Entrepreneurial orientation (EO) is the capacity to innovate, ability to act proactively, propensity to take actions in the face of uncertainty, and tendency to make calculated moves (strategically and tactically) to beat competitors. It is essentially a collection of skills that help an entrepreneur to create appropriate corporate goals, maintain vision and assure competitive advantages for their entities. EO is generally thought to have five dimensions: innovativeness, proactiveness, risk-taking, competitive aggressiveness and autonomy.
There are several advantages to be derived when an entrepreneur or organization possesses high EO: EO makes it possible for a firm to achieve and maintain a healthy degree of market relevance as it is about market-driving activities and innovation of products and services that delight customers. In a competitive business environment like Nigeria, ability to read the market correctly and deliver goods and services that delight customers is probably the most important skill that any firm can possess. More so, firms with high EO have better capacity to sustain visions, realize their goals and achieve enduring competitive advantage. In particular, alliance firms that have EO tend to lead others, readily accept new ideas, enjoy first-mover advantage and are more enthusiastic about their business success.
Model for assuring and enhancing franchisees’ entrepreneurial behaviors
Given the proven benefits of EO to business firms, how can franchisors best organize their businesses and relationships with franchisees so that more franchisees possess and exhibit greater entrepreneurial behaviors? In my 3-year in-depth study (including a review of franchising practices in eight countries with highly developed franchise industry), I asked this question to nearly three dozen franchisees in Nigeria. All the franchisees interviewed in this study were unequivocal in their submission that franchisees with high EO skills run a better and more profitable outlet. The insights and obtained from the study have led me to design a framework that could help franchisors to maximize return on their investments.
The central idea in my model is that franchisors must take a deliberate and pro-active measures to ensure that franchisees not only possess but also implement appropriate entrepreneurial behaviors in the running of their individual outlets. Essentially, my model provides a step-wise approach and strategies for franchisors to enhance the entrepreneurial capacity of their networks.
The first step and foundation for accruing maximum returns from franchisees entrepreneurial behaviors is to incorporate into franchisees recruitment process, a high-integrity test of such entrepreneurial skills as innovativeness, pro-activeness, risk-taking, competitive aggressiveness and independent will. Given the proven benefits of entrepreneurial skills, appropriate tests and due diligence procedures must be conducted to be sure that those who join the system possess appreciable amount of these skills.
The second step for creating an enhanced entrepreneurial environment in a franchise system as depicted in my model is to design and deliver targeted training on each element of EO to franchisees. Once franchisees are onboard, efforts must be made to create and continuously enhance an environment where their exhibition of entrepreneurial behaviors is the normal – the rule, not the exception. Regardless of franchisees’ initial level of entrepreneurial skills, targeted training must be conducted pre-launch and regularly to keep them aligned and abreast of resources for improving their innovative skills, proactive attitude, risk-taking propensity, competitive ability and independent will.
The third step and strategy for ensuring that franchisees not only possess the right entrepreneurial skills for improving business performance in a franchise system but also actually exhibit high degree of entrepreneurial behavior, is to make these behaviors a culture of the entire franchise system. Corporate culture is simply the way of life or the how-we-do-things-around-here of an organization. It represents the values and the highest ideals of an organization. Although corporate culture takes time to form, it tends to stick and endure once accepted as a way of life. Obviously, a culture of widespread entrepreneurial behaviors among members of a business organization is a great strategic asset for such organization. The long-term impact of such an asset is huge: it creates a company where members: are not afraid to dare the impossible, take initiative and feel personally responsible for results, believe that they can overcome any emerging challenges and work collectively to build a highly innovative system. But how actually do we build such a culture?
Although there are many ways to create and maintain such culture, I recommend two key approaches: franchisors must lead by example, and they need to design an excellent reward system around each of the desired entrepreneurial behaviors.
Franchisors must provide the necessary leadership in establishing a culture of innovation, proactiveness, risk-taking, competitive aggressiveness and independent willby using company-owned outlets as an experimental lab where these skills are consistently demonstrated. For impact, franchisors will need to constantly tell stories of this company-owned effort to all franchisees using the network’s email newsletter. Another way through which franchisors can lead by example with regard to all of the identified entrepreneurial behaviors is by establishing and supporting a team comprising both franchisors and representatives of franchisees to drive exhibition of each of the behaviors throughout the network. For example, there should be an innovation management team that oversees idea generation and commercialization across the system. This not only creates a sense of ownership of the innovation process (same for other skill areas) among franchisees – a key prerequisite for passionate execution – it sends the right signals to franchisees that their franchisor does care about and cherishes innovative behaviors. On the other hand – in terms of rewards for exhibiting desired entrepreneurial behaviors, special recognitions and awards should be instituted for celebrating franchisees that consistently demonstrate or implement any of the desired behaviors in the running of their outlets.
The findings of my 3-year research has demonstrated that franchise systems where franchisees behave entrepreneurially – innovate, take responsibility as well as calculated risk, compete aggressively and act autonomously – are more likely to achieve better profitability and higher franchisees’ overall satisfaction. The challenge for franchisors is to take measures to draw out and maximize the entrepreneurial potentials of their franchisees. I have developed a three-step framework for assisting franchisors to establish and sustain a franchise network with an entrepreneurial culture at heart.
Adams Adeiza
Dr Adeiza is a lecturer at Dangote Business School, Bayero University, Kano. He is a consultant on Smart Innovation, New Venture Creation and Franchise Business. He can be reached on successfuladams@gmail.com and his tweeter handle is @Adamsking
