Governance and Opportunism in Franchise Systems

This is a faculty candidate seminar for the Department of  Marketing & Policy Studies.

Kersi Darius Antia is an Assistant Professor of Marketing in the Wisconsin School of Business in Madison, WI

Abstract

Grounded in agency theory, this study focuses on franchisor reliance on
ex ante contracts and ex post monitoring and enforcement efforts to govern relationships with franchisees. Survey and archival data are integrated from three different sources, and a conditional mixed process regression model is specified to test the research hypotheses. Study results highlight how franchisors attempt to utilize multiple governance mechanisms to safeguard against franchisee opportunism, sometimes with counterproductive results. While contractual completeness and contractual one-sidedness individually appear to serve as substitutes for monitoring and enforcement, the combination of a relatively complete and one-sided contract appears to increase franchisor ex post governance efforts. Further, franchisee opportunism appears inhibited when behavior and output monitoring are both high, but heightened by a combination of high behavior monitoring and enforcement. The study provides an initial baseline of understanding on how franchisor combinations of ex ante and ex post governance mechanisms function to deter or engender franchisee opportunism.
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Thursday, Oct. 7, 2010 from 9:30 a.m. to 11 a.m.
Peter B. Lewis Building, Rm 418
11119 Bellflower Road
Cleveland, OH 44106-7235
United States
Speaker(s): Kersi Darius Antia

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