A dynamic integrative view of signaling strategies during the franchisee recruitment process

Abstract

During the franchisee recruitment process, franchisors and franchisee candidates must both engage and screen each other to determine whether they are a suitable match. To facilitate this, they usually exchange a number of signals that reduce information asymmetry. Whilst several authors have attempted to examine the role of signals in the decision-making process, these studies have overlooked the evolution of signals over the recruitment process and the active role of both parties in reaching an informed decision. Building on a dynamic integrative view of signaling theory, our research aims to provide a more thorough understanding of the signaling strategies franchisors and franchisee candidates adopt during this process. We rely on data stemming from in-depth interviews with 29 franchisors and 34 franchisee candidates in the French market. Our findings challenge the literature on franchisee recruitment by showing how franchisors and candidates alike customize their signals and screen each other over the recruitment process in order to decide whether to contract based on their assessment of person-organization fit. Our research thus confirms the relevance of frameworks combining the latest developments in signaling theory and the person-organization fit perspective to examine contexts of information asymmetry, thereby opening new avenues for research in B2B settings. Additionally, our paper offers managerial implications for franchisors and franchisee candidates by helping them effectively send and interpret mutual signals to avoid adverse selection.