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The impact of design choices and market factors on brokerage firms' efficiency

The impact of design choices and market factors on brokerage firms' efficiency Purpose – The purpose of this paper is to explore how scale and scope of operations, firm age, and the choice to join a franchise formula influences brokerage firms' efficiency. Design/methodology/approach – Four‐year data of 1,282 Dutch real estate brokerage firms is used to compute a relative efficiency measure for all firms. Consecutively, variation in this efficiency measure is explained from the firm and market characteristics. Findings – The results show that scale and scope have a non‐linear, U‐shaped, relationship with efficiency. A reversed U‐shaped relationship is found between age and efficiency. Finally, being a member of a franchise does not necessarily lead to improved efficiency, but it depends on the franchise formula terms used. Practical implications – Based on these results, managers of real estate brokerage firms are able to reconsider their own organizational design choices. Originality/value – Compared to prior studies, this study uses data from multiple years. Further, the analysis also incorporates non‐linear effects of scale, scope and age on efficiency. Finally, prior research has only compared efficiency of franchise versus independent firms. This study shows that benefits of a franchise depend on the contract terms. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of European Real Estate Research Emerald Publishing

The impact of design choices and market factors on brokerage firms' efficiency

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References (36)

Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
1753-9269
DOI
10.1108/17539261111129461
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to explore how scale and scope of operations, firm age, and the choice to join a franchise formula influences brokerage firms' efficiency. Design/methodology/approach – Four‐year data of 1,282 Dutch real estate brokerage firms is used to compute a relative efficiency measure for all firms. Consecutively, variation in this efficiency measure is explained from the firm and market characteristics. Findings – The results show that scale and scope have a non‐linear, U‐shaped, relationship with efficiency. A reversed U‐shaped relationship is found between age and efficiency. Finally, being a member of a franchise does not necessarily lead to improved efficiency, but it depends on the franchise formula terms used. Practical implications – Based on these results, managers of real estate brokerage firms are able to reconsider their own organizational design choices. Originality/value – Compared to prior studies, this study uses data from multiple years. Further, the analysis also incorporates non‐linear effects of scale, scope and age on efficiency. Finally, prior research has only compared efficiency of franchise versus independent firms. This study shows that benefits of a franchise depend on the contract terms.

Journal

Journal of European Real Estate ResearchEmerald Publishing

Published: May 10, 2011

Keywords: Real estate; Business performance; Franchising; The Netherlands

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