Value co-creation through knowledge exchange in franchising

Purpose – This paper proposes a knowledge-exchange framework for value co-creation in franchise network. Design/methodology/approach – This conceptual study integrates literature on franchising, knowledge based view of the firm, absorptive capacity, and service dominant logic to propose a theoretical framework for value co-creation in franchising using knowledge as an operant resource. Findings – The proposed framework suggests that in a franchise network value is co-created by three key actors – franchisor, franchisees, and the customers; the operant resource these key actors bring to the value creation process is knowledge; and the absorptive capacity of principal actors and the appropriation hazard affect the flow and sharing of knowledge. Research limitations/implications – The authors hope that the proposed knowledge exchange framework for value co-creation in franchise networks provides an impetus for future research in this critical aspect of franchising – i.e. viewing knowledge as an operant resource and viewing the three actors as resource integrators and co-creators of value. Practical implications – The proposed framework suggests that managers in franchise industry should stop looking at consumers and franchisees as passive operand resources, but look at them as operant resource. They should also alter their perspective about the source of competitive advantage, with the focus shifting to knowledge as the operant resource. Originality/value – The study takes a new approach to value creation in a franchising network by introducing the concept of knowledge as an operant source.