Psychological climate in franchising system channels and franchisor-franchisee solidarity

ELSEVIER

Psychological Climate in Franchising System Channels and Franchisor-Franchisee Solidarity David Strutton UNIVERSITY OF SOUTHWESTERN

LOUISIANA

Lou E. Pelton UNIVERSITY OF NORTH TEXAS

James R. Lumpkin UNIVERSITY OF SOUTHWESTERN LOUISIANA

The ability of franchisors to preserve long-term, mutually committed relationships with their franchisees likely exercises a crucial influence on the success offranchised retailing systems. Solidarity is the general contracting norm that binds channel relationships. The degree to which the psychological climates offranchising channel systems influences the level of solidarity that exists between franchisors and franchisees is investigated in this study. Lowsolidarity and high-solidarity franchisees were distinguished by their significantly differing perceptions of the recognition, fairness, cohesion, innovation, and autonomy associated with their franchising system's psychological climate. The psycholo~cal climate perceptions held by franchisees that frame their exchange relations with theirfranchisors likely affect the level of commitment (above and beyond contractually-obligated commitment) that franchisees are willing to invest in this relationship, and thus, toward the franchisors themselves. Consequently, recommendations regarding how franchisors might act to foster solidarity-facilitating psychological climates are offered, j BUSN RES 1995.34.81-91

ll commercial transactions can be classified along a continuum, ranging from purely discrete to relational exchanges (Macneil, 1980). Purely discrete transactions involve one-shot, impersonal exchanges with minimum or no relational context (Miles et al., 1990)-such as a consumer purchasing fruit at a stand along an out-of-state highway. Relational transactions are characterized by long-term, continuous, and complex relationships in which any single exchange is of insignificant importance as compared to the implicit imperative to sustain the relationship itself (Kaufmann and Stern, 1988)-such as a franchising relationship within a retail setting.

Please address all correspondence to: James R. Lumpkin, Gene Brauns Professor of Marketing, University of Southwestern Louisiana, RO. Box 44372, Lafayette, LA 70504-4372. Journal of Business Research 34, 81-91 (1995) © 1995 FIsevier Science Inc. 655 Avenue of the Americas, New York, NY 10010

More than half of all retail sales will occur within franchised outlets by the year 2000 (Levy and Weitz, 1992), but franchising systems are not only economic entities, they are also social exchange systems featuring the antithetical elements of cooperation and conflict (Etgar, 1979). Franchising channels are implicitly based upon the recognition by individuals that they can benefit from joining and remaining part of the franchising system (Strutton et al., 1993a). A challenge that franchisors continually encounter is how best to retain control over their outlets without dampening the franchisee's commitment to the overall franchising relationship as conflict inevitably arises. When engaging in discrete exchange, parties can successfully rely on arms-length negotiations to execute individual exchanges because each transaction is complete unto itself (Dam and Schul, 1992). By contrast, no single transaction between franchisors and franchisees is complete unto itsel[ Instead, each transaction is part of a long-term, on-going, and complex "alliance" of exchanges. Rather than being administered on an ad hoc basis, most successful franchising relationships are tacitly or overtly planned, properties characteristic of relational transactions (Arndt, 1979). Relational exchanges can be distinguished from their discrete counterpart based upon the degree to which general contracting norms are present in the parties' relationship. Solidarity is the general contracting norm binding exchanges (Macneil, 1980; Kaufmann and Stern, 1988). The discrete form of solidarity focuses solely on the consummation of the individual transaction. While such a focus is a minimum condition necessary to conduct business, franchising relationships should exceed this state. The relational form of solidarity is concerned with sustaining a unique and continuing relationship that provides a haven in which various forms of franchising channel exchange can occur. The level of solidarity present in channels reflects the exchange partners' reorientation away from the importance of any single transaction and toward the importance of susISSN 0148-2963/95/59.50 SSDI 0148-2963(94)00053-H

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raining the relationship itself (Macneil, 1981). Solidarity can be used to indicate how far any franchising relationship is along the continuum toward the preferred state of relational exchange. An understanding of the conditions that influence the degree of solidarity present in franchising channels should prove valuable to all levels of franchise system managers. The purpose of this study was to investigate the relationship between franchisees' perceptions of channel climate and their perceptions of the degree to which solidarity characterized their relationships with their franchisors. The perceptions of franchisees are examined because as the stronger channel member (Selz, 1992), franchisors retain most of the opportunity to shape franchising channel climates. Therefore, franchisors should enjoy greater opportunity to successfully foment solidarity through administering channel relationships and shaping franchisees' perceptions of their franchising system's channel climates.

Theoretical Framework and Hypotheses The Psychological Climate of Franchising Channels Franchising systems are unusual in that they concurrently reflect market-like and organizational-like qualities. Their organizational-like qualities arise from the nature of the restricted exchange relationship that exists between franchisor and franchisees (Norton, 1988). Franchisors typically offer managerial assistance to the franchisee; in turn, the franchisee agrees to run the business according to the franchisor's stipulations. Reliance on clauses that permit unilateral termination by the franchisor as well as strict performance guidelines make the relationship resemble an employer-employee contract (Rubin, 1978). Their organizational qualities permit the psychological climates of franchising channels to be assessed. People derive perceptions of an organization's climate based upon their experiences within it (Schneider, 1975). Such climate perceptions share two traits making them valuable as descriptors of franchising channel relationships. First, climate perceptions condense people's description of their organizational experiences rather than their affective or evaluative reactions as to what has been endured. Second, climate perceptions are relatively stable over time (Campbell et al., 1970). Climate perceptions serve as cognitive maps indicating how the franchising channel operates, and therefore, from the perspective of the franchisee, may influence the nature of what is considered appropriate behavior in given situations [e.g., whether to act in accordance with the discrete (low) or relational (high) variant of the solidarity norm during exchange transactions]. Organizational climate is a multidimensional construct that can be separated into organizational and psychological elements (Campbell et al., 1970). The psychological component can be conceptualized and operationalized at the individual level (Glick, 1985). Psychological climate is an experience-based and persistent state widely shared among members of organizations (Koys and DeCotiis, 1991). Psychological climate should provide the dominant cue when franchisees judge the qualities of their franchising channel relationships. Psychological climate

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has proven useful in non-franchising market settings as a tool that matches individual behaviors with an organizational identity (Strutton et al., 1993b). Koys and DeCotiis (1991 ) suggest six dimensions exist that collectively serve as summary descriptors of psychological climate: autonomy, cohesiveness, fairness, pressure, innovation, and recognition. In terms of franchising organizations, autonomy can be addressed through the "closeness of the (franchise) manager's supervision," "individual responsibility delegated (to the franchisee)," and the "absence of (franchisor) initiated structure" (Joyce and Slocum, 1984). Cohesiveness addresses the "cohesiveness," "esprit," and "workgroup cooperation" present between the franchisor and franchisee (James and Sells, 1981). Fairness can be operationalized through the "objectivity of the (franchisor's) reward system" and if the channel system is characterized by "egalitarianism" (James and Sells, 1981 ). Innovation consists of (the franchising system's)"organizational flexibility" and "implicit challenge to their subordinate to find better work methods" (Steers, 1977). Pressure consists of the "role overload," "time span orientation," and "production emphasis" associated with a channel (Joyce and Slocum, 1984). Recognition can be conceptualized by examining the "recognition and feedback" and "opportunities for growth and advancement" present in the (franchising) relationship (James and Sells, 1981). Psychological climate is directly and exclusively related to the informal within-organization channel structure (Koys and DeCotiis, 1991). Psychological climate perceptions primarily refer to the nature of existing superior-subordinate relationships within an organization (Schneider, 1975); however, multiple climates may exist within a franchising system because organizational life can be perceptually dissimilar for individuals at different franchising levels, locations, or within different units at the same location (Johnson, 1976). Still, the nature of the dominant member-weaker member association exercises the dominant influence on the franchisor-franchisee relationship (Schul and Babakus, 1988; Stern and Abelson, 1991). From either side of a franchising dyad, the managers/owners responsible for sustaining exchange between the franchisor-franchisee function as the organizational identity (e.g., they each occupy a boundary role position within their respective organizations); thus, solidarity at the organizational level may be generated from the psychological climate that exists between individuals. Because these individuals inherently act in ways that influence the franchising channel's internal climate, psychological climate should shape the nature of the relationship between franchisots and franchisees through its influence on the discrete or relational nature of their exchange transaction.

Solidarity in a Franchising Channel Relational exchange presumes the presence of a temporal continuum governed by varying degrees of formal structure, i.e., a contractual relationship (Macneil, 1978). The norms and standards of behavior that distinguish a relational exchange (or whose absence marks a discrete relationship) begin to emerge during the exploration phase of relationship development (Dwyer et al., 1987), and thereafter evolve. Such norms pro-

Franchising Climate and Solidarity

vide "guidelines for the initial probes that exchange partners make towards each other" (Scanzoni, 1979, p. 68). By adopting norms and establishing implicit standards of conduct at the outset of their relationship, franchise partners begin to till the ground that will affect the nature of their ongoing exchange transactions. Once franchising system parties unite, pass through their honeymoon period, and begin to exchange met and unmet expectations, norms which did not exist prior to or at the outset of their relationship will emerge. Thus, whereas an instinctive consensus may initially support positive exchange transactions, the experiences that accrue from these early exchanges will shape normative expectations for future transactions (Brickman, 1974). Franchisors who share common goals with their franchisees are more able to efficiently allocate roles among themselves in light of what are mutually viewed as "functional necessities" (Fox, 1974, p. 86). Disputes threatening the continuity of exchange occur in both discrete transactions and relational exchange; however, in discrete transactions, the nature and identity of acts that threaten the relationship are more difficult to identify with certainty (Muris, 1981). By contrast, the norm of solidarity may often be enacted within franchising channels through a form of giveand-take in which each party examines the general patterns of the other's actions and assesses whether these actions support or harm the relationship (Axelrod, 1984). Either franchising party who buys into solidarity should tend to support the norm and, as a result, will tend to view this exchange relationship "as important in and of itself' (Kaufmann and Stern, 1988, p. 536); thus, the norm's presence will preserve the relationship as long as the other is apparently willing to uphold it. Through recurrent episodes of cooperation, the franchising parties may intentionally create mutual reputations for a commitment to the relationship.

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Patterns of cohesive group behavior can occur at the point of franchisor-franchisor exchange because firstlevel supervisory units are one of the two most immediate social classifications present within business organizations. Organizational cohesion is indicated by the presence of team spirit and mutual cooperation. There is more pressure to act in accordance with group values, norms, and expectations in cohesive groups as opposed to less cohesive groups (Shaw, 1981). Members of cohesive work groups are more satisfied and possess more optimistic views of their working relationships than those in non-cohesive groups (Gross, 1954). Satisfaction and optimistic predispositions are positively related to pro-social behaviors at the individual level (George and Bettanhausen, 1990; Strutton and Lumpkin, 1993). Examples of prosocial behaviors within organizational environments include the propensity to more willingly accommodate others' views, self-disclose, trust, and to align one's behavior with normative expectations (Roark and Hussein, 1989). The cohesiveness of the psychological climates of franchising channels should be associated with franchisee perceptions of solidarity because of the influence of cohesion on prosocial and norm-adherent behaviors. COHESIVENESS.

H2: As a component of the psychological climate associated with franchising channel systems, cohesiveness should positively influence the degree of solidarity present in the franchisor-franchisee relationship.

AUTONOMY. Autonomy involves the amount of freedom franchisees have to run their outlets according to their own dictates (Stephenson and House, 1971) and is a primary element of the psychological climate that prevails within any organization (Reisman, 1986). In non-franchising settings, subordinates operating in autonomy-supporting, as opposed to controloriented, environments have exhibited more trust in their superiors (Deci and Ryan, 1987). The realization of autonomy should cultivate within the recipient a deeper sense of security. The presence of mutual security provides a stabilizing function which promotes confidence in one's counterpart (Kotler, 1989). Individuals who are secure in a relationship are more likely to expose themselves to the risk inherently associated with committing to, or placing expectations in, others.

The capacity to be simultaneously provokable and forgiving fosters a perception that an organization is firm, but fair (Komorita and Esser, 1975). Potential franchisees may be more likely to enter into long-term relationships with franchisors who are perceived in this manner. A "fair" characterization is primarily a consequence of organizational climate. Perceptions of fairness presuppose the presence of procedural and outcome justice within organizational settings (Folger and Konovosky, 1989). Procedural justice involves the objectivity of the means used to determine the outcomes of conflicts, whereas outcome justice relates to the objectivity of the ends actually achieved. Machiavelli argued that the gravity of ends sometimes overrides the need for objectively-derived means in diplomatic channels (c1513). By contrast, Konovosky and Cropanzano (1991) argue that each form of justice must be present in roughly equivalent amounts within organizational structures for subordinate exchange partners to discern the presence of a fair psychological climate. The fairness of its reward and/or corrective systems reflect an organization's value and normative structures (Williams and Sashkin, 1990). Because conflict is inevitable in franchising systems (Thomas, 1976), franchisees likely incorporate judgments of their franchisor's fairness into their evaluation of the level of intimate and sustained commitment, they are willing to invest into the franchisor-franchisee relationship.

H1: As a component of the psychological climate associated with franchising channel systems, autonomy should positively influence the degree of solidarity present in the franchisor-franchisee relationship.

H3: As a component of the psychological climate associated with franchising channel systems,fairness should positively influence the degree of solidarity present in the franchisor-franchisee relationship.

Hypothesized Relationships

FAIRNESS.

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INNOVATIVENESS. In a study of organizational climate, innova-

tive employees experienced significantly more conflict than adaptive employees. This conflict resulted because their efforts at initiating creative workplace operations and responses to problems were frequently frustrated (Isaksen and Kaufmann, 1990). Efforts aimed at facilitating innovative (e.g., open-minded), psychological climates should reduce the friction experienced by innovative franchisees. Such efforts may have far-reaching effects because individual franchisees tend to be innovativelyoriented and entrepreneurially-oriented (Tannenbaum, 1992; Waters, 1993). In innovative organizational structures, franchisees will be provided more opportunity to improve established work procedures and their own performance outcomes; e.g., there is more opportunity to follow through on the entrepreneurial impulses many of them are likely to have without experiencing untoward conflict with their franchisors. Thus, no matter how slight, movement toward an emancipated set of workplace procedures should positively influence franchisee's perceptions of solidarity with their franchisors, because in the view of the franchisees, their fanchisors will be flexible to accommodate the franchisee's needs. In innovative psychological climates, there is a tacit channel-wide acceptance of the precepts associated with management by consensus (Vaziri et al., 1988). Management by consensus usually results in fewer mixed signals between subordinates and superiors (Roark and Hussein, 1989). Franchisees are likely to perceive less inconsistency between the words and actions of franchisors in such climates and, thus, more closely align themselves with their transactional counterpart. This hypothesis is also based in diffusion paradigms that suggest supportive change may induce improved intraorganizational relationships (Beyer and Trice, 1978; Zmund, 1982). The hypothesis indirectly supports the notion that managerial support can be a normative tool for implementing change. Dyadic relationships sometimes manifest a mutual dependence that helps preserve and stabilize organizations. This mutual dependency is predicated on a sense of reciprocity (Gouldner, 1960); therefore, if franchisees perceive their franchisors's support of innovative procedures as purely a favor, they are likely to reciprocate by supporting other behaviors expected by the franchisor (Sgro et al., 1980). A hypothesis concerned with the likely association between innovation and solidarity in franchising channel relationships is a logical extension. H4: As a component of the psychological climate associated with franchising channel systems, innovativeness should positively influence the degree of solidarity present in the franchisor-franchisee relationship. External]y-imposed pressure limits individuals' and organizations' opportunities for self-determination (Amabile et al., 1976). When experiencing excessive externally-imposed pressure, people are less likely to initiate their own behavior as their sense of free choice is superseded by a sense of coercion (DeCharms, 1968). Franchisees are more likely to feel as if they are pawns to the desired outcomes of their franchisors PRESSURE.

D. Strutton et al.

if excessively pressured, even when they support the outcomes being pursued. Individuals who work within such psychological climates are less likely to believe in their superiors (Deci and Ryan, 1987), and consequently, franchisees should be less likely to perceive that a future-oriented sense of give-and-take exists between them and their franchisors when they experience excessive external-imposed pressure. H5: As a component of the psychological climate associated with franchising channel systems, pressure should negatively influence the degree of solidarity present in the franchisor-franchisee relationship. RECOGNITION. As a dimension of psychological climate, recognition reflects the rewards that follow from franchisor awareness of their franchisees' successes. Receiving such overt acknowledgements of one's appropriate behavior likely imbues franchisees with enhanced feelings of security and belonginghess to the franchising system, whereas making them feel appreciated and inwardly good about themselves. Each perceptual outcome is associated with constructive and open and/or trustful behaviors toward others (Hart, 1988). When properly administered, the dispensation of recognition also provides franchisors the opportunity to implicitly reinforce the sense that there is an interdependence between franchisors and franchisees whereby providing evidence that norm-adherent behavior is rewarded. Recognition should positively affect the internal structures of franchising channel systems. H6: As a component of the psychological climate associated with franchising channel systems, recognition should positively influence the degree of solidarity present in the franchisor-franchisee relationship. A summary depiction of the direction of the hypothesized relationships is given in Figure 1.

Contributions of the Study An underlying sense of dyadic continuity is imposed by the substantive presence of solidarity. The presence of solidarity within franchising channels should contribute meaningfully to the maintenance of a successful franchising system; thus, insight into the nature of the effects of psychological climate on solidarity in franchising channels would be useful to franchisots. The information gained from investigating these hypothesized relationships will help franchisors adapt their behaviors PSYCHOLOGICAL CLIMATE CONSTRUCTS AUTONOMY COHESiVENESS~ FAIRNESS INNOVATIVENESS- -

-

+ + ~

~

DEGREE OF SOLIDARITY

RECOGNITIONPRESSURE~

FIGURE 1.

Direction of Hypothesized Relationships.

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in ways that facilitate relational exchange by shaping the prevailing psychological climate within their franchising systems. Even if it is not absolutely imperative to the success of franchising systems that franchisees and franchisors maintain an ongoing commitment to their exchange relationship, such commitment is still a matter of considerable importance. For example, if a sense of mutual commitment to their relationship is not established, franchisees and franchisors will each squander time and resources on activities aimed at defending themselves from one another. The performance of the entire franchising system would suffer as a result.

Methods

Sample A self-administered questionnaire was distributed to a stratified random sample of franchisees operating in two southeastern states of the United States. The sampling domain encompassed four primary metropolitan statistical areas (PMSA), each contiguous to a major city. A stratified random sampling procedure was used to decrease the standard error of the estimator beyond what would have been the case with only simple random sampling (Kinnear and Taylor, 1991). The effect with stratified sampling is that we can increase the precision of our estimates with the same number of respondents that could have been developed through any unstratified sampling procedure. The first stratum assured that each franchise system category had an equal chance of inclusion by randomly selecting franchise categories from the FranchiseOpportunities Handbook

85

(U.S. Department of Commerce, 1991). Then, a comprehensive list of franchises for each category was assembled from the most recent telephone directory. The directory was regional, accommodating each PMSA. Trained interviewers then randomly selected and contacted 400 franchisees, attempted to secure agreement to cooperate and left the measurement instrument with the franchisees. This procedure allowed the franchisees to address the instrument at their convenience. Only the responses of franchise owners or primary managers who had been affiliated with their francbisor for more than 1 year were used in the analysis. This constraint provides sufficient time for meaningful normative patterns to have developed. Based on these criteria, the sampling procedure yielded 318 usable questionnaires (79,5% response). The large number of randomly selected organizations facilitates the opportunity to generalize the results. The number of responding franchises emanating from within each franchising category is given in Table 1. The generally balanced representation of those franchises sampled that is evident across the respective franchise product/service categories also provides support for the generalizability of these results.

Operationalization of Measures PSYCHOLOGICAL CLIMATECONSTRUCTS. Twenty-eight, Likertlike statements were used to measure the psychological climate within the franchising channels. Each item was taken from Koys and DeCotiis's (1991 ) inductive measures of psychological climate; however, in certain instances, items were modified slightly to more appropriately describe circumstances and behaviors

Table 1, Categorization by Product/Service Type of Responding Franchises

Product/Service Category Advertising Appliances Automobiles Banks/Financial Services Bed and Bath Brick Communications Equipment Food/Beverage Gifts and Novelties Health Care Services Home Electronics Hospitality (HoteLs/MoteLs) Industrial Suppliers Insurance Interior Design/Carpeting Office Machines/Supplies Pets (Retail) Printing Real Estate Retail Clothing Research Lab Services Sports Equipment/Services Total

Example of Franchise Outlet Money Mailer, Inc. Colortyme, Inc. Check X-Change Voice-Tel Enterprises McDonald's Corporations Dial-a-Gift Pearl Vision, Inc. Radio Shack Holiday Inns Worldwide Property Damage Appraisers, Inc. Decorating Den Tom's Franchise International Petland Alphagraphics Real Estate ACA Joe, Inc. Play It Again Sports

Number of Franchises Responding

Number of Franchises Contacted

8 12 15 21 6 5 18 14 10 28 2O 5 33 19 16 17 4 12 14 18 7 16 318

11 15 20 25 7 8 22 17 16 36 24 6 41 23 19 20 4 15 19 23 8 21 400

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Table 2, Final Factor Structure for Psychological Climate Scales Scale Name and Items Innovation My franchisor encourages me to find new ways around old problems My franchisor encourages me to develop my own ideas My franchisor encourages me to improve upon its methods My franchisor talks up new ways of doing things My franchisor likes me to try new ways of doing things Pressure 1 have too much work and too little time to do it The franchise arrangement provides a relaxed working environment I feel like I never have a day off In this franchise, too many people get "burned out" by demands of the job Cohesion In this company, franchisees pitch in to help each other out In this company, franchisees take a personal interest in each other There is a lot of team spirit in this company Franchisees tend to get along well with each other I feel like I have a lot in common with other franchisees Recognition I can count on a pat on the back when the franchise performs well The only time 1 hear about my franchise performance is when 1 make a mistake My franchisor knows what my strengths are and lets me know it My franchisor is quick to recognize good performance Autonomy I organize the franchise as I see fit I set the work standards for my franchise I make most of the decisions that affect the way my franchise performs I schedule my own work activities I determine my own operational routine Fairness l can count on a fair shake from my boss The objectives my franchisor sets for me are reasonable If my franchisor terminates a franchise relationship, the franchisor was probably at fault My franchisor does not play favorites

F1

F2

Factor Loading F3 F4

F5

F6

Alpha Coet~cient 0.831

0.812

0.222

0.181

0.093

0.076

0.199

0.730

0.017

0.198

0.089

0.133

0.334

0.713 0.621

0.237 -0.190

0.045 -0.124

0.449 0.055

-0.084 -0.141

0.154 0.237

0.601

0.199

0.249

0.045

0.270

0.273

0.022

0.581

0.035

0.135

0.167

0.099

0.073 0.249

0.562 0.522

0.129 0.032

0.271 0.338

0.031 0.341

0.119 0.077

0.119

0.518

0.284

0.084

-0.198

0.201

0.763

0.713 0.051

0.107

0.692

0.083

0.111

0.213

0.339 0.091 0.137

0.167 0.073 0.141

0.630 0.602 0.599

0.231 0.057 0.237

0.022 0.174 0.201

0.031 0.301 0.192

0.172

0.073

0.446

0.117

0.171

0.093 0.737

-0.099

0.123

0.213

0.601

0.129

0.093

0.167

0.101

0.124

0.560

0.008

0.045

0.051

0.190

0.049

0.508

0.237

0.142

0.115

0.386

0.316

0.468

0.017

0.284

0.089 0.173

0.249 0.187

0.027 -0.098

0.154 -0.110

0.692 0.690

0.181 0.132

0.054 0.045 0.101

0.053 -0.088 0.129

0.315 0.267 0.084

0.055 0.241 -0.107

0.503 0.489 0.461

-0.022 -0.129 0.154

0.008

-0.048

-0.260

0.142

0.091

0.730

0.270

0.073

0.049

-0.016

0.081

0.622

0.036 0.290

0.410 0.221

0.313 0.107

0.217 0.310

0.184 0.320

0.544 0.471

0.703

0.691

germane to franchising channels. These modifications involved substituting the term "franchisor" for the term "boss" or "organization" within the statement itsel[ The franchisees were asked to evaluate the extent to w h i c h each statement appropriately characterized their franchising system's channel climate using a s e v e n - p o i n t scale that ranged from 1 - S t r o n g l y Disagree to 7 - S t r o n g l y Agree. Each of the psychological climate dimensions were subjected to a m a x i m u m likelihood factor analysis using the SPSSX statisti-

cal package. The factors extracted f r o m this p r o c e d u r e could be appropriately labeled as innovation, pressure, cohesion, negotiation, autonomy, and fairness. W i t h four exceptions, only those items loading greater than 0.50 w e r e included in the final solution. O n e item, w h i c h read "My franchisor uses me as an example of what to do," failed to load at an adequate level on the recognition factor, and thus was eliminated from the final factor solution. Coefficient alphas (Cronbach, 1951) ranged from 0.831 to 0.691, p r o v i d i n g general s u p p o r t for the internal con-

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Table 3. Franchising Channd System Solidarity Factor Loading

Scale Name and Items

Solidarity My franchisor is just like other franchisors I expected a "close" relationship, but there was no specific expectation that our franchising relationship would extend beyond our contractual obligations My relationship with my franchisor could be better described as an "arms length negotiation" than a cooperative effort

Alpha Coefficient

0.728 0.717 0.581 0.537

sistency of the measures. The size of these alphas were comparable to those derived by Koys and DeCotiis (1991). Summated scales based upon the derived factors provided the independent variables used to test the hypotheses. The psychological climate items, along with their loadings and alpha coefficients, are shown in Table 2.

the discrete version of solidarity as compared to the intertwined relational context of solidarity, Because disagreement with the items signifies the presence of the franchising channel, solidarity norm preserving this particular exchange relationship, each item was reverse coded.

SOLIDARITY. Three items taken from the Kaufmann and Stern (1988) solidarity scale were modified for use. The relational norm of solidarity should be viewed as focusing on the perpetuation of a unique and ongoing franchising exchange relationship. If the relational, as opposed to the discrete, form of the solidarity norm characterizes a channel relationship, then the fruitful maintenance of the relationship itself takes precedence over any conflict that may be associated with individual transactions. The Kaufmann and Stern (1988) items are designed to capture three dimensions of solidarity. Each item was composed in the discrete form. Because the items were altered to fit the franchising domain, they were subjected to a principal components, rather than confirmatory, factor analysis. Here, the modifications involved changing the context of the items from a generic to a franchising-specific setting. A single solidarity factor emerged from the analysis and the summated scale based upon these items provided the dependent variable. The details associated with this analysis were consistent with those observed by Kauffman and Stern (1988) and are shown in Table 3. In the emergent solidarity scale, the first item focused on the uniqueness and the importance as an exchange partner of the franchisee's franchisor. The second item captured the franchisee's expectation that this will be a continuing relationship. The final item addressed the detached transactional focus of

Results The correlations among the psychological climate dimensions were, primarily, small (see Table 4). Because none of the bivarlate correlations among the psychological climate dimensions approached 0.8, it was safe to conclude that multicollinearity was not a major problem precluding the appropriate use of regression (Lewis-Beck, 1980). The evidence suggested there was little possibility that any extant interactions among the dimensions critically influenced the regression results. Multiple regression analysis was then used to test the hypotheses concerned with whether the degree to which franchisees characterized their relationships with their franchisors as low (discrete) or high (relational) in solidarity would display significandy different perceptions of their franchising channel system's psychological climates. The analysis was conducted using the SPSSX package and revealed that a statistically significant relationship exists between five of the six psychological climate dimensions and franchisee perceptions of franchiseefranchisor solidarity. Franchisee perceptions of their franchising channel's cohesiveness,fairness, innovativeness, and, recognition were significantly associated with the level of solidarity perceived to be present in their franchising channels (supporting H2, H3, H4, and H6, respectively). Franchisee perceptions of autonomy were also

Table 4. Correlation Matrix: Psychological Climate Dimensions Psychological Climate Dimension

1 2 3 4 5 6

Autonomy Cohension Pressure Recognition Fairness lnnovativeness

Mean Value"

5.77 5.05 4.08 4.57 4.74 4.80

1

0.09 0.06 0.03 0.17 b 0.12 b

2

0.02 0.06 -0.18 b -0.33 b

aBased on a 7-pointscale with 1-indicating strong disagreementand 7-indicating strong agreement bSignificant0.05 lever

3

0.04 --0.08 0.01

4

0.14 b 0.13 b

5

0.24 b

6

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marginally associated with channel solidarity (partially supporting HI). No relationship was observed between franchisee perceptions of pressure and the degree of solidarity present in their respective franchising channels (failing to support H6). This final result was, of course, unexpected. An explanation may lie in the comparatively low mean value associated with the pressure construct (see Table 4), which suggests these franchisees generally did not perceive the presence of excessive pressure without their franchising channel climates. In turn, this may demonstrate that as semi-autonomous, presumably entrepreneurial-oriented businesspeople, most franchisees understand and tacitly appreciate that some baseline level of pressure will always accompany the franchisee role. Such pressures often emerge from within the individual, and franchisees may be able to use them as an intrinsic motivational force. Had those sampled generally encountered greater externally-imposed pressures in their franchising roles, their senses of self-governance would likely have been challenged and/or violated; however, the results associated with the autonomy construct indicated this was not the case. Had the psychological climate perceptions been reversed (i.e., higher pressure and lower autonomy), considerably more strain would likely have eventuated within the franchisee-franchisor dyad. Such a circumstance likely would have negatively affected the presence of solidarity. Based on the size of their beta weights, the psychological climate dimensions exerting the most influence on channel solidarity were, in descending order: recognition, fairness, innovativeness, cohesiveness, and autonomy; but, recognition exerted the most influence by a wide margin. The mean values indicated that, without regard to the psychological dimensions' influence on solidarity relationships, this sample was most likely to perceive their franchisors as willing to grant them autonomy and to operate in a cohesive manner. Conversely, across the solidarity categories, these franchisees were least likely to perceive their franchisors as willing to confer recognition or Table 5. Test of Relationship Between Solidarity and

Psychological Climate in Franchising Channels Psychological Climate Construct Recognition Fairness Innovativeness Cohesiveness Autonomy Pressure Product/Service Classification a Multivariate F-test = 23.98 Adjusted R 2 ~ 0.3852

Beta 0.369 O. 173 0.165 0.145 0.133 -0.037 0,030

T 5.16 2.64 2.08 1.99 1.86 0.51 0.59

p 0.000 0.008 0.032 0.044 0.063 0.605 0.554 0.000

"To account for the possible influence of an individual franchising unit's productorientation or service-orientation, a dummy variable was introduced into the regression equation Introducing this variable failed to meaningfully increase the explanatory power of t h e original model ( R 2 - 0.3798 without the dummy variable), nor was the product/service orientation of the franchise significantly related to franchisor-franchisee solidarity.

treat them fairly. These mean scores, however, were generally more favorable than unfavorable. The overall mean values also suggested this sample felt their franchising channels were relatively amenable to innovative franchisee activities. The beta weights, t-values, and significance levels associated with this analysis are shown in Table 5. The sample upon which the prior analysis was based captured and aggregated several different broad categories of franchising systems. The nature of the analysis sample consequently begged the question of whether the product-oriented or serviceoriented nature of the franchises sampled influenced the relationship between psychological climate and solidarity in franchising system channels. This conjecture follows from the following circumstances: It is known that services are essentially performances. Further, because they are so labor intensive, it is likewise known that the quality of service homogeneity across individual providers and distinct franchising units is sometimes difficult to attain. The fact that standardization and quality are rather more difficult to control in service-oriented franchise settings implies that certain aspects of the relationship between franchisees and ffanchisors could systematically differ as compared to product-oriented franchise settings. It was thus appropriate to account for possible influence of the franchise unit's product-oriented or service-oriented nature on franchisee-[ranchisor solidarity in the study. This was accomplished by introducing a dummy variable adjusting for the product/service dichotomy into the regression equation; however, introducing this new variable failed to meaningfully increase the regression model's explanatory power, nor was the product/service orientation of the franchises significandy related at the univariate level to franchisor-franchisee solidarity.

Discussion The franchising dyad (or series of dyads across a franchising system) must jointly maintain quality control, implement plans, and foster creative ideas, practices and solutions appropriate to local market conditions for their mutual gain; however, the propensity toward conflict in these and other matters is a fact of the human condition. Complete agreement between franchisors and franchisees over any sustained period is almost certainly unattainable. In a broad sense, the human propensity toward conflict is simply something to which franchisors must continuously accommodate themselves (Schul and Babakus, 1988). The absence of solidarity will not destroy franchising relationships because they are still bound by contractual constraints, but the likelihood of successful ongoing contractual behavior is diminished without the presence of the relational form of solidarity. Channel inefficiencies result when there is movement away from relational exchange because discrete relationships are characterized by limited communications, narrower content, and greater opportunistic behavior by exchange partners (John, 1984). Successfully starting or managing a franchising system can be compared to a successful marriage in that the task requires constant commitment and continual corn-

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promises by the involved parties. Under channel conditions of dyadic commitment and ongoing compromises for the sake of the longer view (e.g., the longer run orientation that is inevitably associated with the relational form of solidarity), the human propensity toward conflict need not be any more dysfunctional than any other limiting factor associated with our human nature. The psychological dimate perceptions held by franchisees that frame their exchange relationships with their franchisors may affect the level of commitment (above and beyond contractually-obligated commitment) that franchisees are willing to invest in this relationship, and consequently, toward the franchisors themselves. The level of a subordinate's commitment to a leader is primarily contingent upon the leader's behavior (Boss, 1978). The franchisor usually occupies the more powerful role in franchising systems (Strutton et aL, 1993a). These factors suggest franchisors can fruitfully introduce activities intended to enhance franchisor-franchisee solidarity. The view that psychological climates exercise a substantial influence on employee work attitudes and behaviors is a foundation of managerial thought dating to Lewin's (1951 ) conceptualization of behavior as a function of individual variables and a person's psychological environment. The psychological climates of organizations are primarily created by managerial actions (Bateman and Organ, 1983). The psychological climate perceptions held by employees can be partially shaped through altering common structural characteristics of organizations (Schneider, 1975). Psychological climate is a manageable construct (Day and Bedeian, 1991). The results of this study support a tentative conclusion that the degree to which franchisees perceive the presence of solidarity in their franchising system's channel relationships can be shaped by franchisors if franchisors act to influence the psychological climate that prevails within the channel system. Specifically, five dimensions of a franchising channel's psychological climate were observed to be significantly associated with franchisorfranchisee solidarity. Broadly stated, the results implied that franchising channels distinguished by high levels of recognition, fairness, innovativeness, cohesion, and autonomy should confer within franchisees enhanced feelings of solidarity toward their franchisors. The research of others (Macneil, 1980; 1983; Kauffman and Stern, 1988) implies that, ceterus paribus, franchisees will be more likely to view their franchising relationship as unique, important in and of itself, continuous in nature, and worthy of preservation when their channel relationships are characterized by the relational norm of solidarity. Implicit support was developed that suggests the cultivation of franchisee solidarity within their franchising relationship is a matter of need satisfaction, those needs are related to the specific franchisee concerns embodied within the set of significant psychological climate constructs. Franchisee perceptions of their channel system's recognition exercised the most influence on solidarity. As a psychological climate construct, recognition is associated with the presence of rewards, feedback, and opportunities for growth and advancement within the franchising system. Each factor reflects the franchisor's acknowledg-

ment and appreciation of their franchisee's efforts and successes. Franchisors can initiate a variety of actions when attempting to promote feelings of belongingness and security among their franchisees. These actions generally involve the allocation of tangible and intangible rewards, with the details of these rewards obviously varying according to specialized circumstances. Perceptions of fairness exerted the second greatest affect on the presence of the relational dimension of solidarity. Perceptions of fairness are influenced by the objectivity of the franchising system's reward and disciplinary procedures. Franchisors could favorably affect franchisee perceptions of fairness by acting consistently, truthfully, respectfully, and equitably in all associations with their franchisees. Franchisors could also provide substantive evidence of procedural and outcome justice in matters relating to their reward and/or disciplinary systems. Franchisee perceptions of the innovativeness and cohesiveness associated with their franchising channel's psychological climate also exercised substantial and approximately equivalent effects on dyadic solidarity. As a psychological climate constuct, innovation captures an organization's flexibility and its willingness to accept risk and new ways of performing job tasks. To facilitate innovativeness, franchisors could, where possible, manage by consensus and through a style that respects the feelings and inputs of others. Again, where possible, franchisors could also administer their franchisees in an open-minded fashion. Logically, incorporating such a managerial style should not represent a major dilemma for most franchisors because, in many franchising systems, franchisees will enjoy richer and more accurate and timely insights due to their proximity to the issues in question. Granting franchisees the opportunity to act more innovatively should also increase their involvement with their work, which yields its own rewards. Cohesive channels are distinguished by their member's 1) tacit acknowledgement of each franchising unit's inherent connectedness (with and across levels), 2) esprit, 3) work-group cooperation, and 4) an absence of conflict. Franchisors can likely increase channel cohesiveness by handling conflicts quickly, being available to, and cooperative with franchisees, rewarding pro-organizational behaviors and acting as positive role models. Franchisee perceptions of their autonomy within the franchising channel exercised relatively little influence on their perceptions of solidarity. Autonomy primarily reflects franchisor's willingness to delegate responsibility to those occupying subordinated positions. Perceptions of the level of autonomy present within a franchising system can be enhanced simply by loosening the reins of franchisees; but common sense suggests that this is not a universally appropriate action because of the widely-shared need for standardization, consistency, and quality control within franchising systems, and irrespective of this consideration, franchisee perceptions of the level of autonomy were already high and only marginally significant. It did not appear appropriate to offer any recommendations regarding franchisor manipulations of the autonomy construct. The franchisor's ability to unilaterally specify franchisee actions has been continually eroded by legal constraints (Hogan, 1992). This trend implies franchisors will have to increasingly

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rely on measures aimed at inducing voluntary franchisee cooperation to achieve necessary levels of franchisor-franchisee coordination and cooperation (Guiltinan et al., 1980). If these ends are to be achieved, franchisors need to understand more about the factors that serve to foster franchisor-franchisee commitment. The tentative insights derived in this study regarding the relationship between psychological climate and solidarity in franchising system channels should be useful in this regard. The cross-sectional nature of the data limits the research methodology to an analysis of correlations among contemporaneous variables; thus whereas the results of our analysis were consistent with the causal linkages hypothesized to exist among the variables of interest, they alone are not sufficient to establish those linkages. In addition, other issues relating to the relationships explored remain unanswered. For example, the mediating influence of power should be addressed in future research. Certainly, the specific nature of the influence of franchise- or franchise-system characteristics (e.g., such highmargin versus high-turnover or differences in annual sales volume) on psychological climate, solidarity, and the relationships between the two constructs needs to be further evaluated. Because the degree of respondent's perceived solidarity might have affected their evaluations of psychological climate, a two-way relationship may exist between the two constructs. This possibility should also be addressed in the future because it could potentially bias the estimator. A three-stage least squares model (e.g., simultaneous equations) could be used to investigate these relationships in future research; however, other exogenous variables beyond those considered in this study would have to be considered in the analysis to have a fully identified model. The issues explored in this study might also examined through a research design that captures the views of each side of franchising channels.

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