IDEAS home Printed from https://ideas.repec.org/a/eee/jbrese/v68y2015i10p2117-2124.html

Franchising, local market characteristics and alcohol sales to minors

Author

Listed:
  • Utgård, Jakob
  • Nygaard, Arne
  • Dahlstrom, Robert

Abstract

This study examines how organizational form (corporate or franchised store) and local market characteristics (competition, size and risk of sanctions) influence retail stores' likelihood of selling alcohol to minors. Drawing on agency theory, we hypothesize that franchised stores are more likely than corporate stores to sell alcohol to minors. We also examine whether local market competition, risk of sanctions, and market size influence the relationship between franchising and alcohol sales to minors. We test the hypotheses with data collected by minors attempting to purchase alcohol in retail stores. The results offer partial support to the theoretical predictions and have implications for retail chains and regulators.

Suggested Citation

  • Utgård, Jakob & Nygaard, Arne & Dahlstrom, Robert, 2015. "Franchising, local market characteristics and alcohol sales to minors," Journal of Business Research, Elsevier, vol. 68(10), pages 2117-2124.
    • Handle: RePEc:eee:jbrese:v:68:y:2015:i:10:p:2117-2124
    DOI: 10.1016/j.jbusres.2015.03.010
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0148296315001241
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jbusres.2015.03.010?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Herbert A. Simon, 1955. "A Behavioral Model of Rational Choice," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 69(1), pages 99-118.
    2. Dahlstrom, Robert & Haugland, Sven A. & Nygaard, Arne & Rokkan, Aksel I., 2009. "Governance structures in the hotel industry," Journal of Business Research, Elsevier, vol. 62(8), pages 841-847, August.
    3. Oliver D. Hart, 1983. "The Market Mechanism as an Incentive Scheme," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 366-382, Autumn.
    4. Ornstein, Stanley I & Hanssens, Dominique M, 1985. "Alcohol Control Laws and the Consumption of Distilled Spirits and Beer," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 12(2), pages 200-213, September.
    5. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54, National Bureau of Economic Research, Inc.
    6. Dant, Rajiv P. & Grünhagen, Marko & Windsperger, Josef, 2011. "Franchising Research Frontiers for the Twenty-First Century," Journal of Retailing, Elsevier, vol. 87(3), pages 253-268.
    7. Alexander, Cindy R, 1999. "On the Nature of the Reputational Penalty for Corporate Crime: Evidence," Journal of Law and Economics, University of Chicago Press, vol. 42(1), pages 489-526, April.
    8. Francine Lafontaine, 1992. "Agency Theory and Franchising: Some Empirical Results," RAND Journal of Economics, The RAND Corporation, vol. 23(2), pages 263-283, Summer.
    9. Renée A. St-Pierre & Jeffrey L. Derevensky & Rina Gupta & Isabelle Martin, 2011. "Preventing lottery ticket sales to minors: factors influencing retailers' compliance behaviour," International Gambling Studies, Taylor & Francis Journals, vol. 11(2), pages 173-191, August.
    10. 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.
    11. Ginger Zhe Jin & Phillip Leslie, 2009. "Reputational Incentives for Restaurant Hygiene," American Economic Journal: Microeconomics, American Economic Association, vol. 1(1), pages 237-267, February.
    12. 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.
    13. Victor Manuel Bennett & Lamar Pierce & Jason A. Snyder & Michael W. Toffel, 2013. "Customer-Driven Misconduct: How Competition Corrupts Business Practices," Management Science, INFORMS, vol. 59(8), pages 1725-1742, August.
    14. Andrei Shleifer, 2004. "Does Competition Destroy Ethical Behavior?," American Economic Review, American Economic Association, vol. 94(2), pages 414-418, May.
    15. Alexander Rasch & Christian Waibel, 2018. "What Drives Fraud in a Credence Goods Market? – Evidence from a Field Study," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 80(3), pages 605-624, June.
    16. Michael Mazzeo, 2003. "Competition and Service Quality in the U.S. Airline Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 22(4), pages 275-296, June.
    17. Ryan C. McDevitt, 2011. "Names and Reputations: An Empirical Analysis," American Economic Journal: Microeconomics, American Economic Association, vol. 3(3), pages 193-209, August.
    18. 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.
    19. Itai Ater & Oren Rigbi, 2015. "Price control and advertising in franchising chains," Strategic Management Journal, Wiley Blackwell, vol. 36(1), pages 148-158, January.
    20. Daniel S. Nagin & James B. Rebitzer & Seth Sanders & Lowell J. Taylor, 2002. "Monitoring, Motivation, and Management: The Determinants of Opportunistic Behavior in a Field Experiment," American Economic Review, American Economic Association, vol. 92(4), pages 850-873, September.
    21. Carl Shapiro, 1982. "Consumer Information, Product Quality, and Seller Reputation," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 20-35, Spring.
    22. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
    23. Lamar Pierce & Michael W. Toffel, 2013. "The Role of Organizational Scope and Governance in Strengthening Private Monitoring," Organization Science, INFORMS, vol. 24(5), pages 1558-1584, October.
    24. Arne Nygaard & Ingunn Myrtveit, 2000. "Moral hazard, competition and contract design: empirical evidence from managerial, franchised and entrepreneurial businesses in Norway," Applied Economics, Taylor & Francis Journals, vol. 32(3), pages 349-356.
    25. Roland E. Kidwell & Arne Nygaard, 2011. "A Strategic Deviance Perspective on the Franchise Form of Organizing," Entrepreneurship Theory and Practice, , vol. 35(3), pages 467-482, May.
    26. Henry S. Schneider, 2012. "Agency Problems and Reputation in Expert Services: Evidence from Auto Repair," Journal of Industrial Economics, Wiley Blackwell, vol. 60(3), pages 406-433, September.
    27. Hirschman, Elizabeth C, 1992. "The Consciousness of Addiction: Toward a General Theory of Compulsive Consumption," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 19(2), pages 155-179, September.
    28. David A. Matsa, 2011. "Competition and Product Quality in the Supermarket Industry," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 126(3), pages 1539-1591.
    29. Kaufmann, Patrick J. & Eroglu, Sevgin, 1999. "Standardization and adaptation in business format franchising," Journal of Business Venturing, Elsevier, vol. 14(1), pages 69-85, January.
    30. Rachel M. McCleary & Robert J. Barro, 2006. "Religion and Economy," Journal of Economic Perspectives, American Economic Association, vol. 20(2), pages 49-72, Spring.
    31. Olav Sorenson & Jesper B. Sørensen, 2001. "Finding the right mix: franchising, organizational learning, and chain performance," Strategic Management Journal, Wiley Blackwell, vol. 22(6‐7), pages 713-724, June.
    32. Ron Shachar & Tülin Erdem & Keisha M. Cutright & Gavan J. Fitzsimons, 2011. "Brands: The Opiate of the Nonreligious Masses?," Marketing Science, INFORMS, vol. 30(1), pages 92-110, 01-02.
    33. Kidwell, Roland E. & Nygaard, Arne & Silkoset, Ragnhild, 2007. "Antecedents and effects of free riding in the franchisor-franchisee relationship," Journal of Business Venturing, Elsevier, vol. 22(4), pages 522-544, July.
    34. Donald S. Siegel & Donald F. Vitaliano, 2007. "An Empirical Analysis of the Strategic Use of Corporate Social Responsibility," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(3), pages 773-792, September.
    35. Dina Mayzlin & Yaniv Dover & Judith Chevalier, 2014. "Promotional Reviews: An Empirical Investigation of Online Review Manipulation," American Economic Review, American Economic Association, vol. 104(8), pages 2421-2455, August.
    36. Joseph Heath, 2008. "Business Ethics and Moral Motivation: A Criminological Perspective," Journal of Business Ethics, Springer, vol. 83(4), pages 595-614, December.
    37. Schwieren, Christiane & Weichselbaumer, Doris, 2010. "Does competition enhance performance or cheating? A laboratory experiment," Journal of Economic Psychology, Elsevier, vol. 31(3), pages 241-253, June.
    38. Mick Carney & Eric Gedajlovic, 1991. "Vertical integration in Franchise systems: Agency theory and resource explanations," Strategic Management Journal, Wiley Blackwell, vol. 12(8), pages 607-629, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mark D Easton & Andrea M Noack & Leah F Vosko, 2021. "Are franchisees more prone to employment standards violations than other businesses? Evidence from Ontario, Canada," The Economic and Labour Relations Review, , vol. 32(1), pages 39-64, March.
    2. Kejia Hu & Sunil Chopra & Yuche Chen, 2021. "The Effect of Tightening Standards on Automakers’ Non‐compliance," Production and Operations Management, Production and Operations Management Society, vol. 30(9), pages 3094-3115, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Guo, Shiau-Ling, 2023. "The governance implication of the geographic concentration of franchise activities for franchise relationships," Journal of Business Research, Elsevier, vol. 157(C).
    2. Block, Sidney T. & Friebel, Guido & Heinz, Matthias & Zubanov, Nick, 2022. "Mystery Shopping as a Strategic Management Practice in Multi-Site Firms," IZA Discussion Papers 15599, Institute of Labor Economics (IZA).
    3. Vázquez-Suárez, Luis & Mejía-Vásquez, Pericles Ramón & Serafim da Silva, Sheila & Sánchez-Gómez, Roberto, 2022. "Gender’s moderating role in the relationship between organisational form and performance in the Spanish supermarket industry," Journal of Retailing and Consumer Services, Elsevier, vol. 64(C).
    4. Jell-Ojobor, Maria & Windsperger, Josef, 2014. "The Choice of Governance Modes of International Franchise Firms — Development of an Integrative Model," Journal of International Management, Elsevier, vol. 20(2), pages 153-187.
    5. Gillis, William E. & Combs, James G. & Yin, Xiaoli, 2020. "Franchise management capabilities and franchisor performance under alternative franchise ownership strategies," Journal of Business Venturing, Elsevier, vol. 35(1).
    6. Ahlin, Christian & Kim, In Kyung & Kim, Kyoo il, 2021. "Who commits fraud? evidence from korean gas stations," International Journal of Industrial Organization, Elsevier, vol. 76(C).
    7. Victor Manuel Bennett & Lamar Pierce & Jason A. Snyder & Michael W. Toffel, 2013. "Customer-Driven Misconduct: How Competition Corrupts Business Practices," Management Science, INFORMS, vol. 59(8), pages 1725-1742, August.
    8. Scott Shane, 2001. "Organizational Incentives and Organizational Mortality," Organization Science, INFORMS, vol. 12(2), pages 136-160, April.
    9. Lamar Pierce & Michael W. Toffel, 2013. "The Role of Organizational Scope and Governance in Strengthening Private Monitoring," Organization Science, INFORMS, vol. 24(5), pages 1558-1584, October.
    10. Melih Madanoglu & Gary J. Castrogiovanni, 2018. "Franchising proportion and network failure," Small Business Economics, Springer, vol. 50(4), pages 697-715, April.
    11. William E. Gillis & Ellen McEwan & T. Russell Crook & Steven C. Michael, 2011. "Using Tournaments to Reduce Agency Problems: The Case of Franchising," Entrepreneurship Theory and Practice, , vol. 35(3), pages 427-447, May.
    12. Jakob Utgård, 2018. "Retail Chains’ Corporate Social Responsibility Communication," Journal of Business Ethics, Springer, vol. 147(2), pages 385-400, January.
    13. Chabowski, Brian R. & Hult, G. Tomas M. & Mena, Jeannette A., 2011. "The Retailing Literature as a Basis for Franchising Research: Using Intellectual Structure to Advance Theory," Journal of Retailing, Elsevier, vol. 87(3), pages 269-284.
    14. Fladmoe-Lindquist, Karin, 1996. "International franchising: Capabilities and development," Journal of Business Venturing, Elsevier, vol. 11(5), pages 419-438, September.
    15. Falbe, Cecilia M. & Welsh, Dianne H. B., 1998. "NAFTA and franchising: A comparison of franchisor perceptions of characteristics associated with franchisee success and failure in Canada, Mexico, and the United States," Journal of Business Venturing, Elsevier, vol. 13(2), pages 151-171, March.
    16. Josef Windsperger, 2013. "The governance of franchising networks," Chapters, in: Anna Grandori (ed.), Handbook of Economic Organization, chapter 27, Edward Elgar Publishing.
    17. Hsu, Liwu & Kaufmann, Patrick & Srinivasan, Shuba, 2017. "How Do Franchise Ownership Structure and Strategic Investment Emphasis Influence Stock Returns and Risks?," Journal of Retailing, Elsevier, vol. 93(3), pages 350-368.
    18. Victor Manuel Bennett & Lamar Pierce & Jason A. Snyder & Michael W. Toffel, 2012. "Competition and Illicit Quality," Harvard Business School Working Papers 12-071, Harvard Business School, revised May 2012.
    19. Dahlstrom, Robert & Haugland, Sven A. & Nygaard, Arne & Rokkan, Aksel I., 2009. "Governance structures in the hotel industry," Journal of Business Research, Elsevier, vol. 62(8), pages 841-847, August.
    20. Madanoglu, Melih & Lee, Kyuho & Castrogiovanni, Gary J., 2011. "Franchising and firm financial performance among U.S. restaurants," Journal of Retailing, Elsevier, vol. 87(3), pages 406-417.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jbrese:v:68:y:2015:i:10:p:2117-2124. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jbusres .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.