Digital marketing capabilities, entrepreneurial orientation and franchise systems' performance

Purpose We adopt the conceptual lens of the Dynamic Capabilities Approach to evaluate the relationship between Entrepreneurial Orientation (EO), Digital Marketing Capabilities (DMC), and Performance in Brazilian franchises. Design/methodology/approach We applied a survey with franchisors at the Brazilian Franchising Association Expo 2022. Data were collected for 145 franchise systems. We used Partial Least Squares Structural Equation Modeling and tested two distinct models. Model 1 presents the direct effects of EO and DMC on Performance. In Model 2 we include the mediation effect of DMC on the relationship between EO and Performance. Findings Aligned with prior literature, in our first model we found a direct association between EO and Performance and between DMC and Performance. In our second model, when analyzing the combination of EO and DMC, we observed a full mediation effect of DMC in the relationship between EO and performance, and an indirect effect of EO on performance. Originality/value We advance in the debate of the relationship between EO and Performance in the franchise context, adding to our model the DMC perspective. Findings shed light on the importance of digital marketing capabilities for franchise systems. These elements open important avenues for dedicated research to further understand how digitalization process can be redefining the drivers of performance in entrepreneurial firms.