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Determinants of Contractual Completeness in Franchising

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  • Hendrikse, G.W.J.
  • Windsperger, J.
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    Abstract

    The aim of the study is to explain the determinants of contractual completeness in franchise relationships by formulating and testing various propositions derived from transaction cost theory, agency theory, property rights theory, organizational capability theory and relational view of governance. The degree of contractual completeness depends on behavioural uncertainty (negatively), trust (positively), franchisees’ specific investments (negatively), environmental uncer-tainty (negatively), intangibility of system specific know-how (negatively) and contract design capabilities (positively). The hypotheses are tested with a data base consisting of 52 franchise systems in Austria. The empirical results support the hypotheses regarding behavioural uncertainty, trust and intangible system-specific know-how.

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    File URL: http://repub.eur.nl/pub/19424/ERS-2010-017-ORG.pdf
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    Bibliographic Info

    Paper provided by Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam in its series ERIM Report Series Research in Management with number ERS-2010-017-ORG.

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    Date of creation: 26 Apr 2010
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    Handle: RePEc:ems:eureri:19424

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    Related research

    Keywords: contractual completeness; franchising;

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    1. Philippe Aghion & Mathias Dewatripont & Patrick Rey, 2004. "Transferable Control," Journal of the European Economic Association, MIT Press, vol. 2(1), pages 115-138, 03.
    2. Josh Lerner & Ulrike Malmendier, 2005. "Contractibility and the Design of Research Agreements," NBER Working Papers 11292, National Bureau of Economic Research, Inc.
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