GOAL CONGRUENCE AND COMMUNICATION IN FRANCHISING SYSTEMS
Journal Title: European Journal of Business and Social Sciences - Year 2016, Vol 5, Issue 3
Abstract
Purpose: Franchising systems tend to use hierarchical governance, unlike the market governance of independent firms. To date, the establishment of successful long-term cooperative relationships in franchising systems remains an issue. This study integrates theories of agency, communication, and social exchange to establish an antecedent model for the commitment of the franchisee to the franchiser. Design/methodology/approach: 275 questionnaires were collected from owners or managers participating in the operations of the franchising stores. These franchising stores included convenience stores, watch and glasses retailers, telecommunications, photo developing and printing, and real estate agents in Taiwan. The proposed model was tested using structural equation modeling. Findings: Results show that goal congruence and communication between the franchiser and the franchisee will affect the franchisee’s trust in and satisfaction with the franchiser, in turn affecting the commitment of the franchisee to the franchiser. Further, goal congruence is more important than communication, especially regarding the influence on trust. Compared with independent channels, franchising systems particularly need a common goal. In addition, the effect of communication in franchising systems is relatively low. Research limitations/implications: In channel relationships, goal congruence, which is generally neglected in traditional market governance, is highly important in a hierarchically governed franchising system. This result suggests that agency problems can be ameliorated by goal congruence. Practical implications: For franchisers, understanding the importance of goal congruence enables more effective improving relationship quality with franchisees. Originality/value: Prior research on channel relationships showed that communication significantly affects social exchange. Furthermore, this study finds that in franchising, communication is influential, but its effects are restricted and not as important as goal congruence.This is the first work to indicate relationship context of the social exchange is important to determine the importance of the antecedents of relationship quality.
Authors and Affiliations
Shueh-Chin Ting| Professor, Department of Education National University of Tainan Tainan, Taiwan, ROC E-mail: tingsc@ms49.hinet.net
Keywords
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