Exploring the influence of channel leadership style on channel commitment in a franchising context

Abstract

Purpose This paper aims to explore franchisor–franchisee relationships in the context of plural forms. Plural forms implies the co-existence of franchised and non-franchised outlets of a given company. More specifically, the paper examines the impact of franchisors’ leadership styles on franchisees’ relationship commitment when the company franchised outlets co-exist with independent non-franchised outlets. Specifically, this study operationalize the plural forms phenomenon in franchising, using multi-channel complexity as a moderator. The mediating role of relational capital is also examined. Design/methodology/approach Data were collected from 254 franchisees. The hypothesized model was tested using partial least squares structural equation modeling (PLS-SEM). Findings The results indicate that all three – participative, supportive and directive leadership styles of franchisors increase relationship commitment. In a high channel complexity context, a supportive leadership style is the most effective, whereas, in a low channel complexity context, a participative style is the most effective. Relational capital also partially mediated the relationships between leadership styles and relationship commitment. Practical implications Franchisors should follow a participative leadership style when channel complexity is low. However, as they add new channels and the channel complexity increases, franchisors should shift toward a supportive leadership style to maintain existing franchisees’ commitment. In current environments, managers should avoid using directive leadership in favor of the other two leadership styles. Originality/value The present study is the first to examine the influence of channel leadership style on relationship commitment in an environment of multiple channel complexity.

Turning aligned interests into higher chain performance in franchising

“…This result supports our prediction (H3) that a chain achieves greater sales growth when interest alignment is joined with the franchisor's greater ongoing support. This result is consistent with prior findings by Hernandez-Espallardo and Arcas-Lario ( 2003) and Sharma et al (2021). The positive interactive effect of greater franchisor interest and greater franchisee interest on chain sales growth is amplified by the franchisor's use of the plural form (b = 5.93, p < 0.001), which supports our prediction (H4) that the positive performance effect of interest alignment is amplified when a franchisor affords greater coordination of franchisees through use of the plural form.…”

“…The challenges of mastering the operational routines and costly mistakes that may occur during the learning process are likely to put a damper on the franchisee’s motivation. A franchisee under these conditions is likely to lose confidence in the franchisor’s commitment to franchisees and lack the necessary capabilities to run store operations efficiently (Barkan, 2011; Sharma et al , 2021). For example, with little field training by the franchisor, a franchisee is likely to lack the skills needed to respond effectively to unforeseen contingencies (e.g.…”

“…In contrast, longer duration of a franchise contract makes it harder for a franchisor to replace wayward franchisees with new franchisees and is unlikely to increase the franchisor's interests. Instead, it may Figure 1 The conceptual framework dampen the franchisor's motivation to commit to the relationship (Lee et al, 2015;Sharma et al, 2021). Such onesided interests mean diminished commitment and greater hazard of opportunism (e.g.…”

The role of ICTs for knowledge sharing in franchising networks

“…By doing this, the model contributes to informing a set of general relationships (Lin, 1998) that can be translated into hypotheses likely to be verifiable in future studies that investigate if the research findings can be appropriate to other similar franchising systems or if they are specific to the franchising context examined. These findings, therefore, improve our understanding of the mechanisms involving the franchisor–franchisee relationships (Sharma et al , 2021).…”

“…This research considers that knowledge sharing promotes innovation and stimulates the creation of products, services and processes (Darroch, 2005). In this regard, key enablers of knowledge-sharing process include trust (Dávila et al , 2019), leadership (North and Scharle, 2020; Sharma et al , 2021) and the existence of available physical and virtual knowledge environments. In this regard, information and communication technologies (ICT) tools are considered facilitators of knowledge sharing (Gomes et al , 2018; Inkinen, 2016).…”