1.1 – Retail network and satisfaction

6Retailing constitutes the final stage of a supply chain and is among the largest industries in many economies (Tambo, 2014). Sorescu et al. (2011, p.4) define retailing as “acquiring, stocking, displaying and exchanging goods and services that fulfill the customer experience.” The majority of definitions of retailing include both services and goods in retail activities ; the difference between goods and services is becoming increasingly difficult to distinguish due to the blurred boundaries between them (Morrar, 2014). Gallouj and Gallouj (2009) view commerce as a specific activity of service. Therefore, we define retailing in this study as the activity of commerce related to both services and goods. In addition, there are different forms of retail systems, such as franchising, licensing, and multilevel marketing channels (Kacker et al., 2016). The plural form—that is, the simultaneous use of company-owned and franchised units—is probably the most popular type of retail network (Botti et al., 2009).

7A retail network comprises different entities, such as a focal retailer, the retailer’s vendors, logistics suppliers, software and system providers, and so forth (Bradford et al., 2004). In the current study, we focus on retailers’ vendors, known also as store managers. Store managers represent the retail organization at the store level, and they are the primary interface between the retail organization and customers (Teller and Alexander, 2014). In a plural-form network, the store manager is an employee–manager in the case of a company-owned unit or a franchisee in the case of a franchised unit.

8Researchers in the retail context have focused mostly on consumers’ perspectives (Teller and Alexander, 2014), particularly when the topic is satisfaction. Customer satisfaction is widely discussed, while the satisfaction of members in a retail network has received less attention. However, this level of satisfaction is vital ; it enhances network performance by reducing conflicts and motivating the members of the network (Gauzente, 2003). According to Mellewigt et al. (2011), satisfaction refers to organizational members’ perceptions of the organizational environment. Bradford et al. (2004, p.182) define network satisfaction [6] as “the extent to which network members feel the processes and outcomes of interactions with other network members exceed their expectations.” Schul et al. (1985) use the term “channel members’ satisfaction” [7] and define it as a channel member’s affective attitudes and feelings concerning the domain of characteristics describing the internal environment of the channel organization and the relationships between the channel member and other institutions in the channel arrangement.

9In the current study, we focus on the satisfaction of stores managers (franchisees or employee managers) in the context of their internal environment and their relationship with the retail organization.

1.2 – Innovation in the retail sector

10Innovation management occurs at the intersection of various disciplines : marketing, management, technology, entrepreneurship, engineering, and information systems, among others (Aarikka-Stenroos et al., 2014). The literature offers various definitions of innovation. For example, innovation might refer to the adoption of a new idea or behavior, and it can be classified into the categories of product, process, or administrative (organizational) innovations (Jiménez and Valle, 2011). According to Nemati et al. (2010), innovation is the creation, development, and implementation of a new product, process, or service to gain competitive advantage. According to the Oslo Manual (2005, p. 46), “the minimum requirement for an innovation is that the product, process, marketing method or organizational method must be new (or significantly improved) to the firm. This includes products, processes and methods that firms are the first to develop and those that have been adopted from other firms or organizations.” Following this same logic, innovation can be viewed as the development of new (or the improvement of existing) organizational methods, products, or processes in response to customer demand (Weng et al., 2012). From a management perspective, innovation is linked to a set of outcomes or activities that are new to the organization (Hristov and Reynolds, 2015). Although literature presents a variety of ways to define innovation, there is a general consensus that innovation must represent “newness” or “significant improvement.” In terms of the three main innovation types we identify here, organizational innovation brings change to administrative systems (Jiménez and Valle, 2011), product innovation refers to new products or services in response to market demands (Cheng et al., 2010), and process innovation is related to improvements in production or service delivery (Cheng et al., 2010).

11Therefore, we define innovation in our study as the development of new (or the improvement of existing) organizational forms (organizational innovation), products/services (product innovation), or processes (process innovation). We chose this definition because we believe that it captures the essential characteristics of innovation described in prior literature and takes into account the presence of different forms of innovation. [8] Note that the term “newness” can refer to being new to the firm, new to the market, or new to the world (Oslo manual, 2005). In our case, newness is defined as new to the firm, not necessarily new to the market or the world.

12Despite the importance of innovation in the retail sector, it has received little attention (Hristov and Reynolds, 2015 ; Tether, 2005 ; Miles, 2000)—and even less so in developing countries (Fall Diallo et al., 2015). Even if innovation is not well defined in retailing, the sector presents a broad range of innovation-related practices (Hristov and Reynolds, 2015). Hristov and Reynolds (2015) describe the retailer as a co-innovator and an innovation hub in the retail network.

13Different approaches have been used to study innovation management in retailing. One of the more well-known approaches is rooted in the technology acceptance model, which investigates the degree to which a subject (generally, the consumers) accepts a specific system (Pantano, 2014). Another approach to innovation management in the retail sector is based on the involvement of consumers in the process of developing a new product or service (Pantano, 2014). Furthermore, the structure of networks is considered crucial in the development and commercialization of an innovation (Aarikka-Stenroos et al., 2014). Therefore, different network approaches are mobilized to understand innovation management in retailing, such as industrial networks (effect of interactive relationships in the commercialization of innovation), social networks (ecosystem of the commercialization of innovation), strategic networks (competitive advantage through the commercialization of innovation), and entrepreneurship networks (mobilizing limited resources to commercialize an innovation) (Aarikka-Stenroos et al., 2014).

14Scholars have paid attention to innovation in retailing due to its role in network performance. Ostendorf et al. (2014), for example, highlight the determinant role of innovation in the development of retail brand concepts and in staying competitive in an industry. Tambo (2014) establishes that innovation improves the business performance of the retail network, and it is shared between the brand owner and the stores. Thus, retailers must be innovative to survive in a dynamic and competitive environment. Furthermore, innovation seems to have a positive impact on the satisfaction of a network’s members—in particular, store managers, the primary subject of our investigation.

1.3 – The role of innovation in store managers’ satisfaction

15Current innovation literature provides a very limited understanding of the potential impacts of innovation on satisfaction in retail networks. The phenomenon is most often studied from a customer perspective, in research that has demonstrated that innovativeness is positively related to customer satisfaction (Kibbeling et al., 2013).

16To understand network members’ satisfaction, different approaches have been mobilized. For example, job satisfaction is widely used in marketing research (Gauzente, 2003 ; Schul et al., 1985). According to Lee et al. (2014), the concept of job satisfaction was introduced in 1935 by Hoppock ; it refers to a person’s overall feeling about his or her working environment. It represents the starting point for understanding network members’ satisfaction when moving from the organizational (job satisfaction) to the interorganizational (satisfaction in a network) level (Gauzente, 2003). According to this approach, understanding the antecedents of store managers’ satisfaction is possible through a careful analysis of job satisfaction.

17Scholars have suggested myriad antecedents of job satisfaction, such as market orientation (Zhou et al., 2008), organizational culture and structure (Hazoor and Masood, 2013), empowerment, involvement, recognition (Johnson and McIntye, 1998), time spent at work, autonomy, hierarchical support, employee health, and a sense of evolution and growth in the workplace (Le Flanchec et al., 2015). Schul et al. (1985) examine the antecedents of job satisfaction and conclude that the internal channel environment has a positive and significant effect on channel members’ satisfaction. Specifically, these authors study four dimensions of a franchise channel’s climate and find that franchisees’ satisfaction is positively related to initiating structure (administration and services support), consideration (involvement in the implementation of procedures and policies), autonomy, and reward orientation. In line with these researchers and in order to extend the research on the antecedents of job satisfaction, we mobilize innovation theory to analyze the potential effect of different innovation forms on job satisfaction.

18Innovation theory scholars have studied different concepts of innovation to understand employee satisfaction. For example, some researchers focus on the concept of innovation culture. Drawing on the resource-based view, Wei et al. (2013) show that innovation culture in Chinese firms has a positive impact on employee satisfaction, which helps sustain a firm’s competitive advantage. In this context, innovation culture is defined as the firm’s orientation with respect to the development of new products. The positive effect of innovation on employee satisfaction is in line with the findings of Zhou et al. (2005) in Chinese firms and of Lee and Chang (2008) in Taiwanese firms.

19Other researchers have focused on a particular form of innovation. For example, Cheng et al. (2010) focus on the effect of process and product innovation on job satisfaction. They conclude that both process and product innovation have positive and indirect effects on employee job satisfaction, through the enhancement of organizational performance. However, product innovation seems to have a greater effect on organizational performance than process innovation. Consequently, product innovation is more suitable for enhancing job satisfaction, which is positively related to organizational performance.

20Shipton et al. (2006) demonstrate that job satisfaction is significantly and positively associated with organizational innovation in the context of manufacturing firms in United Kingdom. Likewise, Lambert and Hogan (2009) find that employee satisfaction is positively related to organizational innovation in the context of a correctional facility in United States. According to these authors, organizational innovation helps workers experience a greater sense of involvement in the work they do and a feeling of positive change, which enhances their job satisfaction.

21Based on these findings, we formulate our central hypothesis : Innovation is positively related to store managers’ satisfaction. This hypothesis can be subdivided into three subhypotheses :

22H(a) : Organizational innovation is positively associated with store managers’ satisfaction.

23H(b) : Process innovation is positively associated with store managers’ satisfaction. H(c) : Product innovation is positively associated with store managers’ satisfaction.

24We summarize our hypotheses in Figure 1.

Figure 1

Conceptual Model

Conceptual Model

2.1 – Research context

25Retailing activity is facing rapid changes in developing countries in terms of modernization and the number of retailers, largely due to the introduction of foreign brands, increasing demand, and market expansion (Fall Diallo et al., 2015). In Tunisia for example, the retailing sector comprises approximately 210,591 retailers. [9] Tunisia is an Arab-Muslim country in the Middle East/North Africa (MENA) region. The Tunisian economy is characterized by rapid growth and the evolution from a closed to an open economy, marked by particularly high growth in larger Tunisian cities, such as Tunis and Sousse (Bennasr and Azouazi, 2010). The development of commerce in Tunisia can be explained by several factors, such as the rise of purchasing power, the development of transportation infrastructure, the emergence of a middle class (Touzani et al., 2015) and the modernization of the retail format. [10]

26The retail sector in Tunisia is also characterized by an increased presence of international retailers, whose organized retail stores are present mainly in big cities (Touzani et al., 2015). It is also marked by the presence of informal commerce, which constitutes a principal barrier in the sector (Bennasr and Azouazi, 2010).

2.2 – Sample

27Data were collected in 2013 using a face-to-face approach, through a self-administered questionnaire at Tunisian retail and services outlets. Due to the absence of an official database of Tunisian business networks, we addressed the questionnaire to a target population comprising brands referred to in the Tunisian yellow pages and cited in catalogues published by trade fairs (TunisMedFranchise, 2011/2012), as well as those stores in commercial centers in the Tunis and Sousse regions. In total, 130 questionnaires were administrated in Sousse and 70 in Tunis.

28After pretesting the questionnaire with researchers and professionals (owners and managers of stores), we administered it to the 200 identified targets. All respondents were franchisees or managers of a store. Each questionnaire was accompanied by a cover letter describing the purposes of the study and guaranteeing anonymity to participants. After rejecting some incomplete or invalid questionnaires and replacing missing values with mean values, we obtained a total of 95 valid questionnaires, for a response rate of 47.5%. The sample comprised 73% integrated outlets and 27% franchisees. Of the respondents, 77% were men, and the mean age was 34 years. The most represented industries were clothing (21.1%) ; business and personnel services (16.8 %) ; fitness, health, and beauty (13.7%) ; and home appliances (11.6%) (see Table 1)

Table 1

Distribution of Sample by Industry

Industry Frequency Percentage Clothing retail 20 21.1% Business and personnel services 16 16.8% Fitness, health, and beauty 13 13.7% Home appliances retail 11 11.6% Hospitality, restaurant, and leisure 9 9.5% Furniture and decoration 8 8.4% Automobile 6 6.3% Mobile and computer services 6 6.3% Others 6 6.3% Total 95 100%

Distribution of Sample by Industry

2.3 – Measures

29We adopted preexisting measures that have been used and validated in prior empirical research. When necessary, we adapted the measures to fit the context of the current study. All items are based on perceptions of franchisees and managers, and we pretested them in the exploratory phase of the study. A list of the items and their descriptive statistics appears in Table 2.

Table 2

Items and Descriptive Statistics

N M SD Store managers’ satisfaction SMSAT1 : I am happy about my decision to work in this network. 95 5.87 1.347 SMSAT2 : I believe that I did the right thing when I chose this network. 95 5.71 1.479 SMSAT3 : Overall, I am satisfied with my employer (franchisor) relationship. 95 5.81 1.416 Organizational innovation OIN1 : Novelty of administrative systems 95 4.54 1.649 OIN2 : Efforts for development of new administrative methods 95 4.72 1.778 OIN3 : Frequency of change in administrative methods 95 4.32 1.652 Process innovation PSIN1 : Novelty of work practices 95 4.83 1.760 PSIN2 : Efforts for development of new work practices 95 5.07 1.626 PSIN3 : Frequency of change in work practices 95 4.69 1.572 Product innovation PIN1 : Novelty of products/services 95 5.72 1.397 PIN2 : Efforts of development of new products/services 95 5.22 1.592 PIN3 : Frequency of change in products/services 95 5.14 1.527

Items and Descriptive Statistics

30We measure employee job satisfaction in terms of overall satisfaction (Shipton et al., 2006). In our case, we use the term store managers’ satisfaction and measure it in line with the approach used by Chiou et al. (2004). Respondents assessed items related to perceptions of job satisfaction using a 7-point Likert scale ranging from “strongly disagree” to “strongly agree.”

31We assessed the three types of innovation—organizational (administrative), process, and product—using measures based on Jiménez and Valle (2011). The items corresponding to the different forms of innovation were assessed on a 7-point Likert scale ranging from “below competitors in past 3 years” to “above competitors in past 3 years.”

32We use gender and education as control variables. We used a dummy variable for each (gender : 0 = female, 1 = male ; level of education : 0 = high school level, 1 = university level).

3.1 – Measurement model

34In the first step, we examined the reliability of the constructs. As Table 3 shows, both Cronbach’s alpha and composite reliability (CR) values are higher than 0.70, which indicates the good internal consistency of the constructs (Henseler et al., 2009). In a second step, we assessed convergent validity. Henseler et al. (2009) recommend using average variance extracted (AVE) to assess convergent validity. As Table 3 shows, the AVE of the constructs are at least equal to 0.50. Thus, we conclude that convergent validity is acceptable, meaning that the variables are able to explain more than half of the variance of their indicators (Henseler et al., 2009).

Table 3

Reliability and validity of constructs

Constructs Item descriptions Loading t-value Cronbach’s alpha CR AVE Organizational innovation (AIN) 0.88 0.92 0.80 OIN1 0.84 7.07 OIN2 0.93 11.65 OIN3 0.90 12.63 Process innovation (PSIN) 0.89 0.93 0.82 PSIN1 0.88 11.47 PSIN2 0.89 11.19 PSIN3 0.93 23.12 Product innovation (PIN) 0.80 0.87 0.69 PIN1 0.89 6.69 PIN2 0.68 3.49 PIN3 0.90 7.34 Store managers’ satisfaction SMSAT 0.82 0.89 0.74 SMSAT1 0.92 46.12 SMSAT2 0.80 8.70 SMSAT3 0.84 15.97

Reliability and validity of constructs

35Finally, we assessed discriminant validity by examining the cross-loadings (see Table 4). Indicators should be more correlated with their latent variable than with the other constructs (Henseler et al., 2009). The result show that discriminant validity of constructs is acceptable.

Table 4

Cross-Loadings

OIN PSIN PIN SMSAT OIN_1 0.84 0.08 0.10 0.18 OIN_2 0.93 0.32 0.31 0.30 OIN_3 0.90 0.30 0.09 0.29 PSIN_1 0.25 0.88 0.39 0.23 PSIN_2 0.18 0.89 0.59 0.23 PSIN_3 0.33 0.93 0.52 0.38 PIN_1 0.20 0.35 0.89 0.23 PIN_2 0.15 0.54 0.68 0.07 PIN_3 0.18 0.50 0.90 0.26 SMSAT1 0.28 0.26 0.26 0.92 SMSAT2 0.21 0.13 0.13 0.80 SMSAT3 0.27 0.16 0.16 0.84

Cross-Loadings

36On the basis of these results, we conclude that our measurement model presents acceptable fit, and we proceed to examine the structural model.

3.2 – Structural model

37The analysis of the coefficient of determination (R2) and the coefficient of prediction relevance (Q2) (see Table 5) indicates that the inner model provides an acceptable fit : R2 = 0.18 (≥0.1) and Q2 = 0.14(>0).

Table 5

Test of Hypotheses^**

Model fit Hypotheses Store managers’ satisfaction R2 0.18 Q2 0.14 H(a) : Organizational innovation → store ma- ß3 = 0.23** (t = 2.55) nagers’ satisfaction (M = 0.23, SD = 0.09) H(b) : Process innovation → store managers’ ß4 = 0.19 (t = 1.62) satisfaction (M = 0.18 ; SD = 0.11) H(c) : Product innovation → store managers’ ß5 = 0.10 (t = 0.76) satisfaction (M = 0.14 ; SD = 0.12)

Test of Hypotheses^**

** Results are significant at a threshold of 1% (p < 0.01)

38First, our results show no significant effect of the control variables on the dependent variable : education (ß1 = –0.09, t = 0.93) and gender (ß2 = –0.14, t = 1.43). Second, H(a) predicts that organizational innovation is positively associated with store managers’ satisfaction. Our results support this prediction (ß3 = 0.23, t = 2.55), in that store managers who perceive that their network has a strong innovative capacity in terms of organizational and administrative systems are more satisfied in their jobs.

39Third, and contrary to our predictions, we observe no significant relationship between process or product innovations and store managers’ satisfaction (ß4 = 0.19, t = 1.62 ; ß5 = 0.10, t = 0.76). Consequently, H(b) and H(c) are not supported. These findings indicate that product and process innovation do not affect store managers’ job satisfaction in their retail network.