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

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  • Heiner Evanschitzky
  • Barbara Caemmerer
  • Christof Backhaus

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.

Suggested Citation

  • Heiner Evanschitzky & Barbara Caemmerer & Christof Backhaus, 2016. "The Franchise Dilemma: Entrepreneurial Characteristics, Relational Contracting, and Opportunism in Hybrid Governance," Journal of Small Business Management, Taylor & Francis Journals, vol. 54(1), pages 279-298, January.
    • Handle: RePEc:taf:ujbmxx:v:54:y:2016:i:1:p:279-298
    DOI: 10.1111/jsbm.12145
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    Cited by:

    1. Rosado-Serrano, Alexander & Navarro-García, Antonio, 2023. "Alternative modes of entry in franchising," Journal of Business Research, Elsevier, vol. 157(C).

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