Franchise Core Competency and Its Relationship with Environmental Uncertainty, Competitive Advantage, and Financial Performance: An Empirical Assessment of Food-Service Franchise Firms

Abstract

This paper examines the relationships between environmental uncertainty, franchise core competency, competitive advantage, and financial performance within the context of food-service franchise companies that build and maintain harmony between external characteristics and internal resources and competency. A survey of 156 food-service franchise firms provides the basis for this empirical investigation. Findings show that both environmental uncertainty and franchise core competency can lead to firm success – but in very different ways. Franchise core competency enhances firm performance by providing differentiation advantage, whereas environmental uncertainty improves performance through franchise core competency. This paper discusses the implications of these findings for researchers and managers.

Key words:

• franchise core competency
• differentiation
• cost advantage
• business performance
• environmental uncertainty