An Empirical Investigation of Ex Post Transaction Costs in Franchised Distribution Channels

This study focuses on organizational efforts to constrain ex post transaction costs in interorganizational exchange. The theoretical model frames opportunism as a determinant of transaction costs and implicates cooperation and formalization as control structures that alleviate opportunism. The model also examines whether the proposed theoretical relationships are enduring. Franchisee–franchisor relationships in the Norwegian distribution system of a multinational oil refiner provide the context for analysis. A test of the model using multisample data across two time periods indicates that opportunistic behavior consistently increases transaction costs. Furthermore, cooperative interaction curbs bargaining costs, and formalization reduces opportunism. The authors discuss implications for interorganizational theory and franchising management.