Opportunistic behaviors in franchise chains: the role of cohesion among franchisees

Abstract

International audienceThis paper explores social processes between franchisees as a way to control franchisee opportunism. Based on the literature of socio-psychological and interorganizational relationships, we argue that cohesion among franchisees is negatively associated with opportunistic behaviors that are potentially harmful to the whole chain. We use multilevel and multisource data to show that perceptions of cohesion among franchisees relate both to a) how franchisees apply know-how from franchisors (i.e., deviation from chains standards), and b) whether they transfer or withhold information that could be useful to the franchise system (i.e., information withholding). Our results underscore the importance of relationships among franchisees, an underexplored component of franchisin

New challenges in franchisor-franchisee relationship. An analysis from agency theory perspective

“…This theory has been used to argue many aspects that are based on two or more actors, such as a business model franchise (Shane 1998), separation of ownership and control (Letza et al 2004), mergers and acquisitions, opportunistic behavior between managers and subordinates (El-Akremi et al 2010;Mellewight et al 2011), or an associated enterprise (Michael and Combs 2008;Salar and Salar 2014).…”

Differential effects of plural ownership and governance mechanisms in limiting shirkers and free riders

“…Opportunistic behavior among franchisees can include releasing proprietary information about the franchise, not making royalty payments, free riding on the brand and not complying with quality standards (Combs, Ketchen, Shook and Short, 2011;El Akremi, Mignonac, and Perrigot, 2011). The brand-owner franchisor often invests heavily in marketing, promotion and communication to build the reputation of quality associated with the brand.…”

Understanding distributor opportunism in a horizontal network

“…The main idea underlying the network influence on a distributor's opportunism toward its supplier is that most distributors are embedded in the distribution network dominated by the supplier (Clarkin & Rosa, 2005;Cochet & Ehrmann, 2007;Dormann & Ehrmann, 2007;El Akremi, Mignonac, & Perrigot, 2010). Their motivation and capability to engage in opportunistic behaviors are affected not only by the suppliers' governances, but also by their peer distributors' actions and relationships.…”

“…A few recent studies have suggested that we should examine if network relationships would reduce or enhance the friction inherent in the interactions taking place between the two self-interested parties (e.g., El Akremi et al, 2010;Morgan, Kaleka, & Gooner, 2007;Rindfleisch & Moorman, 2001;Wang, Gu, & Dong, 2013;Wathne & Heide, 2000). For example, Wathne and Heide (2004) examined how a firm's relationship governance is contingent on the nature of its vertical network.…”

“…On the one hand, some researchers viewed such interactions as being competitive, focusing on inter-firm rivalry (Bengtsson, 1998;Noh, 2000;Ramaswamy & Renforth, 1996). On the other hand, others have viewed such interactions as being cooperative, focusing on inter-firm coordination and communication (Antia & Frazier, 2001;El Akremi et al, 2010). As distributors within a network are often forced to simultaneously compete and cooperate with one another (Bengtsson & Kock, 2014;Chien & Peng, 2005;Levinson & Asahi, 1995), this paper uses two constructs, cooperation intensity and competition intensity, to explore the effect of network relationships on distributor opportunism.…”