Managing Innovation & Technology Transfer

Introduction:
From last few decades, companies have been changed the way they treated their customers in
service industry. Technology has affected the techniques of service to delivered and developed.
Few companies utilized different types of innovation which is absent in other industries such as
self-service technologies (SSTs). This service is mainly common in retailing, banking and
travelling industry. So there is an opportunity for many companies that can implement these
technologies and received huge benefits for customers and companies.
There is a limited research has been done to investigate the role of management with respect to
innovation process in fast food chains restaurants. SST has key importance because of innovation
in this project. Interviewees have answered according to them. Moreover, companies have
received significant profits after implementing these technologies. Thats why the author of this
project took self-service technologies as a key innovation. Thus, the purpose of this project is to
describe the role of management in innovation process in fast food chains restaurant.
Self-Service Technologies
In 1977, it is suggested that service companies should make operation efficient. It can be done by
shifting operation that needs employee- customer interaction to head office if interaction of these
two is not important to company (Chase, 1977). With passage of time, customers replaced
employees and generated services by their own (Natarajan, 2010). By doing this, company
started getting profits, enhanced productivity and reduced cost (Kelley, 1994; Lovelock, C.H.
and R.F. Young, 1979). For instant, IBM saved about 2 billion dollar because of replacing
telephone call service over online service provision (Burrows, 2001). According to Holman
(2010) few hinders that developed fast food restaurants somehow are more reluctant to utilize
that kinds of technologies. He described that most of fast food restaurants are franchisees.
Moreover, financial resources, service philosophies, and comfort levels of technology are not
suitable for implementation of Self-Service Technologies.
On the other hand, few restaurants implemented Self-Service Technologies such as touch screen
ordering systems & generating financial benefits. For instant, Subway applied touch screen
ordering in one franchisee. This becomes the source of increased profit that went $750 per week,
consisting large order and reduced labor cost (Nextep systems, 2006). Anyhow, the given

researches that described the successfulness of technologies and practical examples of business
world, it is still surprising that many of fast food restaurants are not willing to implement SelfService Technologies.
Problem Statement:
Many of the fast food companies utilized two kinds of establishments such as company owned
outlets and franchisees (Bradach, 1997). These two establishments impacted on power, authority
(Furquim De Aze-vedo, 2010), and communication. Dane (1992), and innovation process
(Lewin-Solomons, 1999). According to Lewin-Solomons (1999), Dandridge and Falbe(1994)
described the value of advisory councils with respect to communication among franchisor and
franchisees. Both parties get benefits as franchisors is depended on franchisees creativity and
feedback as well they can easily share opinions and thoughts.
After an extensive research of literature, author came to know that there is limited research is
done on the role of franchisee in innovation process (Sundbo, 2010; Dandridge, 1998). The study
of Dandridge (1998) also explained that organizational variables such as growth, age, and size
influenced the support of franchisor with respect to innovation of franchisee.
Existing research on entrepreneurship and innovation in franchising focused on franchisees,
because franchisees are taken as entrepreneurs (Dan dridge, 1998), although entrepreneurship by
franchisees has received policies and standards from franchisor (Bradach, 1997). From these
findings, the author determined the objective of this project which was to investigate the
influence of franchisees in innovation process inside fast food industry. It is described through
effectiveness of communication and power among franchisor and franchisee.
Company owned outlets
Researches described that the manager of company-owned stores are not taken interest in profits
or sales as they are less independent rather than franchisee managers (Lewin-Solomons, 1999;
Boyle, 1994). Managers are more concerned about promotions and stable job. Therefore, it is
expected from managers to follow the authority despite being creative and independent (LewinSolomons, 1999). Additionally, Williams (1985) claimed that managers of company owned
stores delivered bad results because they received fixed salary and the unit performance do not
affect them. Thus, headquarters that are employed managers and willing to impose control.
Anyhow, numerous researchers analyzed with respect to less company-owned stores and more
franchisees or both similar establishments. Thus, it is interesting to see this argument where

establishment is fully company owned. From these findings, the author determined the objective
of this project which was to investigate the influence of franchisees in innovation process inside
fast food industry. It is described through effectiveness of communication and power among
headquarters and company-owned outlets.
Purpose
The objective of this project which was to investigate the influence of franchisees in innovation
process inside fast food industry.
Research questions
1. How the power distribution does influenced the role of management in innovation process inside
fast food industry?
2. How internal communication in fast food industry is effective?
Methodology:
Why case study approach is selected?
Yin (2003) described that three conditions should be considered before selecting research
strategy; 1) research question type, 2) control of author over units of study, 3) contemporary Vs
historical phenomena (Yin, 2003). The author of this project has been selected case study
because it linked operational of phenomenon rather than prevalence or incidence of
phenomenon. It also focused on how structure of organization on innovation process. Yin (2003)
explained that why and how are exploratory and solved by experiments, case studies, and
histories.
Case selection
Subway
Subway is considered as an international standard fast food franchise, having 34 600 franchisees
running in about 98 countries (Subway, 2011, 20 May). It is ranked on 9 th number in
Entrepreneur's 2011 Franchise 500 and famous as growing franchise system all over the world
(Stapp, Februari 2011). Two franchisees of subway are located in Jonkoping, Sweden. Subway
has order system based on individual choices. And it demands high involvement of customer as
compare to other fast food franchises. Subway initiated small shop while Stuart Frankel was its
owner. He introduced foot long Subway sandwich of price 5$ that was 1$ cheaper. This idea
affected the sales of subway and spread all over the headquarters (Boyle, 2009).

Thus, the author of this project believed that SST of Subway is beneficial for customers as
compare to other fast food franchise running in Jonkoping. It is observed that local management
is more motivated for innovation and interested to take part in this project.
Max
Max is considered as a most famous fast food company of Sweden from last year by ISI Winning
(2011). It has 82 restaurants operated in Sweden, along with 3 company owned restaurants in
Jonkoping. Authors thought that Max is different from Subway. As Max already implemented
SST but Max is company owned in Jonkoping while having different setting.
Choice of study units:
Bias is taken as weakness and must be avoided in statistical sampling. Anyhow, this method is
taken as strength in qualitative study. So biased sampling or purposeful sampling in used to get
rich information from cases to answer the research questions of great importance (Patton, 2002).
Data Collection
To achieve the objective of this project, the author performed semi structure interview with
restaurant managers and employees of Max and Subway restaurants present in Jonkoping. The
author received information of decision making process and organizational structure of two
companies through interview. Firstly, initial contact was done over phone to finalized the
meeting date and discuss the purpose of this project. In meeting the interest, current mindset, and
knowledge of local managers about SST & other innovations was analyzed.
Interview guide:
Bouchard (1976) described that interviewing is a best way to take advantage of language and it is
a powerful source of communication between human beings. A person can save time and efforts
in order to get valuable information (Bouchard, 1976).
Interview guide is listed an issues or questions that are needed to be asked in interview (Patton,
2002). The author of this project followed this interview guide:
1. Start of creativity inside organizations
2. The extent of power that the local managers have when they deals with innovations
3. Independence of decision making
4. Know-how regarding Self-service technology
5. Ways of communication inside the organization
6. Vertical communication among higher level managers and local management

7. Horizontal communication between local managers

8. Frequency and Effectiveness of communication
Data analysis
The case study analysis is least develop and tough aspect of heading with case studies (Yin,
2003). According to Yin (2003), mostly researchers do not know the analysis of case studies.
Inductive and Deductive approach
Patton (2002) described that inductive analysis is considered as discovering pattern and come out
from collected data. On the other hand, deductive method deal with data that is analyzed with
respect to previously generated framework. Qualitative analysis is inductive in starting with
categories, themes and emerged patterns. After this, deductive method is applied to test and
affirm the suitability and validity of inductive method (Patton, 2002).
Anyhow, Patton (2002) described that inductive analysis is start with theory while inductive
analysis start with concepts or applying the framework of someone else. In start, the author of
this project used propositions that derived from framework. The author used questions instead of
proportions and related it with theory like Rogers diffusion of innovation.
Cross case analysis
To investigate the phenomenon of this cross case analysis is used (Patton, 2002)
Denzin (1978) explained that in cross case analysis we carefully compare case studies and
through comparison we explained the phenomenon. Ragin (2000) described that cross case
studies is a systematic comparisons between many cases. It is used when researcher need to
consider the commonalities & uniqueness among cases, thus explained differences and
similarities among them.
Analysis
Communication:
Max
The results of interview showed that mangers in Jonkoping gave importance to vertical
communication. Similarly, managers took initiatives and decisions regarding daily operations.
While higher level management took decisions about future changes or larger decisions. Figure
described the communication system of Max.

Innovation, at Max
Innovation has been done at Max by following this Rogers diffusion innovation process shown
in figure.

Knowledge
During interview it is noticed that local managers have knowledge of SST. Everyone manager of
restaurants are familiar with SST while they having less or more knowledge.
Persuasion
Local managers of Max described in interview that they gave importance to innovation but they
do not think much about it. The manager told that SST was there when hired as a manager but
they do not gave importance to other innovations. On the hand, board of operations searched
information and interested to apply more innovations in restaurants.

Decision
Headquarter accept or reject the information of innovation implementation that are received from
board of operations.
Implementation
Local managers are responsible for implementation of innovation in restaurants. They can
discuss any difficulty or issue regarding this with board of operations. They operated
accordingly.
Confirmation
After getting feedback of local managers, the headquarters made final decision for innovation
implementation.
Subway
Communication
The communication process of subway is shown in figure. When it was asked from local manger
about communication they described that they have satisfactory communication system and
support of higher level management. According to Dane (1992), an advisory council is an
important tool for communication for franchisees. These councils are connected with franchisees
and work together and acted upon opinions or thoughts or feedbacks of franchisees.
arranged phone conferences for it.

Innovation at Subway

They

Innovation has been done at Max by following this Rogers diffusion innovation process shown
in figure.

Knowledge
In knowledge stage, franchisees are responsible for creativity and innovations. According to
managers franchises are awarded of innovations because it is a part of day to day operation.
Persuasion
Franchisees do not take part in persuasion stage. Subway has two committees as: marketing and
Food committee. It included franchisee representatives and higher level management. They
discussed ideas, issues and innovations. It acts as a mediator and discussed when US
headquarter, when committee perceived innovation is suitable for all franchisees.
Decision
US headquarter took final decision regarding a new innovation.
Implementation
Franchisees have not power to accept or reject innovation so headquarters accepted it and
ordered to implement. Anyhow, few decisions are optional. As franchisees can choose whether
implement decision or not. In this case franchisees exercised power for implementation.
Confirmation
After implementation, US headquarters are received noticed about it and they confirmed
innovation.

Conclusion
This project supports the last research that took franchisees as controlled self-employees with
encouragement to be innovative. Franchisees have innovation thinking for little extent. Anyhow,
hurdles of company headquarters do not encouraged innovations.

When franchisees are

considered as a union then huge amount of power is discovered in food and marketing
committees. In contrast, the managers of company-owned outlets are more independent, when
handling minor changes. Thus, the author of this project declared the positive relationship among
innovation process and distributed power of local management. Where local manager have
greater formal power, they are also have greater influenced on innovation process. Anyhow, it
differed with respect to structure of organization. Franchisees have greater extent power for
medium-sized innovation while on the other side, company-owned outlets manager have greater
amount power for minor innovations.
With respect to effectiveness of communication, both company-owned outlets and franchise
mangers are satisfied with communication of regional management. Anyhow, authors discovered
that efficiency inside the communication among top level management and local management
differed. Company owned outlets managers have closer connection with top level management,
rather than franchisees. Moreover, authors found that collaboration and communication that are
presented among company owned outlets are lacking in franchisees. Despite, franchisees
individually acted and take other as a competitor. Due to this higher level management involved
in unnecessary communication and could not able to focus on important issues. Horizontal
communication & collaboration among franchisees become a caused of effectiveness of
communication is increased, discovered by author. Thus, authors of this project described that
even communication inside two fast food restaurants are satisfying but there is an opportunity
exist for improvements. Specifically, inside franchise system where enhanced collaboration and
local communication leads to efficient communication for entire organization.
Discussion
This project discussed the role of local management regarding innovation process. Previous
studies focused only on franchise system, on the other side, this project considered both company
owned outlets and franchisees. Authors came to know that previous study can also applied in
company-owned outlets context. Although, Max is company owned but it have many similarities
like franchise system. Efficiency of communication is low in franchise as compare to company-

owned outlets context. Anyhow, franchisees have larger amount of power about medium sized
innovations. It is affected by company size. Max only located in Sweden but its issues is not
similar with subway as it operates in different countries and cultures. Organizational structure
and communication in Subway is complicated rather than in Max. By enhancing horizontal
communication, author thought that efficiency of internal communication will be improved in
Subway. Author own experience and efficient internal communication is become a way of this
successful operation.

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