Hybrid Organizational Arrangements and Their Implications for Firm Growth and Survival: A Study of New Franchisors

Abstract

This study proposes that hybrid organizational forms provide a way to overcome the agency problems of adverse selection and moral hazard in selecting, assimilating, and monitoring new managers. Consequently, hybrid forms allow firms to overcome managerial limits to firm growth and therefore grow faster. Specifically, the study shows empirically that the degree to which a firm emphasizes franchising as its expansion strategy has a significant, positive effect on its growth and survival.