Original scientific paper
https://doi.org/10.1080/1331677X.2020.1824124
An evolutionary analysis of franchise firms
Sanghoon Lee
orcid.org/0000-0002-9861-5534
Abstract
This study uses an evolutionary perspective to examine the relationship between profit and growth. The evolutionary perspective
argues that firm growth refers to the diffusion of fitter routines of
the firm. In order to apply this evolutionary view, we investigate
franchise data by using various regression techniques such as
pooled OLS, fixed/random effects, dynamic GMM, and split-sample regressions. Overall, the empirical results support the positive
relationship. Some more findings are: (i) the positive relationship
is pronounced for the traditional measure rather than the
“evolutionary” measure; (ii) the dynamic GMM regressions show
that the positive effect of profit on growth is found only when
using the evolutionary measure, which implies that the idea of
evolutionary analysis fits well with the dynamic model. Also, the
positive relationship is pronounced in small and young groups
when using the evolutionary measure.
Keywords
Growth; profit; franchise; evolutionary analysis; panel data
Hrčak ID:
301229
URI
Publication date:
31.12.2021.
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