A Stakeholder Theory Perspective on Opportunism in Franchising Networks

Abstract: This study tackles opportunism in franchise chains through a multilateral stakeholder perspective, thus relaxing the traditional dyadic franchisor-franchisee perspective assumption. By employing the stakeholder salience framework, we argue that incorporating a stakeholder perspective in the franchisor’s decision making can increase relationship efficiency by mitigating franchisee opportunistic behavior. Specifically, the more the franchisor pursues a stakeholder orientation, the more support it provides to franchisees and the greater the openness of communication is encouraged between them, both resulting in higher relationship efficiency, due to less franchisee opportunism. Through structural equation modeling using data from four European countries, our empirical results provide evidence for our projections. Overall, this study offers new insights on the efficiency of relationships in franchise networks by applying a multilateral stakeholder perspective. Keywords: Franchisee opportunistic behavior, stakeholder salience, relationship efficiency, franchising