Restaurant franchising and top management team

The primary purpose of this study was to investigate how top manager attributes account for the implementation of risk-averse strategy by applying a conceptual framework based on upper echelons theory. We selected franchising as a representative risk-averse strategy based on resource scarcity, agency, and risk-sharing theories. We chose the top management team (TMT) as a proxy for the upper echelon to examine the theoretical argument. The study period was from 2000 to 2013, and 29 restaurant companies were included in the research. Related data were derived from EXECUCOMP, COMPUSTAT, Annual 10-K, and publicly accessible resources (e.g., LinkedIn and Business Week). Feasible generalized least squares and random effect regression models were used to analyze the data. The results suggested that the formal education levels of top managers negatively affected franchising implementation, whereas the tenure of TMT members positively influenced restaurant franchising.