Innovation Management within the Plural Form Network

Abstract

Nowadays, most retail chains are organized in a network structure, which operates under the principals of mutual communication and cooperation for lower overhead cost, increased responsiveness and flexibility, and greater operational efficiency (Lozenzoni and Baden, 1995). In addition, thanks to interfaces between many units, the network is a powerful tool to foster innovation. However, networks can also block innovation because of the divergence of interests among units (Hagedoorn, 1995). A franchised network is an illustration of this, due to the fact that franchisees, as independent entrepreneurs, have the right not to adopt all the modifications proposed by the franchiser. A solution is to use the plural form, associating franchise and company arrangements. In reality, the plural form is increasingly used in retailing; it has advantages over the pure franchised and wholly owned chains in terms of innovation. This paper deals with innovation management within the plural form network. Firstly, we point out difficulties in managing innovation that network operators have to cope with. Secondly, we explain why the plural form could facilitate innovation. And finally, we study the innovation process and build the process models for how innovation is made and managed in the plural form network. Data for analysis are obtained by interviews with network operators in France. On the whole, this work tends to show the superiority of the plural form and has a practical purpose that is to help the plural form network to optimize the management of innovation projects.