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The impact of design choices and market factors on brokerage firms' efficiency

Tom Groot (Department of Accounting, VU University Amsterdam, Amsterdam, The Netherlands)
Peter Risseeuw (SEO Economic Research, Amsterdam, The Netherlands)
Eelke Wiersma (Department of Accounting, VU University Amsterdam, Amsterdam, The Netherlands)

Journal of European Real Estate Research

ISSN: 1753-9269

Article publication date: 10 May 2011

403

Abstract

Purpose

The purpose of this paper is to explore how scale and scope of operations, firm age, and the choice to join a franchise formula influences brokerage firms' efficiency.

Design/methodology/approach

Four‐year data of 1,282 Dutch real estate brokerage firms is used to compute a relative efficiency measure for all firms. Consecutively, variation in this efficiency measure is explained from the firm and market characteristics.

Findings

The results show that scale and scope have a non‐linear, U‐shaped, relationship with efficiency. A reversed U‐shaped relationship is found between age and efficiency. Finally, being a member of a franchise does not necessarily lead to improved efficiency, but it depends on the franchise formula terms used.

Practical implications

Based on these results, managers of real estate brokerage firms are able to reconsider their own organizational design choices.

Originality/value

Compared to prior studies, this study uses data from multiple years. Further, the analysis also incorporates non‐linear effects of scale, scope and age on efficiency. Finally, prior research has only compared efficiency of franchise versus independent firms. This study shows that benefits of a franchise depend on the contract terms.

Keywords

Citation

Groot, T., Risseeuw, P. and Wiersma, E. (2011), "The impact of design choices and market factors on brokerage firms' efficiency", Journal of European Real Estate Research, Vol. 4 No. 1, pp. 48-68. https://doi.org/10.1108/17539261111129461

Publisher

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Emerald Group Publishing Limited

Copyright © 2011, Emerald Group Publishing Limited

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