Empirical Analysis on the Moderating Effect of Self-Efficacy on
Peer Trust and Opportunistic Behavior
Master Thesis, MSc BA, track Small Business & Entrepreneurship University of Groningen
Faculty of Economics & Business
January 21, 2019
Jelly Wien
Student number 2512203 j.wien.1@student.rug.nl
Supervisor: dr. E. P. M. (Evelien) Croonen, University of Groningen Co-assessor: dr. M. J. (Maryse) Brand, University of Groningen
Word count: 12.760
Abstract
It is generally known that intraorganizational trust can facilitate effective relationships that impact an organization. Yet, research on trust among franchisees (“peer trust”) within one single business format is scarce in the franchising literature. More specifically, the consequences of peer trust remain understudied. Therefore, this paper focuses on one specific consequence of peer trust: opportunistic behavior. Focusing on the effect of peer trust on opportunistic behavior is important, as such behavior can undermine the success of a franchise system. In addition, keeping in mind the heterogeneity among franchisees, this study includes the concept of self-efficacy as a moderator. Altogether, the purpose of this study is to answer the question of how franchisees’ self-efficacy moderates the effect of peer trust on franchisees’ opportunistic behavior. Using a simple linear regression, the findings reveal that peer trust positively affects opportunistic behavior when franchisee’s have high levels of self-efficacy, whereas peer trust negatively affects opportunistic behavior for franchisees with low self-efficacy. When the level of peer trust is known in a franchise formula, these results will help the franchisor to determine the most beneficial level of self-efficacy for (potential) franchisees when the franchisor’s goal is to minimize opportunistic behavior. Yet, it is key for franchisors to keep in mind that low levels of self-efficacy might have disastrous effects on outcomes other than opportunistic behavior. Therefore, future research should reveal more about this issue.
Table of Contents
Chapter 1. Introduction 4
Chapter 2. Literature review & Theoretical framework 8 2.1 Direct effect: peer trust and opportunistic behavior 8
2.1.1 Social Exchange Theory 8
2.1.1.1 Peer trust 9
2.1.1.2 Co-worker trust 10
2.2 Moderating effect: self-efficacy 12
2.3 Conceptual model 13 Chapter 3. Methodology 14 3.1 Sample 14 3.2 Independent variables 15 3.2.1 Peer trust 15 3.2.2 Self-efficacy 15 3.3 Dependent variable 15 3.4 Control variables 16 3.5 Data analysis 17 3.6 Validity 17 Chapter 4. Results 18 4.1 Descriptive statistics 18 4.2 Results of analyses 20 4.2.1 Hypotheses 20 4.2.2 Control variables 22 Chapter 5. Discussion 22 5.1 Summary of results 22 5.1.1 Direct effect 23 5.1.2 Moderating effect 24 5.1.3 Control variables 24 5.2 Theoretical implications 25 5.3 Managerial implications 26
5.4 Limitations & Further research avenues 26
5.5 Conclusion 27
References 28
Appendices 35
Appendix A - Scale to measure peer trust 35
Appendix B - Scale to measure self-efficacy 36
Appendix C - Scale to measure franchisee’s opportunistic behavior 37
Appendix D - Scale to measure control variables 38
Appendix D.1 - Scale to measure franchisees’ perceptions of alternative
attractiveness 38
Chapter 1. Introduction
Over the last fifty years, franchising has evolved into one of the fastest growing business strategies in many countries (DiPietro et al., 2007; Welsh et al., 2006). As a result, franchising has developed into an increasingly significant medium for entrepreneurial wealth creation (Dant, Grünhagen and Windsperger, 2011; Sorenson and Sørenson, 2001). In business format franchising, independent business owners (i.e. franchisees) enter into a contractual relationship with a franchisor, and pay fees or royalties to obtain the right and duty to use the franchisor’s business format (Davies et al., 2011; Grünhagen and Dorsch, 2003). The business format includes a trade name, product specifications and operating systems (Combs and Ketchen, 2003) and the sharing of intangible capital, such as goodwill (Caves and Murphy, 1976).
such as franchisee opportunistic behavior, which might occur due to these mixed motives of both parties and the asymmetrical power distribution of the franchisor (Frazer and Winzar, 2005; Kidwell, Nygaard, and Silkoset, 2007; Winsor et al., 2012).
The above already reveals the importance of trust in franchise relationships. Overall, trust has been known to be a very influential concept in organizational contexts. Moreover, trust is a widely studied and complicated concept, existing of different definitions and types. Multiple definitions of trust have been developed over time as a result of the numerous studies on trust. Two definitions that are commonly found in the literature are the definitions of Mayer et al. (1995) and Davies et al. (2011). Mayer et al. (1995) define trust as ‘‘the willingness of a
party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party” (Mayer et al., 1995, p. 712). Davies et al. (2011) define trust as the
confidence of one party to accept some level of risk from another party, allowing them to deal with the vulnerability that arises in the relationship with the other party. What these two definitions have in common is that they include two critical components of trust: 1) the positive expectations a trustor has towards a trustee’s intentions, and 2) the willingness to be vulnerable (Rousseau et al., 1998; Zaheer et al., 1998; Six and Sorge, 2008). Yet, these definitions only take into account one type of trust referent: the organization. Fulmer and Gelfand (2012) argue that there are three types of referents in which the trustor can trust (i.e. personal, team and organization), but which have not been distinguished in extant franchising literature. When applying the other two types of trust referents to the franchise context as well (Croonen, 2017), personal trust refers to the franchisee’s trust in a franchisor’s representative, such as the CEO or region manager. Team level trust, on the other hand, reflects the franchisee’s trust in the other franchisees of the franchise system (“peer trust”).
result in less opportunistic behavior (El Akremi et al., 2011). In addition, it is also found that peer trust leads to franchisees sharing tacit knowledge due to the creation of networks (Meiseberg et al., 2017). The few studies on peer trust in combination with the positive outcomes of trust in general imply that considerably more research should focus on the key dimensions and consequences of trust for this type of referent in the franchise context. Therefore, this paper will solely focus on franchisee peer trust. To be more specific, it will focus on one consequence of peer trust in franchise networks: opportunistic behavior.
standards concerning the franchise core format may lead to misinterpretation and ambiguity for customers with regard to the image and reputation of the franchise system. This, in turn, might jeopardise the survival of the individual units (Winter et al., 2007). As survival is critical for any business, preventing deviation from standards is crucial.
In addition to the article by El Akremi et al. (2011), the literature on co-worker trust (i.e. Croonen and Hamming, 2018) will be used to further strengthen the theoretical foundation of the effect of peer trust on opportunistic behavior, as peer trust is a rather new concept and can be perceived as similar to co-worker trust. For both lines of reasoning, the social exchange theory will be adopted as the theoretical perspective from which the hypothesis will be built.
Moreover, another objective of this research is to gain more insight into the effect of peer trust on opportunistic behavior by including the concept of self-efficacy, as described in Bandura’s social learning theory (1977). Fazey and Fazey (2001) state that higher levels of self-efficacy will enhance the desire to be autonomous. However, a franchisee’s desire for autonomy is generally known to positively affect opportunistic behavior (e.g. Davies et al., 2011; Cox and Mason, 2007; Kidwell et al., 2007) Therefore, this paper argues that high levels of self-efficacy will attenuate the negative effect of peer trust on opportunistic behavior. The result will give franchisors knowledge on which level of franchisees’ self-efficacy and peer trust will result in the lowest engagement in opportunistic behavior in their franchise formula. Taking the above altogether, this leads to the following research question: “How does franchisees’
self-efficacy moderate the effect of peer trust on franchisees’ opportunistic behavior?”.
Answering this research question will contribute to the extant literature on consequences of franchisee peer trust by filling the aforementioned knowledge gap. That is, it will broaden franchise scholars’ current understanding of peer trust. Furthermore, addressing this research question is meaningful because knowing what influence self-efficacy and peer trust have on franchisees’ opportunistic behavior can create practical opportunities for franchisors that might increase the effectiveness of their franchise network. That is, it gives insights into how franchisors should potentially manage peer trust and which franchisees’ characteristics are relevant in minimizing the chances of opportunistic behavior.
Chapter 2. Literature review & Theoretical framework
Croonen (2017) differentiates between three types of franchisee trust (i.e. franchisee as trustor) in the franchising context, depending on the type of ‘referent’: personal trust, team level trust, and organizational trust. For the purpose of this study, the remaining parts of this paper will solely focus on trust at the team level. That is, trust among franchisees in the same network or “peer trust”. More specifically, this paper will focus on “generalised peer trust”, which represents the franchisee’s overall level of peer trust in a franchise network (Croonen and Hamming, 2018). This contrasts with “specified peer trust”, which is a dyadic form of trust and focuses on the level of trust specifically between two peers in a network.
Furthermore, it should overall be noted again that franchising scholars have not paid systematic theoretical attention to peer trust. In other words, the consequences of peer trust remain understudied (Meiseberg et al., 2017) and, thus, a gap is present in the extant franchising literature. Due to the lack of previous research on the concept of peer trust, this paper will also build on the literature on co-worker trust to develop a theoretical understanding of the consequences of peer trust. Co-worker trust is deemed similar to peer trust as there are several similarities between franchisees in a franchise network and co-workers within an organization. First, contractual requirements are set up by the franchisor, who will monitor the franchisee’s compliance with those requirements (Kidwell et al., 2017; Croonen and Broekhuizen, 2018). This shows that the franchisee-franchisor relationship consists of some hierarchical components in which the franchisor has a higher hierarchical position, similar to the intra-organizational context. Secondly, franchisees are part of a network of peers, just like co-workers. Since the behavior and performance of one franchisee may influence the behavior and performance of other peers, they are interdependent (Combs and Ketchen, 2003; Kidwell et al., 2007). In other words, the performance of the entire franchise network is dependent on the behavior of each franchisee (Jambulingam and Nevin, 1999). This interdependence is similar to intra-organizational contexts.
2.1 Direct effect: peer trust and opportunistic behavior
2.1.1 Social Exchange Theory
between different parties (Cropanzano and Mitchell, 2005). Social exchanges also occur in the franchising context, as the interdependence that characterizes franchise relationships is known to be a fundamental element in social exchanges (Cropanzano and Mitchell, 2005).In addition, the opportunistic behavior that might occur from the implicit obligations in these processes of ongoing reciprocity is considered a risk of social exchanges (Das and Teng, 2002). Two streams of literature that are relevant for this study generally adopt this theory: the literature on peer trust and the literature on co-worker trust. Below, both streams of literature will be used to reason towards the first hypothesis, while taking SET as the theoretical perspective.
2.1.1.1 Peer trust When examining the concept of peer trust in franchise relationships in particular, SET is considered an appropriate starting point (e.g., Cropanzano and Mitchell, 2005; Das and Teng, 2002; Ring and Van de Ven, 1994). Combining the aforementioned implicitness of the obligations with the risk of free-riding, trust has been found to be an important element in SET (Croonen, 2010). Yet, there are only few articles that combined SET and opportunistic behavior in the franchise context specifically (Brookes et al., 2015). This is unexpected, as there is always some risk of opportunistic behavior included in social exchanges (Das and Teng, 2002). Nevertheless, studies that did apply SET in the franchise context found that more rules and procedures regarding the franchise relationship (i.e. more formalisation) and high levels of trust in the franchisor due to low vertical control (i.e. more decentralised decision-making) will lead to less engagement in opportunistic behavior by the franchisees (Kidwell et al., 2007). In addition, higher levels of emotional attachment to the franchise system (Mignonac et al., 2013) and an increased feeling of group cohesion between franchisees (El Akremi et al., 2011) will similarly decrease the extent to which franchisees engage in opportunistic behavior. The first two studies focus on the franchisor-franchisee relationship and only the latter of these three studies focuses on the effect of peer trust on opportunistic behavior in particular.
El Akremi et al. (2011) conducted a study that was concerned with the consequences of group cohesion among franchisees. According to these authors, “trust among exchange
partners is conceptually related to individuals’ perception of group cohesion” (El Akremi et al.,
study, this paper defines group cohesion as “franchisees’ inclinations to forge social bonds [with other franchisees], help each other, and coordinate their efforts around the chain’s tasks
and objectives” (El Akremi et al., 2011, p. 933). In other words, it concerns a group’s tendency
to stick together and form a united front in realizing its objectives (Carron, 1982). El Akremi et al. (2011) argue that there are various opportunities for franchisees to meet within the franchise chain, such as regional and national meetings, and thus group cohesion can certainly occur. This feeling of cohesion is also visible among franchisees within a franchise chain and it has been shown that it causes franchisees to engage in less opportunistic behavior for three interrelated reasons. First of all, when group cohesion is strong, franchisees realize they will benefit from cooperation with the group as they will be more likely to develop relevant know-how. In order to avoid collective punishment when they do not contribute to the group’s success and to get the benefits from cooperative relationships, franchisees will avoid engaging in opportunistic behaviors (Cochet et al., 2008). Secondly, franchisees will cooperate with other franchisees in case of strong group cohesion to avoid the rumor being spread that one is behaving opportunistically. Such rumor might have a bad reputation effect (Brass, Butterfield, and Skaggs, 1998; Burt and Knez, 1995). However, if the group cohesion is perceived to be weak, franchisees may believe that opportunistic behaviors will not spread among the group, increasing the likelihood of opportunistic behaviors. Thirdly, specific, meaningful behavior that determines the competitiveness and survival for a franchise chain will enforce norms within a group (El Akremi et al., 2011). This so-called ‘internalization of norms’ leads to conformity. If there is a strong sense of group cohesion, this conformity due to norms should control the franchisees’ behavior, leading to less opportunistic behaviors. All in all, as group cohesion is assumed to be conceptually related to peer trust, this paper expects that these three interrelated reasons will also hold for the effect of peer trust on opportunistic behavior. More specifically, it is hypothesized that peer trust will negatively affect opportunistic behavior.
Veiga, 2018). In general, these authors argue that the relationship is based on one specific component of trust: the willingness to accept vulnerability that is inherent to trusting another party, which subsequently will give rise to an expectation of reciprocity from the other party. When it is expected that this vulnerability will lead to positive reciprocity, a co-worker will more likely help out another co-worker when needed. As a result, a co-worker is also more likely to engage in behaviors towards other co-workers that are not part of the contractual requirements.
Yet, one might also argue the other way around. Instead of focusing on the effect on beneficial outcomes, this paper will focus on the effects of co-worker trust on disastrous employees behaviors, such as opportunistic behaviors. That is, if co-worker trust has been found to positively affect beneficial outcomes, one might also expect co-worker trust to negatively affect disastrous behaviors with the same line of reasoning. Therefore, this paper hypothesizes that higher levels of peer trust will lead to lower levels of opportunistic behavior. High levels of trust between parties means that there is an expectation that the other party will not harm them, and that there is a willingness of one party to invest in the interests of the other party (Barney and Hansen, 1994; Lui et al., 2009). Moreover, trust will encourage parties to invest their own time and resources in the other party, and to accept risks for each other (Kanter, 1977; Kim et al., 2013; Kramer, 1999; Larson, 1992). All in all, especially the expectation that the other party will not harm them resulting from high levels of trust will lead to the expectation that co-workers will engage in less opportunistic behavior.
Overall, as the study by El Akremi et al. (2011) and the literature on co-worker trust build the expectation of a negative effect of peer trust on opportunistic behavior, the first hypothesis will be proposed as follows:
Hypothesis 1: Peer trust will negatively affect franchisees’ opportunistic behavior.
in conflicts and opportunistic behavior (Dada and Watson, 2013; Pizanti and Lerner, 2013). This increase in opportunistic behavior might possibly attenuate the aforementioned negative effect of peer trust on opportunistic behavior. In the next section, this speculation will be explained more thoroughly.
2.2 Moderating effect: self-efficacy
Thus far, the concept of peer trust has only been applied in the franchising context a handful of times. Therefore, adding the moderating effect of self-efficacy into this relationship automatically infers that this variable contributes to and extends the literature on peer trust in the franchising context and its effect on opportunistic behavior by the franchisees. More specifically, this variable has actually never been used to explain its effect on the relationship between peer trust and franchisee’s opportunistic behavior towards the franchisor in this specific field. Franchisee characteristics in general have not been used extensively to describe franchisee-franchisor relationships (Dant et al., 2013). Therefore, this paper uses self-efficacy as a moderator to explain the opportunistic behavior as a result of peer trust.
Bandura’s social learning theory (1977) describes self-efficacy as the “beliefs in one’s
capabilities to organize and execute the courses of action required to produce given attainments” (Bandura, 1997, p. 3). In other words, it compromises a person’s felt confidence
to perform a particular task. The originator of this theory infers that an individual’s perception of self-efficacy stems from four sources of information. The most influential source of information is performance accomplishments, as it is based on personal mastery experiences. Repeated success directly raises the mastery experiences, increasing the level of self-belief. Another self-efficacy information source is vicarious experience. Seeing individuals around us succeed in (threatening) activities, especially individuals that we regard as similar to oneself, might raise the belief and expectation that they too can achieve success in these activities when putting in effort. A third source of efficacy information is verbal persuasion. Verbal encouragement by people around an individual can help to persuade one to belief that (s)he possesses the appropriate skills to accomplish a certain task or activity. Emotional and
psychological states are considered the fourth, and final, source of information. An individual’s
own responses and emotional state also plays an important role in judging how one feels about its own capabilities and competences. For example, if someone has a fear of failure or experiences high levels of stress, this will contribute to a feeling of low self-efficacy.
the franchisee’s self-belief. In contrast, high levels of stress associated with running your own unit might cause one to judge himself or herself as not having the appropriate skills to succeed. Overall, all franchisees in the franchise system are likely to possess differing levels of self -efficacy. These differences might result from factors inside and outside of the franchise system.
This paper expects a franchisee’s self-efficacy to affect the relationship between peer trust and opportunistic behavior. According to Fazey and Fazey (2001), a high perception of self-efficacy will enhance the desire to behave autonomously. A desire for autonomy refers to the desire to be able to act and think independently (cf. Sims, Szilagyi and Keller, 1976). Applying it to the franchise context, a franchisee’s desire to be autonomous means being able to make its own decisions with regard to, for example, pricing and local advertising (López-Fernández and López-Bayón, 2018). Even though there is an inherent desire for autonomy among all franchisees, the extent to which they also strive for autonomy is obviously not the same (Cochet et al., 2008; Dant and Gundlach, 1999; Dada, 2018). That is, it is assumed that a franchisee’s desire to be autonomous will increase if (s)he is convinced that (s)he possesses the appropriate skills to be autonomous and independent. Yet, the desire to be autonomous that accompanies a high level of self-efficacy is known to give rise to opportunistic conflicts, such as non-compliance from the franchisee (Davies et al., 2011), deviation from standards set by the franchisor (Cox and Mason, 2007) and free-riding (Kidwell et al., 2007). Therefore, it can be argued that more confidence in one’s own skills is related to a desire for autonomy and moderates the relationship between peer trust and opportunistic behavior. All in all, it is hypothesized that self-efficacy enhances the desire to be autonomous, and this desire to be autonomous is known to positively affect opportunistic behavior. Thus, self-efficacy is expected to attenuate the negative effect of peer trust on opportunistic behavior.
Hypothesis 2: Franchisees’ levels of self-efficacy will attenuate the negative effect of peer trust on franchisees’ opportunistic behavior.
2.3 Conceptual model
Figure 1 - Conceptual Model
All in all, this paper will give novel insight into the effectiveness of peer trust by taking into account the possible influence of franchisees’ level of self-efficacy. That is, this paper will reveal if self-efficacy attenuates the negative effect of peer trust on opportunistic behavior.
Chapter 3. Methodology
A quantitative approach was used to test the two hypotheses of this study. Hypothesis 1 proposed that peer trust would negatively affect opportunistic behavior. Hypothesis 2 proposed that the effect of Hypothesis 1 would be attenuated when franchisees have high levels of self-efficacy.
3.1 Sample
The two hypotheses were tested using an already existing dataset. This dataset compromised one single franchise system: franchise units from the People’s Place franchise formula founded in the United States of America. They are a convenience store in a state on the east coast selling a wide range of products to consumers on the go. The data was collected at the beginning of 2016 by the Rijksuniversiteit Groningen using the online Qualtrics survey tool. This dataset was deemed appropriate as it included all the variables that were incorporated in the hypotheses of this study.
A total of seventy-two franchisees voluntarily responded to the survey. At that time, the franchise system consisted of eighty-two franchisees, leading to a response rate of 87,8%. This high response rate was a result of the close cooperation between the franchisees and the franchisor in the People’s Place formula and the guaranteed protection of anonymity when taking part in this study.
That is, they did not rate 11 items or more out of 21 items. Moreover, seven respondents had between one and ten missing values. These missing values were replaced by the mean score of that specific item, which is a traditional approach to retain sample size (Schafer and Graham, 2002). In other words, in this way these respondents could still be included in the sample. Altogether, the results in the next chapter are based on a sample of seventy respondents (19 female, 51 male; Mage = 47.88, SD = 9.43).
3.2 Independent variables
3.2.1 Peer trust
The five items on a 5-point Likert scale (1 = strongly disagree, 5 = strongly agree; see Appendix A) that were used to measure peer trust were loosely based on the article by Cook and Wall (1980), that actually measured trust among co-workers. All items were adjusted and applied to the franchising context. An example of an item that measured peer trust was: “I can trust my fellow franchisees to help me when needed”.
After respondents had answered all the statements, a reliability analysis was performed on peer trust by using Cronbach’s alpha. Peer trust was considered reliable as it passed the threshold of 0.6 (Cronbach, 1951). Therefore, peer trust (α = 0.91) could be used to create a new variable based on its mean scores (M = 4.08, SD = 0.64). The closer the mean score was to 5, the higher the level of peer trust.
3.2.2 Self-efficacy
Self-efficacy was measured using six items on a 5-point Likert scale (1 = strongly disagree, 5 = strongly agree; see Appendix B). Schwarzer and Jerusalem (1995) used ten items to measure self-efficacy in their article. However, for this dataset, only six of those ten items were used to avoid creating a survey that was too extensive. An example of an item that measured self-efficacy was: “I can always manage to solve problems if I try hard enough”.
After performing a reliability analysis on self-efficacy (α = 0.73), it could be used to create a new variable based on its mean scores. The closer the mean score was to 5, the higher the level of self-efficacy (M = 4.35, SD = 0.44).
3.3 Dependent variable
opportunistic behavior was: “Within the context of my activities, I do things more ‘my way’ than according to my franchisor’s recommended methods”.
After performing a reliability analysis on opportunistic behavior, the Cronbach’s alpha did not pass the threshold of 0.6 (α = 0.19; Cronbach’s alpha did not increase if items were deleted). This very low value implied that the four items did not measure the variable opportunistic behavior properly, which was against expectations as the scale was taken from a published article in a top management journal and, thus, validated. Therefore, in order to be able to run the analyses, only one of the four items was taken. Keeping in mind the limitations related to this choice, the item was picked that covered this variable the most. For opportunistic behavior, this was the following item: “Within the context of my activities, I do things more ‘my way’ than according to my franchisor’s recommended methods”. This item specifically targeted the franchisor’s recommended methods and to what extent the franchisee deviated from this. As this study focused on deviation from franchisor’s standards as a type of opportunistic behavior (cf. El Akremi et al., 2011), this item covered opportunistic behavior best. According to Bergkvist and Rossiter (2007), using a single-item scale to measure one variable can be justified as the variable can be uniformly and easily imagined. In addition, from a practical perspective, the authors argue that a single-item scale gives less refusal among respondents and it decreases the amount of data collection. Yet, it can still be considered a limitation to this study.
3.4 Control variables
Two control variables were included in this study: franchisees’ perceptions of alternative attractiveness and franchisees’ perceptions of switching costs.
First of all, franchisees’ perceptions of alternative attractiveness was included as it can be expected that franchisees finding a more attractive alternative in terms of relationships will lead to lower levels of dependence on the franchisor, and more active and destructive responses in the face of problems (Ping, 1993). These circumstances will make opportunistic behavior more likely. This variable consisted of three items on a 5-point Likert scale (1 = strongly disagree, 5 = strongly agree; see Appendix D.1) based on the article by Ping (1993). An example of an item that measured franchisees’ perceptions of alternative attractiveness was: “There are many attractive alternatives for me compared to being a franchisee at People’s Place”. After performing a reliability analysis on franchisees’ perceptions of alternative attractiveness (α = 0.65), a new variable could be created based on its mean scores. The closer the mean score was to 5, the more they perceived alternatives to be attractive (M = 3.15, SD = 0.88).
even if it is an unrewarding relationship (Thibaut and Kelley, 1959). As franchisees are more or less trapped in the franchise formula and realize they have to deal with this situation, they should be disinclined to behave less opportunistically. Respondents had to rate three items on a 5-point Likert scale (1 = strongly disagree, 5 = strongly agree; see Appendix D.2) based on the article by Ping (1993). An example of an item that measured franchisees’ perceptions of switching costs was: “On the whole, I would have to spend a lot of time and money to leave the People’s Place system”. After performing a reliability analysis on franchisees’ perceptions of switching costs, the Cronbach’s alpha did not pass the threshold of 0.6 (α = 0.29; Cronbach’s alpha did not increase if items were deleted). Similar to the variable opportunistic behavior, this very low value implied that the three items did not measure the variable switching costs properly. As the scale was taken from a published article in a top journal and, thus, validated, the outcome of this analysis was unexpected. Therefore, in order to be able to run the analyses, only one of the three items was taken. For this variable, the item that was expected to cover switching costs the most was: “On the whole, I would have to spend a lot of time and money to leave the People’s Place system”. Starting with “on the whole” and referring to both time and money gave a more holistic perspective of the variable, compared to the other two items. Therefore, this item was expected to best cover the control variable franchisees’ perceptions of switching costs.
3.5 Data analysis
The statistical program SPSS IBM 25 was used to analyze the data. The first step in the process of data analysis was to reveal the descriptive statistics. These descriptives show the mean and standard deviations of all variables. Moreover, a correlation test was conducted, and the variables were checked for their reliability and validity. In addition, a multicollinearity test was performed.
Furthermore, all variables were interval variables. Therefore, a simple linear regression was used to test the hypotheses. First, the effect of the control variables on opportunistic behavior was tested. Subsequently, the main effect of peer trust on opportunistic behavior was analyzed. Next, the moderator was added to examine whether there was a direct effect of self-efficacy, as well as to examine whether there was an interaction effect with peer trust. In the latter two analyses, the two control variables were included as well. The significance of the analyses determined whether the hypotheses could be supported or rejected.
3.6 Validity
Construct validity refers to the extent to which an instrument or scale measures what it intends to measure (Field, 2013). The usage of items and scales that have been previously validated in published articles lead to the conclusion that construct validity had been realised as much as possible for the variables peer trust, self-efficacy and franchisees’ perceptions of alternative attractiveness. Yet, the construct validity of the variables opportunistic behavior and franchisees’ perceptions of switching costs was said to be low, as validity is known to presuppose reliability. That is, an unreliable measurement will lead to the expectation that its results and conclusions might not be true (Van Aken et al., 2012). As the Cronbach’s alpha for these two variables was below the threshold of 0.6, construct validity was said to be low as well.
In addition, internal validity refers to the extent to which a result or conclusion regarding cause-effect is due to the independent variable and not another factor (Van Aken et al., 2012). One way internal validity could be ensured is by using control variables. Here, two variables had been used to control for their confounding effects. Moreover, internal validity could also be enhanced by testing for non-response bias. Yet, as the response rate was already over 90%, a non-response bias is deemed unuseful. Taken these two elements together, internal validity was said to be high.
Lastly, there is external validity. External validity refers to the extent to which results and conclusions can be generalized or transferred to situations, organizations and people outside the boundaries of the firm that is used in the research (Van Aken et al., 2012). This form of validity will be examined in the discussion.
Chapter 4. Results
The data of seventyrespondents from the existing dataset in SPSS were used to run the analyses. The results mentioned in this paper are judged based on a 5% significance level.
4.1 Descriptive statistics
Variable Min. Max. Mean SD
Peer trust* 3 5 4.08 0.64
Self-efficacy* 3 5 4.35 0.44
Opportunistic Behavior 1 5 2.43 1.22
Franchisees’ perceptions of alternative attractiveness*
1 5 3.15 0.88
Franchisees’ perceptions of switching costs 1 5 3.21 1.08
* = multi-item variables are combined into one single variable based on its mean score
Table 1 - Descriptive statistics
In addition to the descriptive statistics, a Pearson correlation test has been conducted. Table 2 presents the correlation matrix. The results indicate that the independent variable,
peer trust, and the dependent variable, opportunistic behavior, do not significantly correlate
with each other (r = 0.102, p > 0.05). Moreover, the moderator self-efficacy (r = 0.196, p > 0.05) and the control variable franchisees’ perceptions of switching costs (r = 0.183, p > 0.05) do not significantly correlate with opportunistic behavior. Yet, the control variable franchisees’ perceptions of alternative attractiveness significantly correlates with opportunistic behavior (r = 0.416, p < 0.05)
Furthermore, when analyzing the independent variable peer trust, this variable significantly correlates with the moderator self-efficacy (r = 0.338, p < 0.05). However, peer trust does not significantly correlate with the two control variables, franchisees’ perceptions of alternative attractiveness (r = 0.013, p > 0.05) and franchisees’ perceptions of switching costs (r = -0.100, p > 0.05).
Variable 1. 2. 3. 4. 5. 1. Peer trust -- ,338* ,102 ,013 -,100 2. Self-efficacy -- ,196 ,061 -,099 3. Opportunistic behavior -- ,416* ,183 4. Franchisees’ perceptions of alternative attractiveness -- -,040 5. Franchisees’ perceptions of switching costs --
* = correlation is significant at the 0.05 level (2-tailed)
Table 2 - Correlation matrix
The correlation matrix will serve as the basis for the subsequent simple linear regression analysis. The results of this analysis will be presented in the next subsection.
4.2 Results of analyses
4.2.1 Hypotheses
Model 1 Model 2 Model 3
Step and variables B (SE) B (SE) B (SE)
Intercept 2.43 (0.13)** 2.43 (0.13)** 2.29 (0.14)**
Control
Franchisees’ perceptions of alternative attractiveness
0.52 (0.13)** 0.51 (0.13)** 0.47 (0.13)**
Franchisees’ perceptions of switching costs 0.24 (0.13) 0.27 (0.13)* 0.33 (0.13)* Main effects
Peer trust 0.07 (0.14) 0.03 (0.14)
Self-efficacy 0.21 (0.14) 0.13 (0.14)
Two-way interaction
Peer trust * Self-efficacy 0.42 (0.16)*
R² adjusted 0.19 0.21 0.28
Notes: 1) Dependent variable: opportunistic behavior;
2) Models show the unstandardized beta coefficient and the (standard error); 3) Significance level: * = p < 0.05, ** = p < 0.01
Table 3 - Regression model
Starting with the main effect of peer trust on opportunistic behavior, the results reveal an insignificant effect (B = 0.03, p > 0.05). Thus, Hypothesis 1 is rejected. This means that higher levels of franchisee’s peer trust does not lead to less engagement in opportunistic behavior. Furthermore, although there was not an a priori expectation of the main effect of self-efficacy, the analysis does not yield a significant effect (B = 0.13, p > 0.05).
effect is even more extreme than expected. This finding will be more thoroughly discussed in the next chapter.
Figure 2 - Interaction plot
4.2.2 Control variables
With regard to the control variables franchisees’ perceptions of alternative attractiveness and franchisees’ perceptions of switching costs, both reached significance. The variable franchisees’ perceptions of alternative attractiveness has a positive effect on opportunistic behavior, as expected (B = 0.47, p < 0.01). This effect implies that franchisees finding a more attractive alternative in terms of relationships will make opportunistic behavior more likely. Yet, the control variable franchisees’ perceptions of switching costs reveals an effect that is against expectations. The coefficient belonging to this variable shows a significant positive effect (B = 0.33, p < 0.05). This implies that franchisees perceiving the switching costs to another economic exchange relationship outside the franchise formula to be high will engage more in opportunistic behavior.
Chapter 5. Discussion
5.1 Summary of results
when franchisees’ level of self-efficacy is higher. A summary of the findings of Hypotheses 1 and 2 will be discussed next.
5.1.1 Direct effect
First of all, the findings showed that, despite the significant finding of cohesion on opportunistic behavior by El Akremi et al. (2011), this research did not yield a significant result for Hypothesis 1. To be more specific, this finding goes against what has been found thus far in this understudied field of research. An explanation for this insignificant finding can be that basing the line of reasoning for this hypothesis on the significant findings of only study - the study by El Akremi et al. (2011) - was a mistake. In other words, there could potentially have been a case of publication bias. Publication bias is concerned with the tendency to publish articles that found a significant result and to not publish articles that found insignificant results (Dickersin, 1990). In this case, it can imply that even though El Akremi et al. (2011) found a significant negative relationship between peer trust and opportunistic behavior, it could well be that even more articles did not find such a significant effect but simply were not published. When there is a situation of publication bias, this could indicate that the chances would have been higher of finding an insignificant results than finding similar results to the study by El Akremi et al. (2011).
5.1.2 Moderating effect
Contrary to the aforementioned insignificant result, there was a significant finding in the analyses that confirmed that higher levels of self-efficacy attenuate the negative effect between peer trust and franchisees’ opportunistic behavior. Striking about this result is the positive unstandardized beta coefficient. This indicates that the negative effect is weakened to such an extent that it changes into a positive effect. In other words, the effect of peer trust on opportunistic behavior is positive when the level of self-efficacy is high. This indicates that there is significantly more engagement in opportunistic behavior when there are high levels of peer trust and franchisees experience a feeling of self-efficacy. Although this result still confirms Hypothesis 2, as a positive effect is a way to define a weakened negative effect, it should be highlighted that actually still a negative coefficient was expected before running the analysis. That is, it was still expected that peer trust would negatively affect opportunistic behavior when franchisees’ level of self-efficacy was high, only to a lesser extent than would be the case in the direct effect. Therefore, an explanation needs to be presented about the reason why the negative sign changes into a positive sign when self-efficacy is high. Such an explanation can be that peer trust might actually enhance the franchisee’s perception of self-efficacy, as the trust in others combined with the belief and confidence in oneself possibly strengthen one another. This reinforced perception of self-efficacy, in turn, leads to even more opportunistic behavior. However, as the concept self-efficacy has never been applied to any study within this research field, future research should add this variable and investigate the issue more thoroughly.
5.1.3 Control variables
In addition to the direct effect and the moderating effect, the results of the control variables will also be discussed. As expected, the control variable franchisees’ perceptions of alternative attractiveness had a significant, positive effect on opportunistic behavior. In other words, franchisees who are able to find a more attractive alternative in terms of relationships will be more likely to engage in opportunistic behavior. An explanation for this result is that finding an attractive alternative leads to lower level of dependence on the franchisor. Franchisees might feel like they have less to lose when the relationship between the franchisor and franchisee ends, increasing the likelihood of engaging in opportunistic behavior.
of being trapped in the system and not being able to move to an alternative outside the franchise formula. This feeling, in turn, might lead to franchisees behaving against the franchisor’s standards as a way to express their dissatisfaction and discomfort of not being able to switch easily. Such behavior might be a motivational consequence that occurs when individuals feel their freedom or control is threatened. More specifically, in the field of psychology, such behavior might be considered a manifestation of psychological reactance (Brehm and Brehm, 2013).
Overall, after more thoroughly discussing the results of this research, the answer to the research question is that the moderator self-efficacy attenuates the direct effect of peer trust on opportunistic behavior.
5.2 Theoretical implications
This research has some implications for theory that are relevant to mention. First of all, this research contributes to the literature on consequences of peer trust. More specifically, it contributes to the literature on the effect of peer trust on franchisees’ opportunistic behavior. Its aim was to replicate the findings of El Akremi et al. (2011) to make the results more convincing and increase its scientific evidence. Yet, this study did not yield similar results. That is, it did not reveal a significant negative effect of peer trust on opportunistic behavior. Therefore, caution must be taken in accepting the results of the study by El Akremi et al. (2011). Although one studied found a significant negative effect, it does not imply that this effect is true by definition then. The insignificant results found here indicate that future studies need to look at this effect in order to be able to say with confidence whether peer trust does or does not negatively affect opportunistic behavior.
5.3 Managerial implications
The results of this research creates several specific insights for managers, or in this case franchisors, that are relevant to mention. In general, the significant moderating effect of self-efficacy indicates that potential franchisees will behave differently depending on their perceived level of self-efficacy. Therefore, (potential) franchisees should not be considered a homogeneous group. Rather, it should be considered relevant and worthwhile to closely evaluate individuals before granting them the rights to use a business format. Yet, self-efficacy does not only play a role in the selection of potential franchisees. Self-efficacy as described by Bandura (1977) is known to be a state-like or task-specific construct. Therefore, it has the ability to change depending on the situation. This means that it gives franchisors the opportunity to manage the level of franchisees’ self-efficacy in their franchise formula to some extent. For instance, verbally persuading the franchisee that (s)he possesses the appropriate skills to accomplish a certain task will strengthen the level of self-efficacy.
Then, the question remains which level of self-efficacy will be most useful in reducing franchisees’ opportunistic behavior. Based on the results of this study, a franchisor should first try to assess the extent to which there is peer trust in the franchise formula. Whether a franchisor has to aim for a low or high level of franchisee self-efficacy depends on this level of peer trust. More specifically, when there is a lot of peer trust in a franchise system, low franchisee self-efficacy will result in the lowest engagement in opportunistic behavior. On the other hand, when there is not a lot of peer trust in a franchise system, high franchisee self-efficacy will result in the lowest engagement in opportunistic behavior. All in all, the results here show that the level of peer trust determines the most beneficial level of self-efficacy for reducing the engagement in opportunistic behavior. Yet, caution should be taken with these insights, as this study does not take into account the effect of self-efficacy on other variables. For example, Stajkovic and Luthans (1998) found in their meta-analysis that self-efficacy is positively related to performance. Therefore, franchisors should be aware that aiming for a low level of self-efficacy might do harm elsewhere. Future research should reveal more about this trade-off.
5.4 Limitations and further research avenues
This study includes several limitations. However, bearing in mind those limitations and overcoming them will likely make further research into this understudied field even more successful.
three items from a validated scale were excluded, there is some chance that this one item does not properly and completely measure the dependent variable. In general, multiple-item scales gather much more information about a construct (Bergkvist and Rossiter, 2007). Future research should take into account that this scale possibly does not measure what it is supposed to measure.
A second limitation is concerned with the scale measuring peer trust. Peer trust is still a rather new concept and, therefore, the scale has not been used extensively and might not be as validated as other scales in this research. The items that measured peer trust were loosely based on the article by Cook and Wall (1980), that actually measured co-worker trust. Yet, as has just been suggested that co-worker trust and peer trust might not be completely similar, adjusting the items from Cook and Wall (1980) to the franchising context might create problems as a result. Future research should reveal whether these items correctly measure peer trust and, thus, whether this scale can be validated.
A third limitation is concerned with the external validity of the study. The sample of this study consisted of only one single franchise network, making generalizations to other situations and organizations beyond this study rather difficult. However, to the best of my knowledge, this franchise formula does not include any extraordinary or peculiar features that would give rise to the expectation that different results will be revealed in other contexts. Still, future research should aim at extending the findings to other contexts in order to establish external validity.
5.5 Conclusion
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Appendices
Appendix A - Scale to measure peer trustStrongly disagree Disagree Neither/ nor Agree Strongly agree 1. I can trust my fellow
franchisees to help me when needed.
1 2 3 4 5
2. For the majority of my fellow franchisees, I can trust
that they do what they promise.
1 2 3 4 5
3. I can trust the expertise of my fellow franchisees.
1 2 3 4 5
4. I can trust my fellow franchisees to not harm the franchise.
1 2 3 4 5
5. My fellow franchisees typically have good intentions.
Appendix B - Scale to measure self-efficacy Strongly disagree Disagree Neither/ nor Agree Strongly agree 1. I can always manage to
solve difficult problems if I try hard enough.
1 2 3 4 5
2. It is easy for me to stick to my aims and to
accomplish my goals.
1 2 3 4 5
3. I am confident that I could deal efficiently with
unexpected events.
1 2 3 4 5
4. Thanks to my
resourcefulness, I know how to handle unforeseen situations.
1 2 3 4 5
5. I can remain calm when facing difficulties because I can rely on my coping skills.
1 2 3 4 5
6. If I am in trouble, I can usually think of a solution.
Appendix C - Scale to measure franchisee’s opportunistic behavior Strongly disagree Disagree Neither/ nor Agree Strongly agree 1. Within the context of my
activities, I do things more ‘my way’ than according to my franchisor’s recommended methods.
1 2 3 4 5
2. I regularly make use of the information and methods my franchisor makes available to me.
1 2 3 4 5
3. I organize and adapt outlet operations according to the information and know-how provided by my franchisor.
1 2 3 4 5
4. I make little use of the information and know-how provided by my franchisor within the context of my activities.
Appendix D - Scales to measure control variables
Appendix D.1 - Scale to measure franchisees’ perceptions of alternative attractiveness Strongly disagree Disagree Neither/ nor Agree Strongly agree 1. There are many attractive
alternatives for me
compared to being a franchisee at People’s Place.
1 2 3 4 5
2. Compared to being a franchisee at People’s Place, I could benefit a lot from an alternative position.
1 2 3 4 5
3. Instead of being a franchisee at People’s Place there are other options to make a living.
1 2 3 4 5
Appendix D.2 - Scale to measure franchisees’ perceptions of switching costs Strongly disagree Disagree Neither/ nor Agree Strongly agree 1. On the whole, I would have
to spend a lot of time and money to leave the People’s Place system.
1 2 3 4 5
2. All things considered, I would lose a lot when leaving
the People’s Place system.
1 2 3 4 5
3. The costs of stopping business with the People’s Place franchisor and starting with an alternative would be high.
