Corporate decision-making during recession : product franchisors in the Australian agricultural machinery industry 1967-72

Abstract

This study analyses the impact of scale, establishment mobility and policy siibstitution in the corporation's geographical behaviour. To maximise opportunities for observing change, the effects of recession on firms using a particular marketing system — product franchising — are examined. It is argued that competitive powers, represented by company structural attributes and expressed through relative network control capacities, should assist larger organisations to undertake spatial tactics which maintain their market and economic standing. Nineteen agricultural machinery franchisors are classified on a number of key variables into large and small groups. Their manufacturing, wholesaling and retailing activity between 1967 and 1972 is compared on criteria relating to the entry and exit of outlets. Certain locational strategies adopted by major competitors are seen to stabilise or improve distribution control, thus demonstrating a relationship of structural factors, channel management and representation courses. However, a broader association of these measures and market and general financial performance cannot be shown because of data limitations. Subsidiary findings point out the greater stability of large corporations in a setback, the lower probability of continuation suffered by small franchisors' dealers and the attack on small towns enforced by the economic contraction. Through the use of an operational model within an intensive, longitudinal analysis, the enquiry concludes that scale effects pervade locational decision-making, not only among enterprises but across the whole business sector. For the largest firms, spatial policy is clearly an interchangeable means to goals and, thus, establishment mobility can be pronounced. The divergence of such findings from previous work contributes to the ongoing review of traditional thinking in industrial geography and economics and prompts further research into the interface of the corporation and the entrepreneur.