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The Franchise Dilemma: Entrepreneurial Characteristics, Relational Contracting and Opportunism in Hybrid Governance

Lookup NU author(s): Professor Christof Backhaus

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This work is licensed under a Creative Commons Attribution 4.0 International License (CC BY 4.0).

Abstract

Using franchise data, we identify that entrepreneurial characteristics of franchisees partially impact on their opportunistic tendencies. Further, relational contracting increases franchisee opportunism by strengthening the opportunism-enhancing impact of entrepreneurial characteristics. These findings point to a key dilemma franchisors need to be aware of: Entrepreneurially minded franchisees who might be better at exploiting market opportunities for their units may also behave more opportunistically, if given the chance through a more relational contracting regime. At the same time, if they perceive the contractual framework as being too rigid, they may be less able to leverage their capabilities, become dissatisfied, and exit the system.

Publication metadata

Author(s): Evanschitzky H, Caemmerer B, Backhaus C

Publication type: Article

Publication status: Published

Journal: Journal of Small Business Management

Year: 2016

Volume: 54

Issue: 1

Pages: 279–298

Print publication date: 01/01/2016

Online publication date: 15/01/2015

Acceptance date: 22/12/2014

Date deposited: 10/04/2015

ISSN (print): 0047-2778

ISSN (electronic): 1540-627X

Publisher: Wiley-Blackwell Publishnig, Inc.

URL: http://dx.doi.org/10.1111/jsbm.12145

DOI: 10.1111/jsbm.12145

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