The Effects of Trust and Dependence on Long Term Orientation in Korean Food Franchising

Purpose - The objective of this paper is to compare the Korean foodservice’s B2B(franchiser-franchisee) long term orientation with Ganesan’s study of long term orientation in buyer-seller relationship(1994). The study examines the effects of franchisee’s dependence and trust on long term orientation and compares results with Ganesan’s study. Research design, data, methodology - Data were collected from 495 Korean foodservice franchisees and analyzed with structure equation modeling using path analysis by SPSS 18.0 and AMOS 18.0. Results - 1) The environmental volatility had not positive effect on franchisee’s dependence on franchisor showing the same result with Ganesan(1994). The attractiveness to the alternative, franchisor and franchisee’s TSI(Transaction Specific Investment) and relationship value had positive effects on long term orientation. 2) The franchisee’s dependence and trust on franchisor had positive effect on long term orientation. Conclusions - The findings of this study show that franchisee’s dependence and trust on franchisor have impact on long term orientation in franchisee’s perspective and give managerial implications to franchisors who are striving to keep long term orientation relationships with franchisees.