Abstract
In today’s increasingly competitive environment, the franchisee’s ability to respond to the local market (i.e. market responsiveness) plays an important role in sustaining competitive advantage. Grounded in strategic entrepreneurship with entrepreneurial orientation (EO) and the dynamic capability perspective, this study extends research on how EO and the franchisee’s market responsiveness improves franchised-outlet performance. The internal process through which the franchisee’s perceptions of the franchisor’s EO and franchisees’ EO affect franchisees’ financial performance were examined, revealing that the franchisee’s perception of the franchisor’s EO had a direct effect on franchisees’ financial performance but an indirect effect on franchisees’ financial performance through the franchisee’s market responsiveness. Interestingly, the franchisee’s EO was found to have only an indirect effect on franchisees’ financial performance through the franchisee’s market responsiveness, while the franchisee’s market responsiveness had a positive effect on franchisees’ financial performance. Moreover, a franchisee’s perception of the franchisor’s EO was also found to influence a franchisee’s EO.
A summary of empirical studies on EO at the franchisee level.
| Authors | Research goals | Empirical research design | Key findings |
|---|---|---|---|
| Adeiza, Malek, and Ismail (2017) | Explored how the EO factors of innovation, risk-taking, and proactiveness influence franchisee business performance. | Interviews with 26 franchisees in Nigeria | Innovation and proactiveness improve franchisee business performance. |
| Botha and Prawlall (2017) | Examined whether the choice of location, specifically being inside or outside a shopping center, has an impact on the levels of franchisees’ EO. | Survey of 104 franchisees in South Africa | Franchisees that operate outside a shopping mall have a higher level of EO than those that operate inside a shopping mall. |
| Chien (2014) | Studied how spousal resources, franchisor resources, and franchisees’ EO affect franchisee performance. | Survey of 108 franchisees in Taiwan | A franchisee’s EO positively influences franchisee performance. |
| Colla et al. (2020) | Identified entrepreneurial orientation dimension(s) with strong impacts on franchisee performance. | Survey of 226 franchisees in France | Competitive aggressiveness and managerial autonomy have stronger linkages to performance than the other three dimensions of EO (risk-taking, innovativeness, proactiveness). |
| Sanny (2013) | Determine the influence of a franchisee’s EO on franchisee satisfaction and performance. | Survey of 101 franchisees in Indonesia | A franchisee’s EO positively affects franchisee performance. |
| Sanny (2015) | Investigated how the quality of management and franchisee satisfaction affect franchisee performance, as well as a franchisee’s EO moderates the relationship between satisfaction and performance. | Survey of 72 franchisees in Indonesia | A franchisee’s EO moderates the relationship between franchisee satisfaction and franchisee performance. |
| Watson et al. (2020) | Examined how a franchisee’s entrepreneurial personality traits influence the financial and relational performance of franchise units. | Survey of 761 franchisees in four countries (the United States, the United Kingdom, France, and Spain) | A franchisee’s EO mediates the relationship between proactive personality and financial performance, and also mediates the relationship between proactive personality and relationship quality. |
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