Center for Advanced Management




Prof. Jan Bouwens (Tilburg University)


  • Datum: 06.05.2015
    Zeit: 17:00 - 19:00
    Ort: Schackstr. 4, Raum 307
    Titel: "Who Do Franchisees Work For: Themselves or the Network?"

This paper examines whether franchisees can be enticed to defy economic incentives to adhere to social pressure to meet targets. We examine this question in a franchise network of supermarkets. The franchisor sets targets that franchisees can choose to meet. If they choose to ignore the target they lose 0.5 percent of their sales. Notwithstanding this incentive, some franchisees can be better off to ignore the target. We observe that franchisees located in poorer areas are more profitable if they ignore the target set for them by the franchisor. Yet, our data also suggests that franchisees surrounded by a large group of compliers, are more inclined to comply with the targets even though that is at their (financial) detriment. We conjecture and find some evidence to suggest that they do so because their neighbors have incentives to put pressure on them achieving their targets. That is, we demonstrate that the network suffers in terms of sales levels if an increasing number of units choose not to meet the targets.