Factors that influence a franchisee’s intent to leave a franchise network
Master thesis, Msc BA, specialization Small Business & Entrepreneurship University of Groningen, Faculty of Economics and Business
Rob Reinerink Student number: S1612131 Ambonstraat 9a, 9715 HA Groningen
Tel.: +31 (0)6 23 90 25 93 E-mail: robreinerink@hotmail.com
Supervisor: E.P.M. Croonen Second supervisor: M.J. Brand
Acknowledgement: I would like to thank my supervisor ms. E.P.M. Croonen for her support
and guidance throughout my master thesis.
2 ABSTRACT
Very little is known about the reasons why franchisees leave their franchise networks. This study develops a theoretical framework on variables that influence a franchisee’s intent to leave a franchise network and tests these relationships empirically. Literature about franchising is integrated with literature regarding cohesion, performance, motivation and trustworthiness. It is argued that these four factors influence a franchisee’s intent to leave a franchise network. Using a multiple regression analysis, results show that cohesion,
performance and trustworthiness of the franchisor have a significant relation with intent to
leave of a franchisee. Additional analyses also shows moderating effects of intrinsic
motivation, extrinsic motivation and cohesion on the negative relationship between
performance and intent to leave.
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CONTENT Page:
Abstract 2
Content 3
1. Introduction 4
2. Theoretical Background and Framework 8
2.1. Literature Review on Antecedents of Intent to Leave 8
2.1.1. Intent to Leave – Employee-employer 11
2.1.2. Intent to Leave – Inter-organizational 11
2.1.3. Intent to Leave – Franchise 13
2.1.4. Introduction to Conceptual Model 13
2.2. Hypotheses on Franchisee’s Intent to Leave 14
2.2.1. Franchisee Cohesion 14
2.2.2. Franchisee Performance 17
2.2.3. Franchisee Motivation 19
2.2.4. Trustworthiness of the Franchisor 22
3. Methodology 25
4. Results 29
5. Additional Exploratory Analysis 31
6. Discussion & Conclusion 38
7. References 43
Appendix A - Search Terms and Articles 53
Appendix B – Literature Covering the Independent Variables 55 Appendix C – Questionnaire items and Analyses Results 59
Appendix D – Results Additional Analyses 66
4 1. INTRODUCTION
Networking offers several resources for entrepreneurs in small and medium sized enterprises (SME’s). Firms that are small relative to their competitors and to the requirements of the market often use networking to reach economies of scale and scope (Gomes-Casseres, 1996). Networks come in several forms, ranging from a loose cooperation to a very tight cooperation (Varamäki & Vesalainen, 2010). A franchise system is a specific form of network. A franchise system consists of a franchisor and several franchisees, who have relationships with each other, as well with outside parties such as suppliers and buyers, making it a network (Storey & Greene, 2010). Franchisees are legally, mostly small, independent businesses who pay for the right to use their franchisor’s business format and who make specific investments to adopt the franchise format in their own unit (Baucus, Baucus & Human, 1996). Franchising is very important in modern economies such as the US and the European Union. In the United States, for example, about 46% of sales in the
restaurant industry, 55% of sales in specialty food retailing and 71% of sales in copying and printing is accounted for by franchising (Combs, Michael & Castrogiovanni, 2009).
Franchising offers many benefits for franchisees. Firstly, it is easier to start a business without prior business experience (Kauffman, 1999). Secondly, the idea of self-employment is also an important incentive for entrepreneurs to enter a franchise system (Kauffman, 1999;
Peterson & Dant, 1990). Thirdly, franchising offers an opportunity to those with lower technical skills to enter business (Williams, 1998). External factors also affect the decision to become a franchisee. Growth in franchising is higher in periods of economic downturn and recession (Frazer, Merrilees & Wright, 2007). Furthermore, downsizing of large companies and high levels of unemployment contribute to growth in self-employment in general
(Feldman & Bolino, 2000; Stanworth, Stanworth, Granger & Blyth, 1989). Peterson and Dant
(1990) group seven categories of advantages for franchisees in franchising and test these
categories. They find that three categories are perceived as most positively perceived
advantages in franchising. These are training, greater independence compared to a job and
established name. Other studies find similar results (Knight, 1986; Mendelsohn, 1985), but
also name other advantages. These advantages can be listed in similar categories such as
franchise control (less involvement in daily management, franchisor support), costs (lower
operating costs, better investment, lower development costs) and three remaining advantages
(faster development, proven formula, satisfaction). The advantages found in these three
studies are summarized in Table 1.
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Table 1: Advantages franchising for franchisees compared to being employed (Source: Peterson & Dant, (1990); Knight, (1986); Mendelsohn, (1985))
Peterson & Dant (1990) Mendelsohn (1985) Knight (1986)
Established name Established name Established name
Greater independence Franchisor support Greater independence
Training Better investment Better investment
Better investment Faster development
Lower operating costs Proven formula
Less involvement in daily management
Satisfaction Lower development costs
Franchisees also exit their franchise networks. Scientific literature has paid some attention to why franchisees leave their franchise networks. Financial reasons are mentioned by several authors as an important category in leaving a franchise network. Too high startup costs are negatively related to franchisee exit (Frazer & Winzar, 2005) and high franchise fees are positively related to franchisee exit (Frazer et al., 2007). Other literature suggests that the loss in autonomy might be too high for franchisees, and they feel too bounded by rules and authority (John, 1984; Frazer et al., 2007). Relational factors such as conflict, distrust and unfairness in the franchise relationship, are also mentioned by several authors as an important factor in deciding to leave a franchise network (Croonen, 2010; Frazer & Winar, 2005; Davies et al., 2011).
It is important to understand why franchisees feel the need to leave a franchise system.
The franchise formula loses an outlet and economies of scale decrease (Martin, 1988).
Reasons behind exiting a franchise relationship have not been reviewed very thoroughly.
Although some antecedents of franchisee’s intent to leave have been studied, there is not a systematic understanding of which factors are most important in a franchisee’s decision to leave a franchise network. The work of Frazer et al. (2007) lists exit perceptions among franchisees as an area for future research. Davies et al. (2011) stress the importance of identifying variables that may affect shifts in relational exchange. Croonen and Brand (2013) mention that the effects of trust between a franchisee and a franchisor is an area of future research.
The goal of this study is to refine our current understanding of factors relating to intent to leave in a franchising context. Several factors have an influence on the relationship
between franchisor and franchisee (Croonen, 2010). These variables can be influenced by
6 both parties in a franchising system. If certain factors are not satisfactory to one of the parties, the relationship can be terminated.
From a theoretical perspective it can be very interesting to review what factors influence a franchisee’s intent to leave a franchise network. Firstly, if a franchisee decides to leave, a franchisor loses an outlet and possible economies of scale (Martin, 1988). This may result in that a franchisor cannot reach all the customers it wants because it has no outlets in places they want an outlet. Secondly, it can be very costly to train and invest in a new franchisee (Shane, 1996). Reasons why franchisees leave are therefore important to understand so franchisors can control these factors.
From a managerial perspective it can also be very interesting to review factors that affect a franchisee’s intent to leave a franchise network. Firstly, this study can reveal the true reasons why a franchisee might consider to leave a franchise system. Secondly, this study can identify factors a franchisor can influence to keep their franchisees within their franchise system.
This study continues with a literature review on antecedents of intent to leave,
including three contexts: the employee-employer context, the inter-organizational context and finally the franchise context. These three contexts were chosen because they review intent to leave from multiple perspectives, which gives a more thorough overview of all the aspects that may have an influence on a franchisee’s intent to leave. Franchise relationships have characteristics of each of these contexts. Franchisees follow the guidelines given by a
franchisor. An employee-employer relationship has similarities with a franchise relationship, since employees follow the guidelines of an employer. Franchisees can also be seen as independent businesses that have relationships with other businesses, for example an agreement with a supplier, hence the inter-organizational context.
This study follows a theory testing approach. This approach was chosen because it can reveal if the relationships between the variables and a franchisee’s intent to leave the
franchise system are significant and thus important to consider. The results will hopefully fill a gap that is currently present in literature regarding franchisee’s intent to leave (Frazer et al., 2007; Davies et al., 2011; Croonen & Brand, 2013). A multiple regression analysis will be used to provide results concerning the various relationships.
The main research question is:
7 What factors influence a franchisee’s intent to leave a franchising system?
In order to answer this question this study has developed sub-questions. These sub-questions are:
What factors affect the intent to leave in an employee-employer context in current literature?
What factors affect the intent to leave in an inter-organizational context in current literature?
What factors affect the intent to leave in a franchise context in current literature?
Are the discovered factors significantly related to a franchisee’s intent to leave?
8 2. THEORETICAL BACKGROUND AND FRAMEWORK
2.1 Literature review on antecedents of intent to leave
The literature review started by focusing on the dependent variable Intent to leave.
Intent to leave constitutes the likelihood that a partner will terminate the relationship in the near future (Bluedorn, 1982). This study defines ‘intent to leave’ as ‘the likelihood that a franchisee will terminate the relationship with the franchisor in the near future’. The first step was to find articles that cover the dependent variable and see which factors are of influence.
Literature was systematically found by the use of several keywords, which can be found in appendix A (Table 1). The search engines that were used are Ebscohost Complete, Business Source Premier, Web of Science and Google Scholar. The literature review continued by selecting articles on the amount of citations, where highly cited papers were preferred. This study also limited its article selection to a specific time frame, where papers published after 1990 were preferred. Some selected papers were published before 1990. These papers were also included because of their relevance for this study and/or importance in the field of franchising. Several articles were disregarded as the journal they were in did not meet the quality standards that are strived for in this study. The journals that were used in this study are: Academy of Management Review, Small Business Economics, Journal of Small Business Management, Journal of Business Ethics, Entrepreneurship: Theory & Practice, International Small Business Journal, Journal of Applied Psychology, Administrative Science Quarterly, Journal of Management, Academy of Management Journal, Journal of Organizational Behavior, Journal of Management Studies, Long Range Planning, Journal of Retailing, Journal of Marketing Research, Journal of Marketing, Strategic Management Journal, Journal of Business Venturing, Journal of Marketing Channels and the Journal of Business Research. The aforementioned journals were reviewed, however, some journals did not provide useful articles for this study.
This study selected three contexts to review Intent to leave on, namely the employee-
employer context, the inter-organizational context, and the franchise context. The articles
studied in the literature review all have element of at least one of these three contexts. The
steps that were taken in this literature review can be seen in Figure 1 and the articles relevant
regarding Intent to leave can be found in Table 2 (see p. 11). In Table 1 of appendix A you
will find the search terms and the number of articles found regarding Intent to leave. The main
findings section of Table 2 includes the core variable of the selected article. It is this variable
9 that will be tested in this study in a franchise context. The literature review will now continue with reviewing Intent to leave in the three different contexts.
Figure 1 – Steps of the literature review
10 Variable Study Main findings (Core variable)
Intent to leave* – Employee-employer context
Chiaburu & Harrison (2008) Co-workers serve as an important factor in withdrawal behavior of employees (Cohesion) O’Reilly, Caldwell &
Barnett (1989)
Social integration in groups i.e. cohesion affects turnover intentions among employees (Cohesion)
Maertz & Griffeth (2004) Individual performance influences an employee’s intent to leave (Performance) Griffeth et al. (2000) Individual performance influences an employee’s intent to leave (Performance) Williams & Livingstone
(1994)
Individual performance and voluntary turnover are negatively related (Performance) Robinson & Rousseau
(1994)
Trust violation leads to a higher turnover intention among employees (Trust) Lo & Aryee (2003) Trust violation leads to a higher turnover intention among employees (Trust) Dysvik & Kuvaas (2010) Intrinsic motivation is negatively related to turnover intentions (Motivation) Richer et al. (2002) Motivation is related to higher turnover intentions among employees (Motivation) Intent to leave* –
Inter-organizational context
Medcof (1997) Alliances must be capable, compatible, committed and controlled properly to succeed Geyskens & Steenkamp
(2000)
Economic and social satisfaction are negatively related with intent to leave in marketing channels (Performance)
Geyskens, Steenkamp &
Kumar (1999)
Economic and social satisfaction are negatively related with intent to leave in marketing channels (Performance)
Anderson & Narus (1990) Pursuing goals together in a network strengthens feelings of compatibility and trust in networks. This leads to intention to stay in network (Cohesion and Trust)
Palmatier, Dant & Grewal (2007)
Feelings of compatibility has influences on relational and financial outcomes (Cohesion and Trust)
Rowley, Greve, Rao, Baum
& Shipilov (2005)
Heterogeneous clique i.e. network members are more likely to leave a network. More cohesive groups are likely to stay together. (Cohesion)
Intent to leave* – Franchise context
Barthélemy (2008) Opportunistic behavior, goal conflicts lead to tensions in a franchise relationship (Trust) El Akremi et al. (2011) Franchisee cohesion can influence the behavior of franchisees (Cohesion)
Morgan & Hunt (1994) Trust between franchisor and franchisee is important for a fruitful relationship (Trust) Davies et al. (2011) A lack of trust can lead to undesired franchisee behavior (Trust)
Croonen & Brand (2013) A lack of trust can lead to undesired franchisee behavior (Trust)
Frazer & Winzar (2005) Conflict (p), high start-up costs (n) and large size (p) influence franchisee’s intent to leave
Table 2 (Source: Author)Note: *: covers all the search terms used in literature search, terms can be found in Appendix A (Table 1); (p): positive relationship; (n): negative relationship
11 2.1.1 Intent to leave – employee-employer
Relational factors among employees are important. Coworkers serve as a potentially rich source of help and information, which is related to a reduction in their colleagues’
conflict, role ambiguity and overload (Chiaburu & Harrison, 2008). Coworkers can have a strong influence on employee withdrawal, i.e. turnover (Chiaburu & Harrison, 2008), where employees are more likely to leave if valued coworkers leave. Peers of an employee appear to have a big influence on an employee’s intent to leave the organization. Social integration in groups also affects the turnover intentions of individuals (O’Reilly, Caldwell & Barnett, 1989). This is because group-level homogeneity has a negative relationship with turnover intentions, meaning that an employee is less likely to leave when demographically similar peers are present. Employees seem to fall back on their coworkers, and use them as a reference framework in many situations at work.
Economic factors are considered important by employees. An employee’s intent to leave the organization is influenced by their individual performance (Maertz & Griffeth, 2004; Griffeth, Hom & Gaertner, 2000). The meta-analysis of Williams and Livingstone (1994) also claims that performance and voluntary turnover are negatively related. The performance of an individual employee appears to have a negative influence on an employee’s intent to leave the organization.
Individual factors influence an employee’s intent to leave. Richer et al. (2002) claim that both a lower intrinsic and a lower extrinsic motivation lead to a higher turnover intention among employees. Dysvik and Kuvaas (2010) find that a higher intrinsic motivation leads to a lower turnover intention among employees.
Relational factors between an employee and his/her employer are also important. A violation of the trust between an employee and an employer can lead to a higher turnover intention (Robinson & Rousseau, 1994; Lo & Aryee, 2003). An employee has to have certain amount of trust in their employer. If it is not present, or it is damaged, this leads to a higher intent to leave. To sum up, cohesion, performance, motivation and trust seem to have an influence on employees in remaining in an organization.
2.1.2 Intent to leave – inter-organizational
Many networks fail because they do not pay enough attention to what Medcof (1997)
describes as the “4 C’s” and the “strategic fit” between firms. Medcof uses alliances as a form
12 of an inter-organizational network. Firstly, firms need to focus on the partner’s capability to carry out the role it has in the alliance. Secondly, a firm should be compatible with the partner firm. Thirdly, firms should pay attention to the commitment of a partner firm in an alliance. Finally, there should be some agreement on control issues in the alliance. If these conditions are not properly dealt with, an alliance might not be fruitful and firms might choose to leave the alliance. The compatibility between the organizations is a prerequisite for cohesion. And the control aspect can be seen as a prerequisite for trustworthiness.
Compatibility also influences performance. If firms are not compatible, the performance of both firms may suffer. If these aspects are not met, organizations might leave their network.
Economic factors play a role to stay or leave in a network. Performance measures such as economic and social satisfaction are negatively related to intent to leave in marketing channels (Geyskens & Steenkamp, 2000; Geyskens, Steenkamp & Kumar, 1999). It seems that firms need to achieve a certain level of performance in order for firms wanting to remain in the network. This is similar to that in the employee-employer relationship, where
performance also needs to be of a certain level to stay in the organization.
Relational factors are important for organizations in a network. Trust between
organizations in a network also is important regarding their intent to stay or leave a network.
Jointly pursuing goals heightens each firm’s feeling of compatibility (Anderson & Narus,
1990). This feeling of compatibility influences relational and financial outcomes (Palmatier,
Dant & Grewal, 2007). And compatibility is an important aspect in forming an alliance that
functions properly, which was mentioned earlier. An interfirm-clique is defined as a distinct
region in a network of firms in which the interconnections among firms are more cohesive
than they are in other regions of the network (Wasserman & Faust, 1994). The intention of
members to leave a clique were influenced by the diversity in background characteristics such
as size. Furthermore, heterogeneous clique members showed a higher probability of exiting
this network form (Rowley, Greve, Rao, Baum & Shipilov, 2005). This shows similarities
with the intent to leave in the employee-employer relationship, were individuals were more
likely to leave a heterogeneous group. Again, as in the employee-employer relationship,
cohesion, performance and trust seem to be related to the intent to remain or exit an inter-
organizational relationship.
13 2.1.3 Intent to leave - Franchise
A franchise-relationship can experience tension because of opportunistic behavior and goal conflicts, which may prevent franchise chains to fully leverage potentially valuable resources (Barthélemy, 2008). Perceptions of cohesion among franchisees influence how franchisees apply knowledge from franchisors, and whether they transfer or withhold
information that could be useful to the franchise chain. These perceptions of cohesion are part of their social context and influences the behavior of franchisees (El Akremi, Mignonac &
Perrigot, 2011), including their intentions to leave. The trustworthiness of a franchisor is important for a franchisee to have a fruitful relationship (Morgan & Hunt, 1994). A lack of trustworthiness can lead to undesired franchisee behavior, including exiting the franchise system (Davies et al., 2011; Croonen & Brand, 2013). Negative franchisee exits are
influenced by conflict, startup costs and size, where more conflict leads to a higher exit rate, franchisees with higher startup costs are less likely to exit and large franchise systems are more likely to have franchisees departing than small franchise systems (Frazer & Winzar, 2005). Franchisee cohesion seems to have a relationship with the intent to remain in a franchise system. Also trust seems to be related to franchisee’s decision to stay or exit a franchise system.
2.1.4 Introduction to the conceptual model
The dependent variable Intent to leave has now been reviewed in three contexts, as can be seen in Table 2. This has led to the identification of the variables Franchisee cohesion, Performance, Motivation and Trustworthiness of the franchisor. Literature has suggested that relational factors (hence the Cohesion and Trustworthiness variable) (Chiaburu & Harrison, 2008), individual factors (hence the Motivation variable) (Kuratko, 1997; Mayer, Davis &
Schoorman, 1995) and economic factors (hence the Performance variable) (Walker & Brown, 2004) are important for employees and franchisees in finding and keeping a job and/or
business.
The literature review will continue with going into depth on each of the four variables and will develop hypotheses on the impact of these variables on Intent to leave. The search terms that were used to find literature covering the four independent variables, and the number of articles found, can be found in appendix A. To select relevant articles for the independent variables, this study followed the steps in Figure 1, with the exclusion of step 5.
The following conceptual model shown in Figure 2 will be used in this study.
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Figure 2: Conceptual model
2.2 Hypotheses on franchisee’s intent to leave 2.2.1 FRANCHISEE COHESION
Carron, Brawley and Widmeyer (1998) define cohesion as “a dynamic process that is reflected in the tendency for a group to stick together and remain united in the pursuit of its instrumental objectives and/or for the satisfaction of member affective needs”. This study defines cohesion as a franchisee’s tendency to forge social bonds, help other franchisees, coordinate their efforts around the chain’s tasks and objectives (El Akremi, Mignonac &
Perrigot, 2011) and trust in other franchisees. Trust is defined as “the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party (Mayer, Davis & Schoorman, 1995). Table 1 of appendix B lists the various studies that have been reviewed and their main findings.
Employee-employer cohesion
The first perspective is that of cohesion among employees in an employee-employer
relationship. The paper of Tews, Michel and Ellingson (2013) suggests a negative relationship
between support between coworkers (i.e. cohesion) and employee turnover. Person-focused
support, such as listening to problems and taking interest in an employee, seemed important
for ensuring that employees would remain in the organization. The meta-analysis of Chiaburu
and Harrison (2008) also suggests that there is a negative relationship between coworker
support and both employee turnover and intent to quit. Their argument is that because
15 employees take high value in how their colleagues behave and adapt their own actions to it. It seems that on certain areas in the workplace, employees copy the behavior of their colleagues.
This may imply that there is a form of cohesion present which influences the behavior of employees. If coworkers communicate less and offer less emotional support, an employee’s intent to quit may rise (Cox, 1999). This implies again that the bond between employees is important in their decision to stay or leave the organization. The article of Mitchell, Holtom, Lee, Sablynski and Erez (2001) stresses that job embeddedness among employees is
negatively related to intent to leave the organization. Job embeddedness is defined as “the extent to which people have links to other people or activities in the organization” (Mitchell et al., 2001). To sum up, cohesion among employees seems important in their decision to stay or leave their organization.
Inter-organizational cohesion
The second perspective is that of cohesion between businesses in a network. Greve, Baum, Mitsuhashi and Rowley (2010) apply the force-field model designed by Lewin (1947) together with three levels of factors to explain individual firms’ decision to withdraw from an alliance. The force-field model can be explained as the balancing of two opposing forces, namely cohesion and friction between businesses in a network. The results show several factors that can influence cohesion and friction among businesses but the main point important for this study is that cohesion is an important factor in deciding to stay or leave a network, where higher cohesion leads to firms wanting to stay in the network. Medcof (1997) argues that many alliances end because of the poor fit between the partners (i.e. a lack of cohesion). According to Medcof, many alliances fail because they do not pay attention to the
“4 C’s”. A partner must be capable of carrying out its role in the alliance, compatible with the other organization(s) in the alliance, committed to the alliance and there must be control arrangements to successfully form an alliance. The items mentioned by Medcof all relate to cohesion. As was said earlier, compatibility is a prerequisite for cohesion. The other “C’s”, for example capability, also relate to cohesion. An organization must offer certain generic strategies such as a good management team (Medcof. 1997), but more importantly, the strengths of the targeted partner must be evaluated in light of the specific alliance where partners compensate each other’s weaknesses. The partner, therefore, must be capable to fulfill this strength. This is often seen in the pharmaceutical industry, where smaller
companies are paired up with larger companies, and become successful alliances (Whittaker
& Bower, 1994). If one organization is not capable of doing this, then the cohesion between
16 the two partners can be much lower. When these criteria are not met, the alliance is doomed to fail. To sum up, inter-organizational cohesion is important for organizations in a network. If there is a lack of cohesion, firms may consider exiting the network.
Franchisee cohesion
Franchisees that operate in chains perceived as cohesive are less likely to deviate from standards and withhold information from a franchisor (El Akremi, Mignonac & Perrigot, 2011). The argument here is that socialization among franchisees creates a shared
understanding of what is required in the franchise system, which eventually leads to uniformity across the chain. Franchisees also seem to look at other franchisees, just like employees look at other employees and base their behavior on the behavior of their peers.
Social processes between franchisees, as members of a franchise system, enable and/or constrain their behaviors (Bradach, 1997). To conclude, it seems that franchisee cohesion has an influence on their behavior. This may also include their intent to remain or leave the franchise system.
Hypothesis
The relation between cohesion and intent to leave is an important relationship in multiple contexts. The employee-employer context suggests that cohesion among employees is important regarding an employee’s decision to stay or leave his/her organization.
Employees sometimes copy the behavior of their peers. The inter-organizational context suggests that cohesion between firms is highly important to make a network successful. A network where firms are not cohesive has a lower chance of success than when there is a higher sense of cohesion. Cohesion among franchisees might enhance the uniformity of the franchise network and a lower deviation from chain standards. Cohesion seems to have a negative relationship with intent to leave in all three contexts. The relationship between franchisee cohesion and a franchisee’s intent to leave a franchise network may therefore also be negative. This study focuses on cohesion as a crucial variable in the decision to stay or leave a franchise system. This leads to a first hypothesis:
Hypothesis 1: Franchisee cohesion is negatively related to a franchisee’s intent to
leave a franchise network.
17 2.2.2 FRANCHISEE PERFORMANCE
Subjective performance measures can have a bigger influence on entrepreneurial behavior than objective performance measures (Walker & Brown, 2004). Personal
independence and flexibility can be more important for small business owners than objective financial criteria. Subjective performance criteria are cost effective to collect and, for certain types of organizations, there may be no appropriate financial records (Wall et al., 2004). This study focuses on franchisee’s perceptions of performance and the influence of these
perceptions on a franchisee’s intent to leave. Business success is important in many
businesses. Given various reasons for business ownership, a subjective evaluation of business success by the owner has the advantage of catching multiple dimensions of business that are important (Besser & Miller, 2010). Business-owners may be more inclined to leave a network they are currently in, if they do not perceive it as being fruitful. Table 2 of appendix B lists the various studies that have been reviewed and their main findings.
Employee performance
Job performance has a negative correlation with turnover, where good performers are more likely to stay and poor performers are more likely to quit (Maertz & Griffeth, 2004;
Griffeth, Hom & Gaertner, 2000). This is because high performers are more valued in an organization, and a higher appreciation of an employee leads to employees wanting to remain in the organization (Zenger, 1992). The meta-analysis of Harter, Schmidt and Hayes (2002) suggests a significant negative relationship between individual job satisfaction and employee turnover. Job satisfaction itself is influenced by performance (Judge, Thoresen, Bono &
Patton, 2001). The relationship between job performance and voluntary turnover is negative and robust across three different meta-analytic investigations (Williams & Livingstone, 1994).
High performers are also offered better rewards and therefore are more likely to remain in the
organization (Zenger, 1992). Different authors also refer to the relationship between pay
satisfaction and job satisfaction as predictors for employee turnover (Lum, Kervin, Clark,
Reid & Sirola, 1998). Subjective individual job performance is significantly related to actual
turnover in part-time jobs (McBey, 1996). Performance is a factor that influences turnover,
where a higher performance leads to employees wanting to stay in the organization.
18 Inter-organizational network performance
Ping (1993) found that economic satisfaction (i.e. performance) was a major influence on the intent to exit in a supplier-buyer network. Later, Ping (1999) also found that
performance was a factor that influenced the decision to stay or leave a marketing channel, where a low performance led to a higher exit-propensity. Networking, especially formal networks, shows a significant relationship with firm growth (Watson, 2006). Here, for SME’s, networking has positive effects on performance. Social and economic satisfaction are both negatively correlated to a firm’s exit-propensity in a marketing channel relationship
(Geyskens & Steenkamp, 2000). Economic satisfaction is also negatively related to conflict in marketing channel relationships (Geyskens, Steenkamp & Kumar, 1999). To sum up, it appears that also in inter-organizational networks performance is important in the decision to remain or exit the network.
Franchisee performance
Franchisees are very dependent upon their franchisor for their success and performance (Lafontaine & Shaw, 1998). Frazer and Winzar (2005) find that franchisee performance influences the decision to leave a franchise system. Franchisees with a low performance were more prone to deviate from franchise standards. The deviation from franchise standards, for example changes in basic operations, can lead to an even lower performance, resulting in a higher exit-propensity. Frazer, Merrilees, and Wright (2007) interviewed several ex-franchisees in their article and they come to the conclusion that a bad performance led to a higher exit-rate among franchisees. The argument here is that when performance was low, the franchisor did not offer enough support and guidance to the franchisee. The franchisee still had to pay a fee to be a franchisee, but now failed to see the added value of this fee. Many franchisees claimed that their performance has improved since they left the franchise network.
Hypothesis
The different contexts prove that the relation between subjective performance measures and intent to leave is important. The employer performance context suggests that employees consider their performance very important in deciding to remain or leave their organization. A dropping performance strengthens their intent to leave. The inter-
organizational context suggest that if a network is not successful, organizations are more
19 likely to leave that network. Franchisees who perform poorly are more likely to deviate from chain standards, ultimately leading to a higher intent to leave their franchise network. The relationship between a franchisee’s subjective performance and their intent to leave a franchise network has not yet been tested thoroughly. This study focuses on subjective performance as a crucial variable in the decision to stay or leave a franchise system. This leads to the second hypothesis:
Hypothesis 2: A franchisee’s subjective performance is negatively related to a franchisee’s intent to leave a franchise network.
2.2.3 FRANCHISEE MOTIVATION
In explaining a set of goals which motivate entrepreneurs to sustain their business development efforts, Kuratko (1997) found several factors which contribute to overall motivation of entrepreneurs. Intrinsic motivation exists when someone engages in behavior because he/she finds the activity challenging and rewarding in itself and derives satisfaction in enhancing his competence in that task (Bruno, 2013). Extrinsic motivation exists when
someone engages in a particular behavior for purposes that are extrinsic to the behavior itself.
They concern activities enacted because they are instrumental (Bruno, 2013; Van Steenkiste, Ryan & Deci, 2008). Autonomy is defined as the importance of factors as freedom,
independence and self-employment (Kuratko, 1997; Storey & Greene, 2010). It may be interesting to review motivation in relation to a franchisee’s intent to leave a franchise system.
This is because motivation is vital in understanding the complete entrepreneurial process and motivation also influences entrepreneurial behavior (Kuratko, 1997; Carsrud & Brännback, 2011). Research on this relationship is limited so far, so it may prove new insights for both franchisors and franchisees. This study focuses on intrinsic motivation, extrinsic motivation and autonomy. Motivation in a franchise context will also be discussed. Table 3 of appendix B lists the various studies that have been reviewed and their main findings.
Boivie, Graffin and Pollock (2012) find that both intrinsic and extrinsic motivation play a role in the decision of executives to leave or stay in a company board, where a higher intrinsic and extrinsic motivation leads to the executives wanting to stay in the board.
Furthermore, Richer, Blachard and Vallerand (2002) prove that motivation, both extrinsic and intrinsic, is related to turnover intentions, mediated by emotional exhaustion and work
satisfaction. Literature (Dysvik and Kuvaas, 2010; Vansteenkiste et al., 2007) provides
evidence that intrinsic motivation is negatively related to employee turnover intention. This is
20 because employees derive satisfaction from doing something that is challenging and
rewarding. If work is unchallenging and gives little rewards, employees may become unmotivated and may have a higher intent to leave the organization. Lachman and Diamant (1987) found that intrinsic rewards directly affect turnover intentions among women, but not among men. The absence of intrinsic rewards also leads to a lower intrinsic motivation (Lachman & Diamant, 1987). Intrinsic motivation was also found negatively related to excused personal absenteeism (Blau, 1985). Employees with high internal motivation and positive feelings regarding their job want to enjoy the rewards of work itself.
If employees are extrinsically motivated, for example by earning a high salary, and this is not paid fairly compared to the efforts employees put in, they are more likely to leave (Shields, Scott, Bishop & Goelzer, 2012). Extrinsic motivations also have an influence on employee behavior (Chang, 2003). As employees perceive higher levels of composite extrinsic motivators i.e. rewards, they tend to be motivated to make a bigger effort. This effect is reduced if the composite levels of extrinsic motivators become too high.
Desire for autonomy is positively related to affective commitment, which itself is negatively related to turnover intentions among employees (Ito & Brotheridge, 2005). When employees perceive they have control over their jobs, they are less likely to voluntarily quit their jobs (Iverson, 1999). In the IT industry, autonomy is negatively related to work exhaustion, which in turn is positively related to turnover intentions (Ahuja, McKnight, Chudoba, George & Kacmar, 2007). Ahuja et al. (2007) follow the model wherein work exhaustion fully mediates between job autonomy and turnover intentions. In other work, work exhaustion is partially mediating the relationship between job autonomy and turnover
intentions (Moore, 2000), and the latter model has a better fit than the fully mediating model
(Ahuja et al., 2007; Moore, 2000). Furthermore, job autonomy and social support have a
negative direct effect on turnover intention among employees (Kim & Stoner, 2008). Finally,
the meta-analysis of Spector (1986) showed that greater perceived autonomy reduced the
likelihood of employees quitting their job. Although perceived autonomy has a slight
difference with desire for autonomy, it is still relevant to see that autonomy influences the
exit-propensity of employees. It seems obvious that autonomy is negatively related to intent to
leave here, but a high desire for autonomy is than positively related to intent to leave. An
employee who has a high desire for autonomy is more likely to quit when he/she is not
sensing enough autonomy (Kim & Stoner, 2008).
21 Motivation in Franchising
In franchising, franchisors counterbalance the loss in control over franchisees with relational governance mechanisms (Cochet, Dormann & Ehrmann, 2008). Here, the autonomy of the franchisee may be reduced. It may be interesting to see if desire for autonomy, an indicator of motivation, leads to a higher intent to leave among franchisees. This study
follows the logic that franchisee intrinsic and extrinsic motivation have a negative relationship with franchisee’s intent to leave the franchise system.
Hypotheses
Motivation and intent to leave is an important relationship in multiple contexts.
Intrinsically motivated employees seem to have a lower intent to leave their organization.
Extrinsically motivated employees also seem to have a lower intent to leave their
organization. Autonomy itself seems negatively related to intent to leave, but a desire for autonomy seems to strengthen intent to leave. If a person values autonomy, a job with many constraints may strengthen their intent to leave the organization. The same may go for a franchisee. A higher desire for autonomy may strengthen their intent to leave the franchise network. The relationship between these three indicators of motivation and a franchisee’s intent to leave a franchise network has not yet been tested. This study focuses on motivation as a crucial variable in the decision to stay or leave a franchise system. This leads to the following three hypotheses:
Hypothesis 3a: Intrinsic motivation is negatively related to a franchisee’s intent to leave a franchise network.
Hypothesis 3b: Extrinsic motivation is negatively related to a franchisee’s intent to leave a franchise network
Hypothesis 3c: Desire for autonomy is positively related to a franchisee’s intent to
leave a franchise network
22 2.2.4 TRUSTWORTHINESS OF THE FRANCHISOR
Trustworthiness is an antecedent of trust, where “one trusts someone because she is trustworthy, and one’s trustworthiness inspires trust” (Flores & Solomon, 1998; Mayer, Davis
& Schoorman, 1995; McKight, Cummings & Chervany, 1998). As mentioned earlier in this study, trust is defined as “the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party (Mayer, Davis &
Schoorman, 1995). As trustworthiness leads to trust, literature that covers trust will also be discussed in this part of the literature review. This study will test the perceived
trustworthiness of the franchisor by the franchisee in relationship to the dependent variable. In identifying factors that cause conflicts between franchisors and franchisees, Frazer, Weaven, Giddings and Grace (2012) point out that trust between franchisors and franchisees is one of the factors that has not been researched properly by current literature, and that it might have an effect on the satisfaction of franchisees. A relationship characterized by trust will be highly valued by parties in the exchange, and parties in this trustworthy relationship will have the desire to commit themselves to it (Chaudhuri & Holbrook, 2001). Table 4 of appendix B liststhe various studies that have been reviewed and their main findings.
Employee-employer trustworthiness
Employees use multiple dimensions in considering the trustworthiness of their employer (Gillespie & Dietz, 2009). These dimensions include immediate working
relationships (Butler, 1991), internal groups and the organization itself (Robinson, 1996) and finally senior management (Mayer & Davis, 1999). A violation of the psychological contract by the employer can lead to higher turnover intentions among employees (Robinson &
Rousseau, 1994; Lo & Aryee, 2003), where the psychological contract is defined as “an individual’s belief regarding the terms and conditions of a reciprocal exchange agreement between that person and another party” (Rousseau, 1989). Consequences of trust in an employer-employee relationship is widely researched in scientific literature (Gillespie &
Dietz, 2009; Searle et al., 2011), but if the importance of trust in an employer-employee
relationship also applies to a franchisor-franchisee relationship has not been researched.
23 Inter-organizational trustworthiness
Cooperation between manufacturers and distributors can be seen as being causally antecedents, rather than consequent, to trust (Anderson & Narus, 1990). Cooperation leads to trust, which in turn leads to more cooperation, which leads to more trust. Working together with a partner in the pursuit of mutual goals increases each firm’s sense of compatibility (Anderson & Narus, 1990). This leads to a feeling of chemistry and satisfaction between the two firms (Dwyer, 1980; Sibley & Michie, 1982). Inter-organizational trust influences the negotiation process between firms, and more importantly, exchange performance (Zaheer, McEvily & Perrone, 1998). Commitment and trust between organizations positively influence financial and relational outcomes (Palmatier, Dant & Grewal, 2007). Trust is also a very important aspect in an inter-organizational relationship when organizations go through a strategic organizational change (Lusch, O’Brien & Sindhav, 2003). Here, trust from business partners is important in current relationships, but also important in creating support for a strategically changed organization. Finally, the meta-analysis of Geyskens, Steenkamp and Kumar (1998) provides evidence that trust is a central issue in the marketing channels domain. Evidence is gathered across a wide range of studies for the contention that trust is central to relationship marketing. To sum up, trust is important in inter-organizational networks. It influences relational outcomes of an inter-organizational network. It may therefore also have an influence on a franchisee’s intent to leave a franchise system.
Franchising trustworthiness
Davies et al. (2011) distinguishes trust in franchisors integrity and trust in franchisors competence and demonstrates that each is differently impacted by relationship conflict. The two forms of trust are antecedents of franchisee compliance to organizational norms. It may be true that if franchisors do not feel compliant to organizational norms that they are or can become unsatisfied and their need to leave the franchise system may increase. Three levels of trust can be distinguished in a franchisor-franchisee relationship from a franchisee’s
perspective, namely personal trust, franchise system trust, and institutional-based trust (Croonen, 2010). These three forms of trust are considered important especially during strategic change processes of the franchise system as a whole. The franchising relationship is characterized by mutual interdependence; the franchisee depends on the franchisor for support whereas the franchisor counts on its franchisee to follow certain guidelines (Croonen &
Brand, 2013). This form of relationship, where both parties are mutually interdependent,
24 relies heavily on trust to be successful (Morgan & Hunt, 1994). If a franchisee has a lack of trust in its franchisor, it can lead to undesired franchisee behavior, such as lower efforts to follow franchise guidelines or franchisees exiting the franchise system (Davies et al., 2011;
Croonen & Brand, 2013). Trustworthiness of a franchisor by a franchisee has received little attention in scientific literature (Croonen & Brand 2013). Davies et al. (2011) find evidence that a lack of trust between franchisee and franchisor may lead to a franchisee exiting the franchise system, but also stress that this area of scientific literature is not thoroughly researched.
Hypothesis
The perceived trustworthiness of a franchisor and intent to leave of a franchisee is an important relationship in multiple contexts. The employee-employer context suggests that trustworthiness is crucial in deciding to stay or leave an organization. If the psychological contract between an employee and its employer is violated than this could lead to a higher intent to leave the organization for the employee, or a higher intent to let the employee go for the employer. The inter-organizational context suggests that trust is important in forming a network. Trust leads to cooperation, which leads to more trust, which leads to more
cooperation. Trust in a franchise relationship is also important for both a franchisee and a franchisor. A franchisee relies on the franchisor for support, whereas the franchisor trusts the franchisee to follow franchise guidelines. This study focuses on the perceived trustworthiness of a franchisor as a crucial variable in the decision to stay or leave a franchise system. This leads to a fourth and final hypothesis:
Hypothesis 4: The perceived trustworthiness of the franchisor is negatively related to
a franchisee’s intent to leave a franchise network.
25 3. METHODOLOGY
Research Context, Sample and Data Collection Procedures
This study uses several high quality papers to establish a theoretical framework concerning the area of research. From this theoretical framework a conceptual model was derived. This conceptual model led to several hypotheses which were tested. The hypotheses were tested with an already existing data set which was collected in 2011 by the
Rijksuniversiteit Groningen. It concerns a franchise system of independent craftsmen. The franchisees in this system are mostly businesses where the owner is self-employed and has no employees. The variables in the conceptual model apply to both the individual and the
business level. The number of respondents in this dataset is 127. When the data was collected, the franchise network consisted of 209 franchisees. This means there is a response rate of 60.7 percent. An independent samples T-test was performed to see if there is a significant
difference between early and late respondents and the dependent variable Intent to leave. The T-test revealed there was no significant difference between early and late respondents (results of the T-test can be found in Table 7 in Appendix C). Because the selected dataset contains only one single franchise system, internal validity was enhanced and this research can subsequently be replicated in other franchised organizations (Davies et al., 2011).
As said before, the franchisees are small business owners that mostly work alone or with very few employees. The franchise system provides the franchisees with collective marketing, training and coaching, access to services such as insurances and a strong brand name. The franchisees have strict obligations regarding uniform presentation towards their customers. This entails professional uniforms, the use of company logo on printed materials and similar company vehicles. The franchisees also jointly use a common ICT-system. The rules are less strict regarding operations management. There is no centralized purchasing department. The franchisees are all male.
Measurement Properties and Measures
The measurement scales in the already existing database rely on several articles. The items that were used can be found in appendix C. Regarding franchisee cohesion, the measurement scales were drawn upon the articles of Cook and Wall (1980), and Kiffin- Petersen and Cordery (2003). Franchisee cohesion was measured using 4 items of the
previously mentioned articles. The items were adjusted such that they measure the franchisee
26 perceptions of franchisee cohesion. The franchisees had to evaluate the cohesion between franchisees on a scale of 1 (i.e., strongly disagree) to 5 (i.e., strongly agree). The level of measurement for all items on franchisee cohesion is interval.
Regarding the subjective performance measures, the measures were derived from the article of Dant and Gundlach (1998). Performance was measured using 4 items of the
previously mentioned articles. The items were adjusted such that they measure the subjective performance of franchisees. The franchisees had to evaluate their subjective performance on a scale of 1 (i.e., strongly disagree) to 5 (i.e., strongly agree). The level of measurement for all items on performance is interval.
Regarding motivation, the measures were derived from the article of Kuratko et al.
(1997). Motivation was split up into three dimensions, namely intrinsic motivation, extrinsic motivation and autonomy. Intrinsic motivation was measured using 5 items of Kuratko et al.
(1997) and 2 items that were suggested by the franchisees when the set up of the survey was discussed with the Franchisee Advisory Council, which were classified as intrinsic rewards.
Extrinsic motivation was also measured using 5 items of Kuratko et al. (1997). Finally, autonomy was measured using 5 items of Kuratko et al. (1997). The items were adjusted such that they measure motivations of the franchisees. The franchisees had to evaluate their
motivations on a scale of 1 (i.e., not very important) to 5 (i.e., very important). The level of measurement for all items on motivation is interval.
Regarding the perceived trustworthiness of the franchisor, the measures were derived from the article of Mayer and Davis (1999). Trustworthiness of the franchisor was measured using 13 items of the previously mentioned article. The items were adjusted such that they measure the perceived trustworthiness of the franchisor by the franchisees. The franchisees had to evaluate the trustworthiness of their franchisor on a scale of 1 (i.e., strongly disagree) to 5 (i.e., strongly agree). The level of measurement for all items on the trustworthiness of the franchisor is interval.
Regarding the dependent variable, a franchisee’s intent to leave a franchise system, the measurement scales are derived from the article of Kelloway, Gottlieb and Barham (1999).
Intent to leave was measured using 3 items of the previously mentioned articles, added by 3
items who discuss the franchise contract. The items were adjusted such that they measure the
franchisee’s intent to leave the franchise system. The franchisees had to evaluate the intent to
27 leave they had on a scale of 1 (i.e., strongly disagree) to 5 (i.e., strongly agree). The level of measurement for all items on intent to leave is interval.
Control Variables
This study included two control variables to provide a better model, including franchisee’s perceptions of alternatives and franchisee’s perceptions of switching costs. The franchisee’s perceptions of alternatives is included because it may impact a franchisee’s attitude towards remaining in the franchise system (Mitchell et al.,2001). The attractiveness of the best alternative is tested in marketing literature and found negatively related to intent to leave (Ping, 1993). The franchisee’s perceptions of switching costs can be defined as the costs one incurs, both monetary and nonmonetary (Lam, Shankar, Erramilli & Murthy, 2004) when switching from in this case self-employed to, for example, employment (Storey & Greene, 2010) and is included because these switching costs may impact a franchisee’s intent to stay.
Switching costs are also explicitly tested in marketing channels by Ping (1993) and are
negatively related to intent to leave. The two control variables were chosen because they have proven to be factors that influence intent to leave.
Analysis
Several forms of analysis are used to ensure that the results derived from the dataset will be reliable, valid and controllable (Field, 2010). The analysis started by performing a factor analysis using Direct Oblimin rotation to validate our measures and are calculated using SPSS. The Direct Oblimin rotation was chosen because some factors might correlate with each other (Field, 2010), especially the intrinsic motivation, extrinsic motivation and
autonomy variables, which all fall under the motivation variable, were expected to correlate.
A fixed number of variables, namely five, were selected. This was chosen because the items were already tested in earlier research and have proven they measure the variables tested in this study. The factors are Intent to leave, Franchisee cohesion, Performance measures, Motivation (including intrinsic, extrinsic and autonomy) and Trustworthiness of the
franchisor. After the first factor analysis three items were deleted. One because it revealed a
cross loading between two factors, one because it showed no relationship to the variables, and
one because it measured the wrong variable. The deleted items can be found along the other
items in Table 2 of appendix C. The deleted items are marked red and have a line through the
item. The factor loadings are reported in Table 3 of appendix C.
28 The analysis continued by performing a reliability analysis using the Cronbach Alpha coefficient. The reliabilities of all measures were found to surpass the 0.70 threshold
recommended by Nunnally (1978), implying a satisfactory level of scale reliability. The reliabilities are reported in Table 6 in appendix C.
The analysis continued by developing some descriptive statistics. The franchisees are all male. Their average age is around 45 years old, and the average period of time they are a franchisee is around 3 years. The exact numbers can be found in Table 4 of appendix C. A correlation matrix was also computed. The values in the correlation matrix were not higher than the 0.75 which is far from the 0.90 threshold suggested by Field (2010), which means the variables do not correlate too much. The correlation matrix can be found in Table 5 of
appendix C. The Variance Inflation Factors (VIF) of the analysis are also computed and are all lower than 2.7, suggesting again the absence of multi-collinearity. The VIF-scores can be found in Table 4 on page 30. A Scree plot was also computed. It shows a significant elbow- shape, as is important in determining how many factors you can retain in the entire model (Field, 2010). Factors with an eigenvalue above 1 should be retained and as you can see in Figure 1 of appendix C, five factors can be retained, suggesting that our factors pass this test.
To sum up, our data meets the requirements that are needed to derive sound results.
29 4. RESULTS
A multiple regression analysis was performed in this study. The model tested in this multiple regression analysis reached statistical significance (p<.0005, two-tailed). The R
2and adjusted R
2were 0.639 and 0.614 respectively. Results of the analysis are presented in Table 4. The descriptives of the variables in the multiple regression analysis can be found in Table 3. The descriptives give the means and standard deviations of the variables.
The results show a significant positive relationship between Franchisee Cohesion and Intent to leave (p<0.1), rejecting H1. The results show a significant negative relationship between Performance and Intent to leave (p<0.01), thus supporting H2. The results show an insignificant relationship between Intrinsic Motivation and Intent to leave (p>0.1), thus rejecting H3a. The results show an insignificant relationship between Extrinsic Motivation and Intent to leave (p>0.1), thus rejecting H3b. The results show an insignificant relationship between Autonomy and Intent to leave (p>0.1), thus rejecting H3c. The results show a
significant negative relationship between Trustworthiness of the franchisor and Intent to leave (p<0.01), thus supporting H4. Of the two control variables Perception of alternatives and Perception of switching costs, only Perception of alternatives is significant (p<0.01).
Perception of switching costs has an insignificant relationship with Intent to leave (p>0.1).
Table 3: Descriptive statistics
Mean Std. Deviation N
Intent to leave 2.503 1.918 127
Cohesion 3.418 1.070 127
Performance 3.522 1.067 127
Motivation – Intrinsic 4.267 .508 127 Extrinsic 3.875 .645 127 Autonomy 4.343 .569 127 Trustworthiness of the
franchisor
3.132 1.252 127
Alternatives 3.106 1.510 127
Switching costs 3.151 .965 127
30
Table 4: Regression analysis summary
Hypotheses Standard Coefficient (β)
Standard error
t- value
VIF Coefficient Estimate
Cohesion H1 .118 .092 1.816 1.364 .072*
Performance H2 -.168 .089 -2.697 1.254 .008***
Motivation H3a (Intrinsic)
-.128 .224 -1.148 2.625 .159 N.S.
H3b (Extrinsic)
.092 .160 1.131 2.125 .260 N.S.
H3c (Autonomy)
-.007 .192 -.073 2.577 .942 N.S.
Trustworthiness of the
franchisor
H4 -.298 .100 -3.990 1.813 .000***
Alternatives .499 .095 7.187 1.564 .000***
Switching costs -.102 .079 -1.603 1.308 .112 N.S.
R
2.639
Adjusted R
2.614
Notes: ***: p<0.01;**: p<0.05; *:p<0.1; N.S. indicates that the coefficient is not significant at 90 % confidence level using multiple linear regression. Dependent variable is: Intent to leave
31 5. ADDITIONAL EXPLORATORY ANALYSIS
Certain relations that were expected did not came forward in the earlier performed analyses, especially regarding motivation. This section covers possible moderating effects of certain independent variables on the dependent variable. It may be valuable to review some of these relationships a bit more in depth here. Franchisee performance is negatively related to intent to leave, as was tested in hypothesis 2. Intrinsic motivation, extrinsic motivation and autonomy are not significantly related to intent to leave. Model 1 below explains why intrinsic motivation, extrinsic motivation and autonomy may have a moderating effect on the
performance-intent to leave relationship. The influence of performance on intent to leave may also be different for franchisees who perceive a higher sense of cohesion. This relationship is tested in model 2. Unfortunately, the extant literature base this study covered cannot explain the hypotheses tested in this part in depth. Hence, the analyses performed in this part of the paper are intended as an associative, exploratory exercise with the goal to observe more richly the moderating effects some variables might have on the relationship between two variables.
Figure 3, 4, 5 and 6 on show the models that were tested in this part of the paper.
Model 1 – Motivation and the performance-intent to leave relationship
The results of this study found that intrinsic motivation did not have a significant relationship with a franchisee’s intent to leave a franchise system. However, a relationship between intrinsic motivation and intent to leave was predicted by literature (Boivie, Graffin &
Pollock, 2012; Richer, Blachard & Vallerand, 2002; Dysvik & Kuvaas 2010). The intrinsic motivation may have a moderating effect on certain relationships. Franchisees who have a higher intrinsic motivation may not let a bad performance strengthen their intent to leave as much as people who are less intrinsically motivated, as is also seen in an employee-employer context (Shields, Scott, Bishop & Goelzer, 2012). Lifestyle factors such as personal
satisfaction and a flexible lifestyle may also be important (Walker & Brown, 2004). The
model tested here is depicted in Figure 3. Extrinsic motivation may also have a moderating
effect on the performance-intent to leave relationship. Extrinsically motivated employees
engage in a particular behavior to reach instrumental goals (Bruno, 2013; Van Steenkiste,
Ryan & Deci, 2008). Franchisees who have a higher extrinsic motivation may not let a bad
performance strengthen their intent to leave as much as people who have a lower extrinsic
motivation. The model tested here is depicted in Figure 4. Desire for autonomy may also have
a moderating effect on the performance-intent to leave relationship. The relationship between
32 performance and intent to leave may be stronger for franchisees who have a higher desire for autonomy. If performance is dropping, franchisees with a higher desire for autonomy may have a higher intent to leave, and continue as an independent business. Literature tells us that continuing as an independent business has improved performance of franchisees in the past (Frazer et al., 2007). The model tested here is depicted in Figure 5.
The relationship between performance and intent to leave was tested and supported in hypothesis 2. The variables trustworthiness of the franchisor and franchisee cohesion were also included to create more comprehensive models. These two variables were also tested in the previous parts of this study and both were found significantly related to intent to leave.
The hypotheses for the models below are:
Hypothesis 5a: the negative relationship between performance and intent to leave is weaker if that franchisee has a higher intrinsic motivation.
Hypothesis 5b: the negative relationship between performance and intent to leave is weaker if that franchisee has a higher extrinsic motivation.
Hypothesis 5c: the negative relationship between performance and intent to leave is stronger if that franchisee has a higher desire for autonomy.
Figure 3: Model 1a: The influence of intrinsic motivation on the performance-intent to leave relationship
33
Figure 4: Model 1b: The influence of extrinsic motivation on the performance-intent to leave relationship
Figure 5: Model 1c: The influence of autonomy on the performance-intent to leave relationship
