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Should Fast-Food Franchisees Pursue Entrepreneurial Orientation?

  • Ehsan Asgharian , Misagh Tasavori and Jim Andersén
Published/Copyright: February 9, 2021
Entrepreneurship Research Journal
From the journal Entrepreneurship Research Journal Volume 13 Issue 2

Abstract

Although it is widely accepted that entrepreneurial orientation (EO) improves firm performance, scholars have advised that particular attention should be paid to the context. In this research, we investigate a less explored context of franchising where business systems and procedures are usually dictated to franchisees by franchisors. Therefore, whether a franchisor should allow franchisees to pursue EO (innovativeness, proactiveness, risk-taking, competitive aggressiveness, and autonomy) is not clear. In the context of franchising, the majority of prior studies have mainly focused on the employment of EO as a unidimensional construct and at the franchisor level. In this research, we take a bottom-up perspective and evaluate the impact of different dimensions of EO on franchisees’ performance. Our analysis of a multi-group of 183 restaurant franchisees located in Sweden and Iran reveals that only the pursuit of proactiveness and competitive aggressiveness improves a franchisee’s performance and other dimensions do not play a significant role in improving performance in this context.

Keywords: entrepreneurial orientation; franchising; franchisee performance; restaurant industry
Corresponding author: Ehsan Asgharian, PhD, Graduated from Linköping University, Linköping, Sweden, E-mail:
Appendix 1

Factor loading
Sweden Iran
Risk taking
People in our outlet are encouraged to take calculated risks with new ideas 0.84 0.96
We, in our outlet, would rather accept a risk to pursue an opportunity than miss it altogether 0.78 0.83
Innovativeness
We actively introduce improvements and innovations in our business 0.83 0.86
When it comes to problem-solving, we value creative new solutions more than solutions that rely on conventional wisdom 0.62 0.85
Our outlet tries to find new ways of advertising, customer relations, distribution and so on 0.80 0.79
Proactiveness
We always try to take the initiative in every situation (e.g., against competitors, in projects and when working with others) 0.97 0.91
We excel at identifying opportunities 0.88 0.91
We initiate actions to which other businesses respond 0.85 0.80
Competitive aggressiveness
Our business is intensely competitive 0.81 0.78
In general, our business takes a bold or aggressive approach when competing 0.82 0.91
We try to undo and outmaneuver the competition as best as we can rather than to avoid competitive clashes 0.83 0.83
Autonomy
We are pursuing business opportunities and make decisions on our own without constantly referring to the franchisor 0.90 0.80
We are given authority and responsibility to act alone if we think it is in the best interests of the business 0.78 0.96
Performance
Net profit (i.e., sales minus operational costs) 0.87 0.77
Development of sales (i.e., change or growth in the volume of sales) 0.92 0.85
Cash flow (i.e., inflows vs. outflows of money) 0.90 0.87
Growth of the franchised outlet’s value 0.85 0.74
Environmental competitiveness
Competition in our local market is intense 0.89 0.78
Our organizational unit has relatively strong competitors 0.77 0.89
Competition in our local market is extremely high 0.87 0.89
Price competition is a hallmark of our local market 0.65 0.76

  1. CFA fit indices in Sweden: (χ 2/df = 1.50, CFI = 0.91, RMSEA = 0.09). CFA fit indices in Iran: (χ 2/df = 1.73, CFI = 0.927, RMSEA = 0.07).

Appendix 2 Loading factors and convergent validity of the constructs-aggregated data.

Aggregated data
Factor loading AVE CR
Risk taking
People in our outlet are encouraged to take calculated risks with new ideas 0.89 0.754 0.860
We, in our outlet, would rather accept a risk to pursue an opportunity than miss it altogether 0.84
Innovativeness
We actively introduce improvements and innovations in our business 0.85 0.653 0.849
When it comes to problem-solving, we value creative new solutions more than solutions that rely on conventional wisdom 0.79
Our outlet tries to find new ways of advertising, customer relations, distribution and so on 0.79
Proactiveness
We always try to take the initiative in every situation (e.g., against competitors, in projects and when working with others) 0.93 0.777 0.912
We excel at identifying opportunities 0.90
We initiate actions to which other businesses respond 0.82
Competitive aggressiveness
Our business is intensely competitive 0.78 0.689 0.869
In general, our business takes a bold or aggressive approach when competing 0.89
We try to undo and outmaneuver the competition as best as we can rather than to avoid competitive clashes 0.82
Autonomy
We are pursuing business opportunities and make decisions on our own without constantly referring to the franchisor 0.90 0.763 0.865
We are given authority and responsibility to act alone if we think it is in the best interests of the business 0.85
Performance
Net profit (i.e., sales minus operational costs) 0.81 0.700 0.903
Development of sales (i.e., change or growth in the volume of sales) 0.88
Cash flow (i.e., inflows vs. outflows of money) 0.88
Growth of the franchised outlet’s value 0.77
Environmental competitiveness
Competition in our local market is intense 0.80 0.688 0.898
Our organizational unit has relatively strong competitors 0.87
Competition in our local market is extremely high 0.89
Price competition is a hallmark of our local market 0.74
(χ 2/df = 1.89, CFI = 0.940, RMSEA = 0.07)

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Received: 2019-12-18
Accepted: 2020-10-26
Published Online: 2021-02-09

© 2021 Walter de Gruyter GmbH, Berlin/Boston

Articles in the same Issue

  1. Frontmatter
  2. Competitive Research Articles
  3. Should Fast-Food Franchisees Pursue Entrepreneurial Orientation?
  4. Entrepreneurial Decision-Making Under Risk
  5. Entrepreneurial Attitude and Intention in Higher Education Students: What Factors Matter?
  6. Patterns of Forming Entrepreneurial Intention: Evidence in Vietnam
  7. Formal Institutions and Informal Entrepreneurial Activity: Panel Data Evidence from Latin American Countries
  8. Entrepreneurial Motivation in University Business Students: A Latent Profile Analysis based on Self-determination Theory
  9. Effectuation (EF) and Causation (CS) on Venture Performance and Entrepreneurs’ Dispositions Affecting the Reliance on EF and CS
  10. Effects of Psychological and Cognitive Factors on the Relation between Entrepreneurial Intention and Academic Hazing: Case of the New Students in the Faculty of Social and Human Sciences at the University of Beira – Portugal
  11. Dynamics of Late-Career Entrepreneurial Intentions in Pakistan – Individual and Synergistic Application of Various Capital Resources and Fear of Failure
  12. Local Institutional Profile and the Antecedents of Entrepreneurial Intention
https://doi.org/10.1515/erj-2019-0377
Keywords for this article
entrepreneurial orientation; franchising; franchisee performance; restaurant industry

Articles in the same Issue

  1. Frontmatter
  2. Competitive Research Articles
  3. Should Fast-Food Franchisees Pursue Entrepreneurial Orientation?
  4. Entrepreneurial Decision-Making Under Risk
  5. Entrepreneurial Attitude and Intention in Higher Education Students: What Factors Matter?
  6. Patterns of Forming Entrepreneurial Intention: Evidence in Vietnam
  7. Formal Institutions and Informal Entrepreneurial Activity: Panel Data Evidence from Latin American Countries
  8. Entrepreneurial Motivation in University Business Students: A Latent Profile Analysis based on Self-determination Theory
  9. Effectuation (EF) and Causation (CS) on Venture Performance and Entrepreneurs’ Dispositions Affecting the Reliance on EF and CS
  10. Effects of Psychological and Cognitive Factors on the Relation between Entrepreneurial Intention and Academic Hazing: Case of the New Students in the Faculty of Social and Human Sciences at the University of Beira – Portugal
  11. Dynamics of Late-Career Entrepreneurial Intentions in Pakistan – Individual and Synergistic Application of Various Capital Resources and Fear of Failure
  12. Local Institutional Profile and the Antecedents of Entrepreneurial Intention
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