Entrepreneurial ecosystems in small towns: franchise chain expansion

Resumo (EN)

Purpose – This paper aims to identify the interrelationships of institutional factors that compose an
entrepreneurial ecosystem (EE) in small towns that can potentially increase the attraction of franchises.
Design/methodology/approach – The authors analyzed 728 small towns with franchise chains that do not
belong tometropolitan regions and are limited to populations of up to 50,000 inhabitants. Secondary data are obtained
fromthe Brazilian Institute ofGeography and Statistics. The data analysis technique used is Poisson regression.
Findings – A higher number of employed persons (H1), a higher savings (H2) and a higher number of
educational institutions (H4) correlates with more franchise chains in small towns. The availability of institutional
support (H3) does not correlate with the number of franchise chains. Regarding the interrelationships between
factors, the interactive effect between two constructs is determined to cause a decrease in franchise chains,
whereas interrelating three factors raises the number of franchise chains (R2¼ 72.3%).
Practical implications – The analysis identifies some environmental factors to be considered in market
prospecting by franchise chains’ expansion managers. These factors constitute a relevant analytical model
focused on the regional development of franchise chains.
Social implications – Social contributions are directed to public policy professionals responsible for
regional economic development, as emerging markets demand actions to encourage job creation when
confronted with high unemployment rates and dependence on the informal economy.
Originality/value – The contribution of this paper is bringing EE to the debate of the institutional
environment’s impact on new businesses. EE adds to the debate examining the interrelationships between
different institutional factors. An EE not only identifies the factors, but also examines the interdependence of
these factors, which can potentially explain the attraction of franchise chains in small towns.