A relational performance model for developing innovation and long-term orientation in retail franchise organizations

A relational performance model is developed to show how innovation and long-term orientation can be evaluated and monitored within franchised retail service organizations. Using principles of justice from social exchange theory as a guide, our performance model measures how franchisee entrepreneurial passion (EP) and perceptions of fairness help to promote innovation and long-term commitment across retail franchise organizations. We test our model using data collected from one large U. S. retail service organization ($5B+ annual revenue) and its independent franchise operators. We discover that targeting distributive justice (or fairness) helps to leverage the EP of the independent operators for promoting innovation, while both procedural and distributive elements of the organizational justice climate help to enhance franchisee's long-term commitment. Moreover, we find that retail franchise operators perceive organizational justice differently than do corporate district managers, which suggests several important implications for both research and practice.