A TAXONOMY OF MONITORING IN BUSINESS-TO-BUSINESS RELATIONSHIPS

We provide an empirical taxonomy of monitoring based on our sample of 162 single-unit franchisees in diverse business settings. This resulted in four basic approaches to monitoring: High-Threat, Limited Scope; Middle-of-the-Road; Hands-On, High-Threat; and Hands-Off. We found that (1) different situational factors call for different types of monitoring, and (2) certain types of monitoring can enhance fairness perceptions in relationships while others weaken them. This study helps us better understand why previous studies resulted in conflicting findings as to the efficacy of monitoring as a tool for ensuring that agents comply with their contractual agreements.