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

3 Citations (Scopus)

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
Pages (from-to)990-1005
Number of pages16
JournalJournal of Travel Research
Volume61
Issue number5
Early online date1 Jun 2021
DOIs
Publication statusPublished - 1 May 2022

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