The effect of composite incompatibility on relationship commitment and performances in franchiser-franchisee relationship

Abstract

Purpose - Domestic franchise market has been grown steadily, reaching 50 trillion won in sales and 3,360 franchise headquarters in 2014. A franchise system is an effective business system for the franchisees to lower the failure rate due to the fact that the inexperienced entrepreneurs are supported by their headquarters through the franchisee contract. However, there are also conflicts between franchiser and franchisee behind the quantitative growth of domestic franchise industry. Therefore, it is very important to structure the causes of conflicts and to examine the effect of factors on the relationship commitment and performances. Research design, data, and methodology - In this study, the author divides the composite incompatibility between the franchise and the franchisee into goal incongruity, domain dissensus, and perceptual differences, and examines each dimension to the relationship with commitment and performances. To verify the proposed research model and test hypotheses, the author selected 200 franchise responses in food and beverage industry. The data were analyzed using SPSS 18.0 and AMOS structural equation modeling program. Results - The empirical findings provide goal incongruity and perceptual differences have a negative effect on the affective commitment, but not the calculative commitment. In addition, affective commitment and calculative commitment are found to have a positive effect on re-contractual intention and extended brand shop running intention, respectively. Affective commitment have a stronger effect on re-contractual intention than calculative commitment. Conclusions - First of all, the fact that goal incongruity and perceptual differences negatively affect the affective commitment, but it does not affect the calculative commitment. It means the relationship commitment in distribution channel are multi-dimensional concept that may be attributed to emotional or affective dimensions but may exist in terms of necessity or power-dependence. Second, the level of relationship commitment such as affective and calculative commitment to franchise headquarters positively affects the re-contractual intention and franchiser's extend brand shop running intention suggest that franchiser should encourage and support existing franchisee's commitment. Third, the fact that affective commitment has a greater effect on relationship performance than calculative commitment means to induce franchisee's affective commitment and to prevent the inconsistency between goals and perceptual differences.