Academic journal article European Journal of Tourism Research

Choice of Entry Mode, Strategic Flexibility and Performance of International Strategy in Hotel Chains: An Approach Based on Real Options

Academic journal article European Journal of Tourism Research

Choice of Entry Mode, Strategic Flexibility and Performance of International Strategy in Hotel Chains: An Approach Based on Real Options

Article excerpt

Introduction

The object of the present research is to gain more in-depth knowledge of the process of internationalization of companies. We focus on organisations belonging to the tourism sector, and specifically on the Spanish hotel sector, including both the national chains and those international groups that operate in Spain. The international behaviour of the foreign hotel chains follows a similar pattern in all the countries in which they may decide to operate; therefore the characterization of this behaviour should be of interest for any country that wishes to attract investment from organisations of this type. Equally, although the Spanish hotel chains have traditionally concentrated their international investments in the Caribbean region, in recent years the European destinations have been acquiring increasing importance; for this reason it is very important to understand the particularities of the international strategy followed by Spanish hotel chains, in order to attract their investment or if potential strategic alliances with these chains is being considered.

Our interest in companies of this type is due both to the importance of this sector in the Spanish economy - where tourism activity, according to the Instituto de Estudios Turísticos (IET, 2012) represents around 10% of GDP and a total of 281.4 million overnight hotel stays were recorded in 2011 - and to the relative scarcity of studies centred on this topic. Although the decision by a company on the best mode of entry to a new country market has been widely studied in the manufacturing sector (Gatignon and Anderson, 1988; Kogut and Singh, 1988; Hill et al., 1990; Agarwal, 1994; Tse et al., 1997; Arora and Fosfuri, 2000; Pang and Tse, 2000; etc.), the conclusions reached in these studies cannot easily be translated to the services sector in general, nor to the hotel sector in particular; in the latter sector the most recent research demonstrates the differences that are presented versus the manufacturing sector (Agarwal and Ramaswami, 1992; Contractor and Kundu, 1998a, 1998b.; Ramón, 2002; Quer et al., 2007; Graf, 2009; Martorell et al., 2013). Nevertheless, in our case, the specific objective of the research study is more limited.

Our study presents an explanatory model of the choice of the mode of entry to a foreign market and of the repercussions of this choice on the result of the international strategy of the hotel chains, under the dynamic approach of the theory of real options and giving refined treatment to the topic of uncertainty (Miller, 1993; Werner et al., 1996; Brouthers et al., 2000, 2002; Li and Rugman, 2007). The applicability of this theory to this field of study is analysed from an integrative conceptual approach, which complements the perspective of real options with concepts derived from other theories (theory of transaction costs, agency theory, theory of behaviour and theory of resources and capacities of the company), in order to explain the modality of entry to foreign markets chosen by companies of the hotel industry (Contractor and Kundu, 1998a; Ramón, 2000, 2002; Berbel, 2006; Martorell et al., 2013).

This model will allow us to determine the significant factors that the directors take into account in managing the strategic fit, faced with changes in the initial conditions of uncertainty, by means of strategic flexibility and real options.

In summary, the objectives set for this study are:

1. To check the applicability of the theory of real options to the processes of internationalization, and to confirm its explanatory capacity in the hotel industry; and, in doing so, to add new factors to the doctrinal body existing on the mode of entry to a foreign market in the hotel industry. To the best of our knowledge, this study pioneers research in which this theory is incorporated into the international strategy in companies of this type.

2. To deal in greater depth with the topic of perceived uncertainty in the business environment and its influence on the choice of the mode of entry, from the perspective of real options. …

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