Financial Performance of Hospitality Franchise Firms: an Institutional Economics Perspective

Abstract

ABSTRACT For many years both researchers and practitioners have attempted to learn why some organizations achieve higher level of performance than other organizations. There are two main streams of research that try to explain why and how firms succeed, survive, and decline: economic perspective and behavioral perspective. The economic perspective assumes that top management is exposed to full information, capable of processing the available information, is rational, and shareholder wealth maximization is their primary goal. The behavioral perspective focuses on satisfactory goal achievement rather than profit maximization. Since organizations are dynamic entities composed of different groups with differing goals, organizational orientation shifts from goal achievement to power balance, conflict resolution and survival (Anderson 1982).