The impact of design choices and market factors on brokerage firms' efficiency

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

Purpose: The purpose of this paper is to explore how scale and scope of operations, firm age, and the choice to join a franchise formula influences brokerage firms' efficiency. Design/methodology/approach: Four-year data of 1,282 Dutch real estate brokerage firms is used to compute a relative efficiency measure for all firms. Consecutively, variation in this efficiency measure is explained from the firm and market characteristics. Findings: The results show that scale and scope have a non-linear, U-shaped, relationship with efficiency. A reversed U-shaped relationship is found between age and efficiency. Finally, being a member of a franchise does not necessarily lead to improved efficiency, but it depends on the franchise formula terms used. Practical implications: Based on these results, managers of real estate brokerage firms are able to reconsider their own organizational design choices. Originality/value: Compared to prior studies, this study uses data from multiple years. Further, the analysis also incorporates non-linear effects of scale, scope and age on efficiency. Finally, prior research has only compared efficiency of franchise versus independent firms. This study shows that benefits of a franchise depend on the contract terms. © Emerald Group Publishing Limited.
Original languageEnglish
Pages (from-to)48-68
Number of pages21
JournalJournal of European Real Estate Research
Volume4
Issue number1
DOIs
Publication statusPublished - 2011

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Franchise
Market factors
Brokerage
Firm efficiency
Real estate
Efficiency measures
Relative efficiency
Design methodology
Join
Nonlinear effects
Market characteristics
Organizational design
Managers
Firm characteristics
Firm age

Cite this

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title = "The impact of design choices and market factors on brokerage firms' efficiency",
abstract = "Purpose: The purpose of this paper is to explore how scale and scope of operations, firm age, and the choice to join a franchise formula influences brokerage firms' efficiency. Design/methodology/approach: Four-year data of 1,282 Dutch real estate brokerage firms is used to compute a relative efficiency measure for all firms. Consecutively, variation in this efficiency measure is explained from the firm and market characteristics. Findings: The results show that scale and scope have a non-linear, U-shaped, relationship with efficiency. A reversed U-shaped relationship is found between age and efficiency. Finally, being a member of a franchise does not necessarily lead to improved efficiency, but it depends on the franchise formula terms used. Practical implications: Based on these results, managers of real estate brokerage firms are able to reconsider their own organizational design choices. Originality/value: Compared to prior studies, this study uses data from multiple years. Further, the analysis also incorporates non-linear effects of scale, scope and age on efficiency. Finally, prior research has only compared efficiency of franchise versus independent firms. This study shows that benefits of a franchise depend on the contract terms. {\circledC} Emerald Group Publishing Limited.",
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The impact of design choices and market factors on brokerage firms' efficiency. / Groot, T.L.C.M.; Risseeuw, P.; Wiersma, E.

In: Journal of European Real Estate Research, Vol. 4, No. 1, 2011, p. 48-68.

Research output: Contribution to JournalArticleAcademicpeer-review

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AB - Purpose: The purpose of this paper is to explore how scale and scope of operations, firm age, and the choice to join a franchise formula influences brokerage firms' efficiency. Design/methodology/approach: Four-year data of 1,282 Dutch real estate brokerage firms is used to compute a relative efficiency measure for all firms. Consecutively, variation in this efficiency measure is explained from the firm and market characteristics. Findings: The results show that scale and scope have a non-linear, U-shaped, relationship with efficiency. A reversed U-shaped relationship is found between age and efficiency. Finally, being a member of a franchise does not necessarily lead to improved efficiency, but it depends on the franchise formula terms used. Practical implications: Based on these results, managers of real estate brokerage firms are able to reconsider their own organizational design choices. Originality/value: Compared to prior studies, this study uses data from multiple years. Further, the analysis also incorporates non-linear effects of scale, scope and age on efficiency. Finally, prior research has only compared efficiency of franchise versus independent firms. This study shows that benefits of a franchise depend on the contract terms. © Emerald Group Publishing Limited.

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