Tourism Firms’ Vulnerability to Risk: The Role of Organizational Slack in Performance and Failure

This study explores the influence of political risk on firms in the tourism industry. It addresses a research gap regarding the impact of political risk on firm-level performance and failure and uncovers the role of organizational slack in this relationship. Firm-level political risk is estimated from 2002 to 2019 financial data for firms across six tourism sectors in a developed economy, the United States. Such risk is found to be significantly associated with firm performance and business failure. From the perspectives of the resource-based view and the threat-rigidity hypothesis, the results support the moderating effects of absorbed and unabsorbed slack on links between risk, performance, and business failure. Given that the COVID-19 pandemic has highlighted the tourism industry’s vulnerability, this study will be of interest to tourism firms seeking to improve business sustainability and resilience

Is more better? The relationship between meeting space capacity and hotel operating performance

Due to copyright restrictions, the access to the full text of this article is only available via subscription.This study examines the effect of meeting space capacity on hotel operating performance. We use Resource-Based View (RBV) of the firm as the theoretical foundation. We employ a national-level dataset with more than 20,000 hotels in the United States for the 2007–2012 period. We find that meeting space has a non-linear effect on hotel operating performance. That is, at low levels of meeting space, meeting space capacity is negatively related to hotel operating performance. At high levels of meeting space, meeting space capacity has a positive influence on operating performance. These findings provide insights for hotel owners, developers and practitioners in planning hotel meeting space capacity

Risk return and cost of equity of small and large casual-dining restaurants

Although the financial performance of US casual-dining restaurants has been better than returns in other restaurant segments, it is not known how large and small casual-dining restaurant companies perform when their stock returns are adjusted for risk. The present study uses traditional and contemporary risk-adjusted performance and cost of equity models to fill the void in this area of research. The results indicate that large casual-dining restaurants outperformed their smaller counterparts on a risk-adjusted basis, and had a lower cost of equity for the 1998-2002 period. In addition, the findings demonstrate that the cost of equity estimates pose some serious challenges when sub-periods before and after September 11 events are included in the analysis. © 2007 Elsevier Ltd. All rights reserved

Disparate Safety Enforcement: Curvilinear Effects, Mechnisms, and Boundary Conditions of Supervisor-rated Leader-Member Exchange

Across three studies, we integrate relational leadership theory with affective events theory to examine the leader perspective in dyadic relationships and how this perspective influences differential leader behaviors directed toward each subordinate in terms of safety enforcement. First, in two field studies with different high-risk contexts, we delineate a curvilinear relationship between supervisor-rated leader–member exchange (SLMX) and safety enforcement. In our second field study we also examine the moderating role of leaders’ safety commitment as well as the linkage between safety enforcement and accidents. Finally, in a fully randomized experiment, we explore three relational dynamics as mechanisms of the effect of SLMX on safety enforcement—trust, consideration, and liking. Through these efforts, we offer rare direct tests of the theoretical assertion that leader–member exchange includes differential treatment based on affective relationship cues within a leader-and-subordinate relationship. Our two field studies reveal that leaders are likely to monitor safety most closely for low- and high-SLMX subordinates, but mid-SLMX subordinates are most likely to be overlooked. This U-shaped relationship emerges only for less committed leaders, and safety enforcement translates these effects to actual accidents. Our experimental study reveals a similar U shape between liking and enforcement, but a positive relationship emerges between distrust and enforcement, as well as between consideration on enforcement. These results shed insight into theoretical and practical implications for how leaders can foster a safer workplace for all.supervisor-rated leader-member exchangesafety commitmentsafety enforcementaccidentstrustconsiderationlikin

Estimating Cost of Equity in the Restaurant Industry: What is Your Required Rate of Return?

Accurate estimation of cost of equity is critical when making capital investment decisions to allocate valuable corporate resources. While the importance of proper estimation of required rate of return of an investment project is well documented, challenges surrounding estimation of the cost of equity still abound. This paper empirically evaluates the viability of common cost of equity models to estimate required rate of return for the U.S. restaurant industry for the 1996-2010 period. The Full model which consists of five risk factors emerges as the soundest cost of equity model for the U.S. restaurant industry. We recommend that future studies assess the performance of cost of equity models in other countries and other segments of the hospitality industry