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Abstract
Replication, a familiar phenomenon sometimes referred to as the "McDonalds approach," entails the creation and operation of a large number of similar outlets that deliver a product or perform a service. Companies pursuing this strategy are now active in over 60 industries. Although replicators are becoming one of the dominant organizational forms of our time, they have been neglected by scholars interested in organizations. As a result of this neglect, replication is typically conceptualized as little more than the exploitation of a simple business formula. Such a view clouds the strategic subtlety of replication by side-stepping the exploration efforts to uncover and develop the best business model as well as the ongoing assessment that precedes large-scale replication of it. Empirical evidence supports an alternative view of replication strategy as a process that involves a regime of exploration in which the business model is created and refined, followed by a phase of exploitation in which the business model is stabilized and leveraged through large-scale replication.
In this paper we present the key elements of a theory of replication strategy. We discuss key aspects of a replication strategy, namely the broad scope of knowledge transfer and the role of the central organization, and the analytical concepts of template and Arrow core as a preamble for specifying hypotheses about the conditions under which a replication strategy is more likely to succeed in a competitive setting. Replication strategy provides unusually transparent examples of the process of leveraging knowledge assets; we exploit this in our concluding discussion.
(Knowledge Creation and Use; Replication; Template; Exploitation and Exploration; Franchise)
In this paper we focus on the use of replication as a strategy. Replication, a familiar phenomenon sometimes referred to as the "McDonalds approach," entails the creation and operation of a large number of similar outlets that deliver a product or perform a service. Like McDonalds, many replicators have sustained remarkable growth and profitability, comparable to that achieved through any other model of rapid business growth. While replication has long prevailed in the fast-food realm, companies pursuing it are now active in over 60 industries. Examples include coffee bars, hotels, rehabilitation services, banking, maid-service providers, tax advisers, cleaning services, personnel testing, accounting, wood restoration, and interior plantscaping.
Replicators are rapidly becoming...