How Do Franchisees Assess Franchisor Trustworthiness?

Abstract

This study investigates the antecedents of franchisees’ assessments of franchisor trustworthiness. It combines multiple theoretical perspectives to develop a framework that is empirically tested with survey data from 128 franchisees of a Dutch franchise system. The results show that franchisees’ perceptions of a franchisor's fulfillment of its functional duties on proactive and reactive quality assurance and strategic management positively influence franchisees’ assessments of franchisor trustworthiness. Moreover, the results show that the impact of the antecedents on franchisees’ trustworthiness assessments varies across franchisees: market competition attenuates the influence of strategic management and reactive quality assurance. Unit performance does not moderate the importance of the antecedents.

Notes

1. Kramer (1999) and Schilke and Cook (2015) distinguish between a relational view of trust—stressing social and relational aspects—and a calculative view which emphasizes more rational, functional or instrumental considerations of trustors and trustees.

2. We also collected data on franchisees’ trust in their franchisor. The six‐item scale shows the expected strong positive associations between trustworthiness and trust.

3. As a robustness check, we conducted the analyses using the two‐factor and three‐factor measures of trustworthiness. The results are highly similar to the one‐factor trustworthiness measure. The results are available upon request.

4. Goodhue et al. (2012) argue that PLS, like regression and covariance‐based SEM, suffers from increased standard deviations, decreased statistical power and reduced accuracy when sample sizes are too small. Their Monte Carlo study suggests that terms of accuracy and predictive power of PLS is similar to the two other approaches when the sample size is above 90.

5. A Durbin‐Watson test revealed that the error term of the DV (trustworthiness) is correlated with its regressors. The lack of a valid instrumental variable does not allow us to consistently estimate the causal effect. Therefore, we need to interpret our results with caution, and cannot assume a theoretical causation between the IVs and DV, as it is well possible that we have an omitted variable bias or reverse causality. Although we have tried to be exhaustive in our model by a systematic analysis of the franchisor's duties, omitted variables may cause the regressors to be correlated with the error term. Reverse causation could also exist such that the franchisee's trustworthiness in the franchisor may act as a perceptual lens that influences how the franchisee looks at the franchisor's behaviors. Despite the fact that we cannot claim causality between the IVs and DV, the findings remain relevant, as the associations between the antecedents and trustworthiness still indicate that improvements in either of them may stimulate the other.

6. Using OLS with composite scores, we find highly similar results with regard to the direction and significance of the proposed direct effects and moderation effects, which adds to the robustness of our findings

Additional information

Notes on contributors

Evelien P. M. Croonen

Evelien P. M. Croonen is assistant professor at the Faculty of Economics and Business of the University of Groningen.

Thijs L. J. Broekhuizen

Thijs L. J. Broekhuizen is associate professor at the Faculty of Economics and Business of the University of Groningen.