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• Dr. Haibo Liu
  Assistant Professor of Management
  School of Business Administration
  University of California, Riverside

The replication of an established working example or template across different locations is the main form of growth for multi-unit organizations such as Hilton, Ikea, McDonalds, or Starbucks. While individual units of such replicating organizations often make local adaptations, prior research disagrees on the general question of how such adaptations affect focal unit performance. We argue that distinguishing between two different types of unit-level adaptation – incomplete replication, which consists of the omission of required template elements, and augmentation, which consists of the addition of allowed optional elements – may help reconcile existing disagreements in the literature. Using a unique dataset that tracks unit-level adaptation in a large, U.S.-based franchise organization over a period of eleven years, we find that these two types of adaptation have distinct, and often opposite, effects on a unit’s hazard of failure. These findings shed new light on contradictions exposed by prior research, thus helping mend the gap between studies that advocate strict replication and studies that advocate local adaptation as the strategy to enhance unit performance in replicating organizations.