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Organization governance form in franchising: efficient contracting or organizational momentum?
Author(s) -
Mitsuhashi Hitoshi,
Shane Scott,
Sine Wesley D.
Publication year - 2008
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.702
Subject(s) - corporate governance , momentum (technical analysis) , outcome (game theory) , business , sample (material) , industrial organization , organizational learning , economics , microeconomics , management , finance , chemistry , chromatography
We examine firms' choice of organizational governance form. Using longitudinal data on a sample of business format franchisors operating in North America, we show that the cross‐sectional evidence commonly used to demonstrate support for efficient contracting explanations for organizational governance form is not robust to the year of investigation, firm effects, or selection effects. We theorize that this outcome may result from dynamic processes through which a firm's organizational governance form evolves. We develop and test two hypotheses for the effects of organizational momentum on organizational governance form, and find that organizational momentum is a robust predictor. Our results suggest that researchers consider the dynamics of momentum in explaining the form of firm governance. Copyright © 2008 John Wiley & Sons, Ltd.