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This paper's aim is to examine the risk‐adjusted market performance of an overall franchise and three sub‐sector franchise common stock portfolios from 1990 through 2008.

Four sets of franchise sector portfolios are constructed, their returns are calculated, and their performances relative to three market benchmarks are evaluated using the Sharpe ratio and Jensen's α.

The all franchise portfolio significantly outperformed the three market benchmarks. Among the sector portfolios, the services and restaurant portfolios also outperformed the market benchmarks, but not the lodging portfolio. Results support the theoretical hypothesis that franchising may provide superior advantages to investors and point to a possible “franchising anomaly”. Investors consider franchise firms to be less risky than the average publicly traded firms and therefore require a lower rate of return.

The results of the study suggest that in the past, franchise managers may have paid a much higher cost of capital than warranted by their firms' risk characteristics. Study results also have positive implications for franchise firms' access to capital and for evaluating franchise managers' compensation arrangements. Investors should consider allocating a portion of their investible funds to franchise stocks. Many lodging firms may not have taken full advantage of the benefits of franchising to reduce their financial risks. Restaurant firms may further improve their financial performance by selling their riskier units.

This is the first comprehensive study of the risk‐adjusted market performance of franchise firms over an extended period of time covering a variety of economic conditions that also analyzes the risk‐adjusted performance of the main business subcategories in franchising.

Examines the behavioural implications of the three main micro‐economic explanations – resource constraint, agency theory and search cost theory – for franchising. Reviews these theories, along with the empirical evidence found to support them. Highlights the implications of each explanation upon relational quality using four relational characteristics drawn from Macneil. Uses the characteristics of power balance, anticipation of trouble, sense of unity and presentation of costs and benefits. Argues that since the motivation to franchise depends upon the specific strategy employed by the franchisor, then relational quality will legitimately differ according to franchisor strategy. Describes a model drawn by linking strategic direction, franchise motivation and relational quality. Some illustrative propositions are derived from the model. Discusses the implications of the theory for both researchers and managers.

The purpose of this article is to describe the rationale behind and analyze the results of a strategy in regards to changing conditions and market share dominance. For more than 20 years, with the growth in available product varieties, product and brand proliferation have become increasingly evident in many consumer markets.

This article examines how three L’Oréal mass market businesses, i.e. L’Oréal Paris, Lascad and Gemey-Maybelline-Garnier (GMG), managed proliferation activities between 1988 and 2012 on their domestic market. Data were extracted from the information resources, inc. (IRI) Census and Sample Databases (retail panel data), and information was collected from internal sources and semi-structured interviews with top executives. Brand performance was assessed using panel data structure analysis, as recommended by IRI and Nielsen. Some data, as they remain confidential, were not included in the paper.

The study reveals that when opportunities are lacking, demand is declining, and competition is fierce – the situation that marks most mature markets – a proliferation strategy actually can yield diminishing results and reduced brand dominance.

Offering broader lines appears to generate confusion and to be counterproductive in relation to theoretical assumptions. Additional research on proliferation strategies is needed, particularly in declining market conditions, which implies diminished demand and market saturation due to increased competition and isomorphic practices.

When deciding to extend product lines, managers should take into account competition and more qualitative factors than those included in the models developed by and for store brands. The respective positioning and marketing strategy (i.e. challenger and leader) of the brands involved have also to be considered.

Prior research on proliferation strategies has relied on strong assumptions such as increase in demand and unsaturated markets. Through these case studies, this article shows that making the shelf space denser affects brand dominance, particularly when market conditions change. These results challenge current thinking as, in facing internal and external contingencies, managers might think which scenario is most favorable for maintaining a dominant position: changing the structure of the market by reducing (i.e. concentration) or increasing the number of brands/products in the market.

This study aims to explore the extent to which inter-organizational hybrid governance manages the micro design for optimum reverse knowledge transfer in the open innovation context. The authors use two essential facets of micro design in hybrid governance: product adaptation and integration mechanism.

Data for this study were collected from franchisees through structured questionnaires in Indonesia.

Results indicated that product adaptation has a positive relationship with reverse knowledge transfer. This study also found that the formalization strengthens the relationship between product adaptation and reverse knowledge transfer. However, the socialization does not have a moderation effect.

This research estimates the knowledge transfer from the agent’s side only. Therefore, further research is expected to estimate the reverse knowledge transfer in dyads (from agent and principal) to get a detailed understanding of reverse knowledge transfer.

This study offers guidelines to managers, especially in inter-organizational hybrid governance. The authors suggest reverse knowledge transfer as a form to manage the dispersed knowledge from their agents. Governing institutions should change their view that agents have diverse knowledgebase from experience adapting to local conditions and can improve their open innovation through reverse knowledge transfer. From the results, it is found that giving agents the flexibility to adapt products can boost reverse knowledge transfer to support open innovation.

This study provides an understanding of the utilization of external knowledge sourcing in the context of open innovation from agent to principal in hybrid governance through reverse knowledge transfer, which has thus far been empirically under-researched.

Borrowing from arguments of agency theory, the present study aims to investigate the moderating effect of the deviation from optimal franchising on the relationship between corporate governance provisions and firm financial performance.

The sample consists of 35 publicly listed US restaurant firms for the 1990-2008 period. The study uses a hierarchical regression with cross-sectional time-series fixed effects.

The results show that the deviation from optimal franchising worsens the negative relationship between corporate governance provisions and firm performance.

The availability of governance data restricts our sample to large publicly listed firms in the US restaurant industry, limiting the ability to generalize results for small and privately held restaurant firms.

Firm executives should not only pay attention to which corporate governance provisions they adopt but also strive to maintain an optimal level of franchising.

The key contribution of this study to governance literature is that this study demonstrates how the presence of multiple governance mechanisms influences firm performance.

This paper has two main purposes. First, this paper aims to examine whether pre-initial public offering (IPO) franchising activity of issuing firms is priced in the financial markets and results in pricing differential between franchising and non-franchising firms at the time of IPO. Second, the paper aims to find out whether firms with pre-IPO franchising achieve better post-IPO stock performance compared to non-franchising firms.

To test research hypotheses, empirical models were developed and tested through ordinary least square regression analysis. Several data sources were used including Thomson One Banker’s SDC database, Compustat/CRSP and IPO prospectuses.

The paper provides further insights to the underpricing phenomenon surrounding IPOs and long-run performance of IPO shares subsequent to listing. Particularly, the study reveals that franchising firms underprice their issues to a higher degree compared to non-franchising firms, and franchising positively affects the post-IPO benchmark adjusted cumulative abnormal returns (CARs) over a three-year observation period.

Because the study tests the proposed hypotheses using data only from the restaurant industry, the research results may lack generalizability. Therefore, researchers are encouraged to test similar hypotheses using larger sample sizes from other industries.

The study’s findings have important implications both for IPO issuers in positioning their offering and for IPO investors in comparing IPO stocks and forming long-run portfolios.

This paper contributes both to the IPO and franchising literatures by providing primary insights about how investors perceive pre-IPO franchising and incorporate their perception into their pricing at an IPO.

One of the most significant recent developments in the risk measurement and management area has been the emergence of value at risk (VaR). The VaR of a portfolio is the maximum loss that the portfolio will suffer over a defined time horizon, at a specified level of probability known as the VaR confidence level. The VaR has proven to be a very useful measure of market risk, and is widely used in the securities and derivatives sectors: a good example is the RiskMetrics system developed by J.P. Morgan. VaR measures based on systems such as RiskMetrics' sister, CreditMetrics, have also shown their worth as measures of credit risk, and for dealing with credit‐related derivatives. In addition, VaR can be used to measure cashflow risks and even operational risks. However, these areas are mainly concerned with risks over a relatively short time horizon, and VaR has had a more limited impact so far on the insurance and pensions literatures that are mainly concerned with longer‐term risks.

The purpose of this study is to determine and compare the performance of small and medium enterprises (SME) and manufacturing company stock portfolios in the Indonesian, Chinese and Indian capital markets by the Sharpe Index and the significance of differences in average performance in the capital market.

This is comparative research that compared the performances of SME and manufacturing company stock portfolios in Indonesian, Chinese and Indian capital markets. The hypothesis examination of comparative test used one-way ANOVA technique on the performance of SME and manufacturing company stock portfolios in Indonesian, Chinese and Indian capital markets. One-way ANOVA test was used in the analysis to test the average difference of performance indices of SME and manufacturing company stock portfolios is in Indonesian, Chinese and Indian capital markets.

The performance of SME and manufacturing company stock portfolios in Indonesian capital market was not better than the performances of IHSG and LQ45 Index, the performance of SME and manufacturing company stock portfolios in Chinese capital market (SZSE) was better than the performance of Shenzhen Composite Index and the performance of Shenzhen A-Share Stock Price Index. The comparison of the performances of SME and manufacturing company stock portfolios in Indonesian, Chinese and Indian capital markets showed that the performance of SME and manufacturing company stock portfolios in Chinese capital market was the best and the performance of SME and manufacturing company stock portfolios in Indonesian capital market was the lowest.

The implication of this study was that SME and manufacturing company stock portfolios had relatively better performances in China and India, so investors should consider investing in SME and manufacturing company stocks. The performance of SME and manufacturing company stock portfolios in Indonesia was not able to exceed market and LQ45 portfolios, so the authority in Indonesia financial market should consider developing a special market for SME and manufacturing company to support the development of SME and manufacturing company in Indonesia and solve the problem of lack of funding source for SME and manufacturing company.

The originality of the present study is in the measurement of the performance of SME and manufacturing company stock portfolio by risk-adjusted return which returns per risk unit measured by Sharpe Index as a more beneficial measurement in measuring stock portfolio performance than average return. Comparative study of the stock portfolio performances of small medium enterprises and manufacturing company In Indonesian, Chinese and Indian stock markets, and object studies conducted in Indonesia, China and India.

The purpose of this paper is to present directions for researching “new territories” by systematically reviewing contemporary research in the area of hotel internationalization.

Comprehensive analysis drawing on frameworks and debates in the international services management literature of research published over the period 1996‐2005 identifies approaches and results of hotel internationalization research. Work is organized into two broad categories: studies that relate hotel organizations to their external environments and those taking an internal perspective. This analysis is complemented by a short review of relevant demand and policy trends to ensure relevance of the critique.

Modal choice research has now reached a stage where it can provide greater depth of understanding in the relationships between this choice and organizational capabilities. Secondly, there has been a welcome increase in more internalised, qualitative research. Thirdly, while there have been some comparative industry studies more is encouraged as dialogue between researchers in different service (and manufacturing) industries will be of value as hotel internationalization meets new supply and demand conditions.

Eclectic paradigms to be supplemented by more focused industry and comparative industry studies; internal, organization focused research must account for cultural diversity amongst new hotel developers, firms and customers to prevent parochialism or ethnocentrism; more specific work could explore policy dimensions.

The paper outlines some future trends which will affect the internationalization process and bases of competitiveness/competitive advantage of hotel companies.

Through a timely review of one of the first service businesses to internationalise the paper contributes to knowledge of hotel internationalization by a rigorous review of contemporary research and suggests a research compass for the future.