Modelling effect of valuable resources on franchise outlet performance: Dynamic sensing capability as mediator

Jilson Zimuto,Rachel Maritz

doi:10.4102/sajems.v22i1.2706

Jilson Zimuto, Rachel Maritz

Open Access

https://doi.org/10.4102/sajems.v22i1.2706

Copy DOI

Abstract

Background: Competitive advantage and superior firm performance depend on resources and dynamic capabilities.Aim: This study aims to provide insight into the franchising industry where research on the value-dynamic sensing capability-performance relationship as part of the resource-based theory (RBT) seems to be novel. Drawing on the RBT, this study examines how valuable resources and dynamic sensing capability impact franchise outlet performance.Setting: Based on a cross-sectional design, a sample of 224 South African franchise outlet managers and owner-operators in the fast food and retailing categories was surveyed.Methods: Hypotheses were tested using a single-level structural equation model for value, dynamic sensing capability and performance.Results: The results contribute to research on RBT in the context of franchises by providing support for the assumption that firm resources and capabilities improve performance.Conclusion: The findings are expected to provide a strong base from which franchise managers and owner-operators can strategise for competitive advantage in an emerging economy like South Africa.

Highlights

The debate over the ability of dynamic capabilities (Teece, Pisano & Shuen 1997:509) to align and realign resources (Eisenhardt & Martin 2000:1106) in a turbulent environment for competitive advantage is rife in research
The study contributes to the understanding of the resource-based theory (RBT) as applied in the franchising environment by showing that a definite relationship exists between valuable resources, dynamic capabilities and firm performance
It adds additional rigidity to the theory as it proves that the dynamic sensing capability will mediate the relationship between valuable resources and performance

Summary

Introduction

The debate over the ability of dynamic capabilities (Teece, Pisano & Shuen 1997:509) to align and realign resources (Eisenhardt & Martin 2000:1106) in a turbulent environment for competitive advantage is rife in research. The RBV has matured into the resource-based theory (RBT) and still has theoretical relevance and applicability in today’s competitive strategy environment and is widely acknowledged as one of the most prominent and powerful theories for describing, explaining, and predicting organisational relationships (Barney, Ketchen & Wright 2011:1300). From previous theoretical and empirical studies (for example, Akremi, Perrigot & Piot-Lepetit 2015:145; Gillis, Combs & Ketchen 2013:449; Mumdziev & Windsperger 2011:449) it is clear that little has been done in the context of franchising. For the purposes of this study, RBT, which evolved as a clear framework from the RBV of the firm, and the literature on dynamic capabilities are adopted to provide an empirical analysis of the variables contained in the RBV and their influence on South African franchise outlet performance. Competitive advantage and superior firm performance depend on resources and dynamic capabilities

Objectives

Results

Conclusion