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Economic Analysis: Theory and Practice

Analyzing the specifics of transaction costs of opportunism in franchising

Vol. 15, Iss. 7, JULY 2016

PDF  Article PDF Version

Received: 24 September 2015

Received in revised form: 5 April 2016

Accepted: 27 April 2016

Available online: 27 July 2016


JEL Classification: D23, D86, L26, M20

Pages: 128-141

Neopulo K.L. State University of Management, Moscow, Russian Federation

Kobylyanskii V.I. Pulmonology Research Institute, Federal Medical and Biological Agency of Russia, Moscow, Russian Federation

Kobylyanskaya A.V. State University of Management, Moscow, Russian Federation

Importance Costs are one of the most important but rather understudied part of institutional structure of economy. They represent the key problem of business, especially of franchising being one of its forms. Cost optimization predetermines the improvement of franchising and overall economy.
Objectives The study aims to clarify the specifics of transaction costs of opportunism in franchising through comparative evaluation of transaction costs of opportunism in the economy as a whole and in franchising in particular.
Methods In the study, we applied the method of comparative and synthetic analysis.
Results The analysis disclosed significant differences of transaction costs of opportunism in franchising as compared to those in the economy as a whole. These differences are due to such features of franchising as the specificity of economic cooperation, as well as a number of time, financial and legal aspects. This form of cooperation, where the main element is a partnership between the franchisor and the franchisee, is characterized by durability and interdependence. From the institutional economics perspective, it is a relational contract, which gives a special emphasis to transaction costs of opportunism in the franchise system's functioning.
Conclusions and Relevance Transaction costs of opportunism in the economy and in franchising have significant differences. However, the differences are not taken into consideration. This implies impairing the efficiency of franchise system's functioning and, therefore, of the overall economy, which requires optimization.

Keywords: transaction costs, opportunism, optimization, franchising


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