Interaction of strategy implementation and power perceptions in franchise systems: An empirical investigation

Franchise systems contain legally independent and economically interdependent organizations that are capable of politically affecting each other. In this unique context, impact of soul ces of power (economic and noneconomic) on franchisees' strategy implementation process and eventual performance (satisfaction) was investigated in this study. Results from the study indicate that financial performance of the franchisees was affected by the method of implementation they chose. Some implementation methods ive, were found to be more effective than others in achieving the desired performance results. There is no significant difference in the satisfaction level of franchisees based on method of strategy implementation. This study demonstrated that interaction of power sources and strategy implementation could impact a firm's performance and satisfaction. The results demonstrated that a proper "match" between the implementation methods and the desired outcomes is essential. Congruence between the sources of power and implementation and its effect on eventual performance (satisfaction) was documented. Finally, economic and noneconomic sources of power have contrasting effects on franchisees' satisfaction and performance (measured as revenues and profits). Originality of thr strategy implementation instrument is one of the major methodological contributions. Obtained statistically significant results provide empirical validity to the research instrument. It is an inter disciplinary research drawing from strategic management, marketing channels, and hospitality literatures. (C) 1999 Elsevier Science Inc. All right reserved.