Executive summary of “Value creation through knowledge management in franchising: a multi-level conceptual framework”

Citation

(2014), "Executive summary of “Value creation through knowledge management in franchising: a multi-level conceptual framework”", Journal of Services Marketing, Vol. 28 No. 2. https://doi.org/10.1108/JSM-02-2014-0072

Executive summary of “Value creation through knowledge management in franchising: a multi-level conceptual framework”

Article Type: Executive summary and implications for managers and executives From: Journal of Services Marketing, Volume 28, Issue 2

This summary has been provided to allow managers and executives a rapid appreciation of the content of the article. Those with a particular interest in the topic covered may then read the article in toto to take advantage of the more comprehensive description of the research undertaken and its results to get the full benefit of the material present.

Knowledge, according to business theorist Dr Jeffrey Pfeffer, is only useful if you do something with it. He’s among distinguished company in providing witty yet insightful phrases about the value of knowledge – “Any fool can know. The point is to understand,” “When you know better you do better” and perhaps the most often quoted “Knowledge is power.” How to acquire knowledge and what to do with it when you get it continues to intrigue business thinkers as knowledge management remains critical in the attainment of innovation and competitiveness.

In the franchising business – which dominates the service sector in the economies of many industrialized nations – there has been limited theoretical development outlining how these service firms can create, share and use knowledge to drive performance and increase competitiveness. Indeed, some previous studies have failed to alleviate concerns about how franchising actors access, interpret and convert information into usable knowledge resources, facilitate collaborative learning, develop unit- and system-wide dynamic capabilities and create value for customers. Consequently there is a need to focus on how effective knowledge management promotes innovation and growth in the firm’s dynamic capabilities, improvements in unit-level effectiveness and profitability, positive inter-firm relationships, and system survival.

In “Value creation through knowledge management in franchising: a multi-level conceptual conceptual framework”, Dr Scott Weaven et al. focus on knowledge development, knowledge transfer and knowledge use within the context of dyadic monitoring, and key relational outcomes (partner congruence, relationship quality, perceived conflict, opportunism), and performance results (franchisor, franchisee and customer welfare). In presenting an integrative systems model of knowledge management (KM) across the franchisor-franchisee-customer triad, they ask:

• How does knowledge development and organizational learning effectively facilitate knowledge transfer and knowledge usage in franchise systems?

• What role does monitoring play in the relationship between the knowledge management processes and the welfare of franchisors and franchisees?

• How does the process of knowledge management (development, synthesis, transfer, usage) influence franchisor, franchisee and customer welfare?

Franchisees use explicit knowledge resources to inform key operational issues (e.g. marketing plans) and tacit knowledge resources in operational and strategic contexts (e.g. add new products and services, resolve conflict). Linkages between knowledge type and relational outcomes are dependent upon a franchisor’s exploitative or exploratory orientation. Exploitation motives endorse standardized service delivery and are reliant upon the dissemination of codified knowledge to ensure compliance and commitment in the network. Exploratory approaches use collaboration (e.g. problem-solving, strategy formulation) to engender positive relational outcomes with franchisees (e.g. increased trust and satisfaction, reduced conflict and opportunism).

Franchisors need to provide the explicit knowledge (e.g. procedures, up-to-date product and pricing information) required for franchisees to operate successfully. Tacit knowledge regarding the implicit values and social norms of the system need to be shared with the franchisee. Such effective knowledge dissemination and sharing will promote collaborative learning, growth in firm capabilities, competitiveness and survival.

Although bound by explicit contracts, franchise systems invariably pursue different modes of relational governance. While franchisees are expected to follow franchisor directives (e.g. procedures, policies, marketing guidelines), they are also permitted to routinely exchange explicit and implicit knowledge (e.g. local marketing improvements) and transfer this knowledge to other organizational constituents (i.e. franchisor and other franchisees).

Typically, low-information-richness (IR) mechanisms (e.g. post, e-mail, manuals) are used to share explicit information and high-IR mechanisms (e.g. conferences, franchise field visits) are used in tacit knowledge exchange. These approaches enable franchisors to access and leverage the knowledge provided by franchisees to inform future operational and strategic choices (e.g. cut costs, increase sales, improve supplier relationships) and assist in creating an atmosphere of trust. Such effective knowledge transfer will promote closer alignment of incentives, greater commitment and a more fully shared vision.

The authors suggest that a franchisee’s collaborative exploitation of explicit and tacit, as well as system- and unit-specific knowledge, will promote unit and system performance and innovation, competitive advantages (at territorial, regional/national levels) and brand value for the franchise concept. Moreover, franchisees that effectively develop knowledge from their interactions with their franchisors over time are likely to exhibit lower levels of opportunism.

Monitoring is used by franchisors to detect sub-par unit-level performance (and opportunism) and inform corrective courses of action to ensure system uniformity. The authors contend that a variety of standards-based (e.g. audits, client polls) and attitudinal (e.g. informal meetings) monitoring mechanisms can be used to ensure efficient use of knowledge assets in franchise systems.

Franchisee assessments of the relational character of the franchise system dictate subsequent behavioral exchanges. In particular their satisfaction, trust, commitment and propensity to adhere to system standards will guide their use of knowledge assets. Positive appraisals of the franchising relationship will minimize opportunistic behaviors, encourage franchisees to engage in the knowledge-exchange process and change routines and processes in an effort to develop optimal service delivery methods, improve competitiveness and realize financial benefits at unit level.

To read the full article enter 10.1108/JSM-09-2013-0251 into your search engine.

(A précis of the article “Value creation through knowledge management in franchising: a multi-level conceptual framework”. Supplied by Marketing Consultants for Emerald.)