Strategic Agility Implementation by Tourism Entrepreneurs to Adapt Technological Changes and Become Competitive

Transcription

1 Strategic Agility Implementation by Tourism Entrepreneurs to Adapt Technological Changes and Become Competitive SAIFUL BAHRI MOHD KAMAL, DAHLIA ZAWAWI Universiti Teknologi Mara, Universiti Putra Malaysia Keywords: Technological flexibility, strategic agility, entrepreneur capabilities and business competitive advantage. INTRODUCTION The field of tourism enterprises is an industry with high technology opportunity where adaptation to latest technologies such as Information Communication Technologies (ICTs) and internet-based technologies will create operational advantage and increase SME tourism enterprises capacity to deliver convenience services, complete control over travel planning, lower product prices, instant access to information about the destination, able to compare prices and constant access to information (Anckar & Walden, 2001; Bennet & Buhalis, 2003; Law et al., 2004; Zhang et al., 2006). Previous literatures suggested that ICTs and internet-based technologies have changed and transformed tourism enterprises traditional approache approaches of conducting business (Buhalis, 2003). ICTs and internet-based technologies are capable of enhancing firms' productivity and flexibility by increasing operational capability, decreasing costs, and improving service quality (Chapman et al., 2000; Buhalis & Licata, 2002; Drew, 2003). Such technologies also enable firms' to interact and engage their business with distant individual travelers as well as suppliers who are increasingly more savvy in using ICTs and internet-related technologies (Anckar, 2003; Buhalis, 2003; Choi & Morrison, 2005). SME tourism entrepreneurs play a vital role within the implementation of latest technologies in SME tourism enterprises operational practices as entrepreneurs are the key person who make the decision making as well as plan the future path of the firms. This statement is supported by Davidsson (2006), as he identified entrepreneurs as the personnel within firms who create new business activities as well as transform existing activities to better ones (Davidsson, 2006). The degrees of entrepreneurs capabilities tend to determine the success in implementation of new technologies within SME tourism enterprises. And success in the constant adaptation to new technologies will have impact on SME tourism enterprises sustained competitiveness as well as overall growth. 433

2 PROBLEM STATEMENT The introduction and implementation of the Computer Reservation Systems (CRSs), Global Distribution Systems (GDSs) and the development of the internet have enhanced tourism enterprises operational and strategic practices considerably (Buhalis, 2003; O Connor, 1999). Enterprises investing and adopting to these latest ICTs attempt to gain a competitive advantage by lowering their operational time and cost or by improving customers perception of the services and products quality, and hence differentiate their offering (Peppard, 1993; Porter & Millar, 1985, UNWTO, 2001). Koch and Cebula (2002) described technology as an absolute necessity for tourism enterprises and tourism firms will never survive if they are unable to use latest technology effectively within their business operations. Nevertheless, many previous literatures demonstrated SME tourism entrepreneurs as being unable to adapt technological changes due to certain significant and unique barriers in embracing changes. They are claimed to be unable to change the corporate culture while implementing new technologies and as some entrepreneurs failed to adjust ICTs and internet-based technologies to fit with the current business practice because of the dominance of face-to-face up sell/cross-sell opportunities and human contact during the transaction (Bolongkikiti et al., 2006; Vrana & Zafiropoulos, 2006). SME tourism entrepreneurs may also in many cases blindly stick to everyday business operation without much thought or consideration on strategic choices that will create distinctiveness (Frese et al., 2000). As a result, SME tourism enterprises tend to remained and attached to solely traditional practices with the notion that traditional practices enhance personal advisory service, friendliness, personal counseling in planning and arranging complex trips as well as support network during the tour or trip (Anckar & Walden, 2001). Latest ICTs and internet-based technologies implementations require SME tourism entrepreneurs alertness, innovativeness as well as willingness to accept new technologies and adapt to changes that these technologies bring into tourism enterprise industry. GOALS AND OBJECTIVES Enterprises need to be technologically flexible to deal with technological changes and flexibility that would lead them to become strategically agile (Chen, 2012). Strategic agility comes in a form of resource integration that produces innovation (Doz & Kosonen, 2008). Integration of resources in this case brings together various combinations of latest ICTs and internet-based technological application that would create improved business operations that will lead to competitive advantage. In addition, integration of ICTs and internet services in conjunction to high value of face-to-face contact as well as personal and competing counseling could innovate value added services. The role of entrepreneurs is important in strategic agility implementation. Shane and Venkataraman (2000) stress that entrepreneurs need to be capable of creating opportunities to discover and exploit new value added goods and services. Entrepreneurs should be the one who is more likely than others to be alert to the identification and exploitation of profit opportunities (Schumpeter, 1934; Kirzner, 434

3 1973). Entrepreneurs' capabilities should highly affect the strength/weakness of implementation of strategic agility within SME tourism enterprises as entrepreneurs are the decision makers who decide the path of firms' operations as well as strategy implementation. The discussion above highlights the purpose of the study to be threefold: 1. To determine if SME tourism enterprises technological flexibility has significant effect on strategic agility implementation that will positively impact competitive advantage. 2. To determine if strategic agility implementation has significant effect on SME tourism enterprises competitive advantage. 3. To determine if SME tourism entrepreneurs capabilities have significant effect on strategic agility implementation in adapting to technological changes. RESEARCH QUESTIONS The study poses these questions: 1. Does SME tourism enterprises technological flexibility have significant effect on strategic agility implementation that will positively impact competitive advantage? 2. Does implementation of strategic agility have significant effect on SME tourism enterprises competitive advantage? 3. Does SME tourism entrepreneurs capabilities have significant effect on strategic agility implementation in adapting to technological changes? 435

4 LITERATURE REVIEW In recent years, more functions and responsibilities of SME enterprises within the tourism market have been identified. One significant development in this regard is to link these enterprises with entrepreneurship. Small business owners or entrepreneurs are now believed to be the fundamental driver of destination dynamics (Tinsley and Lynch, 2001). Russel and Faulkner (2004) within their study found that entrepreneurship was a major aspect that could lead one destination being more successful than the other. In line with development of SME tourism role, lies the importance of technology. Technological progress and tourism business have been developing together for many years and technologies generally determine enterprises competitiveness in global marketplace (Sheldon, 1997). The role of SME entrepreneurs in adapting to latest technologies is manifold, as they involve in the creation of new things, and the drive to acquire profit through progress and innovation (Reynolds et al., 2005). The differences levels of entrepreneurial attributes will determine the intensity or restrained implementation of new technologies. For an enterprise to adapt to technological changes, an entrepreneur must constantly be alert to opportunities brought by technological changes. Entrepreneurs must constantly implement innovation that carries out new combinations of resources within their disposal to create distinct service operation that will create competitive advantage. THEORETICAL FRAMEWORK Three different elements which consist of antecedent (technological flexibility), process (strategic agility), and outcome (competitive advantage) are included within the research framework. Technological flexibility which consists of flexibility in embracing changes in ICTs and internet-based technologies are considered as VRIN resources that enterprises need to adopt to become competitive. Sharifi and Zhang (1999) identified standardized attributes such as responsiveness, competency, flexibility and quickness that enhance capabilities for implementing strategic agility that can be used within several fields of study. These attributes will be used to measure SME tourism enterprises level of strategic agility. On behalf of SME entrepreneurs, capabilities on implementing strategic agility represents the implementation of attributes such as alertness and innovativeness (which are the key attributes of strategic agility) in adapting to latest technological changes. This is the unique elements that validate the entrepreneurs pattern and capability of management that will justify enterprises capabilities in adopting new changes in technology. Finally, the framework is designed to reveal enterprises competitive advantage which will be measured through innovativeness. The study proposed technological flexibility will positively impact SME tourism enterprises strategic agility that will lead SME tourism enterprises to become competitive advantage. In other word, strategic agility mediates the relationship between technological flexibility and competitive advantage. Through strategic agility, SME 436

5 tourism enterprises will embrace a higher degree awareness and alertness on latest technological changes. In addition, enterprises will place a high priority on resources innovation and ongoing development of new capabilities as sources to gain competitive advantage. It is suggested that entrepreneur alertness (Kirzner, 1973) as well as their innovativeness (Schumpeter, 1934; 1950) determine the differences of levels of entrepreneurs capabilities. Alertness (agility) and innovativeness (dynamic capabilities) are the key attributes associated with implementation of strategic agility (Ojha, 2008; Sherehiy, 1998). Thus within the framework, it can be proposed that entrepreneurs capabilities (alertness and innovativeness) is the moderating variable between technological flexibility and strategic agility. In other word, differences in entrepreneurs alertness and innovativeness affect the directions and/or strength of the implementation of strategic agility. The role of entrepreneurs capabilities as the moderating variable is the new contribution of the study. 437

6 1. Technological Flexibility: 2. ICTs Internet-Based SME Strategic Agility Responsiveness Competency Flexibility Quickness Competitive Advantage Innovation Entrepreneur Capabilities: Alertness Innovativeness Figure 1 Relationship between Technological Flexibility, Strategic Agility, Entrepreneur Capabilities and SME Tourism Enterprises Competitive Advantage. METHODOLOGY Structural Equation Modeling (SEM) will be primarily utilized as a technique to analyze variables and the relationship between and among component and construct. This approach is suitable for analyzing the complex relationships among variables in the proposed framework, considering that business success comes from the shared interaction between different elements surrounding business operation (Senge, 2006). An advantage of SEM in model testing is that it can provide direction for modifying the suggested research framework. Therefore, the study is capable of revising or reidentifying the relationship between and among components and constructs in order to justify the new relationships within the research framework. This study brings out an exploratory research which intends to evaluate and assess the characteristics of small and medium travel-based enterprises located in Malaysia, categorized under services sectors. Thus, according to definition of SMEs by SME Corporation of Malaysia, the respondents of this study consist of travel-based enterprises with full time employees between 5 and 50 or with annual sales turnover between RM 200,000 and RM 5 million (SME Corporation of Malaysia). Travel-based enterprises consist of companies or enterprises that provide travel services for instance travel agencies, tour and transportation companies. The components that have been selected in this study are technological flexibility, strategic agility, entrepreneur capabilities, and business competitive advantage. Questions will focus on entrepreneurs capabilities in adapting to technological changes that will determine SME tourism enterprises levels of strategic agility and competitiveness. A seven point Likert-type scale will be used to measure especially within the aspects of quickness, alertness, responsiveness, adaptability, competency, innovativeness and flexibility in executing the variables indicated. Examination on strategic agility will highlight on among other managers quickness, alertness, capabilities and willingness to take business risks, potential of becoming proactive in a competitive situation, and potential of encouraging innovation. A sevenpoint Likert scale will be utilized within this section. The measurement of competitive 438

7 advantage will consist of questions projected to measure managers perceptions on innovation. CONTRIBUTIONS The importance of firms maintaining an effective strategic agility as well as constant strategies renewal to achieve and sustain success has been highlighted in many business and management literatures (Mintzberg et al., 1998; Mintzberg, 2007; Schwartz & Nandhakumart, 2002; Szulanski et al., 2005). Nevertheless, incomplete and even obsolete understanding of what it takes to establish effective strategic agility do exist, as Szulanski et al. (2005) suggested that many empirical studies on strategic renewal and agility conducted to date were either being developed too slow in comparison to the advancements in the business world or generated limited results that provide inadequate assist for entrepreneurs to improve their strategic agility implementation. In addition, most previous studies on strategic agility focused on the one-time implementation of strategic agility and failed to highlight on the entrepreneurs capabilities needed to instantly and constantly implement effective strategic renewal. The trend of facilitating tourism enterprises' service capabilities from general information exchange and basic reservations to a much sophisticated of ICTs practices and value added service practices is apparent through the application of latest technology. Nevertheless, limited research has been conducted in this area and most previous studies have concentrated on preference of travelers between online service and traditional travel agents service (Anckar, 2003; Buhalis, 2003; Choi & Morrison, 2005; Zhang et al., 2006). A better understanding on SME tourism entrepreneurs capabilities in implementing ICTs flexibility is important for SME tourism entrepreneurs to improve their self-capabilities, firms service standard as well as becoming competitive. In line with this claim, the aim of this paper is to shed light on the SME tourism entrepreneurs capabilities towards adapting to technological changes especially with technologies related to ICTs and internet. REFERENCE Anckar, B. & Walden, P. (2001). Self-booking of high and low complexity travel products: Exploratory findings. Information Technology & Tourism, 4(3-4), Bennett, M. & Buhalis, D (2003). Tourism and travel distribution: The travel agent s perspective. Insights, January: Bolongkikit, J., Obit, J. H., Asing, J. G. & Tanakinjal, G. H. (2006). An exploratory research of the usage level of e-commerce among SMEs in the West Coast of Sabah. Malaysia Journal of Internet Banking and Commerce, 11(2). In (Accessed September 26, 2012). Buhalis, D. (2003). E-Tourism: information technology for strategic tourism management. London, UK. Pearson Education Limited. 439

8 Buhalis, D. & Licata, M. C. (2002). The Future E-Tourism Intermediaries. Tourism Management, 23(3), Chapman, P., Fames-Moore, M. & Saizgygiel, M. (2000). Building internet capabilities in SMEs. Logistic Information Management, 13(6), Chen, X. (2012). Impact of business intelligence and IT infrastructure flexibility on competitive advantage: An organizational agility perspective. (Doctoral dissertation, University of Nebraska, 2012). Choi, S. & Morrison, A. M. (2005). Website effectiveness for brick and mortar travel retailers. Anatolia: an International Journal of Tourism and Hospitality Research, 16(1), Davidsson, P. (2006). Nascent entrepreneurs: Empirical studies and developments. Foundations and trends in entrepreneurship, 1(2), Doz, Y. & Kosonen, M. (2008). Fast strategy: How strategic agility will help you stay ahead of the game. Harlow, UK: Wharton School Publishing. Drew, S. (2003). Strategic use of e-commerce by SMEs in the east of England. European Management Journal, 21(1), Frese, M., Gelderen, M. & Ombach, M. (2000). How to plan a small scale business owner: psychological process characteristics of action strategies and success. Journal of Small Business Management, 38(2), Kirzner, I. M. (1973). Competition and entrepreneurship. Chicago, IL: University of Chicago Press. Koch, J. V. & Cebula, R. J. (2002). Price, quality and service on the internet: Sense and nonsense. Contemporary Economic Policy, 20(1), Law, R., Leung, K. & Wong, J. (2004). The impact of the internet on travel agencies. International Journal of Contemporary Hospitality Management, 16(2), Mintzberg, H., Ahistrand, B. & Lampel, J. (1998). Strategy safari. NY: The Free Press. Mintzberg, H. (2007). Tracking strategies: Toward a general theory. NY: Oxford University Press Inc. O Connor, P. (1999). Tourism & hospitality distribution and information technology. Oxford, CABI. Ojha, D. (2008). Impact of strategic agility on competitive capabilities and financial performance. (Doctoral dissertation, Clemson University, 2008). Peppard, J. (1993). IT strategy for business (ed.). London: Pitman. Porter, M. E. & Millar, V. (1985). How information gives you competitive advantage. Harvard Business Review, 63(4), Reynolds, P., Bosma, N., Autio, E., Hunt, S., De Bono, N., Servais, I., Lopez-Garcia, P., & Chin, N. (2005). Global entrepreneurship monitor: Data collection design and implementation Small Business Economics, 24(3), Russell, R., & Faulkner, B. (2004). Entrepreneurship, chaos and the tourism area lifecycle. Annals of Tourism Research, 31(3), Schumpeter, J. A. (1934). The theory of economic development. Cambridge, MA: Harvard University Press. Schumpeter, J. A. (1950). Capitalism, socialism, and democracy, 3 rd Edition. New York, NY: Harper and Row. 440

9 Schwartz, M. & Nandhakumart, J. (2002). Conceptualizing the development of strategic idea. British Journal of Management, 13, Senge, P. M. (2006). The fifth discipline: The art & practice of the learning organization. New York: Doubleday. Shane, S. & Venkataraman, S. (2000). The promise of entrepreneurship as a field of research. Academy of Management Review, 25(1), Sharifi, H. & Zhang, Z. (1999). A methodology for achieving agility in manufacturing organizations: An introduction. International Journal of Operations & Production Management, 21(5-6), Sheldon, P. (1997). Tourism Information Technology. Wallingford: CABI. Sherehiy, B. (1998). Relationships between agility strategy, work organization and workforce agility. (Doctoral dissertation, Jagiellonian University, 1998). SME Corporation Malaysia. (n.d.) Definition of SMEs. Retrieved November 16, 2011, from Szulanski, G., Porac, J. & Doz, Y. (2005). Strategy process. In Baum, J. A. C. (Ed.). Advance in strategic management. (Vol. 22). Elsevier, JAI. Tinsley, R., & Lynch, P. (2001). Small tourism business networks and destination development. International Journal of Hospitality Management, 20(4), UNWTO. (2001). ebusiness for tourism: Practical guidelines for destinations and businesses. Madrid, World Tourism Organization. Vrana, V. & Zafiropoulos, C. (2006). Tourism agents attitudes on internet adaptation: an analysis from Greece. International Journal of Contemporary Hospitality Management, 18(7), Zhang, Y. et al. (2006). What affects travelers preference of e-travel or traditional travel agencies: An empirical study. International Journal of Service and Standards, 2(4),