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Non-contractibility and Market Uncertainty in Franchise Systems

Author

Listed:
  • Hidetoshi Shiroishi

    (Keio University)

  • Tomokazu Kubo

    (Chuo University)

Abstract

Franchisors face a tradeoff between centralization of decision rights and decentralization of decision rights. Regarding the problem, we developed a causal model considering that the relationship between non-contractibility of assets and the allocation of decision rights is not constant, but is contingent on market uncertainty. The results of the analysis showed that a franchise system would be centralized when (1) the franchisor's assets are intangible and are impossible to be transferred by contract, (2) the franchisees' assets are less intangible and are possible to be transferred by contract, and/or (3) the market is uncertain.

Suggested Citation

  • Hidetoshi Shiroishi & Tomokazu Kubo, 2012. "Non-contractibility and Market Uncertainty in Franchise Systems," Keio/Kyoto Joint Global COE Discussion Paper Series 2012-023, Keio/Kyoto Joint Global COE Program.
    • Handle: RePEc:kei:dpaper:2012-023
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    References listed on IDEAS

    as
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