A Strategic Deviance Perspective on the Franchise Form of Organizing

Drawing on various theoretical perspectives, we propose that franchisors cannot assess and control opportunism absent comparative information provided by owning and operating some of their outlets and by franchising others. Moving beyond dyadic perspectives, we propose that the concept of strategic deviance suggests why franchisors accept deviant behavior resulting from vertical and horizontal agency problems in multiagent contracts. A plural form provides efficiency and quality benchmark information that curbs even greater levels of shirking and free–riding behaviors and enhances system performance. Opportunistic behaviors by company managers and franchisees are addressed through self–enforced social control and social comparison mechanisms.

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