Bonding Through Investments: Evidence from Franchising
研究生产者的前期投资能否维系与商业伙伴的关系，利用特许经营合同数据和自然实验，发现限制终止合同的法律会促使特许人要求更高的前期投资，尤其在小规模特许体系中更显著。
This article studies whether producers’ up-front investments can help sustain relations with business partners. The initial investment combined with the business partner’s threat to terminate the contract before it expires can generate a bonding mechanism that precludes the producer from behaving opportunistically. I test this view using franchise contract data and a natural experiment. In practice, the franchisor (business partner) determines how much a franchisee (producer) needs to invest up-front. I show that franchisors affected by the passing of a law that restricts their ability to terminate misbehaving franchisees ask their franchisees for higher up-front investments. This result is particularly large for small franchise systems, as franchisees’ investments are less redeployable in case of contract termination. The data suggest that contractual up-front investments can be used to sustain business relations.