The link among board characteristics,corporate social responsibility performance,and financial performance: Evidence from the hospitality and tourism industry

The aim of this study is twofold: to explore whether board characteristics (i.e. a sustainability committee, board independence, board diversity, and board diligence) lead to greater corporate social responsibility (CSR) performance, and to test whether CSR performance enhances firms' financial performance in the hospitality and tourism (H&T) industry. Data were collected from the Thomson Reuters Eikon database for the H&T firms listed there between 2011 and 2018. We employed panel data analysis, after which we ran robustness tests. The results indicated that having a CSR committee and female directors on the board are robust factors driving firms to show superior CSR performance in all dimensions, including environmental, social, and governance (ESG). Independent directors and directors' diligence selectively enhance the overall CSR score and individual pillars of CSR. Investigating the relationship between CSR performance and firms' financial performance did not produce a significant outcome. The findings propose a straightforward roadmap for H&T firms and policymakers to identify characteristics of CSR-friendly boards.     

Mergers and acquisitions and firm growth: Investigating restaurant firms

Merger and acquisition (M&A) has been viewed as an efficient strategy for firm growth because M&As allow firms to quickly achieve their ideal size. However, whether consistent growth can be maintained after an M&A is questionable because post-M&A integration is a difficult process. In order to identify whether M&A is really an effective tool for producing consistent growth in restaurant firms, this study examined post-M&A firm growth in comparison to non-M&A firm growth. Using financial data from 1980 to 2007, this study analyzed the sales growth of restaurant firms up to five years after an M&A. This study found that post-M&A growth patterns varied across firm sizes and time periods (from one to five years after an M&A). This study also revealed that both small and large acquirers experienced positive sales growth in the year following M&A. However, this positive effect completely disappeared during or after the third year post-M&A. M&A firms showed the same growth patterns as non-M&A firms three to five years after an M&A. This study provides useful post-M&A growth information regarding restaurant firms, which can be practically useful for firms considering M&A.     

Drivers and consequences of sustainability committee existence? Evidence from the hospitality and tourism industry

This study's objective is twofold: (1) to investigate whether board characteristics predict the existence of a sustainability committee, and (2) to examine whether the establishment of sustainability committees stimulates sustainability reporting, external assurance, and the adoption of the Global Reporting Initiative (GRI) framework in hospitality and tourism (H&T) firms. For this purpose, the data was derived from the Thomson Reuters Eikon database for publicly traded H&T firms from 2013 to 2018. The results indicate that while board size is a significant predictor of sustainability committee establishment, female and independent directors are not. Furthermore, the H&T firms with a sustainability committee are more likely to issue a sustainability report, to get an independent assurance statement on sustainability reporting, and to follow GRI guidelines in configuring sustainability report content and structure. Overall, the results suggest important implications to help H&T firms achieve sustainable goals and to design their boards accordingly.     

Effects of within-industry diversification and related diversification strategies on firm performance

The major objective of this study was to investigate the effects of within-industry diversification and related diversification on short and long-run firm performance in the restaurant industry. Accordingly, this study decomposed Jacquemin and Berry's (1979) traditional related diversification entropy into within-industry diversification entropy and pure related diversification entropy. Further, this study examined the interaction effect of within-industry and related diversification strategies on firm performance. The results of this study suggested that in the short-run within-industry diversification strategies have a negative impact on firm profitability but no significant effect on sales growth. However, the long-run effect of within-industry diversification was significantly positive in terms of profitability but not sales growth. This study also showed that related diversification strategies had a positive and significant effect on profitability in the short-run, which turned negative and significant in the long-run. Further, the interaction model indicated that when the two strategies are simultaneously carried out synergy is quickly realized because efficiency is enhanced. A more detailed discussion of the results is provided in the main body of this paper.     

The importance of the firm and destination effects to explain firm performance

An interesting question in tourism management is why tourist firms obtain different performance levels. Firm performance in the tourism industry depends mainly on the destination where the company operates (location or destination effect), and on firm internal resources and characteristics (firm effect). The purpose of this paper is to determine the relative importance of the firm and destination effects using a multilevel approach and hierarchical linear models. The findings show that both effects impact significantly on firm performance, and also that the firm effect is more important than the destination effect. We equally provide some insights about the relationships between these two levels with the aim of building bridges between them.     

Tourism firm restructuring: Does the attention of individual investor matter?

We examine the power of individual investor attention in increasing tourism firms' restructured performance, the different effects caused by ‘attention heterogeneity’, the moderating effect of media coverage on the relationship between individual investor attention and tourism firms' restructured performance, and the robustness of the effects. The results indicate that 1) individual investor attention has a significant positive effect on tourism firms' restructured performance, 2) individual investor attention via mobile devices influences tourism firms' restructured performance more than attention via computers, 3) the moderating effect of media coverage on this relationship varies with time and media heterogeneity, and 4) the effect of individual investor attention is immediate, while time is needed for the moderating effect of media coverage to appear. The main effect of individual investor attention and the moderating effect of media coverage on tourism firm performance do not depend on the firm size or the proportion of individual shareholders.     

The entrepreneurship research in hospitality and tourism

The purpose of this study is to review entrepreneurship research in hospitality and tourism (H&T), draw a map of the evolving domain, and propose a framework for future research. The entrepreneurship literature is categorized by identifying the antecedents and consequences in the context of H&T. The study findings suggest that entrepreneurship research subjects in H&T are extended from developed countries to emerging economies. The research level begins at the meso level (firms) and gradually develops to the micro level (individual entrepreneurs) and macro level (environment). Entrepreneurship in H&T is currently rich in practice but poor in theoretical development. This study is one of the few to critically review entrepreneurship research in H&T. This paper identifies a range of research issues in H&T entrepreneurship.     

The impact of material and immaterial sustainability on firm performance: The moderating role of franchising strategy

CSR and sustainability engagement is growing rapidly with ever-increasing attention. Accordingly, restaurant stakeholders now demand restaurant companies to disclose relevant ESG information (i.e., materiality) to analyze risks and opportunities that ESG factors bring to firms over the long term. As established in stakeholder theory, restaurant materiality is shaped by a firm's key stakeholders and also by the industry's distinguishing factor, franchising. However, despite their importance and timeliness, materiality and franchising remain largely absent from scholarly discussion in the field of tourism and hospitality. Using a novel industry-specific materiality classification of sustainability initiatives, here we show that franchising positively moderates the impact of investing in immaterial sustainability on firm performance. The results provide early empirical validation of stakeholder theory in relation to restaurant materiality and franchising, and show the impact of allocating a firm's resources to material and immaterial sustainability issues on firm performance in the restaurant context.     

The relationship between institutional ownership and casino firm performance

This study examined the relationship between institutional ownership and firm performance in the casino industry from 1999–2003. Given the evidence of the endogeneity of institutional ownership in the casino industry, institutional ownership was found to be a significant and positive determinant of casino firm performance as measured by a proxy for Tobin's Q in a simultaneous equations system. This study reveals that investing institutionally in casino firms may help casino industry investors mitigate the agency problem caused by the separation of management from ownership. In addition, financial institutions tend to invest in larger casino firms with lower financial leverage.     

A theoretical link between corporate giving and hospitality firm performance

This study makes a unique contribution to the hospitality literature by offering a theoretical model of the link between corporate giving (CG) and hospitality firm performance based on a duopolistic competition model with rational profit-maximizing hospitality firms. The equilibrium outcomes of the proposed model explicitly explain the mixed findings of the relationship between CG and hospitality firm performance found in the previous empirical studies. Specifically, the optimal level of a hospitality firm’s CG is positively related to the total market demand and the competitive advantage of CG, and negatively related to the induced cost of giving practices. Moreover, a positive or neutral relationship between CG and hospitality firm performance depends on whether CG could induce a competitive advantage of brand differentiation and customer loyalty to increase profit.     

The effect of environment risk,corporate strategy,and capital structure on firm performance: An empirical investigation of restaurant firms

The co-alignment process has been used in hospitality strategy as a framework to explain strategic orientation of firms. In this study, using a sample from the US restaurant industry, the authors test the simultaneous impact of surrogates from constructs identified as part of the co-alignment model, i.e. environment, strategy, and structure, on firm performance. Results indicate that a significant variance in firm performance is explained by the variables from the foregoing constructs of the co-alignment model. The robustness of this study provides restaurant firms’ managers a basis to evaluate their firms’ strategic orientation vis-à-vis its impact on firm performance.     

Survival in the lodging sector: An analysis at the firm and location levels

this paper studies the determinants of survival of 6494 Spanish hotel firms located in 97 national tourist destinations in the period 2005–2011. The characteristics of the firms and the tourist destinations where they are located have been studied through survival analysis techniques. This is relevant because the impact of the financial and economic crisis on the Spanish lodging sector has shown different effects among tourist destinations. The results confirm that the location significantly affects the probability of survival. In particular, the main determinant of firm survival is the level of occupancy in a tourist destination which has a positive effect. Also, we have found that a low level of competition reduces the average expected survival while the average profitability of a tourist destination has a positive effect on firm survival. Finally, the total effect related to destinations factors can reduce the expected survival by up to 90% (hazard ratio).     

Growth-focused or profit-focused firms: Transitions toward profitable growth

Profitable growth is the most desirable state tourism and hospitality firm managers can hope to achieve. In reality, however, it is not easy for a tourism and hospitality firm to consistently grow and accumulate profits. In order to achieve profitable growth, some firms focus on sales growth while victimizing profits, while others concentrate on profits and hold off on growth. To better understand these strategies, this study investigated the growth state, profit state and transitions of restaurant firms. The findings of this study supported that profit-focused firms are more likely to achieve profitable growth than growth-focused firms. In addition, growth-focused firms with low liquidity had a higher likelihood of transitioning to a state of low growth and low profit in the short-term, and this liquidity effect was more serious for small firms in terms of long-term performance. Further, when profit-focused firms had few growth opportunities, large free cash flows increased the likelihood of transitioning to a state of low growth and low profit in the short-term. More detailed results are provided in this paper.     

The effects of product diversification on firm performance and complementarities between products: A study of US casinos

In spite of the growing importance of product diversification strategy and the existence of varying degrees of product diversity in the US casino industry, research of the effect of product diversification on firm performance has been sparse. By examining the impact of the degree of product diversification on both financial market- and accounting-based firm performance of sampled US casinos and complementarities between products, this study attempts to fill the gap in the hospitality literature. Results of this study show an inverse U-shaped relationship between the degree of product diversification and firm performance and complementarities between gaming business and food and beverage (F&B) business. These findings suggest that US casinos take into account both costs and benefits associated with product diversification, and consider F&B operations more preferentially as a supplementary business when implementing product diversification strategy.     

Strategic orientation and performance of tourism firms: Evidence from a developing country

This study investigates whether tourism firms in a developing country, namely Turkey, which adopt one of the four strategic orientations of Miles and Snow (1978), differ based on their financial and non-financial performance. The study results show that there is a difference in both financial and non-financial performance based on the strategic orientations followed by tourism enterprises. Generally, prospectors were found to outperform defenders, whereas analyzers showed a comparable performance to prospectors. The findings of this study imply that in developing countries, tourism businesses may be indifferent when choosing between these two strategies based on their internal characteristics since they yield similar financial results. Specific factors and developments in the macro environment and company-specific factors seem to affect tourism firms' strategic orientation as well as their performance. Better understanding and closer analysis of such factors can help improve the performance of tourism businesses in developing countries. Further research using both perceptual and objective measures is needed to confirm the present results to better assess possible differences in performance among strategic orientations in some other developing countries.     

Inter-relationship between firm growth and profitability

There is a widespread presumption that there is a close link between firm growth and profitability. However, most of the past studies on firm growth and profitability have been conducted without mutual associations. Only a few studies, thus far, have scrutinized the inter-relationship between firm growth and profitability and the results have been inconsistent. The main reason for this inconsistency is due to the lag structure of the models in each study. To address the issue, this study conducted panel unit-root tests on firm growth and profitability separately and then made appropriate models using dynamic panel system GMM estimators. Through analyzing these models, this study found that in restaurant firms the prior year's profitability had a positive impact on the growth rate of the current year. However, the current and prior year's growth rates had a negative impact on the current year's profitability. This outcome implies that in the restaurant industry profit creates growth but growth impedes profitability. Further implications are also discussed in this paper.     

Entrepreneurs' human capital resources and tourism firm sales growth: A fuzzy-set qualitative comparative analysis

New private tourism firms play a key role in promoting local and national wealth creation. Building upon insights from entrepreneurial motivation and human capital theories, in this study fuzzy-set qualitative comparative analysis of longitudinal data was employed to identify the human capital pathways of 1182 entrepreneurs in Portugal engaged in tourism reporting high firm sales growth between 2008 and 2015. Two dimensions of entrepreneur human capital at firm start-up were found to be sufficient for high sales growth: a) Necessity- and opportunity-based entrepreneurs with specific human capital industry experience relating to tourism, and b) Opportunity-based entrepreneurs with managerial experience.     

Benchmarking firm capabilities for sustained financial performance in the U.S. restaurant industry

This study is designed to present an empirical assessment of important firm capabilities appropriate for benchmarking and on which firm capabilities restaurant firms should focus to achieve sustained financial performance. It also examines the key normative benchmarking theory premise that firm capabilities associated with sustained financial performance can be identified and that a firm's capability gaps, defined herein as the capability gaps between the firm and the selected benchmark firms (e.g., Camp, 1995), explain its financial performance. Lastly, this study shows how to use profile deviation to benchmark firm capabilities and extends this methodology by employing a model that incorporates interdependencies among firm capabilities. Findings offer pragmatic guidelines for restaurateurs to exercise benchmarking to pinpoint and enhance firm capabilities that would lead to sustained competitive advantage.     

Firm growth patterns: Examining the associations with firm size and internationalization

Understanding the growth patterns of an industry is essential for establishing sustainable growth strategies. However, until recently little had been known about restaurant firm growth patterns. Thus, this study examined the growth patterns of restaurant firms in association with firm size class and internationalization, after controlling for total and long-term debt leverage, retained earnings, and growth opportunity. Overall, the results of this study showed that small restaurant firms grow faster than large restaurant firms but the growth rate decreases as firm size increases. Furthermore, the growth rate of large firms decreased more slowly than small firms. In terms of internationalization, this study found that as firm size increases, the growth rate of small international firms decreases more rapidly than that of small domestic firms. However, the growth rate of large international firms decreases more slowly than that of large domestic firms. These findings indicate the appropriateness of internationalization strategies for large restaurant firms but the inappropriateness of these strategies for small firms. More detailed results and discussion are also provided.     

The Impact of Supplier Development on Financial Performance in the Restaurant Industry

ABSTRACT

Many firms have come to recognize the crucial role that cooperative relationships with suppliers play in determining high financial performance. Of main concern in many firms are supplier development activities and behaviors (SDABs) of buying firms, which are an attempt to meet current and future business needs such as high financial performance by improving supplier performance. The purpose of this study is to evaluate how buying firms' SDABs affect supplier performance (in delivery as well as product and service quality) and its impact on financial performance of the buying firms. The authors critically revisit extant knowledge on the subject, develop a conceptual framework integrating buyer and supplier relationship marketing/management practices, and test the framework in the independent restaurant industry context. Using structural equation modeling and data collected from 236 restaurant owners and/or presidents in the United States, the results of this research support the usefulness of the framework, showing that buying firms' SDABs directly affect supplier performance, which leads to high financial performance of the buying firms.