The impact of strategic resources and external support on franchisee survival ability: The mediating role of market orientation

Franchisee businesses play a vital role in Malaysia's economic recovery, growth, and development. Despite their significance, franchisees encounter enormous survival challenges that cause extensive disruptions and decrease their survival ability. The franchisees had to restructure their resources and capabilities while seeking external assistance to adapt and prevent business failure. However, the enabling factors that contribute to franchisee survival during crises remain underexplored. Thus, this study explores the impact of strategic resources and capability factors on franchisee survival ability (FSA) amid a global crisis. Guided by Resource Scarcity Theory (RST), ResourceBased View (RBV), and Agency Theory (AT), the study investigates internal factors, financial resources (FR) and human capital (HC) along with external factors, franchisor (FS) and government support (GS), hypothesised to influence survival outcomes. Furthermore, the study portrays market orientation (MO), which has been rarely tested in franchising, as a mediator between those variables and franchisee survival. A quantitative research design was employed, with survey data collected from 280 franchisee businesses in Kuala Lumpur and Selangor, Malaysia. The data were analysed using Structural Equation Modelling (SEM) with SmartPLS version 4.1.0.6 to test the hypothesised relationships. The findings indicated that financial resources, franchisor support, and government support have significant positive effects on franchisee survival ability. Moreover, market orientation was found to mediate the relationship between financial resources and franchisee survival. This study is among the first to integrate the mediating role of market orientation and the influence of government support in providing a comprehensive analysis of how strategic resources and external support contribute to franchisee resilience during global crises. The findings suggest that franchisee survival during a crisis depends not only on the availability and accessibility of resources but also on the capacity to strategically orient towards the market, thereby aligning with and extending Resource Scarcity Theory. The findings offer valuable insights for franchisees, franchisors, governments, and other stakeholders seeking to promote long-term franchise success. By identifying critical survival strategies, the study contributes to the improvement of the franchise ecosystem, which supports Malaysia's broader economic growth and development aspirations.