Partnering relationships and retailer performance in China

Abstract

Franchising has become an increasingly common way for firms to find and maintain competitive advantage in recent decades. A number of business firms in many industries have been entering into a variety of inter-organizational relationships. Since 1995, China has started to take advantage of the logistical benefits of chain stores, and develop its domestic chains for the distribution of goods and services. This study attempts to look at the partnering relationship within this new retail format, and hence to better understand the home-grown franchising system in China's retail markets. The development of partnerships or other forms of suppliers-retailers alliances has become an increasingly important strategic decision in mainland China. Different patterns of relational exchanges, within the channels occur and are associated with franchise partnerships, based on standard measures of relationship interactions between channel partners. This study is a descriptive summary of partnering activities in franchisors-to-franchisees relationship, from a dyadic perspective. Different issues regarding Chinese-style franchising are discussed. Comparisons are made between the market-driven and government induced partnering regimes, to identify any difference on behaviors and performance. Data was collected via interviews and a structured questionnaire, from a sample of 'franchise-chain' retailers in China. Correlation and regression analyses are used to study the relationships between the retailer motivation to form the chain, and the actual behavior and performance. Managerial implications of the research findings are discussed and conclusions are made about how, and why, different formation motives affect the relational behavior and the ultimate performance level of Chinese franchise chains.