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"When Less May Be More: An Asymmetric View of Franchise Contract Scope" by Dr. Fabrice Lumineau

Event information
Management and Strategy
Seminar
Wednesday, 11 September 2019
1301, K.K. Leung Bldg
  • 02:30 pm - 04:00 pm

Speaker:

  • Dr. Fabrice Lumineau
    Associate Professor of Strategic Management
    Krannert School of Management
    Purdue University

 

Abstract:

We extend the management literature on contractual governance with an asymmetric view of contract design that highlights the strategic implications of selectively excluding specific contractual rights from contracts. Specifically, we consider the choice of contract scope as an alternative way to address exchange hazards. We suggest that when facing exchange hazards, a firm may fortify its own protection not only by bolstering its own contract scope but also by narrowing the contract scope of its partner. The results from a study of disclosed documents and contracts of 136 franchise systems in the U.S. largely support our arguments.