Cooperative arrangements among entrepreneurs: An analysis of opportunism and communication in franchise structures

Abstract

We examine opportunism and participative communication in franchise structures, the most ubiquitous and fastest-growing form of cooperative arrangements among entrepreneurs. Our model links opportunism directly to franchise system performance and franchisee satisfaction; participative communication acts as a quasimoderator variable, directly impacting performance variables and moderating the impact of opportunism. Analysis of survey responses of 162 fast food franchisees shows communication relates positively with satisfaction and moderates the impact of opportunism on satisfaction, although a significant negative relationship remains between opportunism and franchisee satisfaction. Our results also yield a positive communication-franchise system performance association, but communication does not moderate the opportunism-franchise system performance relationship. These results suggest participative communication improves relations and performance of the franchise system while enhancing franchisees' freedom to act on entrepreneurial tendencies and advance their own business ventures. We discuss implications of our research for franchisees, franchisors, researchers, and participants in other forms of cooperative arrangements.