The Impacts of Efficiency and Bargaining Power on Contract Structure: Evidence from Franchising

48 Pages Posted: 17 Feb 2010

See all articles by Nicholas Argyres

Nicholas Argyres

Washington University in St. Louis

Janet Bercovitz

University of Illinois at Urbana-Champaign - College of Business

Date Written: February 16, 2010

Abstract

The strategy literature is paying increasing attention to contract structure, but has largely followed transaction cost and agency approaches that emphasize efficiency. Bargaining power effects have been investigated much less though they are fundamental to the influential Porterian tradition in strategy. We investigate whether bargaining power impacts provisions in franchise contracts after controlling for efficiency impacts. We find the bargaining power does affect the important provisions regarding contract duration and non-compete period length. However, neither efficiency nor bargaining power variables help explain franchisor termination rights in our data.

Suggested Citation

Argyres, Nicholas and Bercovitz, Janet, The Impacts of Efficiency and Bargaining Power on Contract Structure: Evidence from Franchising (February 16, 2010). Atlanta Competitive Advantage Conference 2010 Paper. Available at SSRN: https://ssrn.com/abstract=1554037 or http://dx.doi.org/10.2139/ssrn.1554037

Nicholas Argyres (Contact Author)

Washington University in St. Louis ( email )

One Brookings Drive
Campus Box 1208
Saint Louis, MO MO 63130-4899
United States

Janet Bercovitz

University of Illinois at Urbana-Champaign - College of Business ( email )

Champaign, IL 61820
United States

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