The franchise relationship in China: agency and institutional theory perspectives

Anne Marie Doherty, Xiaomin Chen, Nicholas Alexander

Research output: Contribution to journalArticle

14 Citations (Scopus)

Abstract

Purpose: Explores the franchise relationship in China, focusing on the relational constructs of power, control, support and conflict in this developing franchise environment. Agency theory has dominated franchise research. A more rounded theoretical interpretation of the franchising relationship is offered by employing both agency theory and institutional theory perspectives.
Design/methodology/approach: Adopts an interpretive approach, employing in-depth interviews with franchisors and franchisees in nine franchise organisations operating in the retail sector in China. Contributes a fuller understanding of how to manage the research process in China.
Findings: Reveals how the relational constructs of power, control, support and conflict are manifest in the franchise relationship in China. The explanatory power of agency theory is apparent when viewed in terms of the vertical agency problem. However, free riding outside the franchise system, in the form of counterfeiting, mitigates against the occurrence of free riding within it. With regard to institutional theory, we demonstrate that the regulatory institutional pillar is a crucial foundation for the franchise relationship.
Practical implications: Offers insights for franchisors and franchisees considering franchise relationships in China.
Originality/value: For the first time in the literature, we offer insights into key elements of the franchise relationship in China. Employing both agency theory and institutional theory facilitates a rounded explanation of the developing franchise environment in China.
LanguageEnglish
Pages1664-1689
Number of pages26
JournalEuropean Journal of Marketing
Volume48
Issue number9/10
DOIs
Publication statusPublished - 2014

Fingerprint

China
Franchise
Institutional theory
Agency theory
Free-riding
Franchisor
Franchisee
Franchising
Design methodology
Retail sector
Agency problems
Franchise system
Process research
Counterfeiting
Interpretive
In-depth interviews

Keywords

  • franchise relationships
  • China
  • retail sector
  • institutional theory
  • agency theory

Cite this

Doherty, Anne Marie ; Chen, Xiaomin ; Alexander, Nicholas. / The franchise relationship in China : agency and institutional theory perspectives. In: European Journal of Marketing. 2014 ; Vol. 48, No. 9/10. pp. 1664-1689.
@article{d8c5d4310b02455ba4fe05add7aff888,
title = "The franchise relationship in China: agency and institutional theory perspectives",
abstract = "Purpose: Explores the franchise relationship in China, focusing on the relational constructs of power, control, support and conflict in this developing franchise environment. Agency theory has dominated franchise research. A more rounded theoretical interpretation of the franchising relationship is offered by employing both agency theory and institutional theory perspectives.Design/methodology/approach: Adopts an interpretive approach, employing in-depth interviews with franchisors and franchisees in nine franchise organisations operating in the retail sector in China. Contributes a fuller understanding of how to manage the research process in China.Findings: Reveals how the relational constructs of power, control, support and conflict are manifest in the franchise relationship in China. The explanatory power of agency theory is apparent when viewed in terms of the vertical agency problem. However, free riding outside the franchise system, in the form of counterfeiting, mitigates against the occurrence of free riding within it. With regard to institutional theory, we demonstrate that the regulatory institutional pillar is a crucial foundation for the franchise relationship.Practical implications: Offers insights for franchisors and franchisees considering franchise relationships in China.Originality/value: For the first time in the literature, we offer insights into key elements of the franchise relationship in China. Employing both agency theory and institutional theory facilitates a rounded explanation of the developing franchise environment in China.",
keywords = "franchise relationships, China, retail sector, institutional theory, agency theory",
author = "Doherty, {Anne Marie} and Xiaomin Chen and Nicholas Alexander",
year = "2014",
doi = "10.1108/EJM-04-2012-0199",
language = "English",
volume = "48",
pages = "1664--1689",
journal = "European Journal of Marketing",
issn = "0309-0566",
publisher = "Emerald Publishing Limited",
number = "9/10",

}

The franchise relationship in China : agency and institutional theory perspectives. / Doherty, Anne Marie; Chen, Xiaomin; Alexander, Nicholas.

In: European Journal of Marketing, Vol. 48, No. 9/10, 2014, p. 1664-1689.

Research output: Contribution to journalArticle

TY - JOUR

T1 - The franchise relationship in China

T2 - European Journal of Marketing

AU - Doherty, Anne Marie

AU - Chen, Xiaomin

AU - Alexander, Nicholas

PY - 2014

Y1 - 2014

N2 - Purpose: Explores the franchise relationship in China, focusing on the relational constructs of power, control, support and conflict in this developing franchise environment. Agency theory has dominated franchise research. A more rounded theoretical interpretation of the franchising relationship is offered by employing both agency theory and institutional theory perspectives.Design/methodology/approach: Adopts an interpretive approach, employing in-depth interviews with franchisors and franchisees in nine franchise organisations operating in the retail sector in China. Contributes a fuller understanding of how to manage the research process in China.Findings: Reveals how the relational constructs of power, control, support and conflict are manifest in the franchise relationship in China. The explanatory power of agency theory is apparent when viewed in terms of the vertical agency problem. However, free riding outside the franchise system, in the form of counterfeiting, mitigates against the occurrence of free riding within it. With regard to institutional theory, we demonstrate that the regulatory institutional pillar is a crucial foundation for the franchise relationship.Practical implications: Offers insights for franchisors and franchisees considering franchise relationships in China.Originality/value: For the first time in the literature, we offer insights into key elements of the franchise relationship in China. Employing both agency theory and institutional theory facilitates a rounded explanation of the developing franchise environment in China.

AB - Purpose: Explores the franchise relationship in China, focusing on the relational constructs of power, control, support and conflict in this developing franchise environment. Agency theory has dominated franchise research. A more rounded theoretical interpretation of the franchising relationship is offered by employing both agency theory and institutional theory perspectives.Design/methodology/approach: Adopts an interpretive approach, employing in-depth interviews with franchisors and franchisees in nine franchise organisations operating in the retail sector in China. Contributes a fuller understanding of how to manage the research process in China.Findings: Reveals how the relational constructs of power, control, support and conflict are manifest in the franchise relationship in China. The explanatory power of agency theory is apparent when viewed in terms of the vertical agency problem. However, free riding outside the franchise system, in the form of counterfeiting, mitigates against the occurrence of free riding within it. With regard to institutional theory, we demonstrate that the regulatory institutional pillar is a crucial foundation for the franchise relationship.Practical implications: Offers insights for franchisors and franchisees considering franchise relationships in China.Originality/value: For the first time in the literature, we offer insights into key elements of the franchise relationship in China. Employing both agency theory and institutional theory facilitates a rounded explanation of the developing franchise environment in China.

KW - franchise relationships

KW - China

KW - retail sector

KW - institutional theory

KW - agency theory

UR - http://www.emeraldinsight.com/loi/ejm

U2 - 10.1108/EJM-04-2012-0199

DO - 10.1108/EJM-04-2012-0199

M3 - Article

VL - 48

SP - 1664

EP - 1689

JO - European Journal of Marketing

JF - European Journal of Marketing

SN - 0309-0566

IS - 9/10

ER -