Growing through copying: The negative consequences of innovation on franchise network growth

We explore how more exactly copying a blueprint for establishing a franchise network in a new country influences franchising network growth. We test opposing hypotheses using panel data involving the transfer of franchising knowledge to 23 different countries, measuring the degree to which master licensees ‘copy exactly’ knowledge concerning how to grow a network in their country and the effect that their approach has on subsequent network growth. We conclude that a strategy of copying more exactly seems to enhance growth and that the benefits of more exactly replicating knowledge in the 1st year of a local network’s existence persist for several years. Thus, innovation, in this specific context, seems to hinder firm growth.