Chapter Listing | Return to 1997 Topical Index

Entrepreneurial Personality Traits

Entrepreneurship usually includes the introduction of new products and services, innovative marketing, openness to change, outrunning the competition and growing fast (Aldrich & Auster, 1986). On the other hand, related to the risk-taking behavior of franchising there is a subdivision of entrepreneurship that is highly relevant. Baumol (1986, 141) distinguished between initiating entrepreneurship and imitative entrepreneurship: Initiating entrepreneurship deals with the introduction of products, productive techniques, and other items and procedures that were not available before. Imitative entrepreneurship refers to the diffusion of these innovations after their utility has been demonstrated by the initiators.

On the basis of Brannen (1986, 12) study on the coexistence of entrepreneurship and franchising in the USA, she argued that a franchisee is one type of imitative entrepreneur. Imitative entrepreneurship is less risky than initiating entrepreneurship because, for instance, the expenses of research and development are less. Consequently, the franchisee usually has a less risky type of business ownership. Brannen (1986, 20) also stressed that franchisees believe they have the right to as much control over their operations as is necessary for the operation to be profitable and viable. It appears that the franchise requires a reasonable amount of independence and autonomy and without it the relationship with the franchisor will fail and perhaps business viability as well. It appears that the behaviors of a successful franchisor-franchisee relationship may not be identical to those for business success. Brannen (1986) concluded that the interaction between the different franchise parties defines the limits of control.

Interestingly, a study by Anderson et al.(1992) on the differences in personal characteristics between entrepreneurs, small business owners, and franchisees gave support to the views of Brannen. Franchisees displayed a greater need for security than entrepreneurs and had significantly lower levels of supervisory ability, initiative, achievement motivation, and self-actualization. Consequently, Anderson et al. (1992, 104) came to the conclusion that those individuals who want to be self-employed, but do not want to risk failure, should consider the purchase of an established franchise.

Rather similar conclusions were reached by Hing (1995, 18) in an Australian study exploring how different entrepreneurial personality characteristics of franchisees influence post-purchase satisfaction. The four personality traits investigated were `Need for Achievement,´ `Internal Locus of Control,´ `Ambiguity Tolerance´ and `Role Perceptions´. Of the four traits, only `Need for Achievement´ was statistically associated with post-purchase satisfaction. This implies that operating a franchised small business is an alternative to more traditional forms of entrepreneurial activity associated with high level of `Need for Achievement´, and that this motivation subsequently enhances franchisee satisfaction.

Conversely, high levels of internal locus of control, ambiguity tolerance and accurate role perception did not seem to motivate Hing´s sample of franchisees towards self-employment, nor influence their subsequent satisfaction. While these traits are empirically associated with independent small business success, Hing (1995, 18) argued that the unique conditions in franchisor-franchisee relationships may render them unnecessary to the satisfactory operation of a franchised outlet. For instance, franchisees with high levels of `Internal Locus of Control´ may be dissatisfied with their lack of autonomy, while franchisees with low levels of `Internal Locus of Control´ may sometimes fail to assume sufficient personal responsibility for their outlets´ success and become overly reliant on, and dissatisfied with, inputs from their franchisor. Similarly, while high levels of ambiguity tolerance have often been proposed as contributors to franchisee satisfaction due to increased ability to deal with novel, complex, or insoluble situations, this ambiguity should be decreased for franchisees by prior testing of the business concept and franchise expertise (Hing, 1995, 19). Thus, given the unique conditions in a franchise relationship, personality traits other than the usually examined entrepreneurial personality traits may also be important to successful management . These personality traits could include "other-directedness", such as being a conformist, agreeable, cooperative, adaptable, dependent and submissive.

Accordingly, researchers have tended to see the status of the franchisee as a transitional or in-between role on the way to real economic independence. However, this argument does not always agree with all empirical evidence. For instance, the franchisee respondents of Curran & Stanworth (1983, 20) claimed to experience high levels of independence consistent with their perceived status as independent business owners and, secondly, they claimed little desire to dispose of their contact and outlet. Finally, let us summarize the reviewed past literature as well as other related findings by pinpointing some emerging contradicting features in franchising (see Table 1).

We view paradoxes as dual statements which, taken one by one, are equally true but, if combined, are somewhat contradictory. We also agree with Quinn & Cameron (1988, 2) who identify paradox as "the simultaneous presence of contradictory, even mutually exclusive elements''. In our terminology, the difference between paradoxes and reaction pairs is that reaction pairs are slightly more dynamic in nature. Reaction are often opposite, counteracting or reverse forces which tend to reflect defensive and protective intentions.


The study is based on a questionnaire mailed to a sample of 686 franchisees from sixteen different franchise chains. The chains selected for the sample represented business format franchising. The total amount of franchisee-driven outlets in this category in Finland is about 1,300 and the number of franchisors 70. Thus, the sample covered more than a half of these franchisees and about one out of four franchisors. The sampled industries were retail trade: kiosks, gift shops, candy shops, telecommunications, photography and kitchen furniture; cafes and restaurants: fast food, donuts and pizzerias; and services: car rental, estate agency, insurance customer service, health care and video rental.

The questionnaire comprised the following four sections: 20 statements to measure franchisees´ advantage perceptions and 20 statements to measure disadvantage perceptions. Moreover, 30 statements were geared towards identification of the entrepreneurial characteristics of respondents and the extent to which they were manifesting these traits in acting as franchisees. The measures were Likert-type, ranging from one to four: (1= "Strongly Disagree," 2= "Somewhat Disagree," 3= "Somewhat Agree" and 4= "Strongly Agree"). The final part focused on gathering background data.

Paradoxes of Franchising as Described in Past Literature


Independence / Autonomy vs. Dependence (Dant et al., 1992; Stanworth, 1993)
Responsibility vs. Limited Decision-Making Authority (Hoy, 1994)
Back-Up vs. Pressure to Conform (Curran & Stanworth, 1983; Withane, 1991)
Support vs. Supervision (Hing, 1995)
Self-Employment vs. Low Self-Actualization (Anderson et al., 1992; Hing, 1995)
Meeting Beginners´ Expectations vs. Not Meeting Experts´ Expectations
(Curran & Stanworth, 1983; Stanworth, 1993)
Initiative Entrepreneurship vs. Imitative Entrepreneurship (Baumol, 1986; Brannen, 1986)
Innovation vs. Replication/Adaptation (English & Hoy, 1995; Stanworth et al., 1996)
Creativity vs. Conformity (English & Hoy, 1995; Stanworth et al., 1996)
Profit and Growth vs. Provide Family Income (Kaufmann, 1988)
Individualists vs. Team Builders (Kursh, 1986; Dandridge & Falbe, 1994)
Satisfaction vs. Dissatisfaction (Falbe & Dandridge, 1992; Hoy, 1994)
Harmony vs. Conflict (Falbe & Dandridge, 1992; Hoy, 1994)

The method employed was a set of factor analyses to illustrate the basic constructs of paradoxicalness and reaction pairs in the franchising context. The factoring was made with SPSS Principal Axis Method and Varimax Rotations. These rotations establish factors that do not correlate with each other. The interpretations of the factors were based on the loadings exceeding .40 in any factor.

Two-hundred and eleven usable answers were received, the response rate being 31%. The participation rate of women in franchising (45% of respondents) appears to be much higher than in other self-employment. The average age of the respondents was 39 years and 10 months. The youngest informant was 21 years old, the oldest 60 years of age. The age at which respondents entered into franchising seemed to correspond with the average age of people setting up an independent business in Finland. The sampled franchisees represented a highly educated group (51% had a college degree) compared with average Finnish entrepreneurs and small business owners.

Work experience ranged from one to 38 years, the average being fourteen years and eight months. Seven out of ten respondents had no prior self-employment experience when they signed a franchise contract. The average franchising experience was only three years and one month, ranging from one month to fifteen years. The main sources of the original idea for taking up a franchise were: previous related work experience (30%), chance (23%), and unemployment or the fear of redundancy (19%). The initial franchise fee was some 80,000 Finnish Marks (U$17,000) or less in six out of ten cases.

The annual sales of the franchised companies ranged from 80,000 to 35 million FIM (U$7.4 million), average being 2.9 million FIM. The average number of employees was five. Nevertheless, some 60 percent of franchise outlets had only one or two employees while in thirteen percent of the cases the firm was a solo self-employment. The distribution of the types of businesses (retail 45%, restaurants and cafes 32% and services 23%) run by our respondents matched that of the current situation in Finland. In this sense, the sample ensured the required representation.

Top of page | Chapter Listing | Return to 1997 Topical Index

© 1997 Babson College All Rights Reserved
Last Updated 03/04/98