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

Franchising is an important form of entrepreneurial wealth creation in many retailing and service industries. Since Human Resource Management (HRM) is a critical factor in such industries, it is important to understand how franchisees—as semi-autonomous entrepreneurs—deal with HRM in their units and how this ultimately affects performance at the unit level. However, the very few studies linking franchisee HRM behaviors to performance have not included multi-unit franchising (MUF) as a type of unit ownership. Given the ever-increasing popularity of MUF and the unique characteristics of MUFs, this represents an important knowledge gap. We aim to fill this gap by building a theoretical framework on how the type of unit ownership affects unit HR performance within franchise systems. Building on agency, resource and entrepreneurship perspectives, we propose that units owned by single-unit franchisees (SUFs) and small MUFs (i.e., franchisees with a very small number of units) adopt a ‘best fit’ system regarding HRM, whereas company-owned units (COs) and units owned by larger MUFs (i.e., franchisees with a large number of units) typically adopt a ‘best practice’ system. Each system has its own advantages and disadvantages, which results in two contrasting propositions regarding their effects on unit performance. Moreover, we expect the units owned by medium-size MUFs to have the lowest performance since they are ‘stuck in the middle’ regarding their HRM system.     

Growth of born globals: the role of the entrepreneur’s personal factors and venture capital

This paper examines to what extent the human capital of entrepreneurs and the receipt of venture capital (VC) financing affect the growth of born globals (BGs). The study analyzes a sample of 242 BGs resulting from a survey on high-tech start-ups operating in the ICT and electronics sectors, located in different countries throughout the world. A multivariate explorative analysis controlling for the endogenous nature of VC is conducted. The results indicate that the experience of the entrepreneur in having previously established another entrepreneurial firm positively affects the growth of BGs. A negative effect is associated with the presence of heterogeneity in the management team in terms of education background. With regard to the linkage between financial capital and growth, it is found that both VC financing and the number of founders (a proxy for the availability internal capital) positively influence the growth of BGs.     

The effects of psychological capital and risk tolerance on service workers’ internal motivation for firm performance and entrepreneurship

This study investigates how psychological capital and risk tolerance can inspire service workers to develop internal motivation and entrepreneurial confidence. Data were gathered from a survey of 255 service workers in the metropolitan area of Seoul, South Korea. The results showed that service workers’ psychological capital consisted of two main constructs: hopeful self-efficacy and optimistic resilience. The results indicated that hopeful self-efficacy had no significant effect on service workers’ internal motivation, while the optimistic resilience had a positive effect which in turn positively impacted entrepreneurial confidence. On the other hand, risk tolerance was found not to affect service workers’ internal motivation. These results imply that optimistic service workers, with recuperative powers, tended to be proactive in their work and have more confidence when establishing new ventures. They also suggest that service firms can improve organizational performance by promoting worker optimism and resilience. This study provides practical insights into why service firms should pay attention to worker optimism and resilience to improve firm performance over the long run, not only for the firms but for the national economy as a whole.     

Entrepreneur location decisions across industries

In this paper we analyse whether entrepreneur location decisions differ across industries and identify the factors determining the choice of location between rural and urban environments. Firm location is based on a new taxonomy developed over the influential three dimensions of Hayter’s (1997) approach. The paper uses data from sample of one thousand Portuguese firms. We present a stylized theoretical model to determine how these new five dimensions influence firm’s location and test the model through a logistic regression. Our results show that that the location decisions depend on the sector of activity, type of area (urban vs. rural) and the characteristics of the entrepreneur. We find that companies engaged in knowledge intensive business services prefer to locate in urban areas. From an institutional point of view, firms prefer to locate in rural areas.     

The impact of culture on national prevalence rates of social and commercial entrepreneurship

This cross-cultural study empirically investigates the cultural determinants of macro-level social and commercial entrepreneurship from a new institutional theory perspective. This study investigates if cultural shifts in cultural values, operationalized through the World Values Survey (WVS), impact the prevalence rates of social and commercial entrepreneurship at the national level. Social and commercial entrepreneurship rates are drawn from the 2009 Global Entrepreneurship Monitor (GEM) and aggregated for 53 countries in this cross-sectional analysis using multivariate regression. Findings indicate that traditional societal values positively impact commercial entrepreneurship prevalence rates, but negatively impact social entrepreneurship rates. Furthermore, self-expression societal values positively impact social entrepreneurship prevalence rates.     

Individual entrepreneurship,collective entrepreneurship and innovation in small business: an empirical study

The study reported in this article examines simultaneously the impact of individual entrepreneurship and collective entrepreneurship on innovation in small business. It intends to address the weakness in previous entrepreneurship research that either only focuses on the individual entrepreneur's role in innovation (Miller 1983 Management Science, 29:770-791), or only stresses the importance of collective entrepreneurship (Reich 1987 Harvard Business Review, 65 (3), 22-83; Stewart 1989). The results of structural equation modeling analysis of data from more than 200 small businesses show that both individual entrepreneur(s) and the collective contribute to innovation in small business. Analysis results also reveal the complex relationships between the two types of entrepreneurship in terms of their impact on innovation in small business. Factors that contribute to collective entrepreneurship were found to contribute to individual entrepreneurship, while factors that are often associated with individual entrepreneurship were found to have negative impact on collective entrepreneurship. Communication among members of the small business, which was found to directly contribute to collective entrepreneurship, was found to contribute to individual entrepreneur's knowledge of emerging markets, products, and technologies. In contrast, centralized decision making, which was found to have direct negative impact on innovation, was found to have negative impact on collaboration and communication. Implications of the study are discussed.     

Robustness of banking networks to idiosyncratic and systemic shocks: a network-based approach

We propose a network-based structural model of credit risk to demonstrate how idiosyncratic and systemic shocks propagate across the banking system and evaluate the costs. The banking system is built as a network of heterogeneous banks which are connected with one another. In such a system, single credit events propagate through the interbank market from debtors to creditors and across the system. The shock is imposed as an unexpected event. We demonstrate that while idiosyncratic shocks cannot substantially disturb the banking system, a systemic shock of even a moderate magnitude can be highly detrimental. Such shock includes a huge contagious potential. We demonstrate that the costs of the shock are largely determined by the extent of contagion and range from negligible to catastrophic. The results imply that a severe crisis has to be initiated by a systemic shock of at least moderate magnitude. Capital ratio and the bank size are two additional factors of the banking system stability. Finally, credit risk analysis is sensitive to the network topology and exhibits a profound nonlinear characteristic.     

International automotive production networks: how the web comes together

This paper aims to provide empirical evidence for the connections between new trade theory and the spatial distribution of economic activities, considering the results obtained by the literature on New Economic Geography as a starting point. To do this, we apply Social Network Analysis specifically to the World Automotive Trade Network. We explore the structural features of the auto network for the years 1996 and 2009 using data on trade flows for 172 countries. Our findings suggest that the auto network has become denser, more extensive and more integrated over time, depicting a center-periphery structure in which regional clusters play a prominent role. In this configuration, strong agglomeration forces generated by companies’ desire for large and rich market access with minimum transportation costs are balanced by the search for new high-potential markets.     

Phase transition in the S&P stock market

We analyze the returns of stocks contained in the Standard & Poor’s 500 index from 1987 until 2011. We use covariance matrices of the firms’ returns determined in a time windows of several years. We find that the eigenvector belonging to the leading eigenvalue (the market) exhibits a phase transition. The market is in an ordered state from 1995 to 2005 and in a disordered state after 2005. We can relate this transition to an order parameter derived from the stocks’ beta and the trading volume. This order parameter can also be interpreted within an agent-based model.