Academic journal article Journal of Leisure Research

Strategic Decision-Making in Small Businesses within the Leisure Industry

Academic journal article Journal of Leisure Research

Strategic Decision-Making in Small Businesses within the Leisure Industry

Article excerpt

Introduction

The leisure industry has become an increasingly important component of the economy of many of the world's industrialized nations. Gratton and Kokolakadis (1997), for example, point out that 54 of the world's top 500 companies (as identified by the Financial Times) are leisure companies. In Europe, the corresponding figure is 49 of the top 500 corporations. In the United Kingdom, the growth of the leisure industry over the period 19932001 is projected in terms of employment, to increase by approximately 2.6% per annum, compared to a 0.8% increase in employment across the entire economy (Skills and Enterprise Network, 1996). As the leisure market has grown, the proportion of a consumer's spending on physically active leisure (sport, outdoor pursuits, water activities, etc.) was predicted to increase from 14.9% in 1990 to 15.6% in 1998. This represents an increase of nearly El billion in the economy (Reebok, 1995).

One of the important contributors to the growth of the leisure industry is the small business sector (Berrett, Burton, & Slack, 1993). For example, in the United Kingdom, the latest available figures show that over 99% of businesses in the "recreational, cultural, and sporting industry" have under 250 employees, with nearly 85% having fewer than 10. Those businesses with under 250 staff account for just over 60% of employment within the industry and over 60% of financial turnover (Department of Trade and Industry, 1995).

The importance of small businesses to the leisure industry is not unique. The agriculture and fishing; construction; wholesale, retail, and repairs; hotel and restaurant; business services; and education industries are all heavily populated by small businesses (Department of Trade and Industry, 1995). This increase in importance of the small business sector has been paralleled by an increased interest among the academic community. Researchers have examined a number of unique features of small businesses, in order to help the managers of these organizations gain a competitive advantage (Lee, 1995; Schrader, Mulford, & Blackburn, 1989; Pleitner, 1989; Storey, 1995). The central focus of much of this research has been the investigation of the presence or absence of strategic management in small businesses (Robinson & Pearce, 1984).

However, despite these initiatives, studies of small businesses within the leisure industry have been relatively sparse (cf. Berrett, Burton, & Slack, 1993). This is problematic given the increasing importance of this area to the economy and the burgeoning of leisure management as a viable field of academic inquiry. Consequently, the purpose of this paper is to examine the decision-making activities undertaken by small business owners' within the UK leisure industry. Specifically, we focus on identifying those factors that constrain the ability and desire of these owners to engage in strategic decision-making.

From the possible array of strategic activities from which we could choose, we focus on decision-making because it is generally considered to be "the most significant activity engaged in by managers" (Harrison, 1996, p. 46). Also, as Robinson and Pearce (1984, p. 136) note, the success of small businesses is very much dependent "on the quality of strategic decisions made by [the] principals in such businesses." Furthermore, the leisure industry is quite volatile (Gratton & Kokolakadis, 1997). That is to say it is growing and becoming increasingly diverse and is strongly influenced by changing contextual pressures. This volatility, combined with the fact that small businesses face greater levels of environmental uncertainty and hence have less tolerance for inefficiency than do large firms (Storey, 1995), means that decision-making is particularly important to these organizations.

The paper begins by exploring the nature of the leisure industry and leisure organizations. An examination of the theoretical literature on the concept of strategy, its utility within small firms, and the related concept of bounded rationality is provided. …

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