Open AccessTourism Firms’ Vulnerability to Risk: The Role of Organizational Slack in Performance and Failure
Author(s) -
Chen Zheng,
Zezeng Li,
Jialin Wu
Publication year - 2021
Publication title -
journal of travel research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.403
H-Index - 132
eISSN - 1552-6763
pISSN - 0047-2875
DOI - 10.1177/00472875211014956
Subject(s) - tourism , business failure , business , political risk , vulnerability (computing) , politics , business risks , sustainability , psychological resilience , industrial organization , marketing , finance , ecology , risk analysis (engineering) , computer security , political science , computer science , law , biology , psychology , psychotherapist
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.