1、Research Proposal by Yuewen Qu1 / 6Franchise Model Innovation and EntrepreneurshipI. General overviewOrigin of my research interest in franchise model innovationI started my entrepreneurial life in 2001 when I resigned as the general manager of an American public companys affiliate in China, Falcon
2、Products Inc. Before that, I had successfully led the Chinese facility through its three-year start-up stage and entered into McDonalds China market as the major furniture supplier. Even before I joined Falcon Products, I had been involved with my previous employer in business acquisition and merger
3、 project for more than one year. Therefore, I had a total of over four years intra-entrepreneurial experience before I became an entrepreneur. I succeeded in consulting business, but was dragged down by the manufacturing business that I set up in 2004.In 2007, I led a team to conduct market research
4、 for a project intended to enter the fast food servicing market. My team found that even though traditional Chinese foods are peoples favourite, it was the Western fast food restaurant chains which took the lead in the local Chinese markets in contrast to the poor performances of Chinese restaurants
5、, which were in fact more competitive than the Western counterparts in terms of foods as well as prices. After 3 month research, we found that the reason was that the Western fast food restaurants were serving a market niche that was not attended by the Chinese restaurants, namely, the service to sa
6、tisfy consumers need for social connections. Later I learned that such places provided the so-called “linking value” by post-modern tribalism marketing (Cova, B, 1997). I agree that low price strategy would hurt rather than enhance the competitiveness of the restaurant businesses, which explained wh
7、y the Chinese restaurant chains were more price competitive but eventually worse in overall performances. Eventually, my team developed a new model of the restaurant chain that would greatly improve the performance of Chinese food service chains.In 2010, after finishing the marketing management and
8、strategic management courses of MBA program, I took a course named business design, which focused on the innovative design of business models. Subsequently I wrote a paper regarding this research and its findings and submitted the first draft, currently under review, to an SSCI journal under Emerald
9、 - Chinese Management Studies. I plan to write about the business model innovation in my dissertation to suggest an entry strategy based on the findings in the food service market. To successfully run a chain in todays market competition, a unique and well-designed franchise system has to be exploit
10、ed.Issues with entrepreneurship in ChinaThree dynamics, namely asset investment, trading and consumption, are believed to be the drivers of Chinese economy, yet the scenario has been changing: trading has shrunken in terms of both import and export starting mid-2005; asset investment has been virtua
11、lly weakened after the 2008 economic downturn; and consumption has greatly softened. The expected official growth rate is adjusted to 7 - 8% for the coming 5 years. Furthermore, the unemployment rates keep increasing. The 2009 state statistics recorded a registered urban unemployment rate of about 5
12、%. Even though there is no statistics of actual unemployment rate, one can reasonably rule that the actual unemployment rate is Research Proposal by Yuewen Qu2 / 6much higher, since the rural workforce, the major source of labor is more prone to unemployment than the urban equivalents. Macroeconomic
13、s takes both economic growth and unemployment rate as the primary concerns of study. Given the current conditions in China, the hope to sustain the economic growth and to improve the unemployment rate seems to lie in the boom of entrepreneurship, which may enhance employment conditions as well as fu
14、el the economic growth.Nevertheless, entrepreneurship is hard to revive in China. Since early 1980s, Chinese government started to provoke entrepreneurship, but till today, the survival rate of 3-year-old enterprises has been below 3%, one of the lowest in the world, while the Global Entrepreneurshi
15、p Monitor 2009 (Bosma N. et al., 2010) has revealed a 2-digit business start-up rate nationwide, one of the highest. The seemingly logical interpretations might be that the Chinese entrepreneurs are poorly educated, inexperienced, unprofessional in management and short-sighted etc. These are all sup
16、erficial manifestations rather than the reasons for the phenomenon. The causes behind deserve serious investigations and research.Rationale for the research of the topic in questionMany years of my entrepreneurial experiences dawn on me that the culture and value systems of the nation may account fo
17、r the causes of the issue in question. Basically China is still a highly hierarchical society as it has been for 5000 years. Subsequently, Chinese markets can generally be classified into two types of sub-markets according to their different cultural natures, namely free market and closed market. Th
18、e free market provides equal competition opportunities for players while the opportunities from the closed market are given to certain people, who possess resources that are not accessible to mass competitors. Competitions in this context are used to reinforce the pre-set orders rather than replace
19、them with new competition landscapes. Since equal opportunity competition is the foundation for entrepreneurship or start-ups from scratch, it logically follows that entrepreneurship wont thrive in the closed markets.In this case, it is desirable for the entrepreneurs to identify and select the spec
20、ific sectors in the market to start up their businesses. I tend to view industries targeting individual consumers as free market ones such as information technology and retail. Out of these sectors, franchise seem to be a wise business model because it can spread up fast with limited self-raised bud
21、gets and elaborate running systems. Meanwhile, for every single outlet of the franchise system, it is not always disadvantageous in competition in the beginning stage, because the market leader cannot necessarily exercise economy of scale to win over the newly set up businesses.My research conducted
22、 in 2007 in fast food service industry has resulted in my current paper submission to Chinese Management Studies, an SSCI journal with a focus on Chinese management issues, and triggered my profound contemplation in franchise business models. This research explains the current market context with ev
23、idences of surveys and quantitative researches, and assumes the unmet market demand, which can be explained by Cova B.s tribalism marketing theory (2002). Based on such hypothesis, a new business model is suggested which may be workable for successful business entry. The thesis has not come to the t
24、opic of franchise model. Yet, an integration of business model innovation and franchise from the post-modern marketing perspective deserves further study, which I can elaborate more in my coming masters dissertation.Identification of the relevant literatureResearch Proposal by Yuewen Qu3 / 6To date
25、I have identified the following literature that I feel relevant. The literature mainly discusses the issues about entrepreneurship, franchise, business model innovation, business boundary management and post-modern marketing management.Alvarez S. A. and Barney J. B., 2010, Entrepreneurship and Epist
26、emology: The Philosophical Underpinnings of the Study of Entrepreneurial Opportunities, The Academy of Management Annals, Vol. 4, No. 1, 2010, PP557583Baron R. A., 2006, Opportunity Recognition as Pattern Recognition: How Entrepreneurs “Connect the Dots” to Identify new business opportunities, Acade
27、my of Management Perspectives, Feb 2006, PP104-119Casadesus-Masanell, R. and J.E. Ricart, 2007,Competing through Business Models“, Paper presented at the Academy of Management Conference, Philadelphia.Combs J. G. et al., 2011, Antecedents and Consequences of Franchise: Past Accomplishments and Futur
28、e Challenges, Journal of Management 2011 37: 99 originally published online 4 November 2010, Cova B, 1997, Community and Consumption: Towards a definition of the “linking value” of product or services, European Journal of Marketing, Vol. 31 No. 3/4, 1997, pp. 297-316.Cova B and Cova V, 2002, Tribal
29、Marketing: The tribalism of society and its impact on the conduct of marketing, European Journal of Marketing, Vol. 36 No. 5/6, 2002, pp. 595-620.Cova B et al., 2007, Global brand communities across borders: the Warhammer case, borders: the Warhammer case, Vol. 24 No. 3, 2007, pp. 313-329.Dada O. an
30、d Watson A, 2010, Entrepreneurial Orientation and the Franchise System: Organisational Antecedents and Performance Outcomes, The LUMS working papers series, 2010/012Dada O. et al., 2010, Toward a model of franchisee entrepreneurship, , The LUMS working papers series, 2010/013Davies M. A. P. et al.,
31、2009, A model of trust and compliance in franchise relationships, Journal of Business Venturing 2009, doi:10.1016/j.jbusvent.2009.09.005Easley C. E, 2009, Entrepreneurship and China: History of Policy Reforms and Institutional Development, http:/www.stanford.edu/cee/Papers/, webpage captured on 14 F
32、eb 2011Fitzpatrick, B. D et al, 1999, Financial and planning implications for small business entrepreneurship, Journal of Business and Entrepreneurship; Oct 1999, pp. 27 - 41.Ghezzi A. et al (2010), How to Get Strategic Planning and Business Model Design Wrong: The Case of a Mobile Technology Provid
33、er, Strat. Change 19: 213238 (2010), published online in Wiley Online Library (), DOI: 10.1002/jsc.871Research Proposal by Yuewen Qu4 / 6Goodwin C, 1994, “Private roles in public encounters: communal relationships in service exchanges”, Proceedings of the 3rd Sminaire International de echerche en Ma
34、nagement des Activits de Services, La Londe les Maures, 25-29 May, pp. 311-333.Jacobides M. G. and Winter S. G., 2007, Entrepreneurship and Firm Boundaries: The Theory of A Firm, Journal of Management Studies 44:7 November 2007, 0022-2380Larty J., 2010, Contribution of Franchise Research to entrepre
35、neurship: a review and new opportunities, The LUMS working papers series, 2010/027Liao D and Sohmen P, 2001, Stanford Journal of East Asian Affairs, Spring 2001, Volume 1, PP27-33Mullan M. R. et al., 2009, Research Methods in the Leading Small BusinessEntrepreneurship Journals: A Critical Review wit
36、h Recommendations for Future Research, Journal of Small Business Management 2009 47(3), pp. 287307.Santos, F., A. Abrunhosa and I. Costa, 2007, How to compete in mature industries? Boundary architecture as a mechanism of strategic renewal, Paper presented at the Academy of Management Conference, Phi
37、ladelphia.Zander I, Do You See What I Mean? An Entrepreneurship Perspective on the Nature and Boundaries of the Firm, Journal of Management Studies 44:7 November 2007, 0022-2380, PP1141-1164Key research questions1. Myth with Chinese Economy and Entrepreneurship: they thrive in ChinaI share the view
38、of Easley C. E (2009) that “at this point there is relatively little empirical work in China” regarding entrepreneurship. Even though GEM 2009 shows a seemingly optimistic database of Chinese entrepreneurship, the random walk sampling method of face to face interview (GEM 2009, Bosma N. et al., pp60
39、) is not convincing, since there is no control on standardization of the samples. The dual-track approach (Gregory N. et al 2000) did give rise to opening entrepreneurship since 1980 under the economic reform campaign, but has caused the so-called “corruption” over time since the end of 1980s, which
40、 triggered the explosion of “guanxi”, the social network that enable the beneficiaries to access to resources that could otherwise be accessible through fair competitions on equal opportunity basis. The prevailing of guanxi seriously blocks the development of entrepreneurship in China due to loss of
41、 equal competitive opportunities. There is an implicit common understanding among Chinese that no success can be expected without guanxi. This condition has greatly increased the transaction costs and thus the threshold of entrepreneurship. Consequently, innovation is rarely seen from new enterprise
42、s, since people cant easily establish businesses by innovative ideas but rather by resources solicited from guanxi.2. Innovation of business modelsResearch Proposal by Yuewen Qu5 / 6As is analysed above, innovation is not the factor leading to successful entrepreneurship. Yet, the innovation of busi
43、ness models may not fall into this category and may be employed by the entrepreneurs as business entry and growth strategies. Through my previous research I find out that even the global players may have significant weaknesses in their operations in China. Unlike the innovation of products or techno
44、logy that can be easily imitated and misused, highly elaborate business models, since it usually involves every aspect of business administration and is controlled and managed by centralized data analytical systems, is hard to copy and understand. 3. Franchise: An option to survive the deadly rivalr
45、y against mega-sized playersFor industries that provide equal competitive opportunities, entrepreneurs may survive the competition on the carefully designed and managed franchise systems. One outlet of a franchise usually serves a limited size of the market that provides an escape from the physical
46、comparison in the size of the outlet. That may account for why franchise is prevailing today. As Larty J. (2010) says in her paper, only 65 publications on franchise between 1996 and 2007 met the criteria of study in question. The underrepresented research in franchise and the prospect of franchise
47、as a means for entrepreneurial strategy form a sharp contrast, compelling to the commitment of profound research. So far in Chinese academic arena, no deep quantitative research in franchise has been conducted.MethodologyThe methodology will involve surveys, interviews, first hand data collection fr
48、om field research, desk research and modeling. Qualitative analysis will be done on the data collected to account for the reasons for various phenomena. Quantitative analysis will be done to form parameters for modeling. In the end, financial mathematical models will be built to propose solutions an
49、d make forecasts and set up database for future studies and applications.In terms of qualitative analysis, social sciences such as sociology, economy and probably anthropology will be involved. In terms of quantitative analysis, the key is the data analysis and modeling. For the past 15 years, I have been using Excel of Microsoft for analysis. I believe that I can continue with Excel but do hope that I can learn much more tools in my future research.Timescale/research planningThe first year will be spent on the basics of research, e.g. research methodo
