Revisiting the contingency theory: dissection of entrepreneurial orientation elements in retail franchisee performance

Purpose – This study aims to analyze how various contingencies within the contingency theory influence the entrepreneurial orientation (EO) elements and performance of retail franchisees in a South Pacific Island nation. Design/methodology/approach – This study employs a quantitative approach of data collection from 203 managers in a total of 89 retail franchise outlets. Convenience and snowball sampling techniques were used with data analysis through SPSS AMOS and covariance-based structural equation modelling (CB-SEM). Findings – The results confirmed that technology, innovation and promotion; competitive edge and value co-creation; high return opportunity capitalization; and empowerment and support influenced franchisee performance, while responsive customer focused leadership and competitor knowledge proved to be insignificant. The findings supported EO’s influence on both financial and non-financial indicators, with greater influence on financial indicators. The result revealed that EO accounts for partial impact on franchisee performance, while the remaining impact could be attributed to organization and environment contingencies. Originality/value – The study proposes a novel context of EO in franchising, where we dissect key elements within the EO dimensions. It also adds to the extant literature on how the broader context of environmental and organizational factors termed as “strategic fit” affects entrepreneurial franchisee performance

Best in Class International Franchising: Report for the UK Retail Sector

Retailing is such a fast-moving industry it is difficult to keep on top of changes in domestic markets, let alone those in geographically and culturally distant foreign markets. Although it is tempting for a UK-based retailer to remain domestic and focus on strengthening their competitive position in the UK before going overseas, the most successful retailers continuously explore what it takes to operate effectively across national borders. UK retailers need to “think bigger” if they are to escape the economic slowdown of Western Europe. There is now a renewed push for internationalisation by UK firms and they are setting adventurous growth targets. Retailing is fast becoming a global industry and it is vital for “UK plc” that our leading retailers are successful in emerging markets. Against this backdrop, we conducted a study of one type of foreign market entry mode, namely franchising. We propose that franchising is to retailing what exporting is to manufacturing. It is a low-risk, low-involvement way for retailers to enter risky foreign markets, but which nevertheless must be professionally executed. In order to shed light on how UK retailers can make franchising work in emerging markets, we focus on the advanced franchising model used by one particular retailer. This model has been developed over decades of steady expansion of its franchising operations overseas. As well as examining their franchising operations, the study gathered a range of other information on international franchising in order to develop a complete picture of good practices. It is unlikely that a firm with a fast-moving, complex product assortment (e.g., general merchandise) will be able to follow the franchising model of dealing with many small franchisees across many foreign markets (i.e., the McDonald’s model). Indeed, the focal retailer uses an area development franchising approach, targeting franchisees that have capabilities sufficient to develop and manage a franchisor-branded store network in their country or region. While not equals, given the franchisor’s ownership of the brand, such relationships operate as partnerships. Franchisees are empowered to exert influence and use their local know-how to help meet the precise needs of foreign customers. Unlike in traditional franchising partnerships, where the franchisor is in control and intensively monitors across its network of franchisees, we observe that cross-border franchising may be optimally developed through openly communicating with and trusting a capable partner. The differences between emerging markets and the UK can be so extreme that it is difficult for the franchisor to control operations there, irrespective of their resource base and experience. In effect, the franchisor is reliant on the franchisee to make and implement decisions in the local marketplace and absorb risks. The overseas franchisees can effectively play a role in building the brand with the franchisor through a form of alliance. Knowledge exchange is crucial not only in the running of the franchise partnership but also for the franchisor’s learning about local market conditions and growth opportunities. When operating in emerging markets the franchisor needs to “learn from their experiences all the time”. UK retail brands resonate strongly amongst aspirational, emerging market customers. Yet, retailers can be slow to go overseas if they perceive differences in, and lack familiarity with, foreign markets. This is where franchising comes in. Far from being a basic business model, best-in-class franchising can be made to play a central role in overseas retailing due to its ability to mitigate threats and seek out growth opportunities. Furthermore, UK retailers can derive flexibility advantages from using franchising in emerging markets as the basis upon which to expand into other, higher-profit equity-based modes (e.g., joint ventures) if and when local circumstances dictate this

Franchise Partnership And International Expansion: A Conceptual Framework And Research Propositions

Although academic research has provided tremendous insights about the organizational form of franchising, considerable work remains with regard to understanding the critical factors that enable international franchise expansion and performance. The authors advance the argument that a franchise relationship is essentially an entrepreneurial partnership, and that this partnership influences the speed, scale, and scope of franchise expansion into international markets. In the proposed conceptual model, the authors detail the links among the franchise partnership, international expansion, and franchise system performance

a framework built for artisani’s franchising

Although standardization is the norm in franchising, autonomy is desired by franchisees, which may lead to potential control issues. This qualitative research follows a problem-solving format and is focused on the control challenge faced by Artisani’s franchising, a Portuguese artisanal ice cream company, characterized by low standardization. The aim was developing the overall control system for the chain. Primary data was collected through interviews with the management team and one franchisee, and then crossed with secondary sources. The results implicate that control should be adapted to franchisees’ level of experience and characteristics to ensure compliance, while maintaining their autonomy

Mapping the profiles of franchisees: getting to know the black sheep, rough diamonds, whingers and best buddies

The purpose of this paper is to investigate franchisees' perception of the value of quality service in the franchise system. Two dimensions, perceived importance and perceived gaps of the quality of the franchise system, form the anchors of a proposed 2 x 2 franchise system quality(FSQ) matrix. This is empirically tested with 200 Australian franchisees. The results reflected a strong evidence of four distinct profiles of franchisees as conceptualized. These results also showed that the more cooperative the franchisees, the better their performance and satisfaction levels with the system. In contrast to existing literature, franchisees who fall in the high-perceived importance cells of the FSQ matrix have a stronger desire for autonomy. Cooperation between franchisees and franchisors are fundamental to achieve success. It is important to provide resources and assistance to franchisees and these are considered as key success factors. Further, determining the profile of the franchisees allows franchisors to determine the potential Best Buddy who are considered an asset in the franchise system. A larger sample size should be implored that focuses on specific industries or service sectors. The research can be replicated in other non-Western contexts to formulate different insights. Cross-national studies could be conducted to investigate differences between cultures. The paper addresses the gap in literature by examining franchisees? perception of the value of services provided in a franchise system. The FSQ Matrix is also conceptualized and empirically tested on an Australian sample

An Evaluation of Relational Control in International Franchise Networks in Emerging Markets

Controlling international franchise networks in emerging markets presents complex challenges due to cultural and geographical distance between franchise partners. This distance is created by the external factors in the environment of local franchisees, which is characterised by political, economic, socio-cultural and technological factors. Other challenges include corruption, lack of supporting industries and lack of supplies. The franchisee’s desire to adapt the franchisor’s business format, to his external environment creates the standardisation-adaptation tensions in a typical international franchise network. The franchise literature recognises the role and importance of relational control in combating the control challenges and overcoming the standardisation-adaptation tensions in international franchise networks. However, there has been limited research undertaken to investigate how relational control develops in emerging markets like Nigeria, where control challenges may be exacerbated. There is also an ongoing debate regarding the relationship between formal and relational control in franchise networks. This research seeks to explore how relational control develops through an investigation of international hospitality franchise networks. This study draws on resource dependence, agency, relational exchange and social exchange theories, to address identified gaps relating to the factors that influence the evolution of relational control. It also contributes to the current debate on the relationship between formal and relational control. Based on a qualitative case study approach, international fast-food and hotel organisations were used for the primary investigation. The research was conducted in three stages. The first stage explored the development of relational control in an international fast-food franchise. The second stage explored relational control further in two international hotel franchises and provided insight into variations in the development of relational control, due to differences in service offering, when compared to the fast-food sector. The third stage explored relational control in-depth in one international hotel organisation in order to verify the findings in stage two. A major contribution of this study is the identification of the role and interplay between external (political, economic, socio-cultural and technological) and internal factors (franchisees’ local knowledge, entrepreneurial tendencies, franchisors’ recognition of franchisees’ entrepreneurial tendencies and the existence of relational norms between the franchise partners) that drive adaptations within the franchise networks. The external factors drive the need for franchisors to adapt their business format, while the internal factors enhance greater adaptation within the franchise networks. A further contribution is the emergence of flexibility (inbuilt flexibilities) from the foundation of franchise relationships in the hotel sector, due to the complexity of the service offering and diversity of customer markets. The study therefore, suggests that the complexity of hospitality offering, influences the timing and extent of adaptations. This study also contributes to the ongoing debate about the complementarity of relational control, by presenting empirical evidence that suggests the development of relational control serves to complement formal control in international franchise networks in emerging markets. The impact of external and internal factors and the development of relational norms underpin the need for franchise partners to be sensitive to the dynamic environment of emerging markets. Sensitivity enables franchise partners to agree on the realities of the business environment and work together to surmount challenges. The order in which different relational norms develop, was highlighted by this study. The understanding of this order can guide international franchisors and educate them regarding the norms to prioritise and develop first in order to channel their resources effectively

The process of the new inter-organizational format of social franchising from a social network theory approach: Institutions, social entrepeneurship povile, innovation and the argument of embeddedness

This thesis was submitted for the degree of Doctor of Philosophy and awarded by Brunel UniversityThe inability of the public sector to satisfy social needs- like poverty alleviation, social inclusion of disadvantaged groups, unemployment, health and education - are redefining the relationship between the governments and their citizens by making the latter play an active role as the provider of the welfare state. Citizens through their entrepreneurial activity have been pulled to the third sector leading to the emergence of new organizational forms like social enterprises and social franchises. The main focus of this research study is the investigation of the new interorganizational format of social franchising which has received ‘scunt’ research attention up to now. The behaviour of actors and organizations in the social economy sector are influenced by the properties and dynamics of elements coming from the political, social, organizational and individual level. We have adopted a systems approach of social network theory. A grounded theory named Social Franchise Model (SoFraM) has been induced from an exploratory empirical mixed method study conducted at various stages and from different sources during a time frame of thirty months. Primary data were raised through six case studies in the UK and Greece, more than 143 interviews with social entrepreneurs and various stakeholders and three action research projects which were the subject of analytic induction supported by archival analysis of secondary data coming from governmental, European Commission, local authority and other sources. Our findings indicate that the formation, growth and success of social franchises is heavily shaped through: firstly, law, regulations, and incentives introduced by centralized or formal institutions- both supranational and national- as well as their driving logics; secondly, the relational and structural embeddedness of actors in networks and the social norms that subsequently emerge; thirdly, the characteristics of the individual social entrepreneurship profile; and finally elements of the social innovation model adopted. The properties of the system of informal or decentralised institutions of networks have been further explored through a pilot quantitative study on mainstream franchises in the UK and Greece. An online self-administered questionnaire has been created based on our conceptual framework of the Franchise Network Model (FNM) drawn from existing scales from literature. The findings indicate that relational and structural embeddedness of actors and organizations in networks determine choices of formation, partner selection, governance mode and the subsequent performance of franchise systems

Quality Signals and Franchising Growth

The goal of this article is to demonstrate how signaling support services and contractual arrangements that create value for incumbent franchisees can help to create value for the whole network by attracting prospective franchisees

Microfranchise emergence and its impact on entrepreneurship.

Our investigation uses structuration theory to explore the emergence of a microfranchise whose aim is to raise the income of smallholder farmers in Kenya by enabling an increase in productivity. This longitudinal real time qualitative study tracks the key actions taken in developing the venture, beginning in the conception phase of startup and continuing through to the initial stage of operations. In doing so it focuses on how agency and structure reciprocally influence the resulting social enterprise. The findings indicate that agency is not exclusive to the founders. Rather it was distributed among the micro-franchisor's stakeholders to significantly shape the nature and scope of the enterprise. While franchising, generally, is not noted to provide autonomy and independence to franchisees, we find the opposite in this emerging market context. Implications are discussed