The objective of this study was to examine the
relationship between form of ownership (independent vs.
franchise) and financial performance of a select group of
small, mature firms. MANOVA and ANOVA tests failed
to identify significant performance differences. Recom
mendations for future research studies are mentioned.
Venturing into a small business is risky. Approximately
400,000 small businesses fail each year (The State of Small
Business 1986). A conservative estimate of the failure rate
of start-up firms in their first 5 years is close to 65%
(Hodgetts 1982). Between one-quarter to one-third fail in
their first year of operation (Small Business Reporter
1986). However, many would-be entrepreneurs minimize
their business risk by purchasing a franchise rather than
starting from scratch. In contrast, only about 2.5% of
franchise-owned outlets discontinue operations per year,
many for reasons other than economic ("Franchising is
Management for Success" 1986).
Get full access to this article
View all access options for this article.
References
1.
Anderson, E.A.1984. "The Growth and Performance of Franchise Systems: Company versus Franchisee Ownership." Journal of Economics and Business36:421-431.
2.
Bettis, R.A.1981. "Rlsks and Industry Effects in Large Diversified Firms ." Proceedings of the 4Ist Academy of Management National Meeting. San Diego.
3.
Bracker, J.S.1982. "Planning and Financial Performance among Small Entrepreneurial Firms: An Industry Study." Dissertation. Georgia State University.
4.
Bracker, J.S. and J.N. Pearson.1985. "The Impact of Consultants on Small Firm Strategic Planning." Journal of Small Business Manaqement23 (July): 23-30.
5.
. 1986. "Planning and Financial Performance of Small. Mature Firms ." The Strategic Manaqement Journal. forthcoming.
6.
Bracker, J.S. and W.E. Riggs.1983. "Total Operating Systems Research among Small Entrepreneunal Firms: An Empirical Industry Study." Southern Management Association Proceedings. 341-43.
7.
Brawley. D.E.1982 "Strategy. Structure, & Performance among the 'Stars' ." Dissertation. Georgia State University.
8.
Carland, J.S., W.R. Boulton, J.C. Carland and F. Hoy.1984. "Differentiating Entrepreneurs from Small Business Owners: A Conceptualization." Academy of Management Review. 9.2: 354-359.
9.
Caves. R.E. and W.F. Murphy.1976. "Franchising: Firms. Markets, and Intangible Assets." Southern Economics Journal42: 572-586.
10.
Cooper, A.C.1979. "Strategic Management: New Ventures and Small Business: Commentary." In Strategic Management: A New View of Business Policy and Planning. Eds. D. E. Schendel and C. W. Hofer.Boston: Little, Brown.
11.
Dunn and Bradstreet.1984. Business Failure RecordNew York: Dunn and Bradstreet.
12.
"Franchising is Management for Success."1986. Small Business Reporter. 7.1: 43.
13.
Galbraith, J.R. and D.A. Nathanson.1978. Strategy Implementation: The Role of structure and Process. St. Paul, MN: West.
14.
Hair, J.F., R.E. Anderson, R.J. Grablowsky and R.F. Tatham.1979. Multivariate Data Analysis. Tulsa: Petroleum Publishing Company.
15.
Hodgetts, R.M.1982. Effective Small Business Manaqement. New York: Academic Press.
16.
Hornaday, J.A. and C.S. Bunker.1970. "The Nature of the Entrepreneur." Personnel Psychology23:47-54.
17.
Hosmer. L.1977. The Entrepreneurial Function. Englewood Cliffs, NJ: Prentice-Hall, Inc.
18.
Hunt, S.D.1977. "Franchising: Promises, Problems, Prospects." Journal of Retailing53:71-84.
19.
Liles, P.1974. New Business Ventures and the Entrepreneur. Homewood, IL: R. D. Irwin, Inc.
20.
Lillis, C.M., J.L. Gilman and C.L. Narayana.1976. "Competitive Advantage Variation over the Life Cycle of a Franchise." Journal of Marketing39:20-26.
21.
Lindsay, W.M., W.R. Boulton, S. Franklin and L.W. Rue.1982. "Strategic Planning: Determining the Impact of Environmental Characteristics and Uncertainty." Academy of Management Journal25.3:500-509.
22.
McCain, G.1982. "Toward a Standardized Scoring of Smith's Entrepreneurial Type Model." Working Paper. Boise State University.
23.
Mescon, T.1979. "Entrepreneurship in the Real Estate Industry: A Comparative Analysis of Independent and Franchise Brokers." Dissertation. University of Georgia.
24.
Morrison, D.1976. Multivariate Statistical Methods. New York: McGraw-Hill.
25.
Oxenfeldt, A.R. and A. O. Kelly .1968. "Will Successful Franchise Systems Ultimately Become Wholly-Owned Chains?" Journal of Retailing44:69-83.
26.
Rue, C.W.1973. "Theoretical and Operational Implications of Long-Range Planning on Selected Measures of Financial Performance in U.S. Industry." Dissertation. Georgia State University.
27.
Sausbauer, J.C.1979. "Strategic Management: New Ventures and SMALL Business: Commentary." In Strateqic Manaqement: A New View of Business Policy and Planning. Eds. D. E. Schendel and C. W. Hofer, Boston: Little, Brown.
28.
Smith, N.1967. The Entrepreneur and His Firm: The Relationship between Type of Man and Type of Company. East Lansing, MI: Michigan State University.
29.
Smith. N.R. and J.B. Miner.1983. "Type of Entrepreneur. Type of Firm, and Managerial Motivation: Implications for Organizational Life Cycle Theory ." Strategic Management Journal4.4:325-340.
30.
The State of Small Business: A Report of the President, 1986. Washington, D.C.: U.S. Government Printing Office.
31.
Stephenson, P.R. and R.G. House.1971. "A Perspective on Franchising." Business Horizons14:35-42.
32.
Still, T.1974. "An Exploratory Investigation of Strategic Planning Behavior in Small Business." Dissertation. Florida State University .
33.
Timmons, J., L. Smollen and A. Dingee.1985. New Venture Creation: A Guide to Entrepreneurship . Homewood, IL: R. D. Irwin.
34.
Vesper, K.H.1979. "Strategic Management: New Ventures and Small Business: Commentary." In Strateqic Manaoement: A New View of Business Policy and Planning. Eds. D. E. Schendel and C. W Hofer.Boston: Little, Brown.
35.
Winer, B.J.1971. Statistical Principles in Experimental Design2nd Ed. New York: McGraw-Hill .
36.
Wood, P.R., Jr. and R.L. LaForge.1979. "The Impact of Comprehensive Planning on Financial Performance." Academy of Management Journal. 72:516-526.
37.
Zeidman, P.F.1970. "The Impact of Franchising on Small Business." Hearings before the Subcommittee on Urban and Rural Economic Development. Washington, D.C.: United States Government Printing Office.
38.
Zeithaml, C.P. and L.W. Fry.1984. "An Empirical Examination of Mature Businesses in Four Dynamic Performance Situations: Contextual and Strategic Differences." A paper presented at the 44th Annual Meeting of the Academy of Management, Boston.
