Tourism Firms’ Vulnerability to Risk: The Role of Organizational Slack in Performance and Failure

Chen Zheng, Zezeng Li, Snow Wu

Research output: Contribution to journalArticlepeer-review

Abstract

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.
Original languageEnglish
Number of pages16
JournalJournal of Travel Research
Early online date1 Jun 2021
DOIs
Publication statusE-pub ahead of print - 1 Jun 2021

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