The more a hotel is required to make investments in brand standards, the more likely it is to engage in self-interested opportunism to recover investment costs and assert its independence, a new study co-authored by Chekitan Dev, professor of marketing at the School of Hotel Administration, shows.
The study divided brand standard investments into physical investments (e.g. signage, signature décor) and knowledge-based investments (e.g. training regiments, computer systems). Opportunism was defined as self-interest-seeking guileful behavior, or either party trying to ‘game’ the relationship for its own benefit. Relationship satisfaction was measured as the hotels’ satisfaction with brand headquarters, and monitoring ease was a measure of the ease with which brand headquarters can observe a property’s performance and compliance with brand standards. The study controlled for property ownership type, brand affiliation, duration of the property-brand affiliation, and property size.
Based on prior theory and research, Dev and his co-authors expected to find that significant investments in brand standards will motivate a hotel to engage in opportunism against its brand to recover its investment, but if a hotel is satisfied with its relationship with the brand, it will be less likely to act opportunistically. The study found that investments in brand standards do in fact motivate hotels to act guilefully out of self-interest. A counter-intuitive and surprising finding was that the easier it is for a brand to monitor a hotel, the more likely the hotel is to behave opportunistically. The authors’ explanation for this finding is that a property’s awareness that it is being monitored closely fuels resentment, adding to its perceived lack of autonomy, and thereby motivating opportunistic behavior to regain that perceived loss of autonomy. However, the higher the level of relationship satisfaction (i.e. if a property believes that its brand affiliation is good for business), the less likely it will act opportunistically. Therefore, relationship satisfaction helps reduce the level of opportunism on part of the hotel.
The study adds to the body of knowledge on hospitality branding by confirming that relationship satisfaction acts as a safeguard against brand partner opportunism and by showing that the easier it is for a brand to monitor a property, the stronger the hotel’s motivation to pursue its own self-interest, so ease of monitoring by itself will not make up for a low level of relationship satisfaction. Satisfaction with a brand relationship and a property’s perceived autonomy are key factors to discourage such opportunism and ensure relationship success.
For hotel brand managers, the study generates important implications. Wielding a heavy “overseer” hand with affiliated hotels can motivate those properties to engage in opportunism, not only to recover investment costs but also to assert their independence. Brands should, therefore, resist the urge to rely solely on monitoring their properties to ensure a successful relationship and cultivate satisfaction with their affiliated hotels by maximizing value added (marketing support, business assistance, training, technical support, two-way communication, collaborative decision-making, etc.) and minimizing value extracted (franchise fees, royalty fees, reservation fees, technology fees, loyalty program fees, dictatorial decision-making, etc.).
The major results or implications of the research:
- The more a hotel is required to make investments in brand standards, the more likely it is to engage in self-interested, guileful opportunism.
- The easier it is for a brand to monitor a hotel, the more likely the hotel is to behave opportunistically.
- Such opportunism is less likely to occur when a hotel is satisfied with its relationship with the affiliated brand, thereby safeguarding the brand against hotel opportunism.
Co-authors:
- James R. Brown, professor emeritus, West Virginia University
- Jody L. Crosno, associate professor, West Virginia University
- Chekitan S. Dev, professor, Cornell University
- Yuerong, Liu, doctoral student, West Virginia University
Publication information:
“Relationship satisfaction: An overlooked marketing channel safeguard” was published in Industrial Marketing Management, Volume 87, in May 2020. Read the full paper from Industrial Marketing Management.
