Psychological ownership and franchise growth An empirical study of a Taiwanese taxi franchise

Purpose - The primary purpose of this paper is to verify the importance of psychological ownership in the organisational context of a franchise by testing predicted relationships concerning feelings of ownership towards branding, legal ownership of complementary assets, organisational commitment, and a willingness on the part of franchisees to diffuse a franchise brand to peers. Design/methodology/approach - Evidence is presented from an empirical study on the largest taxi franchise fleet in Taiwan. Two formal questionnaires/surveys were conducted in May 2005 and September 2005, from which data were collected from 147 franchisees. Regression analysis is employed to test seven hypotheses. Findings - The empirical results demonstrate that analysing the psychological ownership of a franchise brand from two dimensions (i.e. the degree of psychological ownership and the self-centred propensity towards psychological ownership) sees an increase in explained variance in organisational commitment and brand diffusion in the context of the franchise organisation. It also illustrates that both dimensions of psychological ownership are negatively affected by the ownership of the non-brand-specified complementary assets owned by a franchisee. Research limitations/implications - The majority of previous research has investigated the phenomenon of franchising from the perspective of the agency theory or of resource scarcity; and has focused on the franchisor's concerns. A major implication of this study indicates that these perspectives, while essential, are insufficient in explaining the growth through franchising strategies. Researchers need to consider how to integrate asset ownership (or property rights) and affect elements in order to influence a franchisee's cognition and behaviour entrepreneurially. A limitation of this study is that it is conducted within the respective boundaries of cultural, professional, and industrial factors. Practical implications - This study indicates that entrepreneurs can achieve better brand diffusion effects for franchise growth if they engage in merging the structures of asset ownership and psychological ownership. Originality/value - This is the first paper to examine the psychological ownership of branding within the setting of a franchise organisation and highlights the importance of a sense of ownership in entrepreneurship.