Small Firms in Tourism

Rhodri Thomas

• Publisher: Routledge
• Year: 2013
• Print ISBN: 9780080441320
• eBook ISBN: 9781136366154
• Edition: 1
• Topic: Business
• Subtopic: Hospitality, Travel & Tourism Industry
• Index: Business

This book provides a varied collection of recent research relating to small businesses in tourism. In doing so it reflects the eclecticism of interest and method associated with this under-researched and under-theorised area of investigation. Topics range from the potential contribution of small firms to achieving social or economic goals to understanding more about business performance and growth. As is common in tourism research, disciplinary boundaries are routinely transgressed in the interests of gaining greater illumination. Insights from a variety of countries are offered, sometimes as a result of trans-national collaboration initiated specifically for this book.

Chapter 1

International Perspectives on Small Firms
in Tourism: A Synthesis

Rhodri Thomas

Introduction

There has been a flourishing of interest in a variety of issues relating to small businesses in tourism over recent years. This has resulted in the organisation of international conferences dedicated to the theme, the creation of formal research networks and there have been a number of books and articles published. Yet, this area of inquiry is vastly under-researched; though some may protest, the depth of our knowledge of the dynamics of smaller enterprises in tourism and how they articulate with the economy and society remains relatively shallow. There is, however, room for optimism. The chapters that follow provide valuable access to understanding some key issues. Though the research focus of particular chapters and the methods of investigation vary according to the interests of commentators, and they undertake work in different national settings, some common themes begin to emerge. As is explored more towards the end of this chapter, the contributions to this volume help provide insights into owner-manager motivations and business practices, and their potential contribution to social and economic development goals. Some conventional wisdom is undermined by the insights afforded in this book.

It is important to point out that Chapter authors do not adopt a single definition of “small firm.” In part, this reflects the lack of academic consensus (for a review see Thomas 2000) and the fact that official definitions — usually expressed in numerical terms — also vary between countries. For consistency of presentation, contributors tend to use the term “small firm” but define its usage as appropriate.

Although the collection of papers is eclectic, readers would be mistaken if they equated this with a lack of coherence. Most of the chapters are predicated on an interest in policy interventions where, for example, small firms in tourism may contribute to regional competitiveness, regeneration or sustainability. Other commentators are driven more by an interest in evaluating business practices with a view to informing business policy at the level of the firm. These appear in the final stages of the book.

Economic and Social Policy Goals

The first substantive chapter, by Rogerson, examines small business development in the context of developing countries, taking the case of South Africa. If there is limited research and theorising on small tourism businesses in general, there is still less available to support Rogerson's endeavours. His contribution in starting to open this field is, therefore, especially welcome.

The location of the study in South Africa is interesting because of official concerns not only to use tourism as a means of economic development but also because small business development is seen as a means of achieving particular social goals, namely black economic empowerment (currently some 95% of tourism businesses are owned by whites).

Drawing on contrasting literatures, he develops a framework for examining the promotion of small business development in South African tourism that is comprised of four elements. Briefly, he notes the need to recognise how smaller enterprises are currently marginalised by the domination of large (and often foreign owned) enterprises; to paraphrase, they are left to scratch around for the crumbs from the table of their wealthier counterparts. Secondly, he draws our attention to the literature on new or alternative tourism, suggesting that such niche offerings relating to say social or cultural tourism may provide more fruitful opportunities for small scale enterprise development than mass (Fordist) tourism. The third strand of the literature he uses relates to that written about the role small firms play in poverty alleviation, especially by considering the articulation of the informal with the formal economy; lessons may be learnt by policy-makers (notably in providing smaller enterprises with access to markets). This theme is developed when Rogerson examines what policy-makers might learn from the literature that has explored “business linkages,” notably those relating to the supply chain. In essence, the argument is that during the early stages of development there is a role for the state in encouraging foreign firms to use local suppliers.

The themes identified above are examined in the context of post-apartheid interventions in tourism and small business development. Although it is too early to offer a full assessment — and there is too little research evidence — Rogerson provides a broadly sanguine interpretation of events. There are clearly obstacles to be overcome; the discrimination and inequalities inherited by the post-apartheid regime will not be countered quickly. However, it seems that the measures taken thus far recognise many of the issues raised by the literatures reviewed, and are likely to make a positive contribution to development.

Gartner's (Chapter 3) explores some of the themes raised by Rogerson. More specifically, his interest is in using notions of dependency — relating the concept to relations between countries and, in turn, small and large enterprises — to examine small business behaviour. His starting point is to construct a framework of selective key issues: population growth, consumption centre development, public involvement, technology. The framework is then used to organise an investigation into small tourism firms in Ghana's Central Region.

The discussion provides a fascinating insight, especially for those familiar only with small business research in advanced capitalist economies. Amongst other things, it emphasises the importance of recognising the cultural dimension. By way of illustration, this case study shows that there are contrasting attitudes to public sector interventions. Further, in many instances, business owners may commonly consult priests or priestesses for advice on business decisions which, presumably, is in sharp contrast with “western economies.” There are, however, also similarities that should not be overlooked: dependence on family labour amongst the smallest firms, low demand for and utilisation of skills, and a suggestion that many small firms engage in informal economic activity.

Wanhill (Chapter 4) also considers the role of the state in promoting entrepreneurship and sustaining small business development, though his work is located in the advanced capitalist economies of the European Union (EU). In doing so, he draws attention to how resources allocated to regional development via tourism initiatives have increased over the recent past. These resources have, in turn, impacted upon numerous small firms because of their preponderance in the sector.

Wanhill makes the case for state intervention in tourism by pointing to various market failures. This is refreshing because in other contexts far too many commentators make assumptions about the desirability of particular forms of intervention based on weak theoretical or empirical foundations (for a critique see Thomas 1998).

The initial focus of Wanhill's chapter is on the nature and potential impact of various forms of investment incentives, from mechanisms to reduce capital or operating costs to schemes that provide security for funds borrowed by SMEs. Although he is broadly supportive of investment incentives, he argues that a wider programme of intervention is required that goes beyond financial considerations to include ways of upgrading standards, improving communication and distribution channels, and enhancing the level of market intelligence available for small firms. He makes an interesting case which will need to be tested in light of the complexity of drivers that influence the decision-making of small business owners and owner-managers.

Fleischer & Felsenstein (in Chapter 5) examine empirically the extent to which public sector investment made in small business support services that relate specifically to tourism enterprises can be justified in terms of their short-run impact on output and employment. The data used for their analysis are gathered from participants in programmes that operated in Israel in the early to mid-1990s.

Their starting point is to model output and employment responses to capital assistance, the focus of their attention. As they suggest, although there is an expectation that output would increase for firms receiving capital assistance, the impact on employment may be less predictable. With assistance, labour becomes more expensive compared with capital so may result in a substitution of capital for labour. However, if output increases substantially, the net result may be an increased demand for labour. It is possible, therefore, for employment generation to increase or decrease as a result of capital assistance.

The authors’ reading of the data suggests that a public sector subsidy has a disproportionate impact on employment in small tourism firms compared with other sectors, though they do not observe significant differences relating to output. The explanation for this, they argue, is linked with the labour intensity of tourism firms and seasonality. The latter encourages small tourism firms to invest in technology that has few cost implications for fluctuations in demand, using changes to the numbers of workers as the main means of adjustment.

Official aspirations to enhance the competitiveness of the tourism sector forms the backdrop to Hall & Rusher's examination of the entrepreneurial characteristics and business practices of bed and breakfast accommodation providers in New Zealand (Chapter 6). As elsewhere, public policy-makers recognise that if interventions concerned with shaping business practices — particularly with those that impact so significantly on the tourist experience — are to be effective, they must “touch” small firms, given their numerical preponderance.

Hall & Rusher's study focuses mainly on operators that employ few, if any, beyond the immediate family. Drawing on data gathered from a comprehensive questionnaire survey, the authors provide a fascinating profile of the attitudes and business practices of bed and breakfast operators in New Zealand's upper North Island. Their findings confirm some aspects of existing research — for example that lifestyle factors permeate decision-making — but also challenge others — for example gender divisions in the operation of micro-businesses, and the importance of profit and “professionalism” in operations to owner-managers. What emerged clearly from this research was the sense that lifestyle goals can be seen as strategic business objectives, consistently (informally) evaluated in the light of commercial considerations (which are clearly required for survival). As the authors point out, a failure to recognise — indeed to understand more fully — the complexity of objectives and circumstances is unlikely to yield public policies that will influence change.

Shaw & Williams (Chapter 7) also focus on small business owners. Their starting point is to provide a systematic review of the literature on entrepreneurship in tourism and the motivations of small business owners in the sector. Not surprisingly, much of the discussion focuses on notions of “lifestyle.” Although use of the term varies, at its heart is the idea that non-economic factors — such as the desire for autonomy or wishing to live in a particular area — play an important part in explaining the reason why many individuals establish small businesses in tourism. Further, it helps illuminate why certain decisions are taken and not others (notably those relating to investment and growth). Readers may recall the contributors’ highly influential study of small firms in Cornwall (Williams et al. 1989) which found that such businesses were as much about consumption as production.

Shaw & Williams — like Hall & Rusher — are alert to the dangers of oversimplification and point out that lifestyle motivations clearly influence behaviour but need to be read alongside the economic (or financial) motives that apply simultaneously. The chapter concentrates on discussing the findings of a recent study of “surf tourism” entrepreneurs in Cornwall. The research suggests that lifestyle factors, linked with surfing, the surfing community and the attractiveness of the area are important to entrepreneurs. However, they also identify a prominent business development orientation that appears to be more important than elsewhere in tourism. As the authors point out, these findings contrast both with their earlier work in Cornwall (where small business owners were often semi-retired) and with the ethically driven lifestyle entrepreneurs associated with New Zealand backpacking (Ateljevic & Doorne 2000). Although more research is required, it seems that the way of running a business by lifestyle entrepreneurs varies by place and sector of activity, with their sometimes distinctive lifestyle norms.

Rural Development

The next four chapters — Komppula (Chapter 8), Keen (Chapter 9), Scott & Laws (Chapter 10), and Hall (Chapter 11) — examine the role of small businesses in contributing to change in rural locations. The first of these focuses on a question that has challenged policy-makers with an interest in regional development for some time, namely how to stimulate and support rural business development in tourism. Komppula starts her examination by drawing attention to the contrasting aspirations of small business owners alluded to above, noting not only lifestyle motivations as a factor that potentially stifles business growth of the type exhorted by officials, but also factors such as lack of capability or skills to manage growth within particular enterprises.

Komppula provides a systematic, yet succinct, review of the literature on small business “success,” “growth” and “performance” (terms that are usually rather vaguely defined and used inconsistently between authors), drawing out aspects that relate particularly to issues of owner-manager agency. The insights offered in her chapter emerge from empirical work undertaken in Finland that comprised a set of almost one hundred and eighty structured interviews with rural tourism entrepreneurs, followed by semi-structured in-depth interviews with an additional smaller sample of business owners from the North Korelia region of Eastern Finland.

Building on the work of those that have for some time sought to construct ways of understanding notions of “success” that include non-financial criteria, Komppula develops a more comprehensive conceptualisation that takes account of a variety of what she terms “quality” aspects: quality of life, quality of service and quality of product. These “interests,” she argues, guide the decision-making of small business owners. The challenge for public policy-makers is to develop strategies for intervention that are consistent with public goals yet resonate with the private interests of small business operators.

Keen's (Chapter 9) research suggests that for some operators in some rural communities, the social benefits of running a tourism business — including a sense of contribution to the maintenance of “community” — were important factors in continuing with operations that were financially of marginal importance. These were positive reasons from people that might operate other financially more secure operations; they chose to continue with tourism enterprises. Keen examines this phenomenon via notions of social and community entrepreneurship, paying attention to how such “movers and shakers” may influence the development of tourism in particular locations.

Her research is based on a case study of Maniototo, Southern New Zealand, a rural area with a population of fewer than 1,000 people dispersed between a network of villages. Keen documents the growth of tourism in the area from a very low base to its current position; one in which the local economy (and apparently community) has been revitalised. Keen ascribes significance to the pivotal actions of one individual who — inter alia — organised community activities to raise funds and, in turn, investments to facilitate tourism. Although ultimately benefitting from a private tourism venture, the main point of interest here is that her actions went considerably beyond what might be expected of someone only interested in financial gain.

This rich vein of potential research is also explored by Scott & Laws in Chapter 10. They examine the articulation of community, small business interests and tourism development by tracing the emergence of commercial whale watching — niche markets — in two case locations: Hervey Bay and Byron Bay, both on the east coast of Australia. The cases are interesting because in the former, small firms have developed the market successfully but were prevented from doing so in the latter.

Scott & Laws begin to explain this contrast in terms that relate to considerations of agency — a particularly dynamic entrepreneur in Hervey Bay whose business ideas were imitated by others — and “structural” factors, such as the availability of, or an ability to set in place, supplier ...

Table of contents

• Front Cover
• Half Title
• ADVANCES IN TOURISM RESEARCH
• Title Page
• Copyright
• Contents
• Contributors
• Preface
• 1. International Perspectives on Small Firms in Tourism: A Synthesis
• 2. Tourism, Small Firm Development and Empowerment in Post-Apartheid South Africa
• 3. Factors Affecting Small Firms in Tourism: A Ghanaian Perspective
• 4. Government Assistance for Tourism SMEs: From Theory to Practice
• 5. Short-Run Output and Employment Effects Arising from Assistance to Tourism SMEs: Evidence from Israel
• 6. Risky Lifestyles? Entrepreneurial Characteristics of the New Zealand Bed and Breakfast Sector
• 7. From Lifestyle Consumption to Lifestyle Production: Changing Patterns of Tourism Entrepreneurship
• 8. Success and Growth in Rural Tourism Micro-Businesses in Finland: Financial or Life-Style Objectives?
• 9. The Interaction of Community and Small Tourism Businesses in Rural New Zealand
• 10. Whale Watching — The Roles of Small Firms in the Evolution of a New Australian Niche Market
• 11. Small Firms and Wine and Food Tourism in New Zealand: Issues of Collaboration, Clusters and Lifestyles
• 12. Quality Homes, Quality People: The Challenge of Quality Grading and Assurance in Small Accommodation Enterprises
• 13. Overcoming the Green Gap: Improving the Environmental Performance of Small Tourism Firms in Western Australia
• 14. Small Firms and the Principles of Sustainable Tourism: The Case of Cycle Tourism
• 15. Accommodating the Spiritual Tourist: The Case of Religious Retreat Houses
• 16. Small Firm Performance in the Context of Agent and Structure: A Cross-Cultural Comparison in the Tourist Accommodation Sector
• 17. Coping with Resource Scarcity: The Experience of UK Tourism SMEs
• 18. Strategic and Structural Variables in Internationalisation: The Case of Swiss Tourism SMEs
• 19. Small Tourism Firms in e-Europe: Definitional, Conceptual and Contextual Considerations
• Author Index
• Subject Index