Working Paper: NBER ID: w13327
Authors: Peter Cappelli; Monika Hamori
Abstract: Franchise jobs are often described as representing the epitome of the "low road" approach to managing employees: high turnover, little training, deskilled jobs, and little employee involvement, practices often seen as unsophisticated. Research on franchise operations suggests, however, that the basic operating principles and practices of franchises tend to be more sophisticated than those of equivalent independent operators. We might therefore expect their employee management practices to be more advanced as well, challenging the stereotype of franchise jobs. We use data from a national probability sample of establishments to examine the relationship between franchise status and employment practices. While descriptive statistics suggest that franchise operations use low road practices, once industry, size, and other control variables are included in the analysis, franchise operations appear on important dimensions to offer better jobs with more sophisticated systems of employee management than similar non-franchise operations.
Keywords: franchising; employment practices; job quality; employee management
JEL Codes: J31; L22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| franchise status (L14) | employment practices (M51) |
| franchise operations (L14) | job quality (J24) |
| franchise status (L14) | lower quality jobs (J69) |
| industry size and establishment characteristics (L25) | employment practices (M51) |
| franchise status (L14) | investment in employee training (M53) |
| franchise status (L14) | higher labor costs per employee (J39) |
| franchise operations (L14) | high-performance work practices (J33) |