Performance and Control across Multiple Markets

Tatiana  Sandino; Dennis  Campbell; Shelby  Yu

Working Paper | 2008

Performance and Control across Multiple Markets

by Tatiana Sandino, Dennis Campbell and Shelby Yu

Abstract

Chain organizations typically operate units across different types of markets, with significantly diverging customer bases. Such market-type dispersion potentially influences performance through two channels: it makes performance a noisier indicator of store manager effort, and it makes chain level decisions less optimal for individual stores. This paper examines the impact of market-type dispersion on chain and store performance in the convenience store industry. Our findings indicate that market-type dispersion has a negative impact on chain and store performance; they also indicate that these effects are mitigated by two control mechanisms: franchising and standardization.

Keywords: Governance Controls; Organizational Design; Markets; Franchise Ownership; Performance; Retail Industry;

Language: English

Format: Print

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Citation:

Sandino, Tatiana, Dennis Campbell, and Shelby Yu. "Performance and Control across Multiple Markets." American Accounting Association Financial Accounting and Reporting Section Paper, January 2008.

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An organization’s culture can be a significant source of sustainable competitive advantage. For the organization, it can attract job candidates who fit and align employees working in different teams around common goals. For employees, a strong culture can generate pride, satisfaction, and purpose. However, a strong organizational culture can easily decay with a company’s growth as new employees join the firm and business units develop cultures of their own. This technical note proposes that the growth a company can sustain while preserving its culture is governed by its ability to attract employees who fit with its purpose and values and to preserve and foster this alignment over time. To achieve this, an effective leader must formally articulate the purpose and values of the company and rely on four management systems that can be collectively thought of as a “North STAR” orienting managers’ and employees’ attention in the intended direction. This note details these organizational capabilities and management systems and describes the steps that successful companies take in order to preserve a strong culture through periods of growth.

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Performance and Control across Multiple Markets

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