Contract Design in Inter-Organizational Relationships: Evidence from the U.S. Franchise Systems

Shiau-Ling Guo, Purdue University

Abstract

This dissertation develops three essays about contract design in interfirm partnerships. Specifically, I develop the first essay, drawing on an asymmetric view of transactions, to understand the effects of asymmetric exchange hazards borne by different parties on contract design at a dyadic level. In the second essay, drawing from the logic of transaction cost economics and research on the "shadow of the future," I develop hypotheses regarding the interplay between a firm’s transaction-specific factors and the predetermined contract duration that affect the need for complex dispute resolution provisions. In the third essay, going beyond the economic theoretical explanations regarding incentive alignment and safeguard mechanisms of contract design, I further examine how the CEO's career experience may influence the contract design. The main empirical part of my dissertation relies on data from contracts and disclosed documents in franchise relationships in the U.S. restaurant industry. Taken together, the theoretical arguments and research settings in this dissertation contribute to a better understanding of contracting between firms.^

Degree

Ph.D.

Advisors

Fabrice Lumineau, Purdue University.

Subject Area

Business administration|Management

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