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Institutions and transaction costs in foreign-local hotel ventures: A grounded investigation in the developing Pacific

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  • Stumpf, T.S.
  • Swanger, Nancy

Abstract

This research investigates how to develop a viable hotel venture where the barriers to both tourism and business development are substantial. To this end, 48 interviews were conducted in a Pacific Island country which lacks a viable tourism industry, while being ranked one of the most difficult places to do business on the planet. Data were collected and analyzed using grounded theory method in conjunction with transaction costs economics as meta-theoretical lens. The grounded theory developed is characterized by a process approach to hotel development called Insider-Outsider Connections and Partnerships (IOCP). As opposed to the status quo approach to foreign-local hotel ventures predicated on idealistic presumptions regarding formal institutions, the IOCP elucidates how transaction costs associated with such ventures can be economized by recognizing, valuing, and utilizing informal institutions. These findings regarding working within, rather than ignoring, the institutional reality provide a revitalized platform for hotel practitioners and researchers alike.

Suggested Citation

  • Stumpf, T.S. & Swanger, Nancy, 2017. "Institutions and transaction costs in foreign-local hotel ventures: A grounded investigation in the developing Pacific," Tourism Management, Elsevier, vol. 61(C), pages 368-379.
    • Handle: RePEc:eee:touman:v:61:y:2017:i:c:p:368-379
    DOI: 10.1016/j.tourman.2017.02.004
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    Cited by:

    1. Nikeel Kumar & Ronald Ravinesh Kumar & Radika Kumar & Peter Josef Stauvermann, 2020. "Is the tourism–growth relationship asymmetric in the Cook Islands? Evidence from NARDL cointegration and causality tests," Tourism Economics, , vol. 26(4), pages 658-681, June.
    2. Merkert, Rico & Hakim, Md Mahbubul, 2022. "Travel agency transaction costs in airline value chains – A risk in distribution channels in South Asia?," Annals of Tourism Research, Elsevier, vol. 95(C).
    3. 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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