A Stewardship Perspective on Goal Alignment in International Social Franchising

Abstract: Nongovernmental organizations (NGOs) are among those that have adopted the United Nations 2030 Agenda for Sustainable Development. Some NGOs may strive to address global challenges and aim to expand internationally. Social franchising offers a possible strategy for that matter. As franchising depicts a delegation relationship, the NGO delegates work to franchisees. Therefore, the NGO needs to ensure that franchisees operate in alignment with its goals to achieve the sought after social impact. However, contrary to the financial incentives for goal alignment in commercial franchising, in social franchising neither the franchisor nor the franchisees are motivated by their own pecuniary interests. Thus, other mechanisms need to be employed to ensure goal alignment when NGOs operate an international social franchise and have to ensure goal alignment in light of geographical disparity and locality. For exploring the research questions of how international NGOs, operating a social franchise, seek to create goal alignment and why goal alignment is sought to be created in this manner, we adopted a qualitative research approach and conducted two case studies of the international NGOs, Dance4life and Aflatoun International, who both operate as social franchises. To generate theoretical insights, we analyzed the collected data using abductive analysis. Our empirical findings demonstrate that both organizations have overall similar goal alignment processes. We find stewardship theory to best explain how and why goal alignment is sought to be created in this manner. By drawing on the principles of stewardship theory, we show that both organizations seek to select and govern stewards for franchisees. Furthermore, it appears that the reason why goal alignment is sought to be created through reliance on stewardship relationships is that the conducive psychological and situational factors of principal-steward relationships are present. Additionally, we found that monitoring does not reduce franchisees' motivation, which is in contrast to general perceptions of stewards. By drawing on Frey's (1993, 1997) "crowding out effect", we show that there is no shift in the locus of control that might reduce franchisees motivation because franchisees did not experience it as controlling. Overall, we believe our findings point towards the applicability of stewardship theory in explanations of social franchising.