Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/87716
Authors: 
Fan, Ying
Kühn, Kai-Uwe
Lafontaine, Francine
Year of Publication: 
2013
Series/Report no.: 
DICE Discussion Paper 114
Abstract: 
Financial constraints are an important impediment to the growth of small businesses. We study theoretically and empirically how the financial constraints of agents affect their decisions to exert effort, and, hence the organizational decisions and growth of principals, in the context of franchising. We find that a 30 percent decrease in average collateralizable housing wealth in a region delays chains' entry into franchising by 0.28 years on average, 9 percent of the average waiting time, and slows their growth by around 10 percent, leading to a 10 percent reduction in franchised chain employment.
Subjects: 
R&D
contracting
incentives
principal-agent
empirical
collateralizable housing wealth
entry
growth
JEL: 
L14
L22
D22
D82
L8
ISBN: 
978-3-86304-113-7
Document Type: 
Working Paper

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