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Entrepreneurial process in franchised outlets
Linköping University, Department of Management and Engineering, Industrial Economics. Linköping University, The Institute of Technology.
Linköping University, Department of Management and Engineering, Industrial Economics. Linköping University, The Institute of Technology.
Linköping University, Department of Management and Engineering, Industrial Economics. Linköping University, The Institute of Technology.
2013 (English)In: Journal of WEI Business and Economics, ISSN 2166-7918 (online); 2166-8477 (CD-ROM), Vol. 2, no 1, 59-71 p.Article in journal (Other academic) Published
Abstract [en]

Although in recent years the study of franchise systems has been the subject of many academic studies, most of them have studied franchise systems from the franchisor's point of view, and the franchisee point of view has received only limited attention. Researchers in business fields have adopted four main perspectives in the study of franchising: strategy, economics, marketing, and entrepreneurship. From an entrepreneurship perspective, while there is no doubt about considering a franchisor's business as an entrepreneurial firm, considering the franchisee's activities during the running and managing of an outlet as an entrepreneurial firm is disputed. An entrepreneurial firm includes involvement in product innovation, commitment to calculated risk, proactiveness and aggressiveness. While the diversity of definitions about entrepreneurship has caused a problem to understand what an entrepreneurial firm is, a process-focused approach offers much unexplored potential for understanding the nature of entrepreneurship in entrepreneurial firms. Therefore, due to the pivotal role of an entrepreneurial process in the nature of entrepreneurship, and considering the entrepreneurial process as the core unit of analysis in entrepreneurial firms, this article aims to study what happens during the entrepreneurial process in a franchised outlet. This study shows, although franchisees are restricted about product innovation, and franchisor reduces the risk of business for them, the franchisor never can omit the risk for franchisee. Moreover, many product innovations in the franchise system stem from the franchisee's ideas, and the franchisor will never be able to eliminate the risk for the franchisees. The franchisee's business also encompasses all dimensions of the entrepreneurial process as the unique features of entrepreneurial firms.

Place, publisher, year, edition, pages
2013. Vol. 2, no 1, 59-71 p.
Keyword [en]
Franchising, entrepreneurial firm, entrepreneurial opportunity, entrepreneurial process, risk-taking
National Category
Engineering and Technology Economics and Business
URN: urn:nbn:se:liu:diva-103322OAI: diva2:688373
Available from: 2014-01-16 Created: 2014-01-16 Last updated: 2014-03-13Bibliographically approved
In thesis
1. Enhancing SMEs competitive advantage by franchising
Open this publication in new window or tab >>Enhancing SMEs competitive advantage by franchising
2014 (English)Licentiate thesis, comprehensive summary (Other academic)
Abstract [en]

Although there is a large body of literature on franchising systems that are mainly produced from the franchisor's perspective, looking at franchising from the franchisee's point of view has remained largely uninvestigated. Creating and sustaining competitive advantage is the prerequisite for the franchisee's (as an SME) survival in today's competitive environment. This research's comprehensive literature review shows three major groups of factors influencing the franchisee’s competitive advantage, including the franchisor-related factors, the franchisee-related factors, and factors associated with the franchisor-franchisee relationship. Since the franchisor has a dominant role in the business, it can influence the franchisee in many ways. Therefore, it is crucial to put special emphasis on how the franchisor-related factors may influence the franchisee business success.

In light of the discussion above, this study was carried out to understand how franchisor-related factors, through enhancing/creating competitive advantage, might influence the franchisee’s business success. According to the literature on competitive advantage, three clusters of literature as three perspectives were reviewed and discussed. These include the resource-based view, the industry structure view, and the relational view. In the resource-based view, the firm's resources are considered as a source of competitive advantage, but in the relational view, not only the firm's internal resources, but also the interfirm resources are the source of competitive advantage. Therefore, this perspective has a significant contribution to this study. In addition to services provided services by the franchisor, as the resources, franchisor organizational factors specifically entrepreneurial orientation, and absorptive capacity were found relevant in the franchisee's competitive advantage. Accordingly, an integrative theoretical/analytical framework was built and used throughout the study.

Because of exploratory nature of the study, the qualitative method was chosen and applied. Along with the purpose of the study, a multiple-case study research strategy consisting of seven cases, in two franchising systems, was performed. The results of the analysis confirm that services provided by the franchisor, the franchisors’ entrepreneurial orientation, and the franchisees’ absorptive capacity have a significant role in enhancement of the franchisees’ competitive advantage. Other significant results of the franchisor-related factors enhancing competitive advantage were found to be: the speed of raw material supply, keeping consistency in quality, economy of scale and keeping prices competitive. Furthermore, the franchisor enhances the franchisee's competitive advantage by transferring business know-how and creating collective tacit knowledge, and as well improvement in the franchisee-specific human capital. Intellectual property in a franchise system through transferring the first mover advantage to the franchisee and creating the differentiated position affect the franchisee's competitive advantage. The franchisor’s entrepreneurial orientation creates the first-mover advantage for the franchisee. Similarly, the franchisor's absorptive capacity, through creating the first-mover advantage and improving the franchisee's social capital, enhances the franchisee's competitive advantage.

Place, publisher, year, edition, pages
Linköping: Linköping University Electronic Press, 2014. 112 p.
Linköping Studies in Science and Technology. Thesis, ISSN 0280-7971 ; 1637
National Category
Engineering and Technology
urn:nbn:se:liu:diva-103334 (URN)LiU-TEK-Lic 2013:71 (Local ID)978-91-7519-436-3 (print) (ISBN)LiU-TEK-Lic 2013:71 (Archive number)LiU-TEK-Lic 2013:71 (OAI)
2014-01-24, Sal A1, A-huset, Campus Valla, Linköpings universitet, Linköping, 10:15 (English)
Available from: 2014-01-17 Created: 2014-01-17 Last updated: 2014-01-17Bibliographically approved

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