BRIDGING SOCIAL EXCHANGE AND ENGAGEMENT THEORY: ENHANCING FRANCHISE BRAND EQUITY THROUGH LEADERSHIP MEDIATION
Keywords:
Franchisee Engagement, Brand Equity, Leadership Mediation, Social Exchange Theory (SET), Engagement Theory (ET)Abstract
The intersection between psychological engagement and social exchange remains underexplored in the context of franchise brand equity. This study bridges Social Exchange Theory (SET) and Engagement Theory (ET) to investigate how leadership mediates the relationship between franchisee engagement and brand equity in Malaysian franchise operations. ET emphasizes reciprocal trust; ET highlights affective motivation. Together they shape long-term brand perception. Their integration within a leadership framework lacks empirical testing. Using a quantitative research design, data were collected from 300 franchisees across F&B, education, and retail sectors. The data were analysed using SmartPLS 4.0, applying structural equation modelling (SEM) to examine direct and indirect effects. Results reveal that leadership significantly mediates the relationship between engagement and brand equity (β = 0.42, p < 0.001), supporting the hypothesis that leadership translates cognitive-emotional franchisee inputs into perceived brand value. The study integrates SET and ET in a mediation framework and shows leadership is the bridge from engagement to brand equity. Practically, leadership programs should build emotional alignment, trust, and participation not just operational oversight to sustain brand strength. This research offers a multidisciplinary lens for scholars and practitioners across business, psychology, and education domains seeking to understand how psychosocial leadership dynamics foster brand equity in complex franchise ecosystems.
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