Franchisors’ long-term viability is tied to the ongoing operations of their franchisees. To ensure the ongoing performance of franchisees, franchisors deploy multiple governance mechanisms. This study assesses how governance mechanisms deployed to enhance franchisee ability (via selection and socialization) and motivation (via incentives and monitoring) impact franchisee bankruptcy. The authors examine the individual and joint effects of deploying governance mechanisms that share the same underlying objective, namely, to enhance franchisee ability and motivation. They also assess how motivation-inducing mechanisms may serve to counter the motivation-dampening effect of an increased royalty rate. Relying on data from multiple archival sources, the authors identify all bankruptcy filings by franchisees and their franchisors across 1,115 franchise systems over a 13-year observation window. Their findings document a positive and significant relationship between franchisee and franchisor bankruptcy. They also find main and interaction effects of the ability- and motivation-influencing governance mechanisms on the likelihood of franchisee bankruptcy, and the existence of significant bankruptcy spillovers among franchisees within the same franchise system. They discuss implications for franchise theory and management.

Over the last two decades, strategy researchers have sought to understand the ownership structure of firms' foreign direct investments (FDI) as reflected in entry mode and equity level. However, prior FDI research has ignored the interrelated nature of these key FDI decisions. In addition, prior research does not fully account for the fact that individual ownership structure decisions occur within the context of a firm's broader FDI portfolio, and thus reflect a wide and frequently unobserved range of parent firm and host nation effects. Our research seeks to address both of these limitations. Using a rich dataset of 4,459 subsidiaries established by 858 Japanese firms across 38 countries over a 9‐year period, we specify a conditional bivariate, cross‐classified multilevel model of FDI ownership structure. Our model enables the joint estimation of entry mode and equity level, accounts for the portfolio nature of FDI, and compares the relative predictive power of transaction cost‐ and experience‐based explanatory variables across both facets of ownership structure. Copyright © 2007 John Wiley & Sons, Ltd.

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Building upon social capital theory, we identify different attributes of frontline employee (FLE) social capital and outline how the use of online social networks (OSNs) can enable social capital development and social capital maintenance. We examine key boundary conditions of time management skills, perceived innovation climate, and customer perceived FLE responsiveness. Use of multi-informant data from FLEs working in B2B sales/service roles, their customers, and managers enabled a comprehensive analysis that accounts for the endogenous nature of the predictor variables. We find the use of

Sales competitions provide students with opportunities to apply their understanding of sales. Despite a long tradition of scholarship on sales role-plays, the answer to what drives student performance in sales competitions remains elusive. In this research, we examine how motivation (work engagement) and ability (cognitive aptitude and selling-related knowledge) affect student performance in sales role-play competitions. We also examine how success in sales role-plays engenders job attainment for the students. Using data from a sales competition held at a large public university in the United States, we provide empirical evidence that both motivation and ability affect sales performance. But, contrary to expectation, they have a substitution effect and not a complementary one. We also find evidence that success in sales role-plays translates into improved success in job interviews and that this effect is stronger for students with greater cognitive aptitude, that is, sales role-play performance complements the cognitive aptitude of the student to improve their mock interview performance.