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Effects of formal institutions on the performance of the tourism sector in the Philippines: The mediating role of entrepreneurial orientation

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  • Roxas, Banjo
  • Chadee, Doren

Abstract

Although formal institutions and entrepreneurial orientation have both been found to contribute separately and positively to firm performance, the interplay between the two factors has not received much attention. This study draws from institutional theory and the entrepreneurship literature to argue that entrepreneurial orientation (EO) provides the mechanism through which the formal institutional environment influences the performance of firms in the tourism sector. Using structural equation modelling and data from a large-scale survey of firms in the tourism sector in the Philippines, it is shown that elements of the institutional environment, by themselves, only have limited influence on tourism firms' performance. EO is shown to partially enhance the effects of the institutional environment on firm performance. The strong mediating effect of entrepreneurial orientation on the relationship between the institutional environment and firm performance is a novel finding and highlights the important role of the government in ensuring that the formal institutional environment promotes entrepreneurship which, in turn, enhances the performance of the tourism sector.

Suggested Citation

  • Roxas, Banjo & Chadee, Doren, 2013. "Effects of formal institutions on the performance of the tourism sector in the Philippines: The mediating role of entrepreneurial orientation," Tourism Management, Elsevier, vol. 37(C), pages 1-12.
    • Handle: RePEc:eee:touman:v:37:y:2013:i:c:p:1-12
    DOI: 10.1016/j.tourman.2012.10.016
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    13. Felipe Hernández-Perlines & Nina Rung-Hoch, 2017. "Sustainable Entrepreneurial Orientation in Family Firms," Sustainability, MDPI, vol. 9(7), pages 1-16, July.
    14. Alaa M. S. Azazz & Ibrahim A. Elshaer, 2022. "Amid COVID-19 Pandemic, Entrepreneurial Resilience and Creative Performance with the Mediating Role of Institutional Orientation: A Quantitative Investigation Using Structural Equation Modeling," Mathematics, MDPI, vol. 10(12), pages 1-17, June.
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    19. Mehmet Altin & Esra Memili & Sevil Sönmez, 2017. "Institutional economics and firm creation in the hospitality and tourism industry," Tourism Economics, , vol. 23(7), pages 1381-1397, November.
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    21. Dolci, Tissiane & Valduga, Vander & Cristovão, Artur & Silva, Leonardo & Souza, Marcelino, 2021. "Incentives And Restrains Related To The Development Of A Wine Tourism Destination: A New Institutional Economics Approach," Journal of Tourism, Sustainability and Well-being, Cinturs - Research Centre for Tourism, Sustainability and Well-being, University of Algarve, vol. 9(1), pages 23-41.
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