Fairness as a mediator between network density and relationship performance: the moderating role of transaction-specific investment

Purpose This study aims to develop a theoretical framework based on network theory to understand franchisor fairness and the effects on franchisee performance in interconnected networks (franchisee network density). Design/methodology/approach This study includes data from 204 franchisees in South Korea-based systems to test hypotheses through mediation and moderated mediation analyses using the PROCESS macro. Findings The results show that franchisee network density increases franchisor fairness dimensions (procedural and distributive fairness), which improves franchisees’ financial relationship performance (FRP). The results also indicate that transaction-specific investment (TSI) can positively moderate the relationship between procedural fairness and FRP. Originality/value This study extends beyond dyadic relationships to network environments, showing that within-network characteristics affect not only network members (franchisees) but also the exchange partners of their members (franchisors). It also demonstrates that network density serves as a mechanism for developing fairness, providing insights to optimize strategic management and franchise performance. Furthermore, the authors suggest that franchisee TSI is a favorable contextual factor that enhances the effect of franchisor procedural fairness on franchisee performance.