Entrepreneurial Orientation and the Franchise System : Organisational Antecedents and Performance Outcomes

Abstract

Purpose – The purpose of this paper is to understand the franchisor’s perception of the role of entrepreneurial strategic orientation (EO)–innovative, risk-taking, and proactive actions–within the special case of franchised firms, given the opposing forces for standardisation/uniformity and system innovation/adaptation. Design/methodology/approach – A cross-sectional research design, involving a mail questionnaire survey, was employed to collect data from a sample of franchisors operating in the UK. The hypotheses specified in the study were tested using a path model. Findings – The results show that for franchise organisations, EO is positively related to performance. The recent meta-analysis conducted by Rauch et al. (2009) also demonstrated that the correlation of EO with performance is fairly large (r=0.242). This correlation is consistent with the significant value reported in our study of 0.234. In addition, franchise system support structures were found to be important in fostering EO within the organisation. Research limitation/implications – Future studies may consider including other dimensions of EO, notably competitive aggressiveness and autonomy, in exploring the relevance of EO to the franchise system. It would be interesting to also use a longitudinal analysis to examine the long-term effect of EO on the performance of franchised firms. Originality/value – The study extends our knowledge of the EO–performance outcomes relationship to the franchising context where the role of EO is presently underexplored. This could be attributed to the fact that the franchise concept is built on standardisation and uniformity, notions that run counter to the flexible strategies involved in fostering EO.