ORGANIZATIONAL FORM AS A SOLUTION TO THE PROBLEM OF CREDIBLE COMMITMENT - THE EVOLUTION OF NAMING STRATEGIES AMONG US HOTEL CHAINS, 1896-1980

This paper describes how organizational form can solve the problem of commitment that complicates exchange. I illustrate this by analyzing t he commitment problem of hotel chains. Consideration of the commitment problem indicates that hotel chains are better off naming their units the same, so as to create the potential for future business from cust omers. However, some hoteliers believed units should be named differen tly so they are not identified with the chain. These two strategies il lustrate a powerful tension between strategies that allow the organiza tion to be more consistent, and strategies that facilitate adaptation to local conditions. I analyze the failure rates of hotel chains to sh ow that selection favored chains that employed the naming strategy tha t generates commitment.