When the music stops playing: post-litigation relationship dissolution in franchising (CROSBI ID 280279)
Prilog u časopisu | izvorni znanstveni rad | međunarodna recenzija
Podaci o odgovornosti
Grünhagen, Marko ; Zheng, Xu (Vivian) ; Wang, Jeff Jianfeng
engleski
When the music stops playing: post-litigation relationship dissolution in franchising
Franchise relationships engender franchisor–franchisee conflicts and are prone to premature dissolution. Building on agency theory and institutional theory, this study examines what specific reasons – from both franchisors’ and franchisees’ perspectives – may cause post-litigation relationship dissolution (PLRD) and how franchise regulations moderate these relationships. We argue that both franchisor and franchisee may misrepresent themselves before their relationship begins (adverse selection) and behave opportunistically after the contract is signed (moral hazard), that is, ‘dual agency’. Based on 20-year archival records of franchisor–franchisee relationship histories gleaned from multiple data sources, we found that PLRD is likely to be caused by franchisors’ passive moral hazard and by franchisees’ active moral hazard. In addition, franchisor adverse selection has a greater impact on PLRD than franchisee adverse selection. With regards to regulatory influences, the presence of relationship law weakens the impact of franchisees’ passive moral hazard, but not their active moral hazard, on PLRD. Contrary to what we hypothesize, the presence of registration law amplifies the impact of franchisee adverse selection on PLRD. Ultimately, this study creates a better understanding of the antecedents and curbing mechanisms of PLRD in franchising.
post-litigation relationship dissolution ; dual agency ; moral hazard ; adverse selection ; regulation ; franchising
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Podaci o izdanju
93 (2)
2017.
138-153
objavljeno
0022-4359
1873-3271
10.1016/j.jretai.2016.10.002