We show that car dealers franchisees who exclusively deal in cars of the brand offered by the franchisor receive easier targets and are more likely to exert effort in achieving their targets compared to dealers who also acquire brands outside of the franchise network. As a consequence the exclusive dealers receive a relatively bigger cut of the total amount of discounts that dealers are offered conditional on their achieving sales targets set by the franchisor.
We explain these results in terms of how much franchisors and franchisees believe that their relations will last or will be intensified in the future. We leverage on relational contracts theory to develop our predictions and Chinese Overseas America Number Data interpret our findings. Download working paper http hbs faculty Pages download.aspx name .pdf pdf The Contaminating Effects of Building Instrumental Ties How Networking Can Make Us Feel Dirty By Casciaro Tiziana Francesca Gino and Maryam Kouchaki ABSTRACT—To create social ties to support their professional or personal goals people actively engage in instrumental networking. we posit that this intentional behavior has unintended consequences for an individual s morality.
Unlike personal networking in pursuit of emotional support or friendship and unlike social ties that emerge spontaneously instrumental networking in pursuit of professional goals can impinge on an individual s moral purity a psychological state that results from viewing the self as clean from a moral standpoint and make an individual feel dirty. We theorize that such feelings of dirtiness decrease the frequency of instrumental networking and as a result work performance.