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The website functionalities of franchisors’
transactional websites
Characterization of franchisors’ e-commerce strategies by analysing the range of search-, purchase and social oriented website functionalities
Name: Martijn Rottiné Student number: S2757745
Date: January 2021
E-mail: M.rottine.1@student.rug.nl Supervisor: dr. E.P.M. Croonen
Co-Assessor: dr. M. Wyrwich Word count: 9467
Small Business & Entrepreneurship Faculty of Economics & Business
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Abstract
The rapid growth of the internet makes the presence of a successful e-commerce strategy important for businesses. Franchisors face more challenges than non-franchising competitors due to the territorial exclusivity where franchising is typically relying on. In this paper that is built on the work by Pénard & Perrigot (2017), the website functionalities of franchisor’s websites were analysed to characterize the e-commerce strategies of franchisors. A franchisors’ website can be used to help the customer in their search process, to provide tools to let customers buy products/services, or to engage in a social interaction with the customer. Based on the analysis of 124 transactional websites from franchisors operating in the Dutch market, there is evidence that an increase in a franchisor’s network size has a positive impact on the range of social-, search- and purchase related functionalities on a franchisors’ website. An increase in the percentage of company-owned stores has a positive impact on the range of social- and search- oriented functionalities. Finally, the range of purchase oriented functionalities seems complementary to the range of search and social oriented functionalities.
3 Table of content Introduction 3 Literature review 6 Franchising 6 E-commerce in franchising 7
Website functionalities as e-commerce strategies 8
Hypotheses 12
Data & Method 15
Sample description 15
Dependent variables description 15
Independent variables description 18
Analysis 19
Results 19
Descriptive statistics & Correlation 20
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Introduction
The rapid growth of the internet has a large impact on the retail industry. Online presence is almost obligatory when doing business nowadays. The rise of e-commerce is one of the most important drivers of growth in the retail industry in the western world, and some consumers even prefer buying via a virtual marketplace over a physical one (Clarke, Thompson & Birkin, 2015; Nisar & Prabhakar, 2017). What is also growing is the amount of franchises in the world (Nijmeijer, Fabbricotti & Huijsman, 2014). The number of franchises in the Netherlands for example, grew from 824 to 921 between 2017 and 2019 (NFV, 2019).
Franchising is most commonly defined as a business relationship based on a licensing agreement between a franchisor, who developed a product or service that it is selling, and a franchisee which is set up to market the service or product the franchisor created (Gillis & Castrogiovanni, 2012). When e-commerce and franchising are combined, a very interesting field of research arises because of the contradictions between the two. Franchising is typically relying on the exclusivity a franchisee receives within a protected territory. Contrarily, e-commerce activities are part of a strategy that does not take territorial boundaries into account. By offering products and services online, a company can reach customers in all geographic locations (Ghosh & Graig, 1991; Di Fatta, Patton & Viglia, 2018). Despite the global rise of commerce activities, franchisors are struggling to recognize the most suited e-commerce strategy for their network (Kremez, Frazer & Thaichon, 2019).
The literature about e-commerce strategy in a franchise environment remains scarce at this moment. Research in this field first analysed the content and functionalities on websites of franchisors. Insights about the possibility to pay and order online, the presence of a store locator and the presence of online sales promotions where gained (Dixon & Quinn, 2004; Young, McIntyre & Paswan, 2004). After that, a research stream that analysed the factors that helped franchisors implement their e-commerce strategy emerged. Evidence has been found that a higher percentage of company-owned stores in a franchise network leads to more investments in an e-commerce website (Kaufman, Cliquet & Achabal, 2010; Perrigot & Pénard, 2013; Cliquet & Voropanova 2016). Perrigot & Pénard (2013) also found that the network size of a franchise influenced the willingness to invest in an e-commerce website.
These two research streams were combined in a research conducted by Pénard and Perrigot (2017). They looked at the e-commerce strategies of franchisors by analysing
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The search oriented functionalities and the purchase oriented functionalities. However, nowadays firms also provide other functionalities as part of their e-commerce strategy.
Technical features on a website can be used for the support of information sharing but also for social interaction. Firms have started to engage in a social relationship with customers by building an online reputation. (Grange & Bensabat, 2010; King, 2016). Customers nowadays looking for a more personalized online buying experience that is based on the online
interaction with a company (Zhou, Zhang & Zimmermann, 2013). This research will use the research conducted by Pénard and Perrigot (2017) as a starting point. However, a range of social oriented functionalities will be added. Therefore, the research questions overlap with the research questions proposed by Pénard and Perrigot (2017) with inclusion of the social oriented functionalities:
RQ1: What is the set of content and services provided by a franchisor website and what is their purpose?
RQ2: Which chain characteristics can explain a franchisor's choice to provide more or less functionality related to social, search and transaction processes?
RQ3: What are the interdependencies between the online purchase functionality and the search functionality, and what are the interdependencies between the online purchase functionality and the social functionality?
This research answers a call by many different authors (e.g., Dant, 2008; Wright & McAuley, 2012; Perrigot & Pénard; Kremez et al., 2019) to extend the current literature about
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Literature review
In the literature review chapter an overview of the relevant literature is provided. Key concepts are defined and theory is discussed. The first paragraph is concerned with research about franchising. The second one defines and discusses the e-commerce strategy in a franchising environment. After that website functionality as an e-commerce strategy will be analysed. And finally, hypotheses will be composed based on the existing literature.
Franchising
There have been many definitions of franchising, these definitions differ between time and location. For this paper, the definition provided by the European Code of Ethics for Franchising (2003) will be used: “Franchising is a system of marketing goods and/or services and/or
technology, which is based upon a close and ongoing collaboration between legally and financially separate and independent undertakings, the Franchisor and its individual Franchisees, whereby the Franchisor grants its individual Franchisee the right, and imposes the obligation, to conduct a business in accordance with the Franchisor’s concept. The right entitles and compels the individual Franchisee, in exchange for a direct or indirect financial consideration, to use the Franchisor’s trade name, and/or trade mark and /or service mark, know-how, business and technical methods, procedural system, and other industrial and /or intellectual property rights, supported by continuing provision of commercial and technical assistance, within the framework and for the term of a written franchise agreement, concluded between parties for this purpose.”
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because it is the most common one, it is also the only form of cooperation that may use the term franchising in the Netherlands (Croonen, 2006). In the past few decades business format franchising became a more and more popular way to grow your business (Kaufmann & Dant, 1996; Duckett, 2008). The number of franchises in the Netherlands is still growing, according to data provided by the ‘Dutch franchise organisation (NFV)’ the number of franchisors in the Netherlands grew from 824 to 921 between 2017 and 2019. These franchises employ over 340.000 people in the Netherlands which makes franchises an interesting topic to conduct research about (NFV, 2019).
E-Commerce in franchising
E-commerce is a term that has been around for a long time, it emerged right after the finding of the internet. The most commonly used definition for e-commerce is the use of technology as enablement for buy-sell interactions (Holsapple & Singh, 2000a). The first stream of literature about e-commerce had a trading view focus (Hayashi, 1996). They saw e-commerce as the use of a computer network to help with the buying and selling of products. The focus later shifted towards a value chain view. Becker, Ferris and Osborn (1998) defined e-commerce as
“commerce which is enabled by WWW-era technologies, to permit the seamless integration of information, communication, and logistical technology along the entire value chain of business processes from the suppliers of raw goods and services to the customers.”
Despite being a relatively new and important topic in the field of academic research about franchising, the link between e-commerce and franchising is quite underexposed (Dixon & Quinn, 2004; Perrigot & Pénard, 2013; Kremez et al., 2019). According to Kremez et al. (2019) the literature is limited, and the literature that does exist, are short articles that are more aimed at the franchising industry rather than the field of research. This can be a possible explanation for the immaturity of internet usage within franchise networks.
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exclusivity a franchisee receives within a protected territory. They receive this exclusivity to protect the franchisee from sales cannibalization (Ghosh & Graig, 1991). Contrarily, e-commerce activities are part of a strategy that does not take territorial boundaries into account because it allows firms to reach consumers in all geographic locations (Di Fatta et al., 2018). This contradiction makes the adoption of e-commerce strategies by franchising organisations more challenging than the adoption of an e-commerce strategy by their non-franchised rival (Perrigot, Basset & Cliquet, 2017). The guidelines of the European commission (2010) describe that every franchisee has the right to use the internet to interact with customers. This means that not only the franchisor is allowed to set up a transactional website, but also the franchisee can set up a website on its own. A transactional website is a website that not only displays information about the organization, it also offers a possibility for customers to buy products and services online (Van Nierop, Leeflang, Teerling & Huizingh, 2011). This could raise a problem with a franchisor’s network uniformity because of the differences in resources among the different franchisees. That is why the franchisor can setup quality standards that franchisees must follow when developing their own transactional website (European commission, 2010; Perrigot, Basset, Briand & Cliquet 2013). The scope of this research will be limited to transactional websites that are created by franchisors. The first reason to only consider the websites created by franchisors is that most of the franchise networks solely have a general website created by the franchisor in order to keep the costs for operating a website low while still preserving uniformity among the franchisees (Perrigot et al., 2013). The second reason is that a resource-based perspective will be used, this perspective sees a company’s internal resources and their tangible and intangible competencies as main factors that determine the e-commerce strategy (Foss, 1998). This makes it important to look at the franchise network as a whole because network characteristics such as network size and percentage of company-owned stores within the entire network are relevant to measure the resources and capabilities that are important for the success of franchisors’ websites (Perrigot & Pénard, 2013). Further explanation about the resource-based perspective and the use of network size and percentage of company-owned stores as determinants for companies’ resources will be provided in the hypotheses chapter.
Website functionalities as e-commerce strategy
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that successfully implementing the more personalized online approach will increase the customer experience which could drive sales. So in this study, the research conducted by Pénard and Perrigot (2017) about website functionalities will be followed. However, their research based on search and purchase oriented functionalities will be further extended with a third view towards the functionalities, namely: The social oriented view. In this view the website functionalities that are aimed towards social interaction with customers will be analysed. What will follow is a brief description of the functionalities that will be analysed in the social oriented purpose category.
Mission & Vision: Mission and vision are both part of corporate communications.
Cornelissen (2004) defined mission as a “general expression of the overriding purpose of the organization, which, ideally, is in line with the values and expectations of major stakeholders and concerned with the scope and boundaries of the organization.” The author defined vision as the future state the organization desires to be in. Beason (1991) sees these forms of corporate communications as a strategic way to gain trust and acceptance by readers of these communications. If the readers agree with the mission and vision of a company it can give them the impressions that they share the same backgrounds, goals and values. According to Combs et al., (2011) the mission and vision statement of a company could also lead to the attraction of franchisees. However, the social role of the mission and vision statement on a franchisor’s website has not been studied yet.
Comments & Ratings: The possibility for a customer to leave a comment and rating on
a product or website also emerged with the rise of the social aspect of the internet (Zhang, Craciun & Shin, 2010). Chevalier and Mayzlin (2006) conducted a research in which they found that comments and ratings from other customers could lead to a positive change in consumers’ purchasing behavior. So the provision of a comments and rating system could possibly lead to an increase in sales. According to Bickart and Schindler (2001) comments and ratings by other customers lead to more empathy, relevance and a higher website credibility. Research by Gruen, Osmonbekov and Czaplewski (2006) confirms the research from Bickart and Schindler (2001) and add that a comment and rating system could improve the overall value of a company’s offerings. The authors also found that the knowledge exchange between customers on a company’s website had a relationship with the intention of the customer to stay loyal to the company.
Live assistance: When analysing the social oriented functionalities of a website, the
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company could engage with customers. Research by Firdous and Farooqi (2017) shows that assistance through direct online contact and through telephone has the strongest correlation with customer satisfaction. For that reason, only direct ways of contact such as Whatsapp, calling and LiveChat functions will be used when measuring the social oriented functionalities.
Returns: With the rise of e-commerce, product returns also gained more interest in the
field of research. Returns became more important in online retailing in comparison with offline retailing due to the fact that customers buy a product based on the image they see online instead of the actual product in-store (Griffis, Rao, Goldsby & Niranjan, 2012). Customers want procedural justice when returning products, this procedural justice also influences the view the consumer has about the company (Smith & Bolton, 2002). When the service effort is high, the negative thoughts a customer has about the company reduce considerably (Oliver & Swan, 1989). A research by logistics company UPS (2013) shows that online shoppers will return when the return policy is hassle-free. Customers also like the option that a product can be returned both online and in-store. Returns will be analysed because they can be a challenge for franchised stores due to the extra-tasks returns bring for franchisees (Pénard & Perrigot, 2017).
Customized delivery: There are several options a customer has when choosing a certain
type of delivery. Nguyen, de Leeuw, Dullaert and Foubert (2019) made an overview of the different customizable delivery options a customer has. Customers nowadays can choose between the day of delivery, on that day a certain time slot, if they would like to receive their package in the evening and choose a delivery fee based on the pace they would like to receive their package with. Research by Dadzie, Chelariu and Winston (2005) shows that delivery is seen as an important aspect of customer service and it is an important driver of the loyalty of customers. After the buying and checkout process, customers would like to receive information about their order. 95% of consumers asked by UPS (2013) sees the tracking option for their order as essential or nice to have.
Social media presence: The importance of a social media presence for a company is
described in an article written by Kietzmann, Hermkens, McCarthy and Silverstre (2011). They describe the change the internet made for companies. Customers previously just read information on the internet and used this information in their buying decision. Nowadays, customers use social media websites on the internet as a place to discuss and create internet content. Engaging in social media activities can impact a firm in both reputation and sales. While not engaging in social media activities could even threaten the existence of a business.
Sustainability activities: According to research, the adoption and communication of
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employees and customers (Kim & Park, 2011; Mandhachitara & Poolthong, 2011). Perrigot, Oxibar and Déjean (2015) conducted a research about corporate social disclosure and found that the presence of sustainable activities on a franchisor’s website is there to fulfil the demands of stakeholders, managing the risks that arise around sustainable activities and to build a reputation as being involved in sustainable activities.
Hypotheses
In a resource-based perspective, a company is described as a collection of resources. These resources cover all assets, know-how, organizational processes and capabilities a company has. A firm’s resources are an enabler to create and implement strategies that increase value for the business (Barney, 1991; Foss, 1998). Intangible assets like brand image, reputation, training facilities and know-how are vital for the success of franchising. That is why a resource-based perspective is very relevant when analysing franchisors’ e-commerce strategies (Perrigot & Pénard, 2013). It is difficult to get a factual overview of the different resources a franchisor has. That is why franchise network characteristics like system age, percentage of company-owned stores and network size are often used as determinants for a franchisors’ resources.
When selling products online, it is hard to lure customers onto a franchisor’s website. There is no presence of a physical store, a display of products, employees that target people and so forth. Sponsored links and online advertisements can help drawing traffic to a
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online customers to a franchisor’s transactional website (Perrigot & Pénard, 2013). That is why for this research the following hypotheses are formulated:
Hypothesis 1. The network size has a positive impact on the range of functionalities provided on the franchisor website to help consumers purchase online.
Hypothesis 2. The network size has a positive impact on the range of functionalities provided on a franchisor website to help consumers search online.
Hypothesis 3. The network size has a positive impact on the range of functionalities provided on a franchisor website to help consumers socialize with the firm.
The second set of hypotheses are based on the relative amount of company-owned stores in a franchise network. Company-owned stores are stores that are owned by the franchisor and managed by employees of the franchisor. Most franchises rely on a plural form, which is a combination between company-owned stores and stores owned by franchisees. This plural form has several benefits that are highlighted in the research of Bradach (1997). The plural form leads to businesses that complement each other. The value and know-how within a franchise network increases if the network includes both company-owned stores and stores owned by franchisees (Bradach, Eccles & Price, 1989). The plural form also could solve problems regarding network growth. Letting franchisees into a network is a fast way of growing your franchising organisation. Another possible advantage is that franchisors in a plural form network are more familiar with the use of a strategy based on multiple channels. The implementation of a transactional website as third channel is a more logical step for franchisors that operate a plural network (Perrigot & Pénard, 2012).
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maintaining a transactional website (Perrigot & Pénard, 2012; Pénard & Perrigot, 2017). To get an idea about the actual role of the percentage of company-owned stores within the chain, the following hypotheses are composed:
Hypothesis 4. The percentage of company-owned stores (PCO) within the network has a positive impact on the range of functionality provided on the franchisor website to help consumers purchase online.
Hypothesis 5. The percentage of company-owned stores (PCO) within the network has a positive impact on the range of functionality provided on a franchisor website to help consumers search online.
Hypothesis 6. The percentage of company-owned stores (PCO) within the network has a positive impact on the range of functionality provided on a franchisor website to help consumers socialize with the firm.
The last hypothesis that will be introduced is concerned with the changing role of businesses in their environment. Organizations are more actively engaging in building a relationship with their customers. According to different researches, this new and more active role leads to a higher performance (Ramani & Kumar, 2008; Andzulis, Panagopoulos & Rapp, 2012; Jeon & Kleiberman, 2017). The decision to provide website functionalities other than purchase related ones cannot be seen as an independent choice. In an online
environment, search functionalities and social interaction functionalities are needed to facilitate the purchase process. That is why the range of purchase functionalities can be seen as an explanatory variable for search related functionalities (Pénard & Perrigot, 2017). But the relationship between social oriented website functionalities and purchase oriented website functionalities has not been researched yet. The expectation is that social oriented
functionalities will increase when the range of purchase oriented functionalities increases. That is why the last hypotheses will be:
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Data & Methodology Sample description:
To gain answers to the different research hypotheses, multiple e-commerce websites were analysed. The focus of this research lays on websites of franchisors that are based in the Netherlands or run their business in the Netherlands. Franchising is a growing business in the Netherlands. In 2018 there were 836 franchise organisations with over 32000 stores which had a total turnover of 35.1 billion euros. In 2019 this grew to 921 organisations with over 34000 stores and a total turnover of 38.1 billion euros (NFV, 2019). Franchising makes its appearance in both the retailing and the service industry. Because of the lack of transactional options in the service industry, only the retailing industry will be used for this research. A sample of 124 franchisor websites in the food, clothing, living, DIY equipment and telecom industry was selected out of a total of 750 franchisor websites provided by the Dutch Franchise Guide (De Nationale Franchise Gids, 2020). The owners of the company behind the Dutch Franchise Guide provided an Excel file with an overview of franchise networks in combination with data like the amount of company-owned stores, the amount of stores owned by franchisees, a link to their websites and details about their address. Because functionalities on transactional websites are the main interest of this study, only websites with a purchase option were taken into consideration. A second selection criterion is that all franchises had at least one physical franchised store. Another selection criterion for the websites was the presence of a privacy statement on the franchisor’s website. Since the 25th of May 2018 it is obligated by Dutch law to have a privacy statement on your website (AVG, 2018). This selection criterion is used to make sure that the website is still in use and gets updated regularly.
Dependent variables description
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Online search functionality score: this score is based on the range of information that
can be found on a franchisors website and the tools that help a consumer search a website. A functionality in this category can be present or not present. When it is present, the functionality received a score of 1, and when it was not present the functionality received a score of 0. The total online search functionality score was based on the sum of the individual functionalities scores divided by the total amount of individual functionalities. What is different from the online search functionality score proposed by Pénard & Perrigot is that this score is compiled on 12 different functionalities which can be found in table 1. Online search functionality score has a mean of 0.6626 and a standard deviation of 0.1646.
Online purchase functionality score: This score is based on the range of tools that can
be found on the franchisors website that help with the online purchasing process. Just like the search functionality scores the purchase functionalities were measured with zeroes and ones. A zero if the functionality was not present and a one if a functionality was present. An overview of the different functionalities can be found in table 2. Online purchase functionality score has a mean of 0.6499 and a standard deviation of 0.1710.
Social oriented functionality score: The social oriented functionality score is based on
the range of functionalities on a franchisors website that are aimed to engage in a relationship with the customer. Just like the previous functionality scores it was measured with a zero if the functionality was not present and a one if it was present. An overview of the different functionalities can be found in table 3. The mean of the social oriented functionality score is 0.6083 with a standard deviation of 0.1927.
Table 1: functionalities with search oriented purpose
Name of the website functionality Brief explanation of website functionality
Language The website can be consulted in several languages
History The website presents the company’s history
Newsletter The website asks if the customer would like to receive a newsletter
FAQ Section The websites propose help via a FAQ section
Smartphone The company has a smartphone application
Text description A text description of the product is available on the website
Image description A picture of the product is available on the site
Actual conditions The product is presented under actual conditions
Zoom It is possible to zoom in on the product
Colours The product is available in different colours which all can be seen
Search bar The website features a search bar
New Collection A new collection heading is presented on the website
As presented by Pénard & Perrigot (2017) p.167
Table 2: functionalities with purchase oriented purpose
Name of the website functionality Explanations on the website functionality
Personal space The website has a space where the customer could login
Wish list The website offers the possibility of creating a wish list
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Top selling items The website provides a top selling items heading
Shopping cart The website proposes composing an individual shopping cart
Customization The website proposes customizing the product at the time of
ordering
Cross-selling The website shows cross-selling recommendations
Good deals A good deals heading is showing on the website
Discount The website shows a difference between the actual price and the
discounted price
Promotional codes The website shows a bar for entering promotional codes
Online payment The website proposes an online payment system
Secure payment system The company proposes a secure payment system
As presented by Pénard & Perrigot (2017) p.167
Table 3 functionalities with social oriented purpose
Name of the website functionality Explanations on the website functionality
Comments & ratings The website provides a place where customers could leave a
comment or rating
Live assistance There is a place on the website where live assistance can be found
Mission & vision The websites present the company’s mission & vision
Customized returns The website presents a description on how to return the customer’s
order
Customized delivery The website shows several options about the delivery of an ordered
product
Social media presence The company has a presence on one or multiple social media sites
Sustainability activities The website presents the company’s sustainable initiatives
Table 4 appearance of each different functionality
Functionality Present in # out of 124 Present on the website in % Search Language 18 14.5 History 75 60.5 Newsletter 98 79.0 FAQ section 80 64.5 Smartphone 43 34.7 Text description 122 98.4 Image description 124 100 Actual conditions 115 92.7 Zoom 75 60.5 Colours 23 18.5 Search bar 100 80.6 New Collection 52 41.9 Purchase Personal space 87 70.2 Wish list 38 30.6 Choice by category 121 97.6
Top selling items 38 30.6
Shopping cart 122 98.4
Customization 25 20.2
Cross-selling 48 38.7
Good deals 85 68.5
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Promotional codes 87 70.2
Online payment 120 96.8
Secure payment system 124 100
Social
Comments & ratings 59 47.6
Live assistance 116 93.5
Mission & vision 47 37.9
Customized returns 87 70.2
Customized delivery 52 41.9
Social media presence 121 97.6
Sustainability activities 44 35.5
Independent variables description
This study is focused on two different independent variables. The first variable is the network size. This variable is based on the sum of company-owned stores and franchised stores in a network. In existing literature, a franchisors’ network size is a representative for the amount of resources a franchisor has (Dant & Kaufmann 2003; Castrogiovanni et al., 2006; Perrigot & Pénard, 2013). The size of a network is also an indicator for brand image (Barthélemy, 2008; Perrigot, López-Fernández & Eroglu, 2013). In this study, the mean size of a network is 109.13 with a standard deviation of 151.82
The second independent variable is the percentage of company-owned stores in the franchise network. A company can be owned by a franchisee or by a franchisor. A company owned by the franchisor is managed by a manager who is in an employment relationship with the franchisor’s organization. In this study the relation between the percentage of company-owned stores and the dependent variables will be analysed. The studied samples show that the average percentage of company-owned stores is 22.44 with a standard deviation of 31.04
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Analysis
Because of the nature of the gathered data. The validity of the variables is hard to measure. The measures that determine the social, search and purchase constructs are not interchangeable, and they individually influence the constructs. This makes them formative measures rather than reflective measures (Jarvis, MacKenzie & Podsakoff, 2003; Freeze & Raschke, 2007). The application of normal methods of construct validity and reliability does not fit with formative constructs. That is why construct validity in the matter of convergent and discriminant validity has no meaning for formative constructs (Bollen & Lennox, 1991; Diamantopoulos & Winklhofer, 2001). The search and the purchase oriented views are already validated by Pénard and Perrigot (2017). They benchmarked e-commerce websites and also gained insights from experts in franchising. To assess the quality of the social oriented view, face validity is used. According to Nevo (1985) face validity leads to a reasonable amount of measurement reliability.
After these forms of validation, the different functionalities where combined and placed in the three main categories. This led to one sum variable for purchase oriented functionalities, one for search oriented functionalities and one for social oriented functionalities. A correlation matrix is presented in which the correlation between the different variables can be found. And finally, a linear regression analysis is conducted to clarify the relationship between measured variables. The primary goal of the linear regression was to find out whether the independent variables are a good predictor for the dependent variables. In this linear regression the dummy variable industry (food or non-food) is included as a control variable. Pénard and Perrigot (2017) found evidence that the purchase oriented view and the social oriented view are complementary. If a franchisor wants to sell products online, they also have to provide additional service information and search tool. To gain insights regarding the role of social oriented functionalities, the relationship between the purchase oriented view and the social oriented view has also been analysed.
Results
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Hypothesis Description Finding
H1 The network size has a positive impact on the range of functionalities provided on the franchisor website to help consumers purchase online.
Supported
H2 The network size has a positive impact on the range of functionalities provided on a franchisor website to help consumers search online.
Supported
H3 The network size has a positive impact on the range of functionalities provided on a franchisor website to help consumers socialize with the firm.
Supported
H4 The percentage of company-owned stores (PCO) within the network has a positive
impact on the range of functionality provided on the franchisor website to help consumers purchase online.
Rejected
H5 The percentage of company-owned stores (PCO) within the network has a positive
impact on the range of functionality provided on a franchisor website to help consumers search online.
Supported
H6 The percentage of company-owned stores (PCO) within the network has a positive
impact on the range of functionality provided on a franchisor website to help consumers socialize with the firm.
Supported
H7 The range of purchase related functionalities on a franchisor’s website has a positive impact on the range of social oriented and search oriented functionalities on a franchisor’s website.
Supported
Descriptive statistics & Correlation
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hypothesized impact of PCO on the purchase oriented functionality score. A positive correlation between the network size and the Social (Correlation = 0.311, Significance = 0.000), Search (Correlation = 0.398, Significance = 0.000 and Purchase (Correlation 0.308, Significance = 0.001) oriented functionality scores has also been found. Other results regarding the correlation can be found in the correlation matrix presented in table 6
Table 5 Descriptives
Descriptive statistics
N Minimum Maximum Mean SD
PCO 124 0 100 22.44 31.05
Network size 124 3 866 109.13 151.82
Search Score 124 0 1 0.6626 0.1646
Purch Score 124 0 1 0.6499 0.1710
Social Score 124 0 1 0.6083 0.1927
Table 6 Correlation matrix
Correlation matrix N 1 2 3 4 5 6 1. PCO 124 -- 2. Network size 124 0.161 -- 3. Industry 124 0.092 -0.77 -- 4. SearchScore 124 0.247** 0.398** -0.35 -- 5. PurchScore 124 0.154 0.308** 0.216** 0.503** -- 6. SocialScore 124 0.276** 0.311** 0.161 0.435** 0.457** -- Significance: ** = p < 0.01 * = p < 0.05 Linear Regression
The outcome of the linear regression model can be fully found in table 7. In this chapter a systematic overview based on the independent variables will be given.
Network size: In this part of the chapter hypotheses 1, 2 and 3 will be discussed. Starting
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leads to an increase in the provision of search functionalities on a website. This means that H2 can be confirmed. The independent variables explain 25.79% (R²) of the variance in the social oriented equation. The relationship between network size and social oriented network functionalities is statistically significant. The network size has a positive impact on the range of social oriented website functionalities (Coefficient = 0.0002261; Standard Error = 0.0001058; Significance = 0.0346). So, when the network size increases, the range of social oriented website functionalities also increases, this is in line with the prediction of H3.
Percentage of company-owned stores: results involving PCO can help gaining insights
regarding Hypothesis 4, 5 and 6. The structure of this paragraph will be the same as the previous one, starting with the online purchase functionalities. With a significance of 0.338456, no significant relationship between the PCO and the range of purchase related functionalities has been found. This is in line with the lack of correlation found between these two variables in the correlation analysis. This means that H4 can be rejected, the range of purchase functionalities do not significantly improve when the percentage of company-owned stores in a network chain increases. This is different for the range of search oriented functionalities on a franchisor’s website. The PCO within a franchise network has a positive impact on the range of search functionalities provided on a franchisor’s website (Coefficient = 0.0008168; Standard Error = 0.0003998; Significance = 0.04324). This means that H5 can be accepted. The expectation that the PCO within a network did have a positive impact on the range of search oriented functionalities, is proven. The PCO also has a positive and significant impact on the range of social oriented functionalities on a franchisors’ website (Coefficient = 0.0011493; Standard Error = 0.0004931; Significance = 0.0214). When the PCO within the franchise chain increases, the range of social oriented functions on a franchisors’ website also increases. This means that H6 can be accepted.
Other insights: Just like in the research conducted by Pénard & Perrigot (2017) the
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increase. These findings are in line with H7 which thus can be accepted. A last remark about the results is one about the control variable. Franchisors in the food industry are less likely to provide social and purchase oriented functionalities on their website than their colleagues in the non-food industry. In the discussion chapter, the results will be interpreted.
Table 7: Results Linear regression
Variables Online purchase Online search Social oriented
Coef Std. Err. Sig Coef Std. Err. Sig Coef Std. Err. Sig
Online purchase 0.4194 0.07738 0.0000003 0.4010408 0.0954309 0.0000513 Network size 0.0003521 0.0000960 0.000364 0.0002489 0.0000858 0.00443 0.0002261 0.0001058 0.0346 Percentage of company-owned stores 0.0004515 0.0004698 0.338456 0.0008168 0.0003998 0.04324 0.0011493 0.0004931 0.0214 Food industry -0.08414 0.03057 0.006835 0.04363 0.02672 0.10511 -0.0328195 0.0329503 0.03213 R-square 0.138 0.3313 0.2579 Significance 0.000010 0.000011 0.00000005 Discussion
Several new ideas regarding the role of resources in franchisors’ website functionalities have emerged after the data analysis. In this section a comparison between this study and other studies that analysed website functionalities will be made. After that, the findings will be used to give some practical and managerial implications.
Main findings
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Moreover, this paper is aimed to gain insights in the role of the percentage of company-owned stores within a franchise network on the functionalities provided on a franchisor’s website. The PCO has a positive and significant impact on the range of search and social oriented functionalities on a franchisor’s website. In other words, when the percentage of company-owned stores is higher, a website offers more search and social oriented functionalities. These findings contradict the findings by Pénard and Perrigot (2017) who found no significant impact of the PCO on the range of search functionalities on a franchisor’s website. A possible explanation for the impact of the PCO on the range of social and search oriented functionalities can be that franchises with a higher PCO are more centralized. The implementation of an e-commerce strategy is easier when the level of centralization is higher due to a stronger hierarchic relationship (Cliquet & Croizean, 2002). Another reason may be that a franchisor with a higher PCO is more likely to have an information system department that can help with the creation of a website (Perrigot & Pénard, 2013). A significant impact of the PCO on the range of purchase oriented functionalities has not been found.
Other findings
The results from the regression analysis also showed other interesting findings. Starting with the positive impact the presence of purchase functionalities has on the range of both search and social oriented functionalities. This finding is in line with findings by Pénard and Perrigot (2017). They found that search and purchase functionalities are complementary because the seller has to offer certain search tools to allow customers to purchase online. This study adds the finding that purchase oriented functionalities and social oriented functionalities also seem complementary. A possible explanation for this phenomenon can be that the social interaction between customers and companies encourage the buying intentions of customers. This study also contributes to the call to include social influences in the academic research regarding e-commerce (Lu et al., 2016).
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Implications
There can be argued that this research comes with theoretical and managerial implications. First the theoretical implications will be discussed and after that the managerial implications will follow.
Theoretical: This study contributes to existing literature on e-commerce strategies in
franchise organisations. The existing work by Pénard and Perrigot (2017) has been extended with a third range of website functionalities: The social oriented functionalities. An attempt was made to develop an overview of the website functionalities on franchisors’ websites that are aimed at social interaction with their customers. To the best of our knowledge, this study is the first one that analysed the social oriented functionalities on franchisors’ websites. This can be a starting point for further research regarding the social interaction a franchisor has with its customers.
Practical: This research also has some practical implications for franchisors. It gives an
overview of the different functionalities on franchisors’ websites. It can help them optimize the website functionalities of their own website. This research can also provide guidance in the implementation of more social oriented interactions and functionalities by franchisors.
Limitations
This research has several limitations that will be discussed in this chapter. First, using content available on franchisors’ website present some shortcomings. Website content is constantly changing, which makes the data used in this research a snapshot of a specific moment. A second limitation of this study is that all data gathered is secondary data. Another form of research such as interviews or questionnaires could provide more background for specific decisions regarding the data provided on franchisors’ websites.
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Further research
This study is one of the first that implements a social oriented view on e-commerce strategies by franchisors. It builds on the existing literature by Pénard and Perrigot (2017) who used website functionalities as a main source for e-commerce strategies. The addition of social oriented functionalities next to purchase and search functionalities is a new one. To increase the reliability of the functionalities that make up the social oriented view, additional research is needed.
This study is written from the franchisor perspective. The role franchisees fulfil in the online social oriented view may be another interesting addition to the field of research about franchising and e-commerce. Moreover, this research is only based on Dutch franchises in the retail industry. For further research it can be interesting if there is a difference between the website functionalities in other industries like the service industry.
Conclusion
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