor?

4 4. How does the access to information regarding the partner influence the exploration of knowledge by the franchisor? Whereas, the second hypothesis (It is supposed that the principal influences the process of knowledge exploration in the franchise system) was divided into the following questions: 1. In what way does the franchisor organise the process of knowledge exploration in the network? 2. In what way does the franchisor control the process of knowledge exploration in the network? Due to the fact that both constructed hypotheses and research questions are defined in the context of generation of added value, it shall be assumed that case studies presented in the PhD dissertation are of descriptive nature and therefore their analysis shall be conducted by means of reference to the model 1. In case of questions derived from the first hypothesis, the characteristics of the organisational network features shown in theoretical deliberations presented in the reference books regarding the franchise shall constitute the model. In case of the research questions posed for the purpose of the second hypothesis, in accordance with the theory which describes the network's aim to generate added value, it shall be assumed that both organisation and control of the process of knowledge exploration performed by the creator of the network will be based on consultations conducted between the participants of the network. 2 Major generalizations resulting from the quantitative analysis of empirical data gathered for the purpose of compiling and presenting case studies which illustrate presented issues and divided into research questions are shown below. 1 R. Krupski, K. Łobos, Cechy organizacji sieciowych, [w:] Instrumenty i formy organizacyjne procesów zarządzania w społeczeństwie informacyjnym, tom 1, A. Stabryła (red.), AE Kraków, 2004, s. 382 and J. Child, D. Faulkner, P. Pitkethly, The Management of International Aquisitions, Oxford University Press, New York 2003, s I. Maj, Wiedza w organizacjach sieciowych opis formalny, [w]: Strategie i logistyka organizacji sieciowych, J. Witkowski (red.), Prace Naukowe Akademii Ekonomicznej we Wrocławiu, nr 1078, Wrocław 2005, s. 100.

5 services Table 1. Organisational features of the network in case of the franchise of advisory Model mutual coordination of actions and matching between entities in the sphere of procedures, technology and infrastructure decisions concerning resources are made jointly in the designated field of cooperation exchange between the entities is of repetitive nature Empirical data for the given cases Typical franchise (binding formalisation defined by the franchisor) Typical franchise with deviation (formalisation defined by the franchisor with the franchisee's possibility to express their initiative upon obtaining the franchisor's consent) Characteristic feature of the network theory on generation of added value (mutual, repetitive flow of information harnessed by all the parties) network entities have the access to information regarding the partners Typical franchise (formalisation defined by the franchisor) Source: own research. Table 2. Organisation and control of the process of the exploration of knowledge by the franchisor Model organisation of the process of knowledge exploration in the form of mutual consultations between the parties control of the process of knowledge exploration in the form of mutual consultations between the parties Source: own research. Empirical data for the given cases Traditional franchise (the franchisee defines formal principles of the way in which information as well as its scope is passed to them) Traditional franchise (realisation of random and periodic control in accordance with formal principles)

6 The discussed cases seem to manifest premises which make it possible to state that in case of the franchise of advisory services one has to deal with the walled garden model in the context of generation of added value for the ultimate consumers. Above all, among these premises the following ones may be listed: the key role of the franchisor in the network, also within the scope of the shaping of cooperation within its framework; limited access to the network (prospective franchisees must meet the demands of the franchisor and undergo recruitment procedure; they are also often granted concession for conducting business activity in a given area, therefore other entities have limited possibilities to start business activity within the framework of the network); the principles governing the operation of the network are compliant with building and strenghtening the image and brand of the network. It may also be stated that the analysis of presented cases of franchise networks defines the causes of appearance of information asymmetry in these systems of cooperating companies: 1. division of duties between parties: contact between the franchisee and the customer leads to generation of knowledge resources on the part of the franchisee which is valuable from the point of view of the whole network, and which cannot be directly accessed by the franchisor themselves; 2. conflict of interest of the parties of the franchise: the franchisor strives after maintaining their own position in the network, whereas the franchisee, thanks to particular knowledge resources (see the above-mentioned), may strive after maintaining their position in this system therefore, the franchisor will make an attempt to smooth away the actual level of that asymmetry; 3. the level of risk acceptance by the parties of the franchise system: the franchisor does not accept the risk of strenghtening the position by another entity within the framework of the network, therefore they strive after smoothing the asymmetry on the franchisee's side away by means of knowledge exploration, which simultaneously causes its development on the franchisee's side (which reduces the risk of strenghtening the franchisee's position in the network).

7 Thus, the presented cases of franchisors in the sector of advisory services indicate that the nature of the rendered service (specialist counselling), the result of which is generation of added value for the customer which is characterized by a certain level of uniqueness, causes consequences for the franchise network's operations. The effect of rendering such service within the framework of the franchise is the appearance of bilateral information asymmetry (unilateral asymmetry where the franchisor constitutes a priviledged party is traditionally talked about). It turns out that franchisors, in order to smooth the asymmetry away and maintain their position in the network, as well as to ensure efficient network's operations, are forced to solve problems regarding knowledge management comprehensively, that is, not only to concentrate on gaining knowledge/gathering information, but also to make its particular resources available in a given way for other franchisees (information systems are widely used for this purpose). Bibliography: J. Child, D. Faulkner, P. Pitkethly, The Management of International Aquisitions, Oxford University Press, New York 2003 R. Krupski, K. Łobos, Cechy organizacji sieciowych, [w:] Instrumenty i formy organizacyjne procesów zarządzania w społeczeństwie informacyjnym, tom 1, A. Stabryła (red.), AE Kraków, 2004 I. Maj, Wiedza w organizacjach sieciowych opis formalny, [w]: Strategie i logistyka organizacji sieciowych, J. Witkowski (red.), Prace Naukowe Akademii Ekonomicznej we Wrocławiu, nr 1078, Wrocław 2005