Revisiting the contingency theory: dissection of entrepreneurial orientation elements in retail franchisee performance

Abstract

PurposeThis study aims to analyze how various contingencies within the contingency theory influence the entrepreneurial orientation (EO) elements and performance of retail franchisees in a South Pacific Island nation.Design/methodology/approachThis study employs a quantitative approach of data collection from 203 managers in a total of 89 retail franchise outlets. Convenience and snowball sampling techniques were used with data analysis through SPSS AMOS and covariance-based structural equation modelling (CB-SEM).FindingsThe results confirmed that technology, innovation and promotion; competitive edge and value co-creation; high return opportunity capitalization; and empowerment and support influenced franchisee performance, while responsive customer focused leadership and competitor knowledge proved to be insignificant. The findings supported EO s influence on both financial and non-financial indicators, with greater influence on financial indicators. The result revealed that EO accounts for partial impact on franchisee performance, while the remaining impact could be attributed to organization and environment contingencies.Originality/valueThe study proposes a novel context of EO in franchising, where we dissect key elements within the EO dimensions. It also adds to the extant literature on how the broader context of environmental and organizational factors termed as “strategic fit” affects entrepreneurial franchisee performance.