Beyond Managerial Opportunism: Supplier Power

and Managerial Compliance in a Franchised

Marketing Channel Jonathan E. Brill
TEMPLE UNIVERSITY

A groundbreaking contribution to transaction cost analysis was advanced

Like any theoretical perspective, transaction

cost analysis in

byJohn (1984) who recognized that managerial opportunism is a behavioral

not without weakness. Robins (1987). for one, has discussed

variable requiring theoretical explanation, not an exogenous constraint to

several assumptions incorporated by this perspective that do

not appear to deserve the axiomatic status they are given. That
managers are inherently opportunistic should also be added
to such a discussion. Indeed, in a groundbreaking
study, John
(1984) noted that the transaction cost research program has
adopted this view in the face of a large body of research which
suggests that opportunism is not inherently characteristic of
human behavioral interactions, especially when relationships
continue over time. Beginning from this basis, John (1984) proposed and tested a theoretical model based upon arguments
that power and organizational structure are important antecedents of managerial opportunism. By recognizing the need to
understand opportunisms antecedents and by offering a plausible explanation for when and to what extent opportunistic
behavior can be expected in marketing channel relationships
involving franchised systems of retail distribution, John (1984)
has made an important contribution to the transaction cost an!ysis theory.
Nevertheless, several aspects of Johns (1984) modei seem
worthy of further examination and raise important questions.
Two of the paths between the latent variables included in the
structural equation predicting opportunism, the path between
coercive influence attributions and opportunism and that between bureaucratic structure and opportunism, are not significant. Another structural pathway - that between coercive influence attributions
and attitudinal orientation-is
also not
statistically significant. (Refer to Figure 2 in John, 1984, p.285,
for details). The presence of these multiple non-significant paths
between latent constructs certainly challenges ones confidence
in the structure of Johns model.
A second, and perhaps even more important, issue is the
models treatment of supplier power. Johns (1984) model posits
that French and Ravens (1959) five bases of social power are
distinct despite wide recognition that these categories of influence are overlapping.
not murudy exclusive (e.g., see Kipnis.
richmtdt, and Wilkinson, 1980; Raven, 1974). Also disconcerting is that the model posits that some of these bases affect
managerial attitudes whereas others affect managerial behaviors,
a hypothesis first suggested by Raven and Krugkmski (197@).
when convincing empirical evidence supporting this typothe-

be assumed and imposed upon the marketing channel network. However,

it is argued that severalfeatures ofJohnsfina1 modeipredictingopportunism
seem problematic. An alternative model, one that explains supplier power
and managerial opportunism-the

latter being viewed as an aspect of the

broader and more common social psychological construct o/compliance-is

proposed and operatlonulrzed using]ohns (1984) indicator measures. Then,
usingJohns (1984) published data, this model is subjected to stathtical testing
and modt$cation through analysis ojcovariance structures. Results suggest
that the proposed model is superior tojohns with respect to goodness-of+
and other important modeling criteria.

Conclusions, manage& implications,

study limitations, and directionsjorficture

RES

research are discussed.

J BUSN

1994. 30.211-223

ncluded among the central constructs posited by the theory

of economics of organization structure known as transaction
cost analysis (Williamson, 1975, 1981) is managerial-opportunism. Opportunism in the context of transaction cost theory
is to be distinguished from strategic opportunism. Whereas the
latter describes a managers ability to remain focused on longterm objectives while staying flexible enough to solve day-to-day
problems and recognize new c?portunities (Isenberg, 1987,
p.92) managerial opportunism refers to the behavior whereby
managers distort or conceal information, or refrain from acting
as promised, expected, or obliged in hope or anticipation of
re:tizing a benefit for themselves or their firm at the expense
of another. Not all managerial efforts to realize advantage
constitute opportunistic behavior, however. Consistent with
Williamsons (1975, p. 6) definition of self-interest seeking with
guile, duplicity must play a central role in shaping the behavior.
Managerial opportunism is undesirable, then, because it involves
the consumption of sidck resources that might have been used
to further the objecnves of the channel network or a particular
dyadic relationship within it.
Addresscorrespondence roJonathan E Br~ll. Ph D ,303OlWedgewood Drwe.
Solon. Ohw 44 139
Journal of Busmess Research 30, 21 I-223 (1994)
0 Elsewer Science Inc ,
655Avenue of the Americas, New York, NY 10010

ISSN 0148.2963f9467.00

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J Bum Res
?994:30:211-223

sis has yet to be reported. Indeed, Johns (1984) model tests this
hypothesis, and it is found to exhibit a relatively poor fi: with
the data, In the absence of stronger evidence, then, it seems rp?sonable to consider other plausible models where the Raven
and Kruglanski (1970) hypothesis is not incorporated in the
explanation of opportunism.
Finally, Johns (1984) model predicts opportunism in a behavioral vacuum, failing to link it conceptually to other behavioral constructs that have been established in social psychology. This seems odd in view of the fact that John (1984) himself
has not only cited lack of cooperation, such as the non-performance of promises or obligations, as an example of opportunism
(p.ER), but also has argued that aggressive retaliarnry actions
in workplace tend to manifest themselves in opportunistic behaviors Because cooperation and aggressiveness are familiar
concepts in social research, these observations suggest that a
more general model, one in which opporrunism is viewed as
an aspect of a broader class of behavior, may be possible.
Consistent with these issues, the initial motivation for the
present study was to use Johns (lJ84)
data set to develop and
test an alternative model that would explain managerial opportunism and supplier power while viewing opportunism as an
outcome or aspect of a more familiar social psychological construct, compliance. Recognizing that John (1984) collected data
from managers of oil company gasoline service station franchises,
this study seeks to understand the antecedents of these variables in the context of a franchised marketing channel system.
Though this study is limited in this way, other studies concerned
with supplier power have provided evidence that marketing theories may hold across both franchise and nonfranchise channel systems (Hunt and Nevin, 1974; cf. Lusch, 1977). By featuring a model in which compliance predicts supplier power and
managerial opportunism, the latter being an element of transaction cost analysis ontology, this study contributes to marketing knowledge by providing a connection between transaction
cost analysis and theories of social power, a traditional construct in marketing channels research.

Theoretical Development
Compliance refers simply to the overt behavioral adherence
to rules or norms (Festinger, 1953; Freedman, Wallington, and
Bless, 1967; Froming and Carver, 1981; Gray and Robl>rtsGray, 1979; Kiesler and Kiesler. 1969). It is to be distinguished
from conformity, which may be defined as compliance eciompanied by attitudinal acceptance of these norms (Allen, 1965;
Festinger, 1953; Kiesler and Kiesler, 1969; Zajonc, 1968). Certainly, behavioral adherence to norms may be observed with
varying degrees. so a useful way of conceptualizing the compliance construct is to think of it as a contirlllous variable, one
that ranges from adherence without any apparent resistance
or objection whatsoever to the extreme opposite of this, aggressive or combative resistance. Included at more modcratc
positions alongthis contmuum would be acts of foot-dragging.

J.E. Brill

avoidance or evasion, and misrepresentation

or deceit. In the
context of the business manager, this conceptualization makes
it &ar that cc,uperation and oanortunism
may be considered
1
exarr&
or aspects of compiiant behavior, with cooperation
representing a position located along the high compliance
half of the continuum and opportunism lying nearer the opposite end.
The application of a general systems approach to theory construction suggests that managerial compliance may be seen to
have its antecedents in the environmentai variables that confront the manager. General systems theory (Bo*llding, 1956;
Miller, 1955; von Bertalanffy, 1950) posits that the environment has profound influences on the behavior of all systems
existing within it. This is necessarily so because the environment defines the range of all possible inputs (either information or matter-energy)
that might enter and interact with its
systems and the systems within them, and places limits on what
activities constitute acceptable system outputs (Berrien, 1968;
Miller, 1978; von Bertalanffy, 1968). In short, the environment
represents a set of restrictions, and the chailenge to the
researcher wishing to explain managerial behaviors such as
compliance is to identify those dimensions of the managers
world that place limitations on him or her. In the context of
interfirm relationships in a marketing channel, this idea leads
to the concept of relational restrictiveness, the constraints faced
by managers that define and limit: (1) the information they receive in making decisions, (2) the roles they are expected to
perform, and (3) the behavioral responses to these inputs they
exhibit or are permitted to exhibit in these roles.
To be sure, much research attention has focused on associating variables representing dimensions of relational restrictiveness with various aspects of managerial compliance. In these
studies, relational restrictiveness most often has been represented by one or more variables measuring aspects of tureaucratic structure present within the managers organization. Typical operationalizations
rely upon the three dimensions of
bureaucracy inferred from the Weberian model: centralization,
the loci of authority in operations and participation in deasionmaking; formalization, the degree of specification in operational
procedures; and control, the extent of surveillance and rule enforcement imposed. These measures are believed to be intercorrelated positively (Dewar and Werbel, 1979; Hage and Aiken, 1967) and are widely used and advocated for organizational
research (Aldrich, 1976; Child, 1972; Marrett, 1971).
In this tradition, the association between compliance and
relational restrictiveness is evidenced by studies associating high
levels of centralization with increased incidences of aggressive
behavior (Berkowitz, 1965) and lower levels of communication
and information sharing (Simpson and Galley, 1962). A more
obvious connection has been reported by Julian (1966) who
found hospital patients to be less compliant when restrictive
cont;,Jl:, at A cuerclve tacncs are used in the administration of
hospttal rules and procedures. Such observations may be Interpreted to sugcst that the presence oflunltat~ons on hchavior
serves as a source of frustration, lostcring resentment and

Beyond Managerial Opportunism

provoking a disposition toward rebellious behaviors. In the context of the franchise manager, then, the following hypothesis
may be seen to follow:
i4: increased levels of relational restrictiveness imposed by
suppliers on franchisees are associated with reduced
compliance among franchise managers.
The construct known as morale represents a class of attitudinal variables that also has been assoctated with relational restrictiveness. Though morale has been a somewhat elusive concept
to define, Lawton (1972) has suggested that morale consistently
is represented by three attributes in people. These include a
general sense of satisfaction or self-worth, a feeling that ones
personal needs and sense of identity are in congruence with
his or her environment, and an acceptance of ones circumstances that are not subject to ones control or influence. Hence,
high morale reflects successful organizational socialization
whereby the franchise manager accepts and is assimilated into
the culture of the franchise network.
As with measures of comp!ianre: several variables tapping
morale typically have been linked to relational restrictiveness
in studies concerned with bureaucratic structure. For example,
high centralization has been linked to decreased feelings of work
involvement and organizational fit (Simpson and Gulley, 1962).
Likewise, Aiken and Hage (1966) found high levels of centralization and formalization to be associated with alienation from
work (i.e., the feelings of dissatisfaction with career and professional development and of disappointment
in ones ability to
fulfill professional expectations) and with alienation from others
in the workplace. Such findings are consistent with the idea
that restrictions placed upon the franchise manager have a tendency to reduce his or her morale: by removing opportunities
for the manager to exercise judgment, relational restrictiveness
reduces the managers feelings of authority and responsibility
for business outcomes which, in turn, may be seen to become
manifest in feelings of reduced self-worth and sense of individual
identity. In view of this evidence and the accompanying rationale, then, the following hypothesis is suggested:
HZ: Increased !eveis of relational restrictiveness imposed by
suppliers on franchisees are associated with reduced
morale among franchise managers.
Managerial morale may also be seen to be related to managerial compliance. Theories of organizational socialization (e.g.,
see Caplow, 1964; Feldman, 1976,198l; Schein, 1968; Van Maanen. 1975) suggest a link whereby an organizations members
adopt organizational norms increasingly as their job-related attitudes become increasmgly congruent with those prescribed
by the organizational culture. Support for this proposition is
found in empirical studies as well. In jlt observational study
comparing two organizations, Dutton and Walton (1966) concluded that attitudinal congruence in objectives among interdepartmental personnel leads to increased cconeration and compliance, whereas incongruent attitudes promote the wlthholdmg
of mlormarlon, a form of (non)compliant and specifically op-

j Gum i&s
1~4:30:2 1 I-223

213

portunistic behavior. In addition, Smith (1977) found a positive relationship between compiiance to attendance rules and
levels of job sa:isfaction and company identification.
The lmderlying nature of the linkages among managerial
compliance, relational restrictiveness, and morale may be understood through a model whereby morale is seen to mediate the
influences of relational restrictiveness on compliance. Support
for this idea comes from severai writers concerned with understanding managerial behavior within organizations. Etzioni
( 1961) has proposed a general theory of managerial behavior
which posits that environmental
influences on behavior are
mediated by attitudes. In more specific and directly related discussions, it has been suggested that higher degrees of formahzation and centralization lead to frustration and dissatisfaction
which, in turn. create an aanosphere of suspicion, distrust, and
low morale that results in reduced cooperation (Dewar and
Werbel, 1979) and reduced compliance manifest by an increase
in aggressive behaviors that are typically opportunistic (John,
1984). Consistent with this thinking, and placed in the context
of a contractual franchise agreement where the manger must
surrender some degree of business autonomy and operational
control, lower levels of morale may be seen to result in reduced
compliance. Noncompliant behaviors, such as cooperation pro__-vided begrudgingly or managerial .+portunism,
may be seen
as a behavioral response whereby managers compensate for
their feelings of identity loss and reduced self-worth. That is,
noncomp!isnce provides the manager ways of demonstrating
his or her ability-however
limited or benign it may be-to affect business outcome, and these are used by the manager to
help restore his or her sense of self-worth and idennty. Thus,
managerial morale may be seen as the agent that first diagnoses
the relevant environmental influences and then prescribes the
appropriate level of compliance to be exhibited given the peculiarities of the work situation. Hence,
H3: The relationship between relational restrictiveness imposed by the suppher and managerial compliance among
franchisees is mediated by mora!e experienced by the
franchise managers.

Supplier Power
Another construct traditionally of interest in the study of
marketing channel relationships is social power, particularly
the power of suppliers. Much of this work has been reviewed
and synthesized by Gaski (1984). and several studies have investigated the role of power as it specifically pertains to franchise channel relationships. For example, using French and
Ravens (1959) typology, Hunt and Nevin (1974) first examined
the question of which power bases are used by franchisers to

achieve cooperation from franchisees, and then empirically

tested the differential effects of the use oteach power base upon
franchisee satisfaction In addition, Frazier and Summers (1986)
have studied the use of various power-based influence strategies m the automotive sales industry. This stream of research
has stimulated efforts aimed at construcring more general the-

214

1. E. Brill

J Busn Res
1994:30:21 l-223

ories of sources of power in channel systems (Gaski, 19%; cf.

Howell. 19871.
AS n~red by others (e.g.. Frazier, 1983). as salient feature

of the marketing channels literature is the rather consistent manner in which power has been conceptualized. Interorganizational
and channel researchers (e.g., El-Ansary and Stun, 1972; Etgr, 1977; Hunt and Nevin, 1974) have adopted the view that
power is an objective resource or inherent characteristtc of a
social actor, This perspective-one in which power typically
is defined as a potential force with definite magnitude that is
not only peculiar to a social actor, but also may be applied at
will by that actor for the purpose of directing behavior of
another-appears to be borne from the writings of theorists such
as Dahl(1957) and French and Raven (1959).
This aspect of the marketing literature seems most curious,
however, inasmuch as this conceptualization of power is but
one of two that are dominant in the broader social science literature. Indeed, several scholars (e.g., Cartwright, 1959; Pahng,
1989) have lamented that the concept of power has been the
subject of rather heated debate. In opposition to the power as
a resource conceptualization stands the alternative that power
is a subjective phenomenon (Bacharach and Bawler, 1976,198l;
Pruitt, i981). !n this view, power is the consequence of attributions made by involved socia! actors. It is therefore an aspect
of a relationship and peculiar to it, not a characteristic of the
actor.
This alternative view, power as a perception, is adopted it-1
the present study. While detailed discussion jastifying this departure from the objective resource conceptualization is beyond
the scope of this manuscript, many of the arguments supportive
of power as an attribution have been covered elsewhere (e.g.,
see BrZl, 1992; Cross, 1969; Pahng, ;989>. For now, it may
suffice to make two points. First, in channels research, power
has been measured using attributions of influence rather consistently (e.g., El-Ansary and Stern, 1972; Etgar, 1977, 1978;
Hunt and Nevin, 1974; John, 1984; Lusch and Brown, 1982;
Wilkinson, 1974); and, second, unlike the power as a chcracteristic resource perspective, the power as an attribution perspective is not burdened with the problem of justifying why
it is appropriate to measure an objective resource with attributions. Though El-Ansary and Stern (i972) have discussed this
question and provide arguments to support the use of subjective measures, adopting the view that power is a perceptual
phenomenon certainly has the advantage of being theoretically
more parsimonious simply because this conceptual challenge
is avoided completely. Hence, power may be conceptualized
and defined as the perceived ability or potential of a social actor
to influentc or control the behavior of another within a pen r&p
timhip
CJ~ context (Brill, 1992, p. 836, emphasis in the origin;il) and presumed measurable using attributions made by an
involved social pa:ty engaged in the exchange relationship.
Given this perspective, the concept of supplier power is appropriately viewed only as a social structural phenomenon, an
attributed aspect of a relationship between the franchisee and
franchiser. It follows from this that suppliers cannot and do

not possess power, Rather$anrhisors are cmgowered only when

and to the extent that the franchise manager attributes power to
them. Furthermore, because attributicns necessarily are derived
from social cues and experiences, supplier power may be predicted from-and, conceptually, it must be explained in terms
of-the theoretical social and structural variables invoked.
Hence, in the present study, supplier power may be seen as
an outcome of relational restrictiveness, managerial morale, and
managerial compliance.
In focusing on the relationship between relational restrictiveness and supplier power, it seems wise to reflect that, in all
social relationships characterized by economic considerations,
the ascendancy of one exchange parmer over another is a consequence of the status conferred upon the first party by the
second party who desires use or ownership privileges over the
economic resources commanded by the first party. That is, franchisees confer deference to their supplier, the franchiser, because *hey depend on the franchiser for the inputs used in operations. To be sure, some aspects of the ascendancy granted are
purely social in nature, governed by the sociai rules and customs
of proper business conduct in the society. Others, however,
are governed by the operational and procedural rules, in a sense
the social and political structure, specified for the intecfirm relationship in the franchise contract agreement. For example, the
more specific and restrictive the terms of this agreement are.
the more legitimate influence the franchiser has which, in turn,
can be exprcted to result in greater power attributed to the franchisor by the franchise manager. This expected positive correlation has been observed by Etgar (1976) who found insurance providers with stronger power bases to have increased
influence in the business practices of agents. However, this finding was in the context of a noncontractual
channel arrangement, so the present hypothesis extends this to the realm of
franchise systems.
Hq: Increased relational restrictiveness
of increased supplier power.

leads to perceptions

Supplier power may also be seen as a consequence of managerial morale. The essence of a franchise contract is that one
party, the franchisee, agrees to subordinate itself to another,
the franchiser. Because of this property, then, the franchise manager must necessarily attribute power to the supplier. It follows
that those who are sansfied with their membership status are
likely to recognize and embrace the reasons for the business
relationship. That is, managers with high morale, those satisfied
with and accepting of their social and organizational circumsances or business role, may be expected to perceive and acknowledge the franchisers power. Thus,
Hs: Higher levels of managerial morale lead to increased attributions of supplitr power.
It seems natural to associate comphance with power. What
however, IS the nature of the relation.
ship. Consistent with Bonoma; (I 976) analysis of bargained
cxchangc (e.g., market exchange) rclauonships, the existence
IS perhaps less obvious.

Beyond rvlsnagerial Qpportmism

of a bargained re~~onship suggests a mixed power system

where there is some degree of equality between exchange partners. In such systems, it is this equality that fosters the formation of behavioral norms and the setting of rules, and these are
adhered to by the parties involved because each party recognizes that compliant behaviors are in its own best interests.
frequent cooperation, and
Thus higher leve!s of compliance,
_
few attempts at dc s.eption (e.g., opportunism) suggest greater
interdependency and equality among the parries involved, and
this may be seen to translate ir,to less social power being attributed to the exchange partner.
H6: Increased levels of managerial compliance lead to reduced levels of power attributed to the supplier (franchisor).
While the hypothesized negativity in this relationship may
seem co~nterinmi~ve to some, it is worth noting that this prediction is plausible only when power is viewed as an attribution.
Those wh3 cornpLy do so because they see benefits to their
cooperation; managers high in compiiance, then, are not particularly likely to attribute then past compliant behaviors to
supplier power, but rather to their acceptance and internalization of the social norms (i.e., see their compliance as voluntary
choice). It is only when power is conceptualized as an objective resource that it becomes necessary to expect that supplier
power and managerial compliance be positively related.

In light of the preceding discussion,

the latent variable structure of the model depicted in Figure I is suggested. The signs
corresponding to the specified regression paths are included
to reflect the h~o~es~ed
directionali~ among the constructs.

1 %usnRes
1994:3&t* f-223

215

!t is worth noting that it is not necessary that the direct path

from relational restrictiveness to comphance be found signifi-

cant for Hypotheses #1 and #j to be supported. Hypothesis

#I suggests only that there is a negative association between
these constructs; it is Hypothesis #3 that suggests that this retationship is causal in nature. For Hypotl~esib#3 to be supported,
it is only necessary that tie paths from relational restrictiveness
to morale and from morale to compliance be found significant
Whether the path from re&onal restrictiveness to compliance
is significant simply determines the strength of the hypothesized
mediation by morale: if it is significant, morale is said to be
a weak mediator; if it is not, mediation is strong.
Certainly, too, it is recognized that predictor variables other
than those included in this proposed model might affect managerial compliance and/or suppiier power. While the inclusion
of such variables would be desirable, the present study still
represents a wo~while contribution to knowledge in that it
tests part of a larger and more cumprehensive alternative theoretical model of compliant marragerial behaviors, including opportunism and cooperation, and supplier power. Neve&eless.
inasmuch as ignoring other potemiatly important variables is
recognized as a limitation of this research, this issue will be
discussed in greater detail at a later point.

Methodology and Results

John (1984) conducted a self-administered postal survey among
top rntinagers of gasoline service station franchises of oil companies. Survey packages were mailed to a total of 1,000 dealers

in March 1980. After two weeks, a fo~ow-up mailing was sent

1.E. Brill

J Busn Res
1994:30:211-223

216

to nonresponders. This procedure yielded 151 completed questionnaires featcring only incidental item nonresponse. While
the 15% survey response rate is low by modern standards, John
(1984) has provided data comparing the sample and population
on gallons of gasolinesold (49,234 vs. 45,830), number of years
involved with the franchiser (13.03 vs.13.04), years as a gasoline dealer (15.38 vs. 14.73), and number of service bays in
service (2.40 vs. 2.30). With only small differences observed
for these characteristics, there is evidence that the sample is
representative of the population, and nonresponse bias is likely
to be acceptably small.

Measures
Twelve measures consisting of multiple-item scales were compiled from the data. The content matter of each scale, along with
the variable name assigned to it, is indicated in Table 1. Selected
scale characteristics, including reliabilities, and the intercorrelations among these measures as previously reported by John
(1984) are presented in Table 2.

The scale measures were assigned as indicators corresponding

to the models latent variables in accordance with judgments
bnsed on theory and consideration of the descriptive information provided by John (1984). The specific reasoning that led
to the indicator assignment decisions for each latent construct
is described below.
RELATIONALRESTRKTIVENESS.
Relationalrestrictiveness already
has been defined as the set of variables that place limitauons
on the manager. As such, appropriate measures would reflect

the degree of control or direction that the supplier is able to

exert upon the operations of the franchisee. Hence, the relational restrictiveness construct should capture: (1) the suppliers
ability to deny resources or show favoritism to the franchisee
so as to encourage desired responses or discourage unwanted
behaviors, and (2) the procedural controls or rules and organizational structure that may be imposed upon the franchisee by
the supplier.
Examinatic,n of the description of the REWARDand COERCIVEscales as wgll as the example items that had been provided
by John (1984) indicate that these scales tap the first of these
two aspects of relational restrictiveness. Operant learning theory (e.g., see Skinner, 1966) suggests that both posi:ive reinforcements (e.g.,reward) and negative reinforcements (e.g.,coercion! direct behavior. Similady, inspection of the example items
provided for the LECITMATscale suggests that this measure
is strongly correlated with the supplier imposed rules aspect
of relational restrictiveness, The measures corresponding to the
three Weberian dimensions of bureaucracy-CENTRAL, FORMAL,and CONTROLS-also have been included among tie indicators of relational restrictiveness. The definitions provided
earlier make it seem clear that centralization, formalization, and
control (i.e., surveillance and rule enforcement) are constructions reflecting the procedural and operational rules aspect of
relational restrictiveness. And, as noted earlier, this assignment
decision is consistent with common practice in the channels
and interorganizational research literatures. Since these measures reflect limitations on behavior, all should be anticipated
to correlate positively with relational restrictiveness.
According to the information provided
by John (1984), job satisfaction and perceptions of role conMANAGERIALMORALE.

Table 1. Scaie Definitionsof Indicator VariablesUsed in the Analysis

Scale

Name

OPTUN~M
COOPRATN
ROLERT
SATSFCTN
FORMAL
CENTRAL
CONTROLS
COERCIVE
REWARD
REFERENT
EXPERT
LECITMAT

Description of Scale Content

Self reported frequency of opportunistic behavior by franchise manager
Self reported intentions to cooperate (i.e., perform required role behavior)
by manager
Perceptions regarding the convergence in beliefs about salient business issues
among the supplier and the manager (respondent)
Perceived satisfaction experienced by the manager (respondent? from his/her
interaction with the supplier
Reported formaI~tion
of operating procedures
Reported centralization of authority in the supplier-retailer relationship
l&ported extent of ruk enforcement and surverllance experienced by the
retail operation
Coercive power attributed to the supplier by the franchise manager
(respondent)
Reward power attributed to the supplier by the franchise manager
(respondent)
Referent power attributed to the supplier by the franchise manager
(respondent)
Expert power attributed to the supplier by the franchise manager
(respondent)
Lcgitlmate power nrtrlhutcd to rhe supplier by the franchise manager
(respondent)

Name Assignedby J&n (1984)

Opportuntsm
Conative orientation
Cn&dvs

orientation

Affective orientation
Formalization
Centralization
Control
Coercive influence
Reward influence
Referent influence
Fxpert influence
Legitnnstc mffucnzc

Beyond Managerib Opportunism

J Busn Res
1994:30:2 1 l-223

217

gruen.cc as they perui;; ;o the franchise manager in his or her

interface with the franchiser are captured by the SATSFCIN
and ROLEFIT measures, respectively. These scales seem ideal
for measurement of the morale construct in the proposed model
in view of Lawtons (1977, p. 6) observation that, in its original
conceptualization, morale subsumed the concepts of both job
sat&action and the motivation to conform to organizatiorzl requirements. . . .* For this reason, the SATSFCTN and ROLEFIT
measures have been used to operationalize the morale construa
and they are expected to correlate positively with it and each
other.
MANAGERIALCOMPUNCE. Farher discussion has already es_
tablished that cooperation and opportunism are behaviors that
may be conceptualized as lying along the continuum representing compliant behaviors. Inasmuch as John (1984) indicates
that his opportunism scale (OPTUNISM) taps the frequency of
oppornmistic
behavior, it seems reasonable to adopt this
measure as an indicator of the managerial compliance construct
in the proposed model. However, given that the COOPRATN
scale has been repreqnted as a measure of the conative dimension of managerial attitudes in Johns (1984) study, a sound
argument that it is appropriate to use this scale as a behavioral,
rather than attitudinal, measure is essential.
Support for this position comes from two sources. One is
the scale item examples themselves, which have been provided
by John (1984, p. 288): I do not volunteer much information
regarding my business to my supplier and There are some
things that I will do only if my supplier checks up and insists
on it. Only the latter item clear!y refers to intended behavior;
the respondent is asked to indicate what he or she wil! do. In
contrast, the first item may be interpreted as a report of either
actual or intended behavior. because this statement is phrased
in the present tense, rather than in the future tense, it is possible
to imagine that this item reflects a report of a current behavioral
pattern, not simply intended behavior. Indeed, had the items
used the past tense-i.e., -1 have not volunteered much information regarding my business to my supplier and There are
some things that I have not done unless my supplier checked
up and insisted on it- it would have been difficult to view these
as anything other than behavioral measures.
A second source of support comes from attitude theory. In
his study, John (1984) adopted the cognitive-affective-conauve
model of attitude structure formalized by Rosenberg and HOVland (1960). This model views attitude as a latent construct that
cannot be directly observed and, instead, must be inferred from
behavioral responses. Ajzen (1989) has warned that, although
it is widely recognized that these behavioral responses may be
either verbal, nonverbal, or both, many fail to appreciate this
in practice. Instead. researchers tend to use evaluative verbal
responses as measures of attitudes and overt behaviors as measures of behavior. The consequence is that almost all models
claiming to predtct behaviors from attitudes are more accurately
conceptualized as models predicting the nonverbal manifestations of attitudes from the verbal manifestations of these same

218

1 Busn Res

J. E. Brill

1994:30:211-223

attitudes. This confusion arises largely as a consequence that

the conanve dimension of attitude structure is a behavioral component; indeed, Rosenbergand Hovland (19601titled their et&jsic chapter Cogdive, Affective, and Behavioral Components
of Attitudes.Hence, all reports of behavior are more accurately
thought of as indicators of the behavioral component of attitude, rather than as underlying constructions of behavior. The
point is that researchers consistently invoke a crucial but typically unstated theoretical assumption: behavioral outcomes are
so tightly coupled to the behavioral component of attitude that,
in the practice of model building, they may be treated as congruent constructions.
In this tradition, the behavioral components of attimde evidenced by the evaluative expressions and reports of managers
regarding their exhibitions of opportunistic and cooperative
behaviors have been assigned as representations of the underlying behavioral construction of comp~ance. Hence,
CQOPRATNand OPTUNISMmay be properly used as indicators of managerial compliance. And, because cooperation is a
highly compliant behavior, COOPRATNis expected to correlate positively with managerial compliance. In contrast, since
opportunism is a noncompliant activity, the OPTUNKM inpicator is expected to exhibit a negative relationship to the compliance construct and to covary negatively with COOPRATN.
SUPPLIERPOWER. The use of French and Ravens(19.59) five
bases of power-referent influence, expert iniluence, legitimate
infuence, reward influence, and coercive influence-to operationaltie the power construct has been a common practice in
the literature (e,g.,Hunt and Nevin, 1974; Lusch, 1977; Rosenberg and Stern, 1971). Consistent with this approach, the five
scale measures correspunding to this ~xonomy of social power
bases appearing inJohns (1984) data-REFERENT, EXPERT,
LEGITMAT,REWARD,and COERCIVE-have been used as indicators of the supplier construct in the present study. However, instead of dividing these iive measures among two or more
constructs (e.g., coercive power and noncoercive power) as is
frequently seen in practice, all have been related to a single construct, supplier power.
There is considerable justification for this departure. First,
though uncommon in channels research, precedent for conceptualizii power as a singledimension does exist (e.g.,see Wilkinson, 1981). Second, and perhaps most compelling, is that when
the French and Raven(1959) taxonomy is used, the assignment
of indicator measures to multiple power constructions may be
seen to be largelyarbitrary. As many have observed (e.g.,Ripnis,
Schmidt, and Wilkinson, 1980; Raven, 19741, these five influence bases are neither mutually exclusive nor logically distinct. To prove this, one need only consider two power bases,
coercive in~uence and reward influence, and recognize that the
failure to provide reward by one party might rightly be considered coercion by another. Consequently, conceiving power as
a single entity seems a reasonable decision.
The d~rectionalities in the relationships between suppliet

power and its indicators should not be expected to be consistent, however. While power is expected to be positively related
to compliance, coercive influence can be expected to be attributed only when compliance is not given voluntarily. In contrast, attributions regarding the other forms of influence are
not inconsistent with volunrary behavior. Therefore, regression weights from supplier power to these indicators can be
expected to be opposite in direction from that to COERCIVE.
This expectation is consistent with past studies that have found
coercive and nonc~rcive power sources to have opposing relationships with other variables (see Gaski, 1984, for a review).

The parameters of the hypothesized model were estimated using

AMOS(Arbuckle, 19881,an alternative structural modelingprogram to the better known USRELu~r~kog and S&born, 1984,
1989) and EQS (Bender, 1985) analysis packages. Recognition
of the reliability of AMOScomputations relative to other wellknown programs, such as LISRELand EQS, has been established by its use in several recently published studies (e.g., see
Pruchno, et al., 1990).
Like these other programs, AMOS first uses a maximum
likelihood procedure to estimate the free parameters of the
model, next computes covariances among the measures based
on these estimates, and then compares these computations with
the sample covariances. This makes the use of AMOSand similar programs advan~geous for several reasons. First, a summary statistic with a chi-square distribution is generated from
the comparison of the computed and observed covariances. This
statistic may be used to test the null hypothesis that the model
is consistent with the observed data, statistically significant
values of chi-square suggesting that this hypothesis is not supported. Second, the measurement of structural equation systems
of the proposed model are simul~neously estimated. Hence,
when an adequate correspondence or fit between the proposed model and& data is found, the method provides evidence supporting claims of the convergent, discriminant, and
nomolo~~ validity for the modelsindicator measures (Bagozzi
and Phillips, 1982). In instances where this evidence is reinforced by conceptual arguments supporting the assignment of
indicators (such as those presented above), claims regarding
measurement validity are especially strong. Finally, the analysis of covariance structures allows the estimation of regression
coefficients of structural paths incorporatingvariables with correlated error terms (Hannan and Tuma, 1979; Markus, 1979).
The sample size ofJohns (1984) data set may be considered
adequate for the application of analysis of covariance structures
to the proposed model. Lawley and Maxweil ( 197 1) have suggested that the number of cases examined should be at least
50 more than n(n t !!!2 where n is the number of manikt (i.e.,
observed) variables included in the model. The sample population of 151 respondent easily exceeds the i 28 minimum suggested by t-he observation of 12 scale measures.

Beyond Managerial Opportunism

JBusnRes
1994:30:21 l-223

Results and Anallyis

Results from the analysis of the proposed model (Figure 1)
yielded a relatively poor fit (x2 - 84.&l, 6.j - 35, p < 0.001).
At this point, the regression path from relational restrictiveness
to managerial compliance was not observed to be significant,
and so this path was eliminated from the model with only an
inconsequential effect on the models overall fit (i.e., x2 - 84.572,
d.j = 46, p < 0.001). Still, Hypothesis #l remains supported
inasmuch as the estimated correlation between these constructs
was found to be significant and negative (r - -.278; SE. of
r - .082>, as predicted.
Inspection of modification indices produced by AMOS suggested that the models fit with the data could be improved by
allowing selected unobserved error variables associated with indicator measures to covary. Specifically, the analysis suggested that
Error 2 should covary with both Error 3 and Error 5, Error
3 should covary with Error 4, and Error 4 should covary with
Error 5. These modifications were incorporated for many
reasons.
First, the idea of covaryingerror variances is consistent with
the previously developed argument that the French and Raven
(1959) power bases are arbitrary and overlapping, so it is reasonable to imagine that the indicators in question are significandy related to constructions not featured in the model. Second, plausible arguments can be made not only for each of these
covariances, but also for why all the error terms corresponding to indicators of suppiier power shou!d not be correlated.
For example, because oil companies are not retailers, there is
little reason to suppose that .vhatever referent influence they
might command from retail managers would have anything to
do with managerial perceptions of legitimate authority, reward
c: coercive capacities, or expertise in oil production. In con-

trast., expertise does provide one with legimnacy relative to operational decisions, and the withhoidingc.f expertise ma;- be ~CF
as a coercive influence tactic; hence, it is reasonable to accept
the proposition
that the error terms associafed with these
dimensions sbvidd covary. I&wise, one partys ability to reward a second party may provide a basis for the second party
to legitimize the first partys wishes; therefore, it is plausible
to imagine that the corresponding error terms should be correlated. In contrast, coercive tactics rarelyare received gmciot&
and those being coerced generally seem to downplay the legitimate rights of those who engage in coercive tactics; thus, no
covariance between the error terms corresponding
to these
dimensions should be expected. Similarly, given that a franchise manager may believe that receipt of whatever expert assistance the franchiser might provide is his or her franchises
right as a consequence of its status in the franchise network,
the error variances associated with reward and expert influence
need not be correlated. Finally, as the withholding of reward
may be seen as a coercive tactic, it seems reasonable to imagine
that the corresponding
error variances are correlated.
As the suggested modifications can be advocated on theoretical grounds and the arguments advanced here appear to
have self-evident representational validity, AMOSs suggestions
were incorporated into the model_ The revised model was subsequently tested and found to fit the data quite well Or* 56.772, d.f. - 42, p = 0.064). Figure 2 presents a diagram of
the final model including parameter estimates of all regression
weights, the variances of all unobserved variables, and rhe covariances among the error variables.
The correspondence of the theoretical model with the empirical evidence is confirmed by other goodness-of-fit criteria as well
(Bender-Bonett NFI - .914; GET - .946; AGR - .899). In kt,
these results compare quite favorably with those reported by
1.49
Emu14
(3

Figure 2.

219

Fmal Model

Ia

220

J. E. Brill

J bun Res
1994:30:21 l--223

John (1984) for hi final proposed model (x2 - 101.63, dj. 43, p< 0.001; Bender-Bonett NFI - .83; GFl - ,851; AGFI .730). But, most importantly, inasmuch as the above discussion has provided a theoretical basis for the model, this ~tatisti~d
evidence solidifies the proposed models staNs as a plausible
and promising theoretical representation.
Also noteworthy among these findings is that all strucNrP1
paths were found to be significant at the .05 alpha level and
consistent with directional predictions. Likewise, all paths between latent variables and their indicators were found to be
consistent with predictions regarding their signs. Furthermore,
only path from supplier power to COERCIVE was not found
co be slgnticant. Although this is somewhat disappointing, there
is little reason for concern; not only has every other hypothesis
entailed by the model been supported, but it has been argued
that indicator measures for supplier power are somewhat arbltrary in the first place. Together, then, the results lend strong
support for the proposed model and demonstrate the validity
implied for its constructs and their corresponding measurements.

Discussion
The results of this study have provided support for several theoretically argued hypotheses regarding the interrelationships
among managerial environment, supplier power, managerial
morale, and managerial compliance in a franchised marketing
channel relatior,ship. Specifically, support was found for two
centra! ideas. First, compliant behaviors exhibited by retail franchise managers, such as opportunism and cooperation, may be
explained as a consequence of the restrictive nature of the franchise network agreement with this relationship mediated by
managerial morale. Second, the ccnceptualization of supplier/
franchiser power as an attribution-with
antecedents in relational restrictions imposed, morale of the franchise manager,
and compliant behaviors exhibited by the franchise manager-is
consistent with the data. Furthermore, the nature of the relationship between power and these variables would appear to be
one of mediation, with morale manifestations of compliance
weakly mediating thr influence of relational restrictiveness imposed on the power attributed to the franchiser by the manager.
The salient implication, then, is that power is not a resource
possessed by suppliers, but rather an aspect of the supplier-retailer relationship. These ideas are in sharp contrast
with earlier studies that not only have adopted the cciiception
that social power is resource possessed by suppliers, but also
have posited that various bases of social power have distinct
causal relationships with respect to both managerial attitudes
and opportunistic behaviors.
The model offers important implications for franchisers
wishing to take steps to maximize cooperation and minimize
opportunistic behaviors by franchise mangers. The regression
coefficients presented in Figure 2 show that there are negative
relationships between cooperation and all measures ot relational
restrictiveness. Consequently, lower levels of formalization, cen-

tralization, surveillance, and fate control (i.e., reward, coercive,

and legitimate influences) should be expected to increase cooperation among franchise managers. Likewise, because of the
positive relationship between relational restrictiveness and opportunism, lower levels of thes? variables should be expected
to help minimize opportunistic behaviors. In short, the challenge to franchise channel design and management is striking
an appropriate balance between the need for imposing these
environmental
constraints and the negative economic effects
associated with the uncooperative and opportunistic behaviors
that such controls can be anticipated to elicit.

Limitations

and Directions for Future Research

While the results of this study are certainly promising, a cautious

approach is nevertheless advisable for at least three reasons.
First, the fact that the data are borrowed from a published table
makes it impossible to split the sample and cross-validate the
results. This is a moot point, however, since the sample 151
is insufficiently large to yield reliable cross-validated results for
a model using 12 observed scale measure; guidelines suggested
by J_awley and Maxwell (1971) indicate that each subsample
should include at least 128 subjects.
Second, the indicator constructs may not be the most appropriate measures to use in testing the proposed latent variable
model. Of particular concern are the manners in which relational restrictiveness and supplier power have been dimensionalized. The arguments regarding the overlapping naNre of the
French and Raven (1959) bases of influence and the use of
shared indicators is certainly largely responsible for the need
to correlate selected error terms of the measures loading on
these constructs. Needed are better strategies for developing
conceptually distinct dimensionaliied measures of these two constructs. Strategies for these enterprises that have been advanced
by Benson (1975) and John (1984) in the area of the relational
restrictiveness should be considered; also needed are more appropriate measures for supplier power.
In developing a political economy framework for understanding channel system behaviors, Benson (1975) developed a construct, environmental StruCNre, which he conceived to define
and limit the informational and matter-energy inputs that managers may receive. Six dimensions were identified: (1) resource
concentration/dispersion;
(2) power concentration/dispersion;
(3) network autonomy/dependence
(with respect to the systems
in which it is embedded); (4) power-exercising patterns
among
and by network participants; (5) resource abundance/scarcity;
and (6) patterns of control mechanisms used (e.g.? incentive
vs. authority influence tactics). Still another dimension of the
environment worthy of consideration is asset-specificity, the
degree to which the means of production (including established
procedures) have been tailored to meet the requirements of another channel member such that their utility in serving other
potential exchange partners is diminished. As noted by John
( 19841, Williamson ( 1975, 198 1) has hypothesized asset: spccilicity to Increase the propensity of managers to behave opportunistically. In the present model, at best only two of these seven

Beyond Mariagerjal

Opportunism

dim2nsiol;s, autonomy/dependence
and patterns of control
mechanisms, have been captured by the indicators of rrlatiortil
restrictiveness. Clearly a more comprehensive operationalization reflecting additional relevant dimensions of this construct
is possible.
With respect to the supplier power construct, BriU (1992)
has presented conceptual and empirical evidence that power consists of two dimensions, perceived ability to resist influence attempts by others and perceived ability to influence others. Brills
(1992) scales are not directly applicable to the present purpose,
however, because they are intended to meaSur2 social power
associated with consumers in a retail setting, not suppliers in
a business-to-business
context. Still, the resistance and influence
dimensions suggested for power might be applied to develop
scales for the study of supplier-retailer
power relationships.
A third limitation of the present study is that other potentially important explanatory constructs have been ignored. For
example, the omission of a conflict construe: from the proposed
model might be incorporated since power has typically been
associated with conflict in the study of marketing channels (e.g.,
Gaski, 1984; Johnson, 1981; Lusch, 1976; Rosenbergand Stem,
1971; Walker, 1972). Conflict is present when the goals of two
parties are disparate and each desires to work toward achieving these disparate goals. And, like pawer, conflict can be conceived as an inherent, stable aspect of a social relationship
(Pondy, 1967).
Consistent with this view, conflict pot2ntials might be
hypothesized to be causally related to three latent constructs
of the present model. First, they may be seen to arise as a consequence of managerial compliance that helps define the arena
for conflict episodes. Second, they might arise from the attributions of supplier power which, in turn, may be perceived
to manifest itself in these episodes. Furthermore, conflict potential may be viewed as an antec2dent contributing to managerial
morale, thus modifying subsequent power attributions and compliant tendenci2s. Subjecting these hypotheses to empirical testing through such an extended model using survey measures
collected among member firms of franchised and/or nonfranchised marketing channels offers a fresh direction for future research.

The author expresses his appreciation to C. Anthony DiBenedetto. Rachel A

Pruchno, Michael F. Smith.JBR editor Ramon Aldag, and the three anonymous
]BR reviewers for their helpful criticisms and suggestions for improvement on
earlier drafts of the manuscript. Special thanks are also extended to James L.
Arbuckle for his input and guidance in the data analysis and to George John
for sharing the Items used to construct the scale measures

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