Plural forms versus franchise and company-owned systems: A DEA approach of hotel chain performance

Plural form tends to be the most popular organization form in retail and service networks compared to purely franchised or purely company-owned systems. In the first part, this paper exposes the evolution of researchers’ state of mind from the way of thinking which considers franchising and ownership as substitutable organizational forms to theories which analyze the utilization of both franchise and company arrangements. The paper describes the main attempts to explain theoretically the superiority of plural forms. In the second part, the paper discusses the hypothesis which says that there is a relationship between the organizational form of the chain and its efficiency score. It is demonstrated through the application of a data envelopment analysis method on French hotel chains that plural form networks are in average more efficient than strictly franchised and wholly owned chains. The Kruskal–Wallis test which is a distribution-free rank-order statistic is used to statistically verify this relationship. The result does not permit the rejection of the null hypothesis regarding whether an organizational form is more efficient than another one. Hence, this paper opens prospects for researches aiming at testing the organizational form effect on different samples and with other methods.