International multi-unit franchising: an agency theoretic explanation
In spite of its considerable popularity, multi-unit franchising has been considered an anomaly from an agency theory perspective. This paper addresses this anomaly by attempting a comprehensive agency theoretic explanation of international multi-unit franchising. Although past agency theoretic examinations have mostly focused on single-unit franchising, a closer examination of the international context, which is characterized by significant geographic and cultural distance between franchisors and franchisees, suggests that multi-unit franchising may be more appropriate. This paper examines several agency problems inherent in multi-unit franchising. These include: bonding, adverse selection, information flow, shirking, inefficient risk-bearing, free-riding, and quasi-rent appropriation. Consideration of each of these problems using agency theory perspective leads to the suggestion that multi-unit franchising might address agency problems better than single-unit franchising in the international context.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 12 (2003)
Issue (Month): 3 (June)
|Contact details of provider:|| Web page: http://www.elsevier.com/wps/find/journaldescription.cws_home/133/description#description|
|Order Information:|| Postal: http://www.elsevier.com/wps/find/journaldescription.cws_home/133/bibliographic|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Shane, Scott A., 1996. "Why franchise companies expand overseas," Journal of Business Venturing, Elsevier, vol. 11(2), pages 73-88, March.
- Alchian, Armen A & Demsetz, Harold, 1972.
"Production , Information Costs, and Economic Organization,"
American Economic Review,
American Economic Association, vol. 62(5), pages 777-795, December.
- Armen A. Alchian & Harold Demsetz, 1971. "Production, Information Costs and Economic Organizations," UCLA Economics Working Papers 10A, UCLA Department of Economics.
- Bates, Timothy, 1998.
"Survival patterns among newcomers to franchising,"
Journal of Business Venturing,
Elsevier, vol. 13(2), pages 113-130, March.
- Brickley, James A. & Dark, Frederick H., 1987. "The choice of organizational form The case of franchising," Journal of Financial Economics, Elsevier, vol. 18(2), pages 401-420, June.
- Norton, Seth W, 1988. "An Empirical Look at Franchising as an Organizational Form," The Journal of Business, University of Chicago Press, vol. 61(2), pages 197-218, April.
- Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
- Mathewson, G Frank & Winter, Ralph A, 1985. "The Economics of Franchise Contracts," Journal of Law and Economics, University of Chicago Press, vol. 28(3), pages 503-526, October.
- Anderson, Evan E., 1984. "The growth and performance of franchise systems: Company versus franchisee ownership," Journal of Economics and Business, Elsevier, vol. 36(4), pages 421-431, December.
- Dant, Rajiv P. & Nasr, Nada I., 1998. "Control techniques and upward flow of information in franchising in distant markets: conceptualization and preliminary evidence," Journal of Business Venturing, Elsevier, vol. 13(1), pages 3-28, January.
- Karin Fladmoe-Lindquist & Laurent L. Jacque, 1995. "Control Modes in International Service Operations: The Propensity to Franchise," Management Science, INFORMS, vol. 41(7), pages 1238-1249, July.
- Kaufmann, Patrick J. & Dant, Rajiv P., 1996. "Multi-unit franchising: Growth and management issues," Journal of Business Venturing, Elsevier, vol. 11(5), pages 343-358, September.
- Oliver E. Williamson, 1967. "Hierarchical Control and Optimum Firm Size," Journal of Political Economy, University of Chicago Press, vol. 75, pages 123-123.
- Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 301-325, June.
- Martin, Robert E, 1988. "Franchising and Risk Management," American Economic Review, American Economic Association, vol. 78(5), pages 954-968, December.
- Levinthal, Daniel, 1988. "A survey of agency models of organizations," Journal of Economic Behavior & Organization, Elsevier, vol. 9(2), pages 153-185, March.
- Rubin, Paul H, 1978. "The Theory of the Firm and the Structure of the Franchise Contract," Journal of Law and Economics, University of Chicago Press, vol. 21(1), pages 223-233, April.
- McNaughton, Rod B., 1996. "Foreign market channel integration decisions of Canadian computer software firms," International Business Review, Elsevier, vol. 5(1), pages 23-52, February.
When requesting a correction, please mention this item's handle: RePEc:eee:iburev:v:12:y:2003:i:3:p:329-348. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.