Exploring Entrepreneurial Cognition in Franchisees: A Knowledge–Structure Approach

Abstract

Franchisees participate in new business creation uniquely, because, in many respects, the development of their ventures is under the direction of franchisors. In this study, using entrepreneurial scripts, we compare the extent to which franchisee venturing is similar to and/or distinct from individual–based entrepreneurship in nonfranchise new ventures. We therefore examined the entrepreneurial scripts of individuals in a purposeful sample of 54 franchisees compared to two counterpart groups: 54 independent entrepreneurs and 94 managers (neither franchisee nor entrepreneur). Using MANCOVA and follow–up tests we find that franchisees are less like entrepreneurs and more similar to nonentrepreneur managers.

Microfranchise emergence and its impact on entrepreneurship

“…For many scholars, the reduced decision-making autonomy and lower risk are among the reasons franchisees are considered 'managers' rather than 'entrepreneurs' (Seawright, Smith, Mitchell and McClendon (2013). However, a poll ) of the editorial board of one of the leading entrepreneurship journalsEntrepreneurship Theory and Practice -was less definitive when it came to franchisors.…”

Social Innovation Through Development Franchising: Compensating for a Lack of Entrepreneurial Expertise and Connecting to Formal Supply Chains

“…These knowledge structures, however, are domain-specifi c (Lord and Maher 1990 ), and they are often used sequentially (Leddo and Abelson 1986 ) -i.e., "for entry into the action sequence within a domain, and…for the doing of the task required within this domain" (Seawright et al 2013 ). In the domain of entrepreneurship, researchers have defi ned entrepreneurial expert scripts as "action-based knowledge structures" (Mitchell et al 2000 : 975), some of which are related to entry into entrepreneurial ventures, and others related to the actual doing of entrepreneurial tasks.…”

“…In a recent study, franchisees in the formal U.S. economy were shown to have cognitive mental schemas more similar to non-entrepreneurial managers (novices) than successful entrepreneurs (experts) (Seawright et al 2013 ). The fact that many franchisees succeed in an entrepreneurial environment suggests that the franchise business model may compensate for the entrepreneurial expert scripts that franchisees lack.…”

New challenges in franchisor-franchisee relationship. An analysis from agency theory perspective

“…These aspects include the origin of the relationship between organizations (Caves and Murphy 1976;Gillis and Castrogiovanni 2012), with regard to coordination mechanisms for compensation and financing (Sen 1993;Wimmer and Garen 1997;Vázquez 2005; Gonzalez-Diaz and Solis-Rodriguez 2012), the duration and optimization of the agency contract (Shane 1998;Vázquez 2007), the control mechanisms on performance (El Akremi 2010; Mellewigt et al 2011), the risks in the relationship (Lafontaine 1992; Michael and Combs 2008), and the propensity to franchise by franchisors (Lafontaine 1992;Barthélemy 2011;Seawright et al 2013). In general, the literature concludes that to overcome the AP in a franchise outlet, it is important to identify these risks at an early stage, even before the business commences.…”

“…The research by scholars such as Kaufmann (1999) and Kaufmann and Eroglu (1999) reflects this dichotomy between being an entrepreneur franchisee or not and proposes an integrative model that considers other aspects, such as individual and social aspects. Seawright et al (2013) compared managers and entrepreneur-franchisees. They analyzed the attitudes of the managers of establishments owned by the chain and traditional entrepreneurs and came to the conclusion that franchisees have a profile more similar to a traditional manager than an entrepreneur; these franchisees exhibit a maximum commitment to the chain but have lower skills than managers or independent entrepreneurs.…”