Abstract
Franchisees play an important role in franchise systems, as they are responsible for managing their business and ensuring its overall performance. Since earlier research confirmed the relationship between entrepreneurial orientation (EO) and performance, this study explores the effect of location on the five dimensions of EO for franchisees. This study assessed franchisees, their risk taking, innovation, pro-activeness, competitive aggression and autonomy, and investigated location clusters related to this. Location was investigated from a geographical and operational stance. A face-to-face survey was conducted among 104 franchisees operating in four major cities in the retail sector in South Africa. Two clusters were identified: ‘operating inside of shopping centres’ (50%) and ‘operating outside of shopping centres’ (50%). Contradictory to what was found in the literature, the results indicate that a franchisee is likely to be more entrepreneurially orientated when operating outside of a shopping mall in the Johannesburg region. The strongest and weakest EO dimensions in terms of cluster construction were identified. Furthermore we found that, since the EO dimensions are highly correlated, it is likely that a franchisee will experience high levels of all of the dimensions simultaneously and therefore share in the positively associated benefits of EO, such as growth and performance.
Highlights
The quest for South Africa to create employment, stimulate growth and foster young and growing businesses has been a difficult journey with mixed results (Barnard, Kritzinger & Krüger, 2011: 112)
Since there are various types of stores, as well as different activities and initiatives, this paper focuses on franchisees operating food franchise systems inside and outside of shopping malls across four major cities namely Johannesburg, Pretoria, Durban and Cape Town within South Africa
The franchises that were outside shopping malls have mostly been in operation between three and six years, with 61.23% of respondents falling within this category
Summary
The quest for South Africa to create employment, stimulate growth and foster young and growing businesses has been a difficult journey with mixed results (Barnard, Kritzinger & Krüger, 2011: 112). The United States of America (USA), for example, has over 3 000 active franchise systems, with 901 093 franchisees employing approximately 18 million people, which in turn generates an economic output of over $2.1 trillion This is a significant contribution to the American GDP and accounts for about 40.9% of the retail sector (Dant, Grünhagen & Windsperger, 2011: 253). According to Kickul and Gundry (2002: 85), the drive to find answers in the entrepreneurial domain has grown significantly and has changed direction from looking at entrepreneurial traits, to activities, and to behaviours. It is this investigation of behaviours that has led to explore the effect of location on the five dimensions of EO for franchisees. Franchisees with high levels of EO are likely to be more productive, which can lead to a more profitable franchise system
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