Research Note: Trade Name Franchise Membership as a Human Resource Management Strategy: Does Buying Group Training Deliver ‘True Value’ for Small Retailers?

Abstract

Human resource management (HRM) is an important source of competitive advantage. However, recent reports document that HRM, and in particular employee training, is less likely to occur in small firms. One possible remedy of special interest to small retailers is trade name franchise membership. Trade name franchises, or buying groups, claim to offer small firms advantages not otherwise realizable, including bulk buying discounts, brand name recognition and workforce training. We report results from our study of over 300 small and medium-sized hardware stores, which tested the effects of employee training and trade name franchise membership, on small firm performance. Trade name franchisees achieve higher mean performance; however, the contribution to performance made by franchisees’ training does not appear to be significantly better than that of independent stores.