Principals and their car dealers
what do targets tell about their relation?
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Author
Contributions
- Cardinaels, Eddy, author - Contributor
- Zhang, Jingwen, author - Contributor
- Harvard Business School - Contributor
Publication
2014 - Harvard Business School, Boston, Massachusetts
Language
English
Word Count
11,500 words, Guess
Page Count
46 pages
Identifiers
- OCLC Control Number879573216
- Open LibraryOL43083439M
Description
In this study we describe target setting and target achievements for a car dealership. Car dealers are eligible for a discount on the purchase price conditional on their achieving the sales targets set by the franchisor. 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 interpret our findings.
Subjects
Series Statement
- Working paper / Harvard Business School -- 14-107
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