The moderating influence of HR operational autonomy on the entrepreneurial orientation–performance link in franchise systems

Abstract

This study investigates the concept of HR Operational Autonomy, i.e., the freedom a franchisor offers to franchisees throughout the system with regards to their creation of HR practices. It is shown to have a significant positive moderating effect on the EO-performance link among UK franchise systems, explaining over 20 percent of the variance in performance outcomes. Implications and future research directions are discussed.

Best fit, best practice, or stuck in the middle? The impact of unit ownership on unit HR performance in franchise systems

“…Franchisees can be considered as 'semiautonomous' entrepreneurs; even though they adopt their franchisors' business formats, they take the risk of investing capital in their units' assets, they are their units' residual claimants, and they generally enjoy some decision rights (Grünhagen et al 2013;Ketchen et al 2011;Sorenson and Sørensen 2001).…”

“…It has been identified in prior studies as a critical success factor in the service and retail industries (McLean 2006;Miller 2006) in which business format franchising is a widely used business model (Combs and Ketchen 2003;Welsh et al 2006). Recent research Castrogiovanni and Kidwell 2010;Grünhagen et al 2013) has noted the critical contributions of HRM policies in a franchising context, both at the unit and the system level.…”

“…Applied to an HRM context, responsibility for the management of human resources is typically delegated by the franchisor without much regulation to individual franchisees, despite the common assumption that in franchise systems, virtually every aspect is regulated via contract in order to ensure system-wide standardization (Grünhagen et al 2013). There may be variation between franchise systems as regards the level of franchisee HR autonomy (Grünhagen et al 2013); however, several studies have found that franchisees generally have quite significant HR autonomy in their units 1 Burgers et al 2010;Mumdžiev and Windsperger 2011;Truss 2004;Windsperger 2004). The major reasons for this franchisee HR autonomy are to maintain franchisee satisfaction and motivation (Truss 2004), and to avoid legal risks for the franchisor ).…”

“…The major reasons for this franchisee HR autonomy are to maintain franchisee satisfaction and motivation (Truss 2004), and to avoid legal risks for the franchisor ). Yet, despite the franchisees' autonomy regarding HRM, not much is known about how franchisees utilize the relatively large degree of autonomy they receive, and the effectiveness of their HR practices, resulting in a recent call for more studies of HRM and its impact on performance at the franchise unit level (Grünhagen et al 2013).…”

Antecedents of early terminations in franchising: franchisor versus franchisee cancelations

“…Autonomy provides franchisees with the freedom and flexibility they need for entrepreneurial activities (i.e., risk-taking, innovative, and proactive initiatives) (Lumpkin et al 2009). However, although the franchisor's autonomy is usually undisputed, that of franchisees is debatable (Grünhagen et al 2014;Dada 2016). We specifically examine franchisees' autonomy in two decision areas, pricing and local advertising.…”