The Moderating Effect Of External Environment Turbulence In Tourism Sector

Abstract

Tourism sector in Pakistan is facing a situation of severe crisis, plagued by poor management, lack of infrastructure, weak and ineffective policy and implementation. The looming cloud of terrorism has further diminished the role the sector could play in the country and the region’s development. Recent military operations against terrorist elements and the inauguration of China Pakistan Economic Corridor (CPEC) are being hailed as a new phase, bringing more opportunities for business. However, it may also bring new challenges to the existing industry as well. The Thailand tourism industry faced similar kind of situation, but it sailed out. The current research paper examined the moderating effect of external environmental factors and relationship of Customer Relationship Management Effectiveness (CRM’e) with business performance and business innovation. A sample of 382 respondents was selected. The respondents belonged to Tourism sector in Pakistan and Thailand. The responses were tested and analysed using Structural Equation Modelling in AMOS. From the analysis it was found that Technological Turbulence, Market Turbulence and Competitive Intensity significantly moderate relationship of CRM’e with innovation and organizational performance. This study is significant as it highlights the importance of external environmental factors for business performance and innovation Vis a Vis the effectiveness of an organization’s CRM capability. Results of this study hold significant implications for policy makers and stake holders

Keywords: CRM EffectivenessInnovationPerformanceMarket and Technological TurbulenceCompetitive Intensity

Introduction

Organizations, especially of the services industry are experiencing more challenging environment which is rapidly evolving making product life cycle shorter, hastily changing technology and demands from the customers more complex and diverse (Shepherd & Ahmed, 2000). The travel and tourism industry has witnessed a consistent and regular surge in tourists due to ever expanding middle class in both developed and developing countries, their capacity and willingness to spend for domestic and international tourism (Economic Impact Pakistan. 2014). One of the main characteristics of tourism and hospitality sector is their competitive environment where technology is shaping the way in a more dynamic way. Systems, technology and practices of the organizations working in this sector are becoming more complex, vibrant and complex.

Problem Statement

Developing and then maintain lasting good relations with the customers/clients are very vital and imperative for the success of any business as customers are the and should be the main focus for businesses. As these relations are very sensitive, therefore, they may affect and usually get affected by the environmental forces. Hence, organizations adapt to the changes happening in the market to satisfy, meet and to retain their customer base (Jones, 1995). It leads to foundation that, adapting to the changes in the external environment to maintain good relations with customers or clients, organizations learn a many new things, practices, adapt new technology and make itself more resilient. Resilience is defined in multiple fields and areas of study such as individual and organizational psychology (Barnett & Pratt, 2000) and strategic management (Hamel & Valikangas, 2003). The concept despite varying contexts remains constant across the board referring to the capacity of an individual and organizational systems to respond to turbulent and disrupting changes and still maintain (or return to) a previously held position of stability. Resilience is based on both weaknesses within an organizational system and its inherent ability and capacity to adjust and adapt to complex environmental changes that may have an impact in the form of reduced performance (Dalziell & McManus, 2004). This adaptive capacity allows an organization to utilize existing resources of an organization to successfully see through any disrupting influence within the system (Staber & Sydow, 2002).

For organizations to maintain stability in growth, continuous learning and adapting to the changes happening in the environment, is very significant (Kamal & Abbas, 2011). Learning from its environmental forces and stakeholders create organizational resilience that directly or indirectly influence/impact relationship and an organization with its customers/clients (Abbas & Hassan, 2016)

The theoretical basis for the model developed for the study is based on systems theory, contingency theory and stakeholder’s theory. The reason is these theories discuss about the external environment factors that an organization may face, influence of the stakeholders and the fact that organization cannot operate indifference to its external environment.

Research Questions

• Environmental factors strongly moderate the relation between CRM effectiveness, Innovation & Business performance in Tourism sector of Pakistan

• Environmental factors strongly moderate the relation between CRM effectiveness, Innovation & Business performance in Tourism sector of Thailand

Purpose of the Study

The intuition behind this study was to observe the moderation impact of Market turbulence, technological turbulence and competitive intensity on the relationship between CRM’e, innovation and organizational performance.

Research Methods

Correlation Statistics

To check the nature of linear relationship among the variables, correlation statistics is used. It determines the direction and measure of the strength of a linear association between two variables (Bolboaca & Jäntschi, 2006).

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Findings

Conclusion

This study is an effort to extend these theories i.e. contingency theory, systems theory and stakeholder theory, in tourism sector of Pakistan, through extending their linkages with each other and their integrated impact on organizational performance and innovation. In the light of results and literature, tourism sector needs to promote resilience strategy and measures within organizations for sustainability and growth considering the political and security related issues that plague the state. On part of government and other policy formation corridors shall provide a stable environment in context of prevailing security situation to let businesses establish and flourish themselves. Similarly, the tourism sector must also build measures of self-sustainability and protection within itself. To cope and survive the challenges of CPEC and vision 2020, this important sector needs to continuous learn from external environment and align itself with the outside changes. Especially the SME’s working in tourism sector need to give more attention to their competitive advantage hence ensuring better performance (Shah, El-Gohary, & Hussain, 2015). Moreover, strategy and policy makers in Pakistan can take help from the outcomes of this research and try to strategically manure the policies regarding country’s important sector i.e. Tourism, to cope the challenges of future.

Acknowledgments

I would like to thank the Department of Management Sciences and Academic Support Office at SZABIST and my research advisor, Dr. Masood ul Hassan for their support. I would also like to acknowledge my parents and family’s support and prayers in this process.

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