DETERMINING THE KEY SUCCESS FACTORS OF TOURISM …

i

DETERMINING THE KEY SUCCESS FACTORS OF

TOURISM SMALL AND MEDIUM-SIZED ENTERPRISES (TSMEs)

IN MALAYSIA

By

KALSITINOOR SET

MBA (Mas), BBA (Hons.) (Mas)

Thesis submitted for the degree of Doctor of Philosophy

Newcastle Business School, University of Newcastle, Australia

December, 2013

ii

STATEMENT OF ORIGINALITY

The thesis contains no material which has been accepted for the award of any other degree

or diploma in any university or other tertiary institution and, to the best of my knowledge

and belief, contains no material previously published or written by another person, except

where due references has been made in the text. I give consent to this copy of my thesis,

when deposited in the University Library Auchmuty, being made available for loan and

photocopying subject to the provisions of the Copyright Act 1968.

**Unless an Embargo has been approved for a determined period.

Kalsitinoor Set

iii

ABSTRACT

This thesis investigates the underlying success factors of tourism small- and medium-sized

enterprises (TSMEs) in Malaysia. Tourism has emerged as one of the world’s major

industries with significant changes in the structure and operation of the tourism industry

worldwide. The global transition to tourism-focused economies, the emergence of new

destinations, and increasing demands for differentiated tourism products and services have

engendered the need for TSMEs to develop strategies to become competitive in the

changing global economy. Despite the efforts, TSMEs continue to face challenges that

impede successful tourism development in destination countries, thus slowing gains that

can emerge from TSMEs activities.

As one of the most popular destinations in the world, the Malaysian government has taken

a strategic approach to developing the performance of its tourism industry. Currently,

tourism has become the second largest contributor to gross domestic product and a major

contributor to foreign exchange earnings in the country. Given this, the Malaysian

government has made concerted efforts to spur the tourism industry through empowering

and supporting TSMEs. Understanding the key success factors of TSMEs is therefore

pertinent.

To achieve this objective, this study examines the operations and identifies key success

factors of TSMEs in Malaysia based on Resource-Based View (RBV) theoretic framework.

A structured questionnaire was administered to 346 Malaysian tourism entrepreneurs to

iv

elicit information on their managerial characteristics and performance. The descriptive and

inferential analyses were conducted using the SPSS 18 and AMOS 18 statistical packages.

The empirical findings from this research are summarised. First, the motivation of tourism

entrepreneurs to enter the industry in Malaysia is driven by certain socio-economic and

demographic characteristics. Empirical results indicate that there exists a positive

association between age and entrepreneurial motivation. Second, tourism entrepreneurs in

Malaysia perceive management practices of business planning, business alliances,

motivation and government support as key factors for sustaining TSME business

performance. Third, there is strong empirical evidence to indicate that a causal relationship

exists between management practices and TSME performance in Malaysia. That, the key

success factors of business planning, tourism entrepreneurial motivation and government

assistance programmes have had a strong positive effect on the performance of TSMEs in

Malaysia.

This study provides strong empirical evidence to indicate that to improve the performance

of TSMEs there is the need to enhance the socio-economic and demographic characteristics

of managers as well as continue to maintain government assistance programmes to TSMEs.

This could be achieved through developing effective government policies and creating

greater awareness of assistance programmes offered by the government, improve efficacy

of public and private institutions that support TSMEs, and encouraging further training and

exposure of managers to advances in entrepreneurial skill development in Malaysia.

v

For my beloved husband and children

Ismadi Ismail

Julia Ismadi

Jasmine Ismadi

Johan Ismadi

With Love and Respect

My Late Parents - Kalsom Dohat and Set Sani

Parents in Law –Norliah Hussin and Ismail Jejaka

vi

ACKNOWLEDGEMENTS

Al-hamdu lillaahi Rabbil-‘Aalamin – ‘All praise unto Allah, the sustenance of the universe,

the most gracious’. Because of Him I managed to complete this study and He sent some

wonderful people to help me complete this challenging journey.

I sincerely thank and am deeply grateful to my supervisors, Professor Amir Mahmood and

Dr. Frank Agbola, for their direction, guidance and endless support. Their wide-reaching

knowledge, patience and invaluable advice helped considerably over the course of my PhD

journey. I am extremely grateful to have both of you as my supervisors.

I am particularly indebted to University Malaysia Terengganu (UMT) and the Ministry of

Higher Education (MOHE) for giving me the opportunity and supporting me financially to

do my PhD at the University of Newcastle. I would also like to thank all the members of

staff at the University of Newcastle for the resource support and administrative assistance.

Last but definitely not the least, I am grateful to my beloved husband and best friend,

Ismadi Ismail, for the unrelenting support he has afforded me, and for being there for me

through thick and thin. Thanks also to my gorgeous daughters, Julia and Jasmine, for the

laughter. To my family-in-law, thank you and much appreciation for your help and your

good care looking after Julia and Jasmine while I was doing my thesis. Also to my

supportive family members: thanks for the prayers and unconditional love and to my late

parents for the inspiration. Thanks are also given to my friends for their moral support and

encouragement throughout my studies. It is only Allah that can repay all your kindness.

THANK YOU.

vii

TABLE OF CONTENTS

TITLE PAGE ..........................................................................................................................i

STATEMENT OF ORIGINALITY ....................................................................................... ii

ABSTRACT .......................................................................................................................... iii

ACKNOWLEDGEMENTS .................................................................................................. vi

TABLE OF CONTENTS ..................................................................................................... vii

LIST OF FIGURES .............................................................................................................. xv

LIST OF TABLES ............................................................................................................. xvii

LIST OF ABBREVIATIONS ............................................................................................... xx

CHAPTER ONE: INTRODUCTION ................................................................................. 1

1.1 Background of the Study .................................................................................................. 1

1.2 Problem Statement ............................................................................................................ 5

1.3 Research Questions ........................................................................................................... 7

1.4 Objectives of the thesis ..................................................................................................... 8

1.5 Methodology ..................................................................................................................... 8

1.6 Organisation of the Thesis .............................................................................................. 10

CHAPTER TWO: THE POLITICAL ECONOMY OF MALAYSIA AND TSMEs ... 12

2.1 Introduction ..................................................................................................................... 12

2.2 Geography, Population and Culture of Malaysia ............................................................ 12

2.2.1 Malaysian Regions .................................................................................................. 17

2.2.1.1 Northern Region ........................................................................................................... 17

2.2.1.2 Central Region .............................................................................................................. 18

2.2.1.3 Southern Region ........................................................................................................... 19

2.2.1.4 East Coast Region ......................................................................................................... 20

2.2.1.5 Sabah, Sarawak and Labuan (East Malaysia) ............................................................... 21

2.3 Stages of Economic Development in Malaysia .............................................................. 22

2.3.1 Malaysia’s Economic Status, 1957-1959 ................................................................ 22

viii

2.3.2 Malaysia’s Economic Status, 1960s to 1980s ......................................................... 23

2.3.3 Malaysia’s Economic Status, 1990s ....................................................................... 26

2.3.4 Malaysia’s Current Economic Status, 2000s .......................................................... 27

2.4 Tourism Organisation in Malaysia .................................................................................. 30

2.4.1 The National Tourism Organisation ....................................................................... 30

2.4.2 State Tourism Organisations ................................................................................... 35

2.4.3 Local Tourism Organisation ................................................................................... 37

2.5 Tourism Policy Planning in Malaysia ............................................................................. 38

2.5.1 The First Malaysia Plan (1966–1970) ..................................................................... 38

2.5.2 The Second Malaysia Plan (1971-1975) ................................................................. 39

2.5.3 The Third Malaysia Plan (1976-1980) .................................................................... 41

2.5.4 The Fourth Malaysia Plan (1981-1985) .................................................................. 43

2.5.5 The Fifth Malaysia Plan (1986-1990) ..................................................................... 44

2.5.6 The Sixth Malaysia Plan (1991-1995) .................................................................... 45

2.5.7 The Seventh Malaysia Plan (1996-2000) ................................................................ 47

2.5.8 The Eighth Malaysia Plan (2001-2005) .................................................................. 49

2.5.9 The Ninth Malaysia Plan (2006-2010) ................................................................... 51

2.5.10 The Tenth Malaysia Plan (2011-2015) ................................................................. 53

2.6 Tourism Industry Performance in Malaysia ................................................................... 56

2.7 TSMEs in Malaysia ......................................................................................................... 59

2.8 Concluding Remarks ....................................................................................................... 65

CHAPTER THREE: LITERATURE REVIEW .............................................................. 67

3.1 Introduction ..................................................................................................................... 67

3.2 Definition of SMEs ......................................................................................................... 68

3.3 Contributions of TSMEs ................................................................................................. 71

3.3.1 Employment Creation ............................................................................................. 71

3.3.2 Economic Growth and Development to Tourism Country ..................................... 71

3.3.3 Diversification on Tourism Products ...................................................................... 72

3.4 TSMEs Challenges .......................................................................................................... 73

ix

3.4.1 High Labour Turnover ............................................................................................ 73

3.4.2 Shortage of Financial Resources ............................................................................. 74

3.4.3 Business Failure Rate .............................................................................................. 74

3.4.4 Limited Business Skills ........................................................................................... 75

3.4.5 Lifestyle Entrepreneur............................................................................................. 76

3.4.6 Supply Dominated by Family Business .................................................................. 76

3.5 Theoretical Foundations .................................................................................................. 78

3.5.1 Resource-based Theory ........................................................................................... 78

3.5.2 Theories on Entrepreneurship ................................................................................. 82

3.5.2.1 Entrepreneurship from an Economic Perspective ......................................................... 82

3.5.2.2 Entrepreneurship from the Psychological Perspective .................................................. 85

3.5.2.3 Entrepreneurship from the Sociological Perspective .................................................... 87

35.2.4 Entrepreneurship from the Tourism Perspective ........................................................... 89

3.6 Factors Affecting the Performance of TSMEs ................................................................ 92

3.6.1 Internal Factors ....................................................................................................... 92

3.6.1.1 Socio-economic Characteristics .................................................................................... 92

3.6.1.2 Business Skills .............................................................................................................. 98

3.6.1.3 Business Planning ......................................................................................................... 99

3.6.1.4 An Adoption of Internet .............................................................................................. 100

3.6.1.5 Business Alliance ........................................................................................................ 103

3.6.2 External Factors .................................................................................................... 104

3.6.2.1 Government Assistance Programmes ......................................................................... 104

3.6.2.2 Technology ................................................................................................................. 106

3.6.2.3 Global Event ............................................................................................................... 107

3.6.2.4 Consumer Behaviour .................................................................................................. 107

3.7 The Conceptual Framework of the Factors to Influence the Success of TSMEs ......... 109

3.8 Limitation of Previous Studies ...................................................................................... 111

3.9 Concluding Remarks ..................................................................................................... 112

CHAPTER FOUR: STUDY METHODOLOGY ........................................................... 115

4.1 Introduction ................................................................................................................... 115

x

4.2 Internal Resource Factors and TSME Success – the Critical Linkages ........................ 115

4.3 Operationalisation of Variables and Research Hypotheses .......................................... 118

4.3.1 Socio-economic Characteristics ............................................................................ 118

4.3.1.1 Age of the Owner-Manager ........................................................................................ 119

4.3.1.2 Gender ......................................................................................................................... 120

4.3.1.3 Education Level .......................................................................................................... 121

4.3.1.4 Ethnic group ................................................................................................................ 122

4.3.1.5 Family Business Background ..................................................................................... 124

4.3.1.6 Working Experience ................................................................................................... 125

4.3.2 Tourism Entrepreneur Motivation ........................................................................ 126

4.3.3 Business Planning ................................................................................................. 128

4.3.4 Business Alliance .................................................................................................. 130

4.3.5 Adoption on Internet ............................................................................................. 131

4.3.6 Government Assistance Programmes ................................................................... 133

4.3.7 TSMEs Performance ............................................................................................. 135

4.4 Data Sources and Description ....................................................................................... 139

4.4.1 Survey Area .......................................................................................................... 140

4.4.2 Population and Sampling Frame ........................................................................... 141

4.4.3 Sampling Method and Sample Size ...................................................................... 143

4.4.4.1 Personally-Administered Questionnaire Approach .................................................... 145

4.4.4.2 Data Collection Procedure .......................................................................................... 145

4.5 Statistical Techniques and Data Analysis ..................................................................... 146

4.5.1 Validity and Reliability of a Construct ................................................................. 147

4.5.1.1 Content Validity .......................................................................................................... 147

4.5.1.2 Constructs Validity ..................................................................................................... 147

4.5.1.3 Convergent Validity .................................................................................................... 148

4.5.1.4 Discriminant Validity ................................................................................................. 148

4.5.1.5 Constructs Reliability ................................................................................................. 149

4.5.2 Descriptive and Inferential Analyses .................................................................... 149

4.5.3 Multivariate Analysis ............................................................................................ 150

4.5.4 Data Analysis Procedure for SEM ........................................................................ 151

xi

4.5.4.1 Measurement Model Procedures ................................................................................. 151

4.5.4.2 Structural Model Procedures ....................................................................................... 157


CHAPTER FIVE: AN EMPIRICAL INVESTIGATION ON THE

CHARACTERISTICS OF TSMEs AND MANAGEMENT PRACTICES OF

TOURISM ENTREPRENEURS IN MALAYSIA ................................................... 159

5.1 Introduction ................................................................................................................... 159

5.2 Structure of TSMEs in Malaysia ................................................................................... 160

5.2.1 Type of TSMEs’ Businesses ................................................................................. 160

5.2.2 TSMEs Firm Size Structure .................................................................................. 164

5.2.3 TSMEs Ownership Structure ................................................................................ 165

5.2.4 TSMEs Firm Age Structure .................................................................................. 168

5.3 Tourism Entrepreneur Characteristics in Malaysia ....................................................... 171

5.3.1 Age of Tourism Entrepreneur ............................................................................... 171

5.3.2 Gender ................................................................................................................... 175

5.3.3 Level of Education ................................................................................................ 178

5.3.4 Ethnic Group ......................................................................................................... 181

5.3.5 Family Business Background ............................................................................... 184

5.3.6 Working Experience ............................................................................................. 186

5.3.7 Motivation to Start a Business .............................................................................. 189

5.4 Management Practices of TSMEs in Malaysia ............................................................. 191



5.4.3 Adoption of Internet .............................................................................................. 194

5.4.4 Awarenes and Use of Government Assistance Programmes ............................... 196


xii

CHAPTER SIX: EMPIRICAL ANALYSIS OF CAUSAL RELATIONSHIPS:

TSMEs MANAGEMENT PRACTICES AND PERFORMANCE ........................ 200

6.1 Introduction ................................................................................................................... 200

6.2 Confirmatory Factor Analysis of Tourism Entrepreneur’s Motivation and TSMEs’

Management Practices .................................................................................................. 201

6.2.1 Tourism Entrepreneurs’Motivation ...................................................................... 201



6.2.4 Adoption of Internet .............................................................................................. 208

6.2.5 Government Assistance Programmes ................................................................... 210

6.2.6 Business Performance ........................................................................................... 211

6.3 Full Measurement Model .............................................................................................. 213

6.4 Validity and Reliability of Constructs .......................................................................... 217

6.4.1 Construct Validity ................................................................................................. 217

6.4.1.1 Convergent Validity .................................................................................................... 217

6.4.1.2 Discriminant Validity ................................................................................................. 218

6.4.2 Reliability .............................................................................................................. 218

6.5 Structural Model and Hypotheses’ Testing ................................................................... 219

6.6 Discussion of the Empirical Results ............................................................................. 224

6.6.1 Relationship between Socio-economic Factors towards Tourism Entrepreneur’s

Motivation ........................................................................................................... 225

6.6.2 Relationship between Tourism Entrepreneurs’ Motivation and Business Planning

............................................................................................................................. 229

6.6.3 Relationship between Tourism Entrepreneurs’ Motivation and Business Alliances

............................................................................................................................. 230

6.6.4 Relationship between Tourism Entrepreneurs’ Motivation and TSMEs’

Performance ........................................................................................................ 231

6.6.5 Relationship between Tourism Entrepreneurs’ Motivation and Internet Adoption

............................................................................................................................. 232

xiii

6.6.6 Relationship between Tourism Entrepreneurs’ Motivation and Government

Assistance Programmes ...................................................................................... 233

6.6.7 Relationship between Business Planning and TSMEs Performance .................... 234

6.6.8 Relationship between Business Alliance and TSMEs’ Performance ................... 234

6.6.9 Relationship between Internet Adoption and TSMEs’ Performance .................... 235

6.6.10 Relationship between Government Assistance Programmes and TSMEs’

Performance ........................................................................................................ 236


CHAPTER SEVEN: SUMMARY, CONCLUSSIONS AND IMPLICATIONS OF

THE FINDINGS .......................................................................................................... 238

7.1 Summary ....................................................................................................................... 238

7.2 Conclusions ................................................................................................................... 241

7.2.1 An Evaluation on the Impact of Government Policy on TSMEs in Malaysia ...... 241

7.2.2 An Appraisal of the Relationship Between Socio-Economic Characteristics and

Tourism Entrepreneurs’ Motivation ................................................................... 242

7.2.3 An Evaluation on the Tourism Entrepreneurs’ Perception on the Importance of

Management Practices on TSMEs’ Performance ............................................... 243

7.2.4 An Assessment on the Causal Relationships between TSMEs’ Management

Practices and Firm Performance in Malaysia ..................................................... 244

7.2.5 The Key Success Factors of TSMEs in Malaysia ................................................. 246

7.3 Policy Implications ....................................................................................................... 247

7.3.1 Managerial Implications ....................................................................................... 247

7.3.2 Implications for Policy Makers ............................................................................. 250

7.4 Suggestions for Future Research .................................................................................. 252

REFERENCES ................................................................................................................... 255

APPENDIX 2.1 ................................................................................................................... 293

APPENDIX 4.1 ................................................................................................................... 295

APPENDIX 4.2 ................................................................................................................... 297

xiv

APPENDIX 5.1 ................................................................................................................... 305

APPENDIX 5.2 ................................................................................................................... 306

APPENDIX 5.3 ................................................................................................................... 307

APPENDIX 5.4 ................................................................................................................... 308

APPENDIX 5.5 ................................................................................................................... 310

APPENDIX 5.6 ................................................................................................................... 311

APPENDIX 5.7 ................................................................................................................... 312

APPENDIX 5.8 ................................................................................................................... 313

APPENDIX 5.9 ................................................................................................................... 314

APPENDIX 5.10 ................................................................................................................. 315

APPENDIX 5.11 ................................................................................................................. 316

APPENDIX 5.12 ................................................................................................................. 317

APPENDIX 5.13 ................................................................................................................. 319

APPENDIX 5.14 ................................................................................................................. 320

APPENDIX 5.15 ................................................................................................................. 321

APPENDIX 5.16 ................................................................................................................. 322

APPENDIX 5.17 ................................................................................................................. 323

APPENDIX 5.18 ................................................................................................................. 324

APPENDIX 5.19 ................................................................................................................. 326

APPENDIX 5.20 ................................................................................................................. 327

APPENDIX 5.21 ................................................................................................................. 329

APPENDIX 5.22 ................................................................................................................. 330

xv

LIST OF FIGURES

Figure 1.1: Thesis Outline .................................................................................................... 11

Figure 2.1: Map of Malaysia ................................................................................................ 13

Figure 2.2: The Development of MOTOUR ........................................................................ 32

Figure 2.3: Government Departments in Malaysia's Tourism Industry Development ........ 33

Figure 3.1: Factors Affecting SMEs' Success .................................................................... 111

Figure 4.1: The Proposed Conceptual Framework ............................................................ 117

Figure 5.1a: TSMEs by Type of Family Business and Type of Ownership ...................... 165

Figure 5.1b: TSMEs by Type of Non-Family Business and Types of Ownership ............ 166

Figure 5.2a: TSMEs by Travel Agency, Tour Operator and Tourism Guide Services and

Business Year of Establishments ..................................................................... 169

Figure 5.2b: TSMEs by Accommodation Services and Business Year of Establishments 169

Figure 5.3: Tourism Entrepreneurs by Location and Family Business Background..........182

Figure 6.1: Standardised Parameters Estimated in One-Factor Congeneric Model for

Tourism Entrepreneurs’ Motivation Items ....................................................... 203

Figure 6.2: Standardised Parameters Estimated in One-Factor Congeneric of Business

Planning’s Items ............................................................................................... 205


Business Alliance’s Items ................................................................................ 207

Figure 6.4: Standardised Parameters Estimated in One-Factor Congeneric Models for the

Adoption on Internet’s Items ........................................................................... 209


Government Assistance Programmes’ Items ................................................... 211

xvi

Figure 6.6: Standardised Parameters estimated in One-Factor Congeneric Model for

TSMEs’Performance ........................................................................................ 212

Figure 6.7: Full Measurement Model for Determining Key Success Factors Affecting

TSMEs’ Performance in Malaysia ................................................................... 216

Figure 6.8: AMOS Model Specification for Determining Key Success Factors of TSMEs in

Malaysia ........................................................................................................... 221

Figure 6.9: Results of Path Analysis of Determining Key Success Factors of TSMEs in

Malaysia ........................................................................................................... 222

xvii

LIST OF TABLES

Table 2.1: Key Natural Resources Attractions in Malaysia ................................................. 21

Table 2.2: Key Economic Indicators of Malaysian Economy, 2009-2011 .......................... 29

Table 2.3: Collaboration with Other Ministry on Tourism Programmes ............................. 34

Table 2.4: Courses Programme Provided by MOTOUR ..................................................... 35

Table 2.5: List of Some Key City Excitement Attractions in Malaysia .............................. 36

Table 2.6: Festivals and Events in Malaysia ........................................................................ 37

Table 2.7: Malaysia's Tourism Specific Economic Planning and Initiatives, 1965-2015 ... 55

Table 2.8: International Tourist Arrivals to Southeast Asia, 1967 and 2011....................... 57

Table 2.9: Tourist Arrivals into Malaysia by Country of Origin, 1980 - 2011 .................... 59

Table 2.10: Key Indicators of SMEs in Malaysia, 2010 ...................................................... 60

Table 2.11: Distribution of SMEs by Sectors, 2005 and 2010 ............................................ 61

Table 2.12: Distribution of TSMEs, 2010 ........................................................................... 63

Table 2.13: Key Performance Indicators of TSMEs, 2010 .................................................. 64

Table 2.14: Distribution of TSMEs by Size, 2003 and 2010 ............................................... 65

Table 3.1: Factors Influencing Growth in SMEs ............................................................... 110

Table 4.1: Measurement Items for Tourism Entrepreneur’s Motivation ........................... 128

Table 4.2: Operational Variables for Importance of Business Planning............................ 129

Table 4.3: Operational Variables for Importance of Business Alliances ........................... 131

Table 4.4: Operational Variables for an Adoption on Internet .......................................... 133

Table 4.5: Operational Variables of Government Assistance Programmes ....................... 135

Table 4.6: Operational Variables of TSMEs Performance ................................................ 138

xviii

Table 4.7: Summary of Research Questions, Research Objectives and Hypotheses of the

Study ................................................................................................................ 138

Table 4.8: Number of Tourist Arrival, 2009 ...................................................................... 140

Table 4.9: Index Category and the Level of Acceptance ................................................... 153

Table 5.1: Distribution of TSMEs by Location and Type of Business .............................. 161

Table 5.2: Distribution of Firm Size by Location .............................................................. 164

Table 5.3: Distribution of TSMEs by Age of Tourism Entrepreneur by Location ............ 172

Table 5.4: ANOVA Results of Hypothesis H1a Relating Tourism Entrepreneur’s Age and

Motivation ........................................................................................................ 175

Table 5.5: Distribution of Tourism Entrepreneurs by Location and Gender ..................... 176

Table 5.6: T-test Results of Hypothesis H1b Relating Gender and Tourism .................... 178

Table 5.7: Distribution of TSMEs by Education Background and Location ..................... 179

Table 5.8: ANOVA Results of Hypothesis H1c Relating Education Level and Tourism

Entrepreneur’s Motivation ............................................................................... 181

Table 5.9: Tourism Entrepreneurs by Location and Ethnic Group .................................... 181

Table 5.10: ANOVA Results on Hypothesis H1d Relating Ethnic Group and Tourism


Table 5.11: T-test Results of Hypothesis H1e Relating Family Business Background and

Tourism Entrepreneur’s Motivation ................................................................ 186

Table 5.12: Tourism Entrepreneurs by Location and Working Experience ...................... 187

Table 5.13: Tourism Entrepreneurs by Location and Working Experience ...................... 188

Table 5.14: T-test Results of Hypothesis H1f Relating Working Experience and Tourism


xix

Table 5.15: Tourism Entrepreneurs' Motivation to Start a Business ................................. 190

Table 5.16: TSMEs and Business Planning ....................................................................... 191

Table 5.17: Business Alliance Activity of TSMEs in Malaysia ........................................ 193

Table 5.18: Distribution of TSMEs Based on Period of Starting to Use the Internet ........ 194

Table 5.19: The Internet Adoption Among TSMEs in Malaysia ....................................... 196

Table 5.20: Level of Awareness and Use on the Government Assistance Programmes ... 197

Table 6.1: Mean and Standard Deviation Values of Entrepreneur's Motivation’s Items .. 202

Table 6.2: Mean and Standard Deviation Values of Business Planning’s Items ............... 204

Table 6.3: Mean and Standard Deviation Values of Business Alliance’s Items................ 206

Table 6.4: Mean and Standard Deviation Values of an Adoption of Internet’s Items ....... 208

Table 6.5: Mean and Standard Deviation Values of Government Assistance Programmes’

Items ................................................................................................................. 210

Table 6.6: Mean and Standard Deviation Values of Business Performance’s Items ......... 212

Table 6.7: Confirmatory Factor Analysis of Full Measurement Model ............................ 213

Table 6.8: Discriminant Validity Test ............................................................................... 218

Table 6.9: Reliability Analyses .......................................................................................... 219

Table 6.10: Results of Hypotheses Testing ........................................................................ 223

Table 6.11: Summary of Research Questions and Key Findings ...................................... 224

xx

LIST OF ABBREVIATIONS

ATV All Terrain Vehicle

AVE Average Variance Extracted

BNM Bank Negara Malaysia

CFA Confirmatory Factor Analysis

CFI Comparative Fit Index

DOS Department of Statistics, Malaysia

EFA Exploratory Factor Analysis

GDP Gross Domestics Product

GFI Goodness-of-fit index

HRM Human Resource Management

ICT Information and Communication Technology

KLIA Kuala Lumpur International Airport

KMO Kaiser-Meyer-Oklin

KSF Key Success Factors

LCCT Low Cost Carrier Terminal

MAS Malaysia Airlines System

MECD Ministry of Entrepreneur and Cooperative Development

MICE Meeting, Incentives Convention and Exhibition

MITI Ministry of Trade and Industry

MLVK National Vocational Training Council

MOCAT Ministry of Arts, Culture and Tourism

MOTOUR Ministry of Tourism Malaysia

MPTB Malaysian Tourism Promotion Board

MRS Manufacturing Related Services

NERP National Economic Recovery Plan

NFI Normed Fit Index

xxi

NOSS National Occupational Skill Standards

NSDC National SME Development Council

NTHRDC National Tourism Human Resource Development Counsil

OECD Organisation of Economic co-Operation and Development

PAF Principal Axis Factoring

PWTC Putra World Trade Centre

RBV Resource Based View

RM Ringgit Malaysia

RMSEA Root Mean Square Error of Approximation

SARS Severe Acute Respiratory Syndrome

SEM Structural Equation Modelling

SFL Satisfactory Factor Loading

SMEs Small and Medium Sized of Enterprises

SRMR Standardised Root Mean Square Residual

STACD State Tourism Action Council Department

TDC Tourist Development Corporation

TLI Tucker Lewis Index

TSA Tourism Satellite Account

TSMEs Tourism Small and Medium Sized of Enterprises

UK United Kingdom

UNWTO World Tourism Organisation

VMY Visit Malaysia Year

1

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Tourism is one of the fastest growing sectors of the world economy, an international

and global phenomenon that is continuously changing. Globally, travel and tourism

industries employ nearly 240 million people and create 10 per cent of the world’s gross

domestic product (GDP) (World Tourism Organisation, 2013). Recent years have seen

rapid growth in travel and tourism. Since the beginning of the new millennium, the

industry has witnessed the growth of the leisure society and people have continued to

value vacations, holidays and travel for cultural experience. In light of global changes,

particularly global warming, there is an emerging trend in the tourism industry for

tourists to demand environmentally friendly holidays (Dodds & Butler, 2010; Jovicic,

2011; Krippendorf, 1987). Further, with the rising number of low-cost air carriers

around the world, the number of younger tourists and travellers has also increased

(Abdullah, Ahmad & Alam, 2007; Musa & Ndawayo, 2011). In the context of this shift

and the corresponding demand for differentiated products, the tourism industry is

becoming increasingly globally competitive.

Globalisation and information technology have allowed cheaper and easier access to

information about places to travel and created greater opportunities and choices for

tourists. At the same time, the importance of TSMEs has been widely recognised in

light of the significant changes in global tourist consumption, and the increase of

differentiated and niche tourism products (Ateljevic, 2009; Buhalis, 1998; Getz &

Carlsen, 2005; Page, Forer & Lawton, 1999).. The implication of these changes

2

increases the range of tourism products and TSMEs’ business opportunities, which

depend on the creative and innovative capacity of individual entrepreneurs to identify

and take advantage of the changing landscape (Ateljevic & Doorne, 2000; Strobl &

Peters, 2013).

However, a major challenge for many tourism-focused countries is their exposure to

computerised information and reservation systems, which have made firms operating in

such countries increasingly fragile to global competition. Terrorism is another challenge

faced by TSMEs. The attack on the United States (more commonly known as

September 11), and the more recent bombings in countries such as Indonesia and India

that purposely target Western tourists have made such travel destinations great deal less

attractive to tourists.

These incidents have exacerbated the lingering challenges of the tourism industry and

its firms. Rigid security measures for air transportation and border crossing, as well as

the introduction of new security policies in the airline industry, have been introduced

due to terrorist attacks and threats. Governments around the world have also tightened

their security on the domestic front thus making travelling a lot less attractive to the

general public. Travel warnings to certain targeted destinations on a country’s websites

have also discouraged potential tourists from travelling to such destinations.

Further, the tourism industry is inextricably bound to nature and the environment.

Unexpected natural disasters can lead to devastating tragedies. For example, the Boxing

Day Tsunami on 26 December, 2004 in South and South East Asia, the earthquake in

New Zealand on 21 February, 2011 and most recently, the worst earthquake and

3

tsunami on record that hit Japan on 11 March, 2011 led to substantial damages to the

infrastructure of these countries, and subsequently had a severely damaging effect on

tourism activities. For example, the recent tsunami caused Japan to lose 50 per cent of

its international arrivals and 24 per cent of its demand for hotel rooms (World Travel

and Tourism Council, 2011).

In Malaysia, the Asian financial crisis of 1997, the Iraq War and the outbreak of Severe

Acute Respiratory Syndrome (SARS) have adversely affected the performance of its

tourism industry. Malaysia faced an 80 per cent drop in tourist arrivals from SARS

affected countries - China, Hong Kong, Singapore, Thailand, Japan, Taiwan and

Vietnam (Nathan, 2003).

These challenges have created more intense competition among firms operating in the

tourism industry in countries around the world. The management and operations of

tourism firms, which are primarily SMEs, has changed quite dramatically to ensure

survival in the tourism industry (Morrison, Carlsen & Weber, 2010; Morrison &

Teixeira, 2004; Thomas et al., 2011; Wanhill, 2000). Further, the performance of

TSMEs is critical, especially during the start-up phase (Hall, 1995) where the survival

rate for new SMEs, regardless of the industry, is very low (Chaston, 1992; William &

Nadin, 2013).

This study focuses on Malaysian TSMEs because the Malaysian government sees the

potential of the tourism industry through its contribution to economic growth and social

development. The Malaysian government has encouraged the active participation of

both the public and private sectors through vigorous promotion and marketing,

4

diversifying target markets, as well as improving the competitiveness of tourism

products and services in an effort to sustain tourists’ interest in Malaysia. The

Malaysian government has a series of five-year economic development plans that have

been implemented since the country’s independence in 1957. Prior to the Visit Malaysia

Year (VMY) campaign in 1990, the country’s tourism revenue from 1981 to 1988 was

in the range of RM 1000 million to RM 2000 million. In 1989, tourist receipts rose by

39 per cent to RM 2.8 billion and by 61 per cent during Visit Malaysia Year 1990 to

RM 4.5 billion. By 1998, the country’s tourism revenue had increased significantly to

RM 8.6 billion with 5.5 million tourists, boosted by the Visit Malaysia Year II

campaign. In 2011, the tourism industry in Malaysia increased by up to RM 58.3 billion

tourist receipts from 24.7 million tourist arrivals in the country (Tourism Malaysia,

2013b). The industry has become the second major contributor to the nation’s GDP and

is now one of the fastest growing sectors in the Malaysian economy.

TSMEs performance and survival in the industry are particularly important to Malaysia

because apart from their key role in delivering tourism products to the tourist, they also

play an active role in advancing the local community. It is essential to observe TSME

performance to ensure the TSMEs will reach their full potential. To ensure TSMEs in

Malaysia continue to support the national tourism industry and remain a source of

employment to the community, this study focuses on determining the key success

factors of Malaysian TSMEs’ performance with a focus on tourism entrepreneurs’

motivation and management. The results of this study will identify resources and their

capabilities for increasing the survival rate of TSMEs in Malaysia.

5

1.2 Problem Statement

It is evident that the tourism industry is an economic reality that can assist Malaysia to

achieve sustained economic growth and contribute to social development. As such, the

Malaysian government has made continuous efforts to stimulate the Malaysian tourism

industry through various channels. Given that TSMEs play a crucial role in the tourism

industry by delivering tourism products and services to the tourist (Ateljevic, 2009;

Buhalis, 1998; Getz & Carlsen, 2005; Page, Forer & Lawton, 1999), vigorous efforts

have been made by the Malaysian government to utilise the advantages that TSMEs can

offer. There are various TSME programmes and policies implemented by the

government to promote the Malaysian tourism industry through TSMEs. The funding

on development allocation for TSMEs has been increasing over the years. In 2011, the

government spent RM 4,677.1 million in the form of 183 training and financial

programmes (Small and Medium Enterprise Corporation Malaysia, 2012). This

indicates that the government has placed high expectations on TSMEs to play their role

as a vital component in increasing the country’s foreign exchange earnings.

However, most tourism entrepreneurs begin TSMEs due to the low entry barrier in the

industry (Brouder & Eriksson, 2013; Morrison & Thomas, 1999, 2004; Skokic &

Morrison, 2011), which gives them an opportunity to be part of the industry (Jaafar,

Maideen & Sukarno, 2010). Previous studies have highlighted the profound challenges

faced by SMEs in other industries that affect the survival of their businesses during the

start-up phase (Hall, 1995). The common challenge impeding their performance is a

lack of management practices in the entrepreneurs such as not regarding the creation of

a business plan as a worthwhile activity (Brinckmann, Grichnik & Kapsa, 2010), not

engaging in business networking (Bosworth & Farrek, 2011); and a poor rate on internet

6

adoption (Alam, Ahmad, Abdullah & Ishak, 2007; Junaidah, 2007; Tan, Chong &

Uchenna, 2009). Further, the owner–manager’s socio-economic characteristics such as

age, gender and education level also form a part of the obstacles that have a

considerable effect on entrepreneurial intention and business performance (Mazzarol,

Volery, Doss & Thein, 1999; Skokic & Morrison, 2011).

In the context of tourism studies, a great deal of research has been conducted on

different segments, including the constrained growth of the tourism industry (Rasul &

Manandhar, 2009), the environmental goals of rural family-owned/family-operated

tourism (Carlsen, Getz & Knight, 2001), financial performance (Sharma & Upneja,

2005) and family business (Getz & Calrsen, 2005). An intensive literature review

reveals that there have been very few studies on tourism entrepreneurship and small

businesses in the tourism industry. One of the significant results from research by

Dewhrust and Horobin (1998) highlighted the ‘lifestyle’ motivations of tourism

entrepreneurs. They are motivated by multiple factors such as providing employment

for family members, companionship with guests and fulfilling their interest or hobbies

(Schroeder, 2003; Skokic Morrison, 2011). These findings characterise tourism

entrepreneurs with a low degree of entrepreneurial motivation, as their managerial

decisions are largely based on personalised criteria (Dewhurst & Horobin, 1998;

Lashley & Rowson, 2010). Further evidence demonstrates that tourism entrepreneurs

are primarily motivated to maintain their business at what they feel is a level that allows

them to maintain the ‘lifestyle’ of a tourism entrepreneur (Carlsen, Morrison & Weber,

2008; Shaw & Williams, 1990, 1998; Tomas et al., 2011).

7

Thus, the scenario of TSMEs presents a challenge for Malaysian governments that aim

to achieve economic growth in the tourism industry, because TSMEs are the backbone

of the industry. The traditional approaches to achieving efficiency through encouraging

entrepreneurs may not work in the case of Malaysia because tourism entrepreneurs are

likely to behave differently. Further, the majority of studies on entrepreneurship and

SMEs have been conducted in different sectors; however, such study in TSMEs in

Malaysia is negligible.

The findings of this research are expected to provide a deeper understanding of tourism

entrepreneurs and TSME characteristics, particularly in Malaysia’s tourism industry.

This research will make several of contributions to the theory and practice of tourism

entrepreneurship and TSME performance. It will validate the RBV theory and reveal

some differences that may exist between TSMEs in developed and developing countries

using a cross-sectional research design. It will also formulate a new approach to

TSMEs’ perceived performance by adopting socio-economic factors in determining the

key success factors of TSMEs in Malaysia.

1.3 Research Questions

The research question for this study is to investigate the underlying success factors for

TSMEs in Malaysia. Specifically, this study aims to address the following research

questions:

1. What is the effect of government assistance programmes on the performance of

Malaysian TSMEs?

2. What is the effect of socio-economic characteristics on Malaysian tourism

entrepreneurs’ motivation?

8

3. How does Malaysian tourism entrepreneurs’ motivation affect the management

practices of Malaysian TSMEs?

4. What is the effect of management practices on Malaysian TSME performance?

1.4 Objectives of the thesis

The objectives of this thesis are:

1. To review government policy on TSMEs in Malaysia.

2. To empirically investigate the characteristics of TSMEs and management practices of

tourism entrepreneurs in Malaysia.

3. To empirically analyse the causal relationships between TSMEs management

practices and TSMEs performance in Malaysia.

4. To identify the key success factors of TSMEs in Malaysia.

1.5 Methodology

Based on the aims of this study, a questionnaire was administered to elicit information

on tourism entrepreneur characteristics, management practices, and government policy

pertaining to TSMEs in Malaysia. The questionnaire contains a series of questions that

were compiled following a review of previous empirical studies on SME and TSME

performance. The structured questionnaire was pre-tested for clarity, difficulty and ease

of response before the execution of the survey. A pilot study was administered to 10

owner-managers of TSMEs based in Kuala Lumpur and Pahang. The questionnaire was

revised following the pilot survey. In order to achieve higher respondent rate and to

save time, data were acquired through personally administered questionnaires at their

business premises. The survey resulted in 346 useable questionnaires, a response that is

9

considered satisfactory for subsequent empirical analysis (Hair, Black, Babin, &

Anderson, 2010)

Due to the incomplete data of TSMEs in Malaysia, the study only focuses on TSMEs

engaged in: a) accommodation services; b) tour operations; c) travel agency services;

and d) tourism guide services. These TSMEs are located in Pahang, Pulau Pinang,

Kedah, Kuala Lumpur and Sabah. The geographical selection of these locations is based

on their significant role and contribution to the Malaysian tourism industry in terms of

number of tourist arrivals. The analysis is narrowed to only TSMEs, due to their role as

the backbone of the Malaysian tourism industry and the increasing share of TSMEs in

recent years.

The empirical investigation in this study consists of two phases. The first phase is a

descriptive analysis of the TSMEs and the characteristics of tourism entrepreneurs. It

consists of correlation analyses, independent sample t-tests and non-parametric test to

test for significant differences of TSME characteristics across locations. The second

phase involves confirmatory factor analysis of the measurement model and full

measurement model.

The confirmatory analysis is performed to examine the measurement model and the full

measurement model based on several fit indices. In determining the fit of measurement

model and full measurement model, at least one absolute fit index, one incremental fit

index and the normed chi-square is utilised (Hair, et al., 2010). If the results indicate a

poor fit model, the measurement model and full measurement model is re-examined and

re-specified by removing items that had factor loadings below 0.50 (Byrne, 2010),

10

squared multiple correlation or R² less than 0.40 (Awang, 2012) or value of

modification indices is above 15 (Awang, 2012). The deletion of items is made one item

at a time and it is repeated until all values satisfy the criteria. Subsequently, the analysis

is expanded to analyse the structural equation model (SEM) to determine the factors

that have significant effects on TSME performance in Malaysia. In order to determine

the fit indices of SEM, it applied the same fit indices of at least one absolute fit index,

one incremental fit index and the normed chi-square utilised on examining

measurement and full measurement model.

1.6 Organisation of the Thesis

This thesis consists of seven chapters. Chapter 2 provides an overview of the Malaysian

economy, the Malaysian government’s policies towards the tourism industry and the

tourism industry’s contribution to the national economy. Chapter 3 focuses on the

literature pertaining to theoretical studies on entrepreneurship and SME performance.

Chapter 4 outlines and discusses the methodological framework to identify key internal

and external factors that explain TSME performance. This chapter also discusses the

sources of data and methods used to compile the data, and explain hypotheses

development and testing. Chapter 5 reports and discusses the results arising from

descriptive statistical analysis. Chapter 6 analyses and discusses the outcomes of

correlation analyses and inferential analyses. This chapter also reports and discuss the

results of the SEM and provides a detailed discussion on hypotheses testing and

findings. Chapter 7 summarises the findings of this thesis, draws some conclusions,

discusses the policy implications of the findings for managerial decision-making and

policy makers, and makes suggestions for future research.

11

Figure 1.1: Thesis Outline

Chapter One Introduction

Chapter Two The Political Economy of Malaysia

and TSMEs

Chapter Three Literature Review

Chapter Four Methodological Framework

Chapter Seven Summary, Conclussions and Implications of the Findings

Chapter Five An Empirical

Investigation on the Characteristics of TSMEs and Management Practices of Tourism Entrepreneurs

in Malaysia

Chapter Six Empirical Analysis of Causal Relationship: TSMEs Management

Practices and Performance

12

CHAPTER TWO

THE POLITICAL ECONOMY OF MALAYSIA AND TSMEs

2.1 Introduction

Chapter 2 provides an overview of Malaysia from a political–economic perspective.

The principal purpose of this chapter is to introduce and explore the manner in which

the political institutions, the geographical landscape and the economy of Malaysia

influence its tourism industry and the development of its TSMEs. It will also explicitly

discuss government efforts to promote the development of TSMEs in Malaysia.

To advance the stated purpose, this chapter is organised as follows: Section 2.2 provides

an overview of the geography, population and culture of Malaysia; Section 2.3 analyses

economic developments in Malaysia; Section 2.4 discusses the tourism industry in

Malaysia; Section 2.5 discusses the organisation of tourism in Malaysia; Section 2.6

discusses tourism policy planning in Malaysia; Section 2.7 examines the effect of

tourism policies on TSME development in Malaysia; and Section 2.8 summarises the

key points of the chapter.

2.2 Geography, Population and Culture of Malaysia

Tourism industry in Malaysia is derived from the great combination of its geographical,

population and the unique cultures of Malaysian. Malaysia is a tropical country situated

in Southeast Asia and has an area of 329,758 square kilometres. The country is

strategically located along the Strait of Malacca, which is a major sea-route connecting

the Far East and Asia, Europe, and the Middle East. The country is divided into 2 parts

– the Peninsular Malaysia and East Malaysia. Peninsular Malaysia consists of 11 states:

K

P

i

K

k

P

M

I

l

Kelantan, T

Penang, Ked

is situated o

Kuala Lump

kilometres (

Peninsular M

Malacca in

Sarawak sha

Sula and Ce

south. Figur

Source: Th

In Malaysia

lowlands wi

Terengganu,

dah and Perl

on the Islan

pur, Putrajay

400 miles) o

Malaysia bor

the east, and

are borders w

elebes Seas

re 2.1 illustra

he Departmen

a’s geograph

ith mountain

Pahang, Jo

lis. East Mal

nd of Borne

ya and Labu

of the South

rders Thailan

d the South

with Brunei

in the east,

ates Malaysi

Figure

nt of Survey

hical landsca

nous interio

13

ohor, Melak

laysia consis

eo. The coun

an. Peninsul

China Sea.

nd in the nor

China Sea i

and the Sou

and the Ind

ia’s location.

e 2.1: Map o

y and Mappin

ape in both

rs that have

ka, Negeri

sts of 2 state

ntry also ha

la, separated

rth, Singapo

in the west.

uth China Se

donesian pro

.

of Malaysia

ng Malaysia

Peninsular

e diverse flo

Sembilan, S

es -Sabah an

as three Fed

d from East

ore in the sou

East Malay

ea in the nor

ovince of K

a (2011)

and East M

ora and faun

Selangor, P

nd Sarawak -

deral Territo

Malaysia by

uth, the Strai

sia of Sabah

rth and west

Kalimantan in

Malaysia, co

na, and there

erak,

- and

ories:

y 640

its of

h and

t, the

n the

oastal

e are

14

dozens of small islands along the coast. Such geographic features allow a wide variety

of activities, from nature-based, eco-friendly adventures to activities such as beach

holidays and scuba diving in locations such as Batu Feringgi Beach located in Pulau

Pinang and Sipadan Island in Sabah.

The country’s mountainous landscape and tropical forests offer a range of outdoor

activities such as caving, hiking, jungle trekking, white-water rafting, rock climbing,

bird watching and river cruising, not only to domestic tourists but also to international

tourists located in Pahang National Park, Gunung Mulu National Park in Sarawak

among other locations. Malaysia’s landscape is varied and each of the regions in

Malaysia has its own local attractions, which are promoted as Malaysian tourism

products.

In terms of population, Malaysia recorded a population of 27,730,000 in 2011

(Department of Statistics, 2012a). The country has three major ethnic groups: the

Malays, the Chinese and the Indians. They make up the majority of Malaysia’s

population. The country also has numerous ethnic and indigenous groups such as Iban,

Bidayuh, Orang Ulu, Kadazan, Bajau and Murut.

The Malays are the largest ethnic group in Malaysia and make up 54 per cent of

Malaysia’s population (Economic Planning Unit, 2012). The Malays are predominantly

Muslims; thus, Islamic values and beliefs are deeply embedded in the Malay culture.

The Malays emphasise values such as courtesy, moderation, tolerance, harmony and

cordial relations among family members, neighbours and community. The Malays also

have their own literature, music, dances and decorative arts. In terms of population

15

distribution across Malaysia, most Malays is highly populated in Terengganu, Kelantan,

Perlis and Kedah (Department of Statistics, 2012c).

The Chinese are the second largest ethnic group and forms about 25 per cent of the

population in Malaysia (Economic Planning Unit, 2012). The majority of Chinese are in

Penang, Perlis, Perak, Kuala Lumpur and Johor. The Chinese arrived in Malaysia

during the 19th century for business and trade. They are originated from the southern

provinces of Kwangtung, Fukien and Kwangsi in China. They are well known for their

entrepreneurial aptitude and hard work. Their natural flair for business activities has

made them successful and advance in economic status. The Malaysian Chinese still

retain their ancestral culture. Their culture is derived from the Chinese civilisation and

is represented by literature, drama, music, painting and architecture. The Chinese are

predominantly Buddhists, though some embrace other religions such as Christianity and

Islam. Buddhist temples are places of worship but also display interesting architectural

elements such as a curved roof ridge, cut-and-paste Chien Nien decoration, and gable

design. All of these elements are derived from ancient Chinese architecture.

The Indians make up the smallest of the three main ethnic groups, and represent 8 per

cent of the population (Department of Statistics, 2012c). They are mainly in the states of

Melaka, Negeri Sembilan, Penang, Perak, Selangor and Kuala Lumpur (Economic

Planning Unit, 2012). The Indians were brought in Malaysia by the British to work on

the rubber plantations. Most Malaysian Indians are Hindus, but some embrace other

religions such as Christianity and Islam. The Indians have a colourful culture and

tradition such as ornate temples, delicious spicy cuisines and exquisitely bright sarees.

They celebrate Deepavali, which is also known as the festival of lights, and Thaipusam,

16

which is a Tamil Nadu celebration and displayed by breaking the coconuts. Thaipusam

is celebrated on a large scale in Penang, Selangor and Perak.

In Sarawak, the Ibans, Bidayuhs and Orang Ulus are the major ethnic groups (Economic

Planning Unit, 2012). They live in longhouses and traditional community homes that

house 20 to 100 families. Most of them are originally animists, but many have now

converted to Christianity. The Ibans are skilled boatsmen and are the upriver tribe from

the heart of Kalimantan. The Bidayuhs are farmers and hunters, who make homes in

Sarawak’s mountainous regions. The Orang Ulus are also known as upriver tribes of

Sarawak, and are artistic people. Their large longhouses are ornately decorated with

murals and superb woodcarvings.

The largest indigenous ethnic groups in Sabah are the Kadazans, the Dusuns, the Bajaus

and the Muruts (Economic Planning Unit, 2012). The Kadazans and the Dusuns both

share the same language and culture but the Kadazans are mainly inhabitants of flat

valley deltas, which are conducive to paddy field farming, while the Dusuns

traditionally live in the hilly and mountainous regions of interior Sabah. The second

largest ethnic group in Sabah are the Bajaus, who are nomadic sea-faring people, and

sometimes referred to as the Sea Gypsies. Those who choose to leave their sea-faring

ways become farmers and cattle-breeders. These land Bajaus are nicknamed 'Cowboys

of the East' as a tribute to their impressive equestrian skills. The third largest ethnic

group in Sabah is the Muruts. Traditionally inhabiting the northern inland regions of

Borneo, they were the last of Sabah's ethnic groups to renounce headhunting. Now, they

mostly practice shifting cultivation of hill paddies and tapioca, and supplementing their

17

diet with blowpipe hunting and fishing. Like most indigenous tribes in Sabah, their

traditional clothing is decorated with distinctive beadwork.

In addition to its natural resources, Malaysia’s multiracial and multicultural society

creates a unique blend of cultures, values, faiths and beliefs, and a contemporary and

diverse Malaysian heritage. Malaysia has a wide variety of music, dance, literature,

cuisine, architecture, decorative arts and festivals stemming from the blend of diverse

ethnic groups and religions, all of which are key city attractions that are also promoted

to international tourists by MOTOUR and the State Tourism Action Department

(STAD) located in each region in Malaysia (see explanation in Section 2.5.2).

2.2.1 Malaysian Regions

Based on Malaysia’s geographical landscape, the 11 states and three federal territories

are divided based on regions. Malaysia has five regions and each region has differences

in its geographical landscape, economic activities, ethnicities and lifestyle. Thus,

utilising these unique features, MOTOUR has promoted each region based on its

specific tourism attractions. The following sections explain the five regions: the

northern region, central region, southern region, east coast region, as well as Sabah,

Sarawak and Labuan with more detail related to their key tourism attractions.

2.2.1.1 Northern Region

The northern region is made up of the states of Perlis, Kedah, Pulau Pinang and Perak.

The population of the northern region represent of 20.5 per cent of the national

population (Department of Statistics, 2012a). The geographical landscape of the

northern region is made up of islands, beaches, landscape and rainforest. Kedah and

18

Pulau Pinang are famous their idyllic islands while Perlis and Perak are formed of rocky

limestone and famous for their ancient historical sites.

In terms of urbanisation level, the most outstanding state in this region is Pulau Pinang

with level of urbanisation of 90.8 percent while the other states are in general above 50

per cent (Department of Statistics, 2012c). This may reflect the economic activity of

Pulau Pinang which is a highly industrialised sector while Kedah and Perlis dominate

the agriculture sector in Malaysia on paddy growing and Perak handles small and

medium based manufacturing. In terms of ethnicity, Perlis, Kedah and Perak are

dominated by Malays while Pulau Pinang has a predominantly Chinese and Indian

population, with Malays in the minority.

2.2.1.2 Central Region

The central region constitutes of Selangor and Negeri Sembilan and Kuala Lumpur

Federal Territory and Putrajaya Federal Territory. The area of Selangor surrounds the

Federal Territory of Kuala Lumpur, which is the capital of Malaysia. Kuala Lumpur is a

bustling cosmopolitan city with modernity, high-tech buildings and major shopping

centres while Putrajaya is the hub of the federal government offices. This region is the

most populous region with 29.3 per cent of Malaysians living in this region. Selangor’s

population is the largest in Malaysia (19.4 per cent of total population) and also the

highest urbanised in Malaysia with the level of 91.4 per cent (Department of Statistics,

2012c). Selangor’s geographical position in the centre of Peninsular Malaysia

contributed to the rapid development as Malaysia’s transportation and industrial hub.

19

Selangor and Negeri Sembilan are dominated by Malays, followed by Chinese, Indian

and other ethnic groups. Selangor’s economies are commerce, industry and services. It

has several industrial sites producing electronic goods, chemicals, and automotive

vehicles such as Proton and Perodua cars and assembling imported cars in the state.

Negeri Sembilan is an agricultural state mainly focusing on rubber, oil palm plantations

and livestock. It is famous for its rural landscape and for the local traditions of the

Minangkabau.

2.2.1.3 Southern Region

The southern region consists of Melaka and Johor (the state that forms part of the long

eastern coastline facing the South China Sea). The beaches and particularly the coral

islands are the main attractions in Johor. Melaka is famous for its historical attractions

related to the Dutch invasion and also the lifestyle of the Baba-Nyonya, or Straits

Chinese. Chinese migrants intermarried with the locals and settled in Malaysia during

the early 1400s. They have strong Malay influence in their clothing and food but also

retained their Chinese heritage, especially the religion, name and ethnic identity.

The population in this region makes up only 14.8 per cent of the total population in

Malaysia. Melaka is the least populated state with only 2.9 per cent; Johor ,on the other

hand, is the second most populated state in Malaysia with 11.9 per cent of the nation’s

population living here (Department of Statistics, 2012c). Both states have majority

Malay and Chinese populations. Indian and other ethnic groups are the minority in

Southern region. In spite of low population, the urbanisation level on Melaka is

relatively high at 86.9 per cent, and Johor at above 71.9 per cent compared to states in

20

other regions (Department of Statistics, 2012a). Aside from the manufacturing industry,

both Melaka and Johor are among the major tourist attractions in Peninsular Malaysia.

2.2.1.4 East Coast Region

Facing the South China Sea is the East Coast region, made up of Pahang, Terengganu

and Kelantan. It covers 51 per cent of the land area of Peninsular Malaysia and

represents 14 per cent of the national population (Department of Statistics, 2012c). The

region remains the least urbanised at 41.3 per cent compared to other regions in

Peninsular Malaysia (Department of Statistics, 2012a). As the region is highly

populated with Malay compared to other parts of Malaysia, this region is known for its

strong Malay culture, especially Kelantan and Terengganu. Both states have strong

influence with Thai elements. Thus, the Malay culture of these two states differs

somewhat from Malay culture in the rest of the peninsula. This is reflected in the

cuisine, arts and even the peculiarity of the East Coast Malay dialect.

The geographical landscape of the East Coast Region, which made up of rainforest and

coastline, influences its economic activities. Kelantan and Terengganu are involved in

the fishing industry, as well as cottage industries which employ traditional skills in

handicraft productions such as batik, wood carving and songket weaving. On the other

hand, besides fishery products, Pahang’s other industries include forestry,

petrochemical processing and shipping, and port industry. This physical geography in

Pahang (the highlands, the rainforest and the coastal area) has contributed to its tourism

industry. Thus, most of the tourism attractions in Pahang are ecotourism activities.

21

2.2.1.5 Sabah, Sarawak and Labuan (East Malaysia)

In these regions, Sabah, Sarawak and Labuan have a mostly indigenous population and

represent 20.7 percent of Malaysia’s total population. As one of the Federal Territories,

Labuan is home to only 0.4 per cent of Malaysia’s population, which makes it the least

populated (Department of Statistics, 2012c). The multi-ethnic nature of this region also

differs from other regions in Peninsular Malaysia in terms of culture, arts, cuisine and

dialect. In term of the level of urbanisation, Sabah and Sarawak have some of the lowest

levels of urbanisation in Malaysia, with less than 54 per cent in Sabah and 55.8 per cent

in Sarawak (Department of Statistics, 2012a). In terms its economic activity, East

Malaysia is focused mainly on oil and gas reserves and natural resources. The landscape

of East Malaysia is mostly lowland rain forest (with some areas of mountain rainforest)

as well as aquatic bio-diversity. These features have become its key tourism attraction

to the world. Table 2.1 lists some of the key natural resource attractions of each region

in Malaysia.

Table 2.1: Key Natural Resources Attractions in Malaysia

Peninsular Malaysia Region States Tourism products Attractions

Northern Region

Perlis Nature and adventure Kuala Perlis,,KelamCave, Wang Burma Cave,Ayer Forest Reserve,Wang Mu Forest Reserve

Kedah Islands and beaches

Langkawi Island,Payar Island Marine Park,Dayang Bunting Lake,Beras Basah Island

Nature and adventure Ulu Legong Hot Spring, Bukit Batu Pahat, Kota Kuala Muda, Muara Sungai Muda, Langkawi Mangroves

Pulau Pinang

Islands and beaches Batu Feringghi Beach Nature and adventure Pulau Pinang National Park, Tropical

Spice Garden, Pulau Pinang Botanic Garden

Perak Island and beaches Pangkor Island Nature and adventure Sungai Klah Hot Spring Park, Belum

Forest Reserve, Bukit Larut (Maxwell Hill), Tempurung Cave

Central Region

Negeri Sembilan

Island and beaches Port Dickson Beach

22

Southern Region

Johor Island and beaches Sibu Island, Desaru Beach, Aur Island, Kukup Island, Johor National Park

Nature and adventure Kota Tinggi Waterfall, Tanjung Piai National Park, Sungai Lebam Wetlands, Gunung Ledang

East Coast Region

Kelantan Island and beaches Bisikan Bayu Beach Nature and adventure Gunung Stong State Park

Terengganu Island and beaches Redang Island, Perhentian Island, Lang Tengah Island, Kapas Island

Nature and adventure Kenyir Lake Pahang Island and beaches Tioman Island

Nature and adventure Genting Highland ,Taman Negara, Cameron Highlands, Fraser’s Hill

East Malaysia

Sarawak, Sabah and

Labuan

Sarawak Nature and adventure Gunung Mulu National Park, Bako National Park, Gunung Gading National Park

Sabah Island and beaches Sipadan Island, Tuanku Abdul Rahman Marine Park,Layang-layang Island, Mabul Island

Nature and adventure Danum Valley,Mount Kinabalu, Rainforest Discovery Center, Sepilok Orang Utan Sanctuary

Source: MOTOUR (2013)

2.3 Stages of Economic Development in Malaysia

2.3.1 Malaysia’s Economic Status, 1957-1959

When Malaysia attained its independence in 1957, the tourism industry was of

secondary importance due to the reconfiguration of the social structure and the focus on

setting up the basic infrastructure for the country (Economic Planning Unit, 1966). The

main economy was primarily commodity-based, with heavy dependence on rubber and

tin. The agriculture and mining sectors were major contributors to the country’s

employment and GDP. Both sectors generated 45.7 per cent of GDP and 61.3 per cent

of total employment. The secondary sector, consisting of manufacturing, building and

construction, was a relatively small contributor to GDP and employment. It contributed

11.1 per cent to GDP and 9.6 per cent of total employment. Trade sub-sectors such as

financial and banking services contributed 15.2 per cent to the nation’s GDP during this

23

period. The services sector (consisting of private and public services such as health and

education) was next in importance, contributing 11.1 per cent to GDP (Shari, 2000).

During this period, the population grew at 3.4 per cent, one of the highest recorded rates

of natural population increase in the world. The unemployment rate increased from 2

per cent in 1957 to 7 per cent in 1967 and 8 per cent in 1970 (Shari, 2000). Due to the

uneven distribution of income between the rural and urban populations and between the

various ethnic groups in Malaysia, the government set up the Rural and Industrial

Development Authority (RIDA) in 1950 as a programme to increase the number of

Malays in business and commerce. This initiative became a major part of the

government’s economic development plan (Gomez & Jomo, 1999; Siddiqui, 2012).

A final feature of the economy at this period was the low level of human resource

development, which resulted in a shortage of many skills required for the nation’s

economic development (Siddiqui, 2012). In summary, the Malaysian economy in its

early years of independence was characterised by exports of primary products of tin and

rubber, resource-based industries, a high degree of inequality, high unemployment and

population growth.

2.3.2 Malaysia’s Economic Status, 1960s to 1980s

The period from the 1960s through the 1980s witnessed the transition from primary

products (like tin and rubber) and resource-based industries to an economy heavily

dependent on manufacturing. This was a result of two fundamental strategies: the

import substitution strategy, which was actively pursued in the First Malaysia Plan

(1966–1970) and the export oriented strategy, which was implemented in the Second

24

Malaysia Plan (1971–1975) (Economic Planning Unit, 1966, 1971, 1976). These two

strategies and the economic policy, which are outlined in the next section, have shaped

the main features of Malaysia’s economic status during these three decades.

In the early 1960s, the Malaysian economy was still heavily dependent on the

agriculture sector, which was the main foreign exchange earner and source of

employment. The reliance on agriculture brought an influx of international visitors for

dealing with the supply of raw materials such as rubber and spices into Malaysia (Jomo,

1990). Since tourism industry was not a primary element at this stage, international

visitors were not counted as part of tourism industry performance. Despite high

productivity in the agriculture sector, most of the population was either unemployed or

engaged in low-income employment. Furthermore, the agriculture sector did not

provide enough growth impetus for the overall economy (Gomez & Jomo, 1999).

This led to the economic shift from the agriculture to the manufacturing sector. The

implementation of the import substitution and export oriented strategies led to the early

structural change to industrialisation, which began in the 1970s and continues today. As

a result, the country gained a better balance between agriculture, manufacturing and

services sectors (Kamaruddin & Masron, 2010). The range of economic activities and

products, as well as sources of growth, became more diversified and enlarged. This

included tourism industry activities under the services sectors. The Malaysia

government has invested RM17.2 million for tourism industry development, which was

spenton basic tourism infrastructure such as airports and tourist sites (Economic

Planning Unit, 1971).

25

The 1980s saw major structural transformations of the economy. During this decade, the

manufacturing sector surpassed the agricultural sector. The tourism industry was

considered as one of the solutions to improve the socio-economic status of Malaysians

through employment, regional development and diversification of the economic base of

the country (Khalifah & Tahir, 1997). The focus on tourism industry has significantly

increased the foreign-exchange earnings to the country. In 1980, the tourism industry

endowed RM619 millions of total receipts to the country (Tourism Malaysia, 2013b).

This move towards industrialisation was based on the premise that the nation needed to

reduce its dependence on imports of capital and intermediate goods in order to sustain

growth and generate rapid development through heavy industries. During this era, the

government imposed deregulation and reforms on several administration and

institutional agendas. Efforts were also focused on upgrading the efficiency of the

public sector and adopting a private sector-led growth strategy to promote private sector

participation (Kuruvilla, 1995). This created an environment conducive for private

sectors to flourish and contribute to economic development. The manufacturing sector

was the largest contributor to employment creation in the economy during this era. Four

industries (wood products, textiles and clothing; rubber products; and electronics

components and assembly) were prominent contributors of growth in manufactured

exports (Wan Abdullah, 1994). Tourism has also significantly provided jobs to the local

community, particularly to the rural population. Focusing on tourism activities in rural

areas—East Coast Region and Sabah and Sarawak (Economic Planning Unit, 1976)—

has led to the improvement on the wealth of communities in these least developed

regions in Malaysia. Since the industries were relatively labour intensive and

established at a time when Malaysia urgently required greater job opportunities for

26

expanding labour force, they have changed the composition of Malaysian exports from

resource-based to non-resource commodities.

2.3.3 Malaysia’s Economic Status, 1990s

The manufacturing sector and the focus on cluster-based (cluster is an agglomeration of

interlinked or related activities comprising of industries, suppliers, critical business

services, requisite infrastructure and institutions) development provided the guiding

principles for Malaysia’s industrial development in the 1990s. During this era, the

government also focused on the promotion of greater intra-industry and inter-industry

trade and foreign direct investment-driven growth policies under the National

Development Policy (NDP) (Leong, 1992). The performance of tourism industry during

this stage was the breakthrough to the national economic contribution. The industry has

contributed RM4.5 billion of total tourist receipt to the country during the 1990. This

thrive performance of tourism industry was a result from the Visit Malaysia Year

campaign in 1990 (Economic Planning Unit, 1986).

However, in mid-1997, the Asian financial crisis interrupted this momentum. The effect

of the financial crisis was evident in all sectors of the economy and led to massive

unemployment and reduction in national income. Malaysia’s GDP in 1998 registered a

reduction in growth to 6.8 per cent, resulting in the decline of per capita income by 1.8

per cent. Tourism industry performance was severely affected and posted losses of

RM30 million in tourist receipts, a decline of 4.8 per cent (de Sausmarez, 2004;

Economic Planning Unit, 1986). The loss of tourists in rest of Asia, which was facing

the same financial crisis, has caused a drop in tourism industry performance. The

agriculture sector also declined by 4 per cent in 1998 as a result of lower production on

27

all major commodities. The manufacturing sector, particularly the production of

electrical machinery, apparatus, appliances and supplies has declined by 7.7 per cent.

The main reasons for the decline were caused by the weak demand from the Asia-

Pacific region and the depressed global market for semiconductors (Economic Planning

Unit, 2008). In contrast, output in the mining sector rose marginally by 0.8 per cent due

entirely to the higher output of crude petroleum and gas.

The government came out with the National Economic Recovery Plan (NERP) to

address the worsening economic situation and to revitalise the economy. Through

NERP, the Malaysian government adopted the policy to focus on reducing risks during

the financial crisis to ensure macroeconomic stability, restore confidence and promote a

stronger financial system in all sectors (Economic Planning Unit, 2013a).

2.3.4 Malaysia’s Current Economic Status, 2000s

In the early 21st century, Malaysia and the rest of the world were affected by Severe

Acute Respiratory Syndrome (SARS), the war in Iraq and an increase in world oil

prices. The Malaysian government introduced the Package of New Strategies in 2003 to

stimulate economic growth. The package was aimed at promoting private sector

investment, strengthening the nation’s competitiveness in manufacturing industry,

developing new sources of growth in tourism industry and enhancing the effectiveness

of the delivery system. This strategy resulted in robust external demand and increased

private sector activity in the domestic economy. The economic performance of 5.2 per

cent growth in 2003 was better than expected (Economic Planning Unit, 2013b).

28

Malaysia’s momentum continued and the economy grew by 6.3 per cent in 2007, above

the 5.8 per cent average recorded between 2000 and 2006. This was attributed to the

diversified economic structure, strong public and private sector expenditures, enhanced

delivery systems and an impressive trade performance (Economic Planning Unit,

2013c). From 2005 to 2007, Malaysia’s GDP grew at an average rate of 4 per cent per

annum. The agriculture sector registered a notable growth of 6.4 per cent in 2007,

reflecting higher production of natural rubber, crude palm oil and cocoa. Manufacturing

outputs had expanded by 7.0 per cent. The services sector continued to grow by about

6.5 per cent, supported by the growth in finance, insurance, real estates and tourism

industry (Ministry of International Trade and Industry, 2009). The tourism industry

indicated a positive contribution to the national’s GDP’s by7.4 per cent in 2007.These

results reflected the effectiveness of the new strategy, which focused on new

international markets such as Australia, Europe, USA and Middle East to boost tourist

arrivals into the country. At the same time, it improved the foreign exchange earning of

the industry instead of merely depending on targeting international tourist arrivals from

Asian region (Economic Planning Unit, 2013a).

Table 2.2 indicates Malaysian key economic performance from 2009 to 2011. In 2011,

the Malaysia economic faced a decrease of GDP to 5.1 per cent, from 7.2 percent in

2010. This resulted from the slowing export following the United States’ economic

performance, the deepening euro debt crisis, global supply chain disruptions resulting

from the earthquake and tsunami in Japan, as well as rising global inflation. In terms of

the sector contribution to Malaysian GDP during 2011, the manufacturing sector

showed slow growth by 4.7 per cent, due mainly to weak export-oriented industries.

The agriculture sector grew at a more moderate pace by 3 per cent following the

29

deceleration in the production of palm oil amidst the onset of a yield down cycle.

Growth in the mining sector was sluggish at -0.3 per cent as a result of a lower natural

gas output (Ministry of Finance Malaysia, 2013). The services sector continued to

expand despite this challenging economic environment with sustained expansion and an

increase of 7.0 per cent. Tourism remained resilient, generating tourist receipts of RM

56.6 billion from 24.6 million tourist arrivals (Tourism Malaysia, 2013b) and in terms

of its GDP contribution, tourism industry showed growth of 6.9 per cent (Economic

Planning Unit, 2012).

Table 2.2: Key Economic Indicators of Malaysian Economy, 2009-2011

2009 2010 2011 Real GDP growth rate (% p.a) 6.0 7.2 5.1

Sector contribution to GDP RM

billion %

growth RM

billion %

growth RM

billion %

growth Agriculture, forestry & fishing 50.1 0.1 51.3 2.4 54.3 5.9

Mining and quarrying 66.4 -6.5 66.1 -0.4 62.3 -5.7 Manufacturing 152.2 -9.0 170.3 11.9 178.3 4.7 Construction 19.3 6.2 20.4 6.0 21.4 4.6 Services 335.0 2.9 359.2 7.2 384.3 7.0 -Tourism industry* 103.4 2.1 111.8 8.0 119.5 6.9

% of labour force Labour force (million) 11.3 12.1 12.6 Unemployment rate 3.7 3.3 3.1 Notes: * Accommodation and restaurant only Source: Economic Planning Unit (2012)

As a highly open economy with strong financial and real economic linkages with the

rest of the world, the Malaysian economy was affected by the global financial

environment. The significant slowdown in global growth is expected to affect the export

sector. However, Malaysia’s better resilience lies in the established strong fundamentals

that have been built up over several years. The continued significant current account

surplus, low external debt, large international reserves and well-capitalised banking

30

system will place the economy in a stronger position to weather future challenging

periods. To mitigate the impact of the weak global growth on the domestic economy,

the Malaysian Government announced the Economic Transformation Programme (ETP)

consisting of initiatives and continuous investment focus on National Key Economic

Areas (NKEAs) that focus on technology-related, services and resource-based industries

(Economic Planning Unit, 2011; PEMANDU, 2013)

2.4 Tourism Organisation in Malaysia

In structuring the tourism development in Malaysia, there are three tiers of government

involvement; Federal government, State government and Local Authorities. The

following section will look into the role of this three-tier organisation in developing

Malaysia’s tourism industry.

2.4.1 The National Tourism Organisation

The development of Malaysia’s tourism industry began in 1972 with the establishment

of the Tourist Development Corporation (TDC) under the Ministry of Trade and

Industry (MITI). In 1987, TDC was shifted under the new ministry: the Ministry of

Culture, Arts and Tourism (MOCAT). The establishment of MOCAT resulted from the

significant contribution of the tourism industry to the national income. Then, in 2004,

MOCAT was split into two ministries: the Ministry of Culture, Arts and Heritage, and

the Ministry of Tourism. The Ministry of Tourism, known as MOTOUR, is under the

federal government, and is responsible for monitoring the development and growth of

the industry as a whole. Figure 2.2 shows the development of MOTOUR in Malaysia.

31

Under MOTOUR, the TDC changed to a new name: the Malaysian Tourism Promotion

Board (MPTB), simply known as Tourism Malaysia. The main role of Tourism

Malaysia is to market and promote the country as a premier tourist destination to the

world. The efforts are geared to increase the number of foreign tourists and to extend

the average length of stay for both local and foreign tourists, through extensive

promotional strategies locally as well as internationally. Tourism Malaysia has offices

in all states and federal territories in Malaysia, 12 Tourist Information Centres in key

tourist attractions in Malaysia, 40 international offices, and eight marketing

representatives in prospective international target markets (see Appendix 2.1) in order

to extensively promote Malaysia as holiday destinations to the world (Tourism

Malaysia, 2013a)

32

Figure 2.2: The Development of MOTOUR Source: Developed by the candidate

Although MOTOUR controls the tourism administration, other related ministries are

also involved directly in tourism development. Figure 2.3 shows the important

ministries and departments engaged with planning, maintaining and controlling tourism

activities in Malaysia.

Ministry of Trade and Industry Tourist Development Corporation (TDC)

1970’s Agency

1980’s

Ministry of Culture, Arts and Tourism (MOCAT)

Tourist Development Corporation (TDC)

Agency

Establishment of new ministry

1990’s

Malaysia Tourism Promotion Board or Tourism Malaysia

TDC changed to a new name

2000’s MOCAT split into two ministries with more specific functions

Ministry of Culture, Arts and Heritage (MOCAT)

Ministry of Tourism

(MOTOUR) Tourism Malaysia

TDC shifted MOCAT in 1987

33

Figure 2.3: Government Departments in Malaysia's Tourism Industry

Development

Source: Modified from Marzuki (2010)

MOTOUR also works closely with other Ministries, namely: the Ministry of Transports;

the Ministry of Entrepreneur and Cooperative Development (MECD); HERITAGE; the

Ministry of Education; the Ministry of Higher Education; the Ministry of Agriculture

and Agro-based Industry; the Ministry of Natural Resource and Environment; and the

Ministry of Youth and Sports. The collaboration with these ministries is intended to

implement national tourism programmes such as the homestay programme, the

Malaysia My Second Home programme, Student Tourism Programme, Education

Tourism, Agro Tourism and Sport Tourism. Table 2.3 lists some tourism programmes

by MOTOUR in collaboration with other related ministries.

Ministry of Tourism -Tourism Malaysia; Policy & Legislation Infrastructure, Promotion

Ministry of Housing & Local Government -Town & Country Planning Department: Prepare local Plan & Structure Plan

Ministry of Science, Tech. & Environment -Wildlife & National Park Department; Wildlife management -Ecotourism Division; Advise government, Identify & Plan programs

Ministry of Primary Industry -Forestry Department; Forest Management

Ministry of Transport -Marine Department; Marine Management

Ministry of Agriculture -Agriculture Department-Fisheries Department

Ministry of Health - Corporate Policy and Health Industry Division; Policy on Medical tourism and related health care products including traditional medicine

Ministry of Higher Education - Educational tourism policy

Tourism in

Malaysia

34

Table 2.3: Collaboration with Other Ministry on Tourism Programmes

Federal Government Tourism Programme Ministry of Higher Education • Student Tourism Programme

• Education Tourism Ministry of Agriculture and Agro-Based Industry • Agro-Tourism Ministry of Youth and Sport • Sport-Tourism Ministry of Health Malaysia • Medical-Tourism Ministry of Health Ministry of Energy, Green Technology and Water

• 1Malaysia Green and 1Malaysia Clean

Source: MOTOUR (2013b)

As the tourism industry in Malaysia is one of the largest industries and employers in

Malaysia, MOTOUR is also responsible for developing the tourism industry in a

sustainable manner and for maximising its potential as a primary and new growth

industry, which in turn generates substantial employment for Malaysians. Thus, besides

planning and developing national tourism products, MOTOUR also provides tourism-

related courses for tourism workers, publics and especially to tourism operators to

increase their competency and competitiveness and to expand the opportunities for

long-term careers in tourism.

Table 2.4 lists the courses provided by MOTOUR in order to provide and support the

human capital with appropriate skills. In 2012, there are 58 MOTOUR registered

tourism training institutes that offer and conduct such courses all over Malaysia

(Ministry of Tourism Malaysia, 2013a). MOTOUR also offered extensive training

supervised by the National Tourism Human Resource Development Council

(NTHRDC) and the National Vocational Training Council (MLVK) to improve the

quality of tourism services. MLVK has developed 77 National Occupational Skills

Standards (NOSS) covering hotel, tourism and travel segments, theme parks and

recreational activities to provide semi-skilled employees to meet the labour force

demand of Malaysia’s tourism industry. According to the 7th Malaysia Plan review, in

35

2005 there are more than 2,500 tourism-related training programmes offered in 113

training places throughout Malaysia (Economic Planning Unit, 2006).

Table 2.4: Courses Programme Provided by MOTOUR

Courses under the Malaysia Welcomes the World Programme 1. Mesra Malaysia 11. Halal Product 2. Think and Act Tourism 12. Marketing 3. Tourism English 13. Train the Trainer 4. Basic Tourist Guide Course 14. Eco-Host Malaysia 5. Local Nature Tourist Guide Course 15. Product Development 6. Homestay 16.Foreign Language 7. Ethics/Communication/Appearance 17. Hygiene Awareness 8. Crisis Management 18. Excellent Customer Service 9. Tourism Awareness 19. Tourist Boat Operating Course

and Courteous Taxi Driver Course 10. Hotel and Services Management

(i.e.. Budget Hotel Efficiency Improvement Course)

Source: Ibrahim (2009)

2.4.2 State Tourism Organisations

Prior to 2002, the tourism industry in Malaysia was largely monitored and controlled by

the federal government. In 2002, state governments requested greater representation in

tourism matters via the State Tourism Action Council (STAC) in each state under

MOTOUR. In 2009, the State Tourism Action Department (STAD) replaced the STAC.

The roles of the STAD include coordinating and monitoring the growth and

development of national tourism products, and making local tourism products and

programmes of each state to become a main sector that is sustainable, viable and

valuable for national tourism products.

MOTOUR and STAD work closely together to generate tourist attractions and attract

both international and domestic tourists to visit Malaysia. They actively promote

Malaysia as a multicultural society and country through the variety of foods, ethnic

36

cultures, and festivals. They also introduced local city excitements as an extension to

Malaysia’s tourism products to develop Malaysia as a key destination in the global

tourism industry. Table 2.5 lists some of the Malaysia’s city excitements promoted and

highlighted by STAD. Each state’s STAD develops its own city attractions that are

supported by MOTOUR to increase tourist arrivals in the state and in Malaysia as a

whole.

Table 2.5: List of Some Key City Excitement Attractions in Malaysia

States Attractions Perlis Padang Besar, Kota Kayang Museum, Snake and

Reptile Farm Kedah Langkawi Cable Car, Klim River Cruise, Langkawi,

Mahathir’s Birthplace, The Paddy Museum Pulau Pinang Cheong Fatt Tze Mansion, Fort Cornwalls, Gurney

Drive,Pulau Pinang, War Museum Perak Kellie’s Castle, Taiping Lake Gardens, Lenggong

Archaeological Museum, Pasir Salah Historical Complex

Selangor Batu Caves, Sunway Lagoon Theme Park, i-City, Kidzania

Kuala Lumpur (Federal Territories)

Petronas Twin Towers, Central Market, KL Tower, Aquaria KLCC, Islamic Arts Museum

Negeri Sembilan Seri Menanti Royal Museum, Rembau Crystal Army Museum

Melaka St. John’s Fort, A’ Famosa, Jonker Walk, Portuguese Square, Baba Nyonya Heritage Museum

Johor Legoland, Endau Rompin National Park, Johor Zoo, Direct Factory Outlet

Kelantan Siti Khadijah Market, Handicraft Village and Craft Museum

Terengganu Tengku Tengah Zaharah Mosque, Terengganu State Museum, Pasar Payang

Pahang Genting Highland, Cameron Highlands Kuala Gandah Elephant Orphanage Sanctuary

Sarawak Sarawak Cultural Village, Longhouse Tours Jalan Satok Sunday Market, Matang Wildlife Center

Sabah Sepilok Orang Utan Sanctuary ,Monkey Tops Safari Labuan (Federal Territories)

Water Village, Tanjung Kubong Tunnel and Chimney, Peace Park

Source: MOTOUR (2013)

.

37

Also, STAD has developed festivals and event celebrations to highlight the diversity in

their local tourist attractions. Each festival events is organised and created based on the

local attractions. For example, the festival in Pulau Pinang is synonymous with the

Chinese culture‘s Hungry Ghost Festival and Dragon Boat Race Festival. Besides that,

the Pulau Pinang Bridge Marathon (promoting Pulau Pinang Bridge, a national

landmark) is an annually held event that successfully attracts both local and

international participants. Other STAD have practiced the same approach, and Table 2.6

lists the festival celebrations held in Malaysia.

Table 2.6: Festivals and Events in Malaysia

States Festival Throughout Malaysia

Visit Malaysia, Merdeka Parade, Malaysia Mega Sales, Malaysia Fest, Eid-Mubarak Celebration, Chinese New Year, Deepavali Celebration

Pulau Pinang Pulau Pinang World Music Festival, Pulau Pinang Hungry Ghost Festival, Pulau Pinang Bridge International Marathon, Dragon Boat Race Festival

Negeri Sembilan Ethnic Arts Festival, ASEAN Regatta Melaka Festival Songket and Batik Melaka, Melaka International Kite

Festival, Anniversary of UNESCO World Heritage City Celebration

Johor Johor Bahru Lantern Festival Terengganu Monsoon Cup Kelantan Cultural Carnival,International Kite Festival Sabah Tamu Besar Festival, Regatta Lepa, Pesta Kalimunan Sarawak Sarawak Regatta, Gawai Sowa Festival, Harvest Festival,

Belaga Regatta and Gawai Dayak, Rainforest Music Festival Labuan (Federal Territory)

Labuan International Sea Challenge

Source: MOTOUR (2013b)

2.4.3 Local Tourism Organisation

Local authorities are established under the Ministry of Housing and Local Government

with the objective to provide and maintain public facilities such as recreational areas,

landscaping areas and garbage disposal services. The local authorities’ tourism-related

projects in each state and the Federal Territories are mainly to improve and beautify the

38

streets such as the Bintang Walk in Kuala Lumpur, the Star Walk in Alor Setar, Kedah,

and the Batu Pahat Walk in Batu Pahat, Johor. These are carried out to create a vibrant

focal point and tourist attraction within cities or towns in each state or Federal Territory

in Malaysia.

2.5 Tourism Policy Planning in Malaysia

The Malaysian government has a three-tier government structure: federal government,

state government and local authorities. These organisations are responsible for

developing tourism strategies as a partial driver for Malaysia’s overall economic

development. This is implemented by preparing the tourism industry’s economic plan,

and strategies and guidelines for the five-year economic plan. Since 1966, the

Malaysian government’s five-year economic plans (better known as the Malaysia Plans)

has been established to implement Malaysia’s overall economic development strategies.

The following sub-sections discuss all ten Malaysia Plans, with particular emphasis on

the strategies and planning pertaining to the tourism industry.

2.5.1 The First Malaysia Plan (1966–1970)

The development of tourism industry was not particularly a concern during the First

Malaysia Plan (1966–1970) (Economic Planning Unit, 1966). During this plan, the

government strategy was to promote the integration of the people of Malaysia and

improve the living conditions in rural areas, particularly among low-income groups. As

the economy was fundamentally primarily commodity-based with heavy dependence on

rubber and tin, the government diversified and modernised its agricultural production.

This stimulated new lines of economic activities in the agricultural and industrial

39

sectors. At this stage, the government’s priority was more on the formation of the basic

facilities.

2.5.2 The Second Malaysia Plan (1971-1975)

After the implementation of the First Malaysia Plan, Malaysia’s economy gained

strength but the deficit in the balance of payments of the country’s foreign exchange

was high (Mohamed, 1995). At the same time the prevalence of poverty and income

disparities between the various ethnic groups exacerbated tensions within the society

(Economic Planning Unit, 1971). As a result, tourism was considered one of the

solutions for decreasing the deficit in the balance of payment, encouraging economic

diversification and eradicating poverty among all ethnic groups, as well as eliminating

the existing racial and spatial imbalance in the Malaysian economy by promoting

greater understanding of the various cultures and lifestyles of the multiethnic

population.

To facilitate the tourism policies designed to meet the Malaysian government’s

objectives on the Malaysian tourism industry’s performance and development, the

Tourist Development Corporation (TDC) was established in 1972 as an agency under

the Ministry of Trade and Industry (MITI). TDC was formed with the following

objectives:

1. To coordinate activities pertaining to the tourism industry conducted by

government and non-governmental bodies,

2. To make recommendations to the government on measures and policies to

be adopted to facilitate the growth of tourism and to implement and assist in

the implementation of approved measures and policies, and

40

3. To generally promote national and international tourism of Malaysia, as well

as to participate in the physical development of the tourism industry in

Malaysia.

To achieve these objectives, TDC set the following targets:

1. To promote Malaysia as a tourist destination at the international and regional

levels,

2. To encourage the growth of domestic tourism,

3. To maintain representational functions and duties on the international as well as

regional levels on matters relating to tourism,

4. To project Malaysia as a convention centre in the region,

5. To monitor and determine present and future requirements of foreign and

domestic tourists as well as recommend desirable land usage strategies for the

purpose of tourism within the development areas,

6. To gather, interpret and disseminate tourism data and information to users of

tourism statistics,

7. To regulate, control and guide the growth of the industry for the best interest of

the country, and

8. To ensure Malaysia’s tourism industry develops in accordance with the

government’s New Economic Policy.

Under the Second Malaysia Plan, the government allocated RM17.2 million for tourism

industry development. The funds were invested in basic tourism infrastructure, such as

highways, airports and tourist sites in all states (Economic Planning Unit, 1971; Musa,

2000). Tourism activities were aimed to increase employment, which would

41

subsequently increase income levels, foster regional development and diversify the

economic base of the country (Khalifah & Tahir, 1997). The TDC developed an

integrated approach to tourism promotion, which reflected the rise of tourist arrivals

into Malaysia and subsequently proved tourism activities as a solution to address NEP’s

objectives.

Besides TDC’s vigorous tourism promotions through its overseas offices and

participation in international tourism conventions, the Corporation also actively

emphasised domestic or local tourism. However, the government paid little attention to

the issues surrounding the negative socio-cultural aspects of tourism. The development

of the tourism industry in Malaysia at this time was not properly organised. Most

tourism economic activities concentrated on the urban centres, particularly Kuala

Lumpur and Pulau Pinang. Traditional destinations or rural areas, primarily those on the

East Coast of Malaysia, Sabah and Sarawak, were given little attention by the

government and no efforts were put into upgrading tourism facilities and accessibility in

these areas. During this period, tourism activities were not fully explored with regard to

the rich cultural and natural attractions.

2.5.3 The Third Malaysia Plan (1976-1980)

Continuing the NEP’s objectives, the Third Malaysia plan emphasised assistance to

enable indigenous groups to participate in the tourism sector. For a start, the

predominantly indigenous populated areas located in the east coast region of Peninsular

Malaysia and Sabah and Sarawak were provided with better facilities for and access to

tourists. This was to raise the incomes of the indigenous and rural population and fully

utilise the rich cultural and natural attractions of the areas. This approach was similar to

42

those embraced by other tourism-oriented countries that have adopted tourism as

economic and social tools to improve national wealth. Thailand, for instance, presented

its ‘colourful’ cultures and tribal lifestyles of ethnic groups from Burma, China and

Laos as its tourism attraction (Andriotis, 2003) in addition to its predominantly

agricultural income.

Under the Third Malaysia Plan, the government introduced a special provision relating

to the hotel industry in the Investment Incentive Act of1968. The Investment Incentive

Act included the granting of pioneer status, location incentives and abatement of

income tax for the establishment of new hotels and expansion and modernisation of

existing hotels (Economic Planning Unit, 1976). The government targeted 1.9 million

tourist arrivals into Peninsular Malaysia with an increase of 5per cent per annum, and

103,000 and 114,000 visitors into Sabah and Sarawak, respectively, by 1980. Besides

increasing promotional activities to achieve the target, a sum of RM 20 million was

provided to TDC to implement a project to establish a company providing management

and consultancy services in the tourism industry, a duty free shop in Pulau Pinang and

the construction of hotels in Kelantan, Johor and Terengganu.

Another promotional effort by TDC during the Third Malaysia Plan was the cooperation

between TDC and the Singapore Tourist Promotion Board, and the National Hotels,

Restaurants and Travel Agents Associations to integrate tourism promotion to increase

tourist arrivals into Malaysia. These aspirations and efforts to improve Malaysia’s

tourism industry for the country’s economic development and racial unity have shifted

Malaysia’s tourism image from the least attractive destination to one of the more

attractive destinations in the region. On May 20, 1987, the Ministry of Arts, Culture and

43

Tourism (MOCAT) was formed, and TDC was transferred from the Ministry of Trade

and Industry to this new ministry. This action was to streamline the roles and

responsibilities of tourism development on a national level.

2.5.4 The Fourth Malaysia Plan (1981-1985)

During this Malaysia Plan, following the success of TDC’s promotion activities in the

Third Malaysia Plan, the Malaysian Government was convinced that the tourism

industry was a significant income-generating sector for the country. This prompted the

government to develop tourist facilities in rural areas, such as the Tanjong Jara and

Rantau Abang projects (tourist destinations for viewing giant leatherback turtles

between May and August) in Terengganu (Economic Planning Unit, 1981)on the east

coast of Malaysia, as well as other projects in rural areas primarily populated by

indigenous people. Approximately RM40 million was allocated for the development of

a tourist complex at Tanjung Rhu in Pulau Langkawi, Kedah and the expansion of

Rantau Abang Visitor Centre in Terengganu (Economic Planning Unit, 1981).

Following the advice of foreign tourism consultants, TDC concentrated marketing

efforts on selected major markets (namely Japan, Australia, Hong Kong, New Zealand,

Germany and the United Kingdom) and explored new potential markets such as West

Asian countries, France and the U.S.A. This targeted marketing is a common practice

among tourism countries to raise revenue. Singapore, for instance, made provisions for

the Japanese market and addressed Japanese tourists’ preference such as room

requirements, food preferences and language difficulties (Din, 1982). These efforts

succeeded in increasing tourism revenues from the selected markets.

44

Within this period, the Malaysian government liaised with air transportation authorities.

TDC and the Malaysian Airline System (MAS) undertook joint promotional efforts to

promote Malaysia abroad. Their joint venture was a huge success. The growth in the

number of tourist arrivals and receipts were substantial. To promote a safe environment

for tourists, the Tourist Police Unit was established under the Royal Malaysian Police

during the Fourth Malaysia Plan. This effort was put forward to ensure tourists’ welfare,

safety and security.

2.5.5 The Fifth Malaysia Plan (1986-1990)

During the Fifth Malaysia Plan, Malaysian tourism policies focused on domestic

tourism to reduce foreign exchange outflows. The government noted a lack of tourism

promotion in the domestic market, and this led to an increasing number of Malaysians

travelling outside the country. Foreign exchange outflows increased from RM807

million in 1980 to RM1,525 million in 1984 (Andriotis, 2003). As a result, besides

actively promoting Malaysia to the international market, the Malaysian government also

put more promotional efforts on the domestic market.

Tourism promotion strategies during this period were based on four themes:

conventions, vacations, sightseeing and special interests. The completion of the Putra

World Trade Centre during this plan intensified Kuala Lumpur as the principal

convention centre and destination. Meanwhile, other destinations were promoted as

secondary destinations for smaller forums and exhibitions. The sightseeing theme

focused on the major cities of Kuala Lumpur, Georgetown in Pulau Pinang and Melaka.

The special interest campaign was promoted toward the national parks, caves and hills,

particularly the National Park in Peninsular Malaysia, the Kinabalu National Park in

45

Sabah and the Niah National Park in Sarawak. Concise and informative state and city

maps and guidebooks were produced and introduced by TDC during this period.

In terms of encouraging the private sector to participate in the tourism industry, tax

incentives under the Hotel Incentives section of the Investment Incentives Act (1968)

was further extended to both accommodation and non-accommodation projects. The

non-accommodation projects included investments in safari parks, zoos, recreation

centres and children’s playgrounds. Under the accommodation project, a new set of

incentives was created for two additional types of economy-priced accommodations:

lodging houses and rest houses (Economic Planning Unit, 1986).

Despite the short- to medium-term effects of the world economic slowdown and post

Gulf War scenario, the Malaysian government continued its emphasis on tourism

promotion and its resilient economy augured well for the long-term growth of its

tourism industry. The Malaysian government set up the Malaysian Tourism Promotion

Board (MTPB), also known as Tourism Malaysia to undertake the roles and

responsibilities previously carried out by TDC. The primary objective of MTPB is to

stimulate and increase the number of tourist arrivals into the country. In pursuit of this

objective, Tourism Malaysia continues to serve the needs of the tourism industry and to

spearhead marketing and promotional activities to place Malaysia on the tourism map.

2.5.6 The Sixth Malaysia Plan (1991-1995)

In the Sixth Malaysia Plan, the Malaysian government increased tourism allocation to

RM533.9 million, which was later revised to RM719.1 million during mid-term review

(Economic Planning Unit, 1991). The additional allocation was mainly to improve and

46

expand tourism facilities and infrastructure. During this period, tourism and distributive

trade grew at a double-digit rate (surpassing the original target), and contributed

significantly to greater output, investment and employment. Within the overall strategy

of improving the balance of payments accounts, tourism became an important foreign

exchange earner. This was largely attributed to the development of new and improved

tourism products, and an increase in accessibility to tourist destinations as well as

enhanced promotion and marketing efforts. The distributive trade sector continued to

provide a wide range of products at competitive prices to consumers in line with the

Government’s policy of maintaining stable prices for essential goods and services. This

was further facilitated by increased modernisation, which led to a more efficient

distributive system.

Besides granting various incentives to promote tourism investment, such as pioneer

status, investment tax allowance and income tax exemption for tour operators, the

Government established the Special Fund for Tourism, which was a revolving fund

amounting to RM200 million. Small and medium sized tourism related projects such as

motel and hotel renovations were eligible for soft financing under the Fund. By the end

of 1995, about RM206.1 million was used to finance 182 tourism-related ventures

(Economic Planning Unit, 1991).

In 1992, the Government established the first National Tourism Policy (NTP),

consisting of broad policies for the planning, development and marketing of tourism.

The policy objectives in NTP were used as the guiding principles to generate foreign

policies, encourage equitable economic and social development, promote rural

enterprises, generate employment, accelerate urban/rural integration and cultural

47

exchange, encourage participation in the tourism sector by all ethnic communities, and

ultimately forge national unity and create an improved image of Malaysia

internationally. The policy also emphasised the “sea, sand and sun” market segment of

Malaysia’s tourism industry. The focus was on tourism product development, including

fly-drive holidays, riverine tourism, eco-tourism, agro-tourism, cultural and heritage-

based tourism, Meeting, Incentive, Convention and Exhibition (MICE) and special

interest tourism. In general, the policy aimed on exploring on the country’s diverse

nature- and culture-based attractions. Besides, NTP also recommended promoting

Malaysia as a shopping destination. This was exemplified by the heavy investments in

promoting Malaysia as a shopping haven through nationwide Mega Sale carnivals.

During the same year, Malaysia increased its cooperation with ASEAN’s national

tourism authorities to promote multi-destination travel to the region. The inauguration

of “Visit ASEAN Year 1992” was an example of cooperative marketing by tourism

agencies of the six-member ASEAN countries (Malaysia, Thailand, Indonesia, Brunei,

the Philippines and Singapore). To continue promoting Malaysia, 1994 was designated

“Visit Malaysia Year” to follow the same campaign success in 1990.

2.5.7 The Seventh Malaysia Plan (1996-2000)

For the Seventh Malaysia Plan, tourism development focused on expanding the range of

activities, products and markets, thereby contributing further to foreign exchange

earnings and savings. Distributive trade continued to be modernised and rationalised in

line with changing consumer preferences and this took into account increasing foreign

investment in this sector. During the Seventh Plan, the tourism sector focused on

improving existing strategies as well as introducing new ones which would enhance the

48

image of Malaysia as a highly diversified and competitive tourist destination (Small and

Medium Enterprise Corporation Malaysia, 2011). The strategies included:

1. Diversifying into new products and services to cater for the varying demands

and interests of international and domestic tourists,

2. Ensuring more effective promotion and marketing for both the foreign and local

markets,

3. Encouraging private sector investment and participation in innovative tourism

products as well as special projects and events,

4. Increasing the involvement of the local population, especially small

entrepreneurs, in the development of distinct and localised tourism products and

services,

5. Improving and facilitating access into and within the country,

6. Providing the requisite infrastructure and amenities at designated tourist sites,

and

7. Focussing on formal as well as on-the-job skills training in order to meet the

rising manpower demand.

However, between 1997 and 1998, Malaysia’s tourism industry was substantially

affected by a series of uncontrollable factors. In 1997, tourist arrivals from Singapore

(Malaysia’s biggest market) dropped due to the dispute of an agreement of railway

services and tourism promotion between Malaysia and Singapore. Soon after that, the

dengue outbreak, the Coxsackie B virus and the cholera epidemic all descended on

Malaysia. Indonesia’s mass forest burning also adversely affected Malaysia. As a result,

Malaysia suffered 30 to 40 per cent holiday cancellations. The incidents and

49

subsequently the economic downturn not only affected Malaysia, but the Asian region

as a whole.

In 1998, the National Economic Recovery Plan was established to stimulate Malaysia’s

economy. The tourism industry faced many issues such as increasing competition from

developing countries like Vietnam, Cambodia, China and India. At the same time,

Thailand, Singapore and Hong Kong launched aggressive promotion efforts to attract

tourists, while Malaysia slashed its tourism promotional activities for economic reasons.

The Government reduced the tourism budget from RM 79 million in 1997 to RM 63

million in 1998. Furthermore, currency depreciation also hit Malaysia’s main tourism

markets such as Japan, Thailand and Indonesia, and caused tourist arrivals from these

regions to decline.

2.5.8 The Eighth Malaysia Plan (2001-2005)

Following the economic slowdown and the success of the National Recovery Plan,

Malaysia’s tourism industry recovered. With limited financial resources, Malaysia

devised strategic plans and effective promotions through the use of electronic media.

Marketing and promotional efforts were focused on countries that were not heavily

affected by the regional economic downturn. Australia, Hong Kong, Taiwan, India,

China, Europe, the USA and West Asia all helped to boost tourist arrivals into the

country.

During the Eighth Malaysia Plan, the Government’s tourism development allocation

reached RM 1 billion. According to Malaysia’s Prime Minister’s Department (2008),

the allocation focussed on a combination of programmes that projected maximum

50

returns to the industry and economy. The major programmes that were implemented

included the preservation and conservation of national historical sites, beautification

and environment protection, tourism product development as well as the provision of

medium budget accommodation and tourism-related infrastructure facilities.

During this period, the Government identified specialised products and services for the

tourism industry. Eco-tourism, agro-tourism, homestay programmes, cultural heritage

tourism, thematic events, MICE (for conventions), sports and recreation, educational

tourism, and Malaysia My Second Home programme were intensified to increase tourist

arrivals, expand tourists’ lengths of stay and boost tourists’ spending. The Eighth

Malaysia Plan saw the development of a more robust tourism industry, contributing to

greater foreign exchange earnings as well as generating new businesses and

employment opportunities.

In 2001, the Rural Tourism Master Plan was established by MOCAT. Its objective was

to target increased visitor spending in rural areas through long stay/high spending to

create a new brand of tourist experience. This was to be achieved by building the two

main strengths of Malaysia: its beautiful countryside and friendly people. The Master

Plan featured attractive scenery of a lush tropical landscape, offered activities and

amenities for tourists to utilise and enjoy safely, provided new and improved

accommodations and nurtured a smiling, friendly customer care approach. A few

priority districts (one in each state) were carefully selected as pilot model areas with

recommended improvement in rural tourism infrastructure (MOCAT, 2001). This plan

would cost RM 75 million for Rural Tourism Product Development and RM 5 million

51

for Human Resource Development over a five-year period, but its implementation was

delayed due to financial constraints (Hamzah, 2004; MOCAT, 2001) .

Later in 2003, the Second National Tourism Policy (2003-2010) was designed to

emphasise Malaysia’s unique multiculturalism as its major selling point. Its main output

is to provide the mechanism to transform Malaysia’s low-yield tourism to that of high

yield. Intra-region cooperation was seen as a major course of action in increasing

tourism receipts (Hamzah, 2004).

2.5.9 The Ninth Malaysia Plan (2006-2010)

For the Ninth Malaysia Plan, the government strengthened Malaysia’s position as the

preferred global tourist destination to ensure that the tourism industry continued to be

an important source of foreign exchange earnings, entrepreneurship development and

employment generation. A more integrated approach to tourism planning and

implementation was implemented. Emphasis was placed on preserving and enhancing

existing natural and cultural assets that are susceptible to environmental damage. As

such, to implement the strategies under this plan, the government formulated

sustainable tourism development, enhancing the development of innovative tourism

products and services, encouraging and facilitating domestic tourism, intensifying

marketing and promotion activities, enhancing human resource development, and

ensuring the comfort, safety and wellbeing of tourists.

Besides specialised tourism products and services (i.e., eco-tourism, agro-tourism

etc.),which were intensified in the previous Malaysia Plan, the Government also

initiated efforts to promote Malaysia as a preferred location for feature films, television

52

commercials and documentaries. The Government’s objective with this new tourism

product, the Film and Media Location was the additional avenue for international

publicity and exposure for many of Malaysia’s holiday destinations and tourist

attractions (Economic Planning Unit, 2006).

The Government’s development allocation for the tourism industry under the Ninth

Malaysia Plan increased to RM 1.8 billion. The Government focused on the provision

of adequate infrastructure, largely upgrading and maintaining tourism-related facilities

and amenities. Attention was also given on improving location accessibility through

improved air and surface transport, including hassle-free travel with online visa

applications and multiple entry permits. Flight frequencies and capacities between

Malaysia and specific markets were increased to facilitate inbound travellers. The

liberalisation of air services in the ASEAN region in 2008 allowed greater access to

ASEAN capitals, thus increasing regional travels, which showed significant increase of

tourist arrivals from ASEAN countries. The Government also expanded the Kota

Kinabalu Airport in Sabah as the nation’s second Low Cost Carrier (LCC) terminal

after KLIA.

Under the Ninth Malaysia Plan, the Government also realised the importance of having

the Tourism Satellite Account (TSA) to quantify the contribution of the tourism

industry to economic growth, income and investments. TSA also supported subsequent

policy making and readjustment of strategies and programmes for the tourism industry.

Thus, the government developed TSA mechanism to ensure an integrated approach in

project planning and implementation (Economic Planning Unit, 2006).

53

2.5.10 The Tenth Malaysia Plan (2011-2015)

The Tenth Malaysia Plan is the current recent Malaysia Plan. It recognises the

importance of the tourism sector as a driver of economic activity that will contribute

towards the growth and distribution of wealth to the economy. The Tenth Malaysia

Plan’s target is to improve Malaysia’s position to be in the top 10 in terms of global

receipts, and to increase the sector contribution by 2.1 times, contributing RM115

billion in receipts by 2015 (Economic Planning Unit, 2011). Key strategies include:

catering to the various market segments, whilst leveraging existing tourism products

such as the Pulau Pinang and Kinabalu Park, Sabah (which has been classified as a

UNESCO Heritage site).

In addition, the tourism sector focuses on eco-tourism (as the country has a comparative

advantage arising from Malaysia’s natural resource endowment), while ensuring the

quality and sustainability of the tourism products. Arising from this, Malaysia hopes to

be able to establish and capture a greater share of the global tourism market, especially

in eco-tourism. This would be accomplished via domestic and regional partnerships as

start up and running costs can be low compared to many other forms of industry

development.

The Performance Management and Delivery Unit (PEMANDU) identified tourism

amongst the 12 National Key Result Areas (NKRAs). These are national priority areas

of focus identified under the Government Transformation Programme (GTP). The goal

of the Tourism NKRA is to formulate initiatives to transform the nation into a high-

income economy though it’s Economic Transformation Programme (ETP).

54

PEMANDU has identified twelve big Entry Point Projects (EPPs) on tourism industry

that could possibly generate RM28 billion in GNI and create another 200,000 new jobs

by 2020. The EPPs are based on five travel themes, i.e. nature adventure and culture

diversity, family, luxury, events and business related which comprises of meetings,

incentives, conventions and exhibitions (MICE). The success of the EPPs includes

support from both the private and public sector in funding and supportive policies from

the federal and state government. Such funding would include the corporate sponsorship

from the private sector in maintaining the heritage sites and involved in marketing to

target growth markets especially Russia, India, China and the Middle East.

The above discussion has look through the economic development strategies

implemented in all ten Malaysia Plans. During these Malaysia Plans, Malaysian

government has developed three specific policies focused on tourism development

which bring great impact to the industry – National Tourism Policy (1992), Rural

Tourism Master Plan (2001) and Second National Tourism Policy (2003-2010). Table

2.7 below provides a summary of the Malaysian government’s tourism-specific

initiatives undertaken during each plan.

55

Table 2.7: Malaysia's Tourism Specific Economic Planning and Initiatives, 1965-

2015

Malaysia Plan Tourism-Specific Initiatives

Budget Allocation

(RM Billions)

Impact on tourism industry

Tourist Arrivals (Billions)

Tourist Receipts

(RM Billions)

1st Malaysia Plan (1965-1970)

No initiatives on tourism No allocation

N/A N/A

2nd Malaysia Plan (1971-1975)

• Provision of basic tourism infrastructure • Establishment of Tourist Development

Corporation (TDC)

0.0085 1.4 0.02

3rd Malaysia Plan (1976-1980)

• Establishment of management and consultancy services for tourism

• Special provision for hotel industry, location incentives and abetment of income tax for new hotels and expansion of existing hotels

0.02 2 0.06

4th Malaysia Plan (1981-1985)

• Improvement of facilities located at all key tourism destinations

• TDC liaisons with Malaysia Airlines (MAS) undertook joint-promotional strategy

0.04 3.1 0.10


• Intensification of domestic tourism campaign • Focused on four-themed campaign;

conventions, vacations, sightseeing and special interest.

0.14 7.4 0.90


• Establishment of a special fund for tourism; small and medium-sized related projects

• National Tourism Policy (1992)

0.53 7.4 0.90


• Expansion of a range of tourism activities, products and markets

0.60 10.2 17.3

• Focus on innovative tourism products and services


• Transition from low yield to high yield- to increase the expenditure yields of tourist while in Malaysia

• Rural Tourism Master Plan (2001) • Second National Tourism Policy (2003-2010)

1.09 16.4 32.0


• Increase of flight frequencies and liberalization of air services in ASEAN region

1.8 24.6 56.5


• Intensification on 5 travel themes ; nature adventure and culture diversity, family, luxury, events and business related which comprises of MICE

9.7 N/A N/A

Source: Economic Planing Unit (1966, 1971, 1976, 1981, 1986, 1991, 1996, 2006, 2008,

2011), Tourism Malaysia (2013b), Marzuki (2010)

56

2.6 Tourism Industry Performance in Malaysia

The tourism policies developed and implemented by the Malaysian government through

Malaysia’s five-year strategic plans since the Second Malaysia Plan (1971–1975) have

resulted in positive achievements in Malaysia’s tourism industry. The combination of

the unique features of Malaysia’s geographical structures, its natural resources and its

multiracial and multicultural society has become the competitive advantage for the

Malaysian tourism industry. It has successfully outperformed other destinations,

particularly the Southeast Asian countries in receiving international tourists and this has

contributed to its national foreign exchange earnings.

In comparison with other Southeast Asian countries, Malaysia is a latecomer to the

industry. Other Southeast Asian countries have been actively promoting their tourism

industry since the 1950s. For example, the Philippines formed its Board of Travel and

Tours Industry in 1956, while both Thailand and Singapore established their tourism

boards in 1960 and 1964 respectively. Conversely, Malaysia established its TDC in

1972 to promote Malaysian tourist destinations.

From the Second Malaysia Plan (1971–1975) to the most recent Tenth Malaysian Plan

(2011–2015), the Malaysian government has concentrated a great deal on the

development of the tourism industry in Malaysia. The provision of basic tourism

infrastructure and the establishment of TDC during the Second Malaysia Plan (1971–

1975) resulted in significant growth in the Malaysian tourism industry. It grew from

attracting fewer than 500,000 tourists in the beginning of 1970, to receiving an increase

of more than 305 per cent to 1,529,915 tourists, with total receipts of RM 619 million in

1980. According to the TDC, the Asian region continues to be the major contributor of

57

visitors to Peninsular Malaysia, accounting for 57.4 per cent of the overall tourists to

Peninsular Malaysia.

Another significant effect of Malaysia’s tourism polices is on arrivals from international

tourists. Resulting from improvements on facilities and joint promotional strategies with

Malaysia Airlines Systems (MAS) targeting the international market during the Fourth

Malaysia Plan (1981–1985), total international tourist arrivals to the country increased

from fewer than 2 million in 1980 to more than 2.9 million over between 1981 to 1985

period. Tourist receipts also increased from RM 618.9 million in 1980 to RM 1,412.3

million in 1985 (Tourism Malaysia, 2013b). Table 2.8 depicts the number of

international tourist visits to Indonesia, Malaysia, Philippines, Singapore and Thailand

during 1967 and 2011. Malaysia recorded the lowest number of international tourist

arrivals in 1967, lagging behind Thailand, Singapore, Philippines and Indonesia.

However, in 2011, Malaysia received the highest influx of international tourists.

Table 2.8: International Tourist Arrivals to Southeast Asia, 1967 and 2011

Destination 1967 (Millions)

2011 (Millions)

Indonesia 0.032 7 Malaysia 0.025 24.7 Philippines 0.120 3.5 Singapore 0.150 11.6 Thailand 0.261 19.1

Source: Din (1982), Singapore Tourism Board (2013), Ministry of Tourism and Creative Economy of The Republic of Indonesia (2013), Department of Tourism, Philippines (2012), Office of Tourism Development, Thailand (2012) Tourism Malaysia (2013c)

Table 2.9 demonstrates that the industry has performed favourably throughout the years,

as reflected by the growth of tourist arrivals and expenditures based on the proportion of

the international target market. ASEAN countries constitute the largest source of

tourists and account for more than 70 per cent of total tourist arrivals into Malaysia

58

particularly from Singapore, Indonesia, Thailand and the Philippines. This resulted from

extensive promotion to international markets. Further, the prosperity and high economic

growth rates of Asian countries encouraged regional travel (Chon, Singh & Mikula,

1993).

Throughout the 1990s, the volume of tourist arrivals into Malaysia grew by 53.6 per

cent to 7,445,908, and total tourist receipts reached RM 4.5 billion. This was principally

attributed to the Visit Malaysia Year 1990 campaign during the Fifth Malaysia Plan

(1986–1990). The Visit Malaysia Year 1990 campaign generated substantial awareness

and recognition of Malaysia as a leading tourist attraction and foreign investment

destination among foreign holidaymakers and business tourists. In 1995, there were

arrivals in Malaysia of tourists from West Asia. This resulted from the Islamic tourism

promotion implemented by MOTOUR to encourage the Muslim community to visit

Malaysia (Tourism Malaysia, 2013c).

The Malaysian tourism industry was affected during the economic turmoil from 1997

until 1999. However, actions were taken and recovery was made because of successful

strategies implemented by the Malaysian government through the National Economic

Recovery Plan. The Malaysian government re-focused its international market to the

countries less affected by the regional economic downturn such as Australia, India,

China, countries in Europe, the United States and countries in West Asia. This approach

has successfully increased the number of visitors from such countries. Other strategy

was to increase international tourist’s expenditure while in Malaysia. Then, during the

Eighth Malaysia Plan (2001–2005), the focus was to increase the expenditure yields of

tourism in Malaysia (Economic Planning Unit, 2001). Thus, the expansion of tourism

59

activities, products and services shows an increment from RM 0.05 billion in 1980 to

RM 72.6 billion of tourist expenditure in 2011, as indicated in Table 2.9.

Table 2.9: Tourist Arrivals into Malaysia by Country of Origin, 1980 - 2011

Indicator 1980 1985 1990 1995 2000 2005 2011 Number of Tourist Arrivals (million)

2.25 3.22 7.4 7.5 10.2 16.4 24.7

Tourist Expenditure (RM,billion)

0.05 0.1 0.7 2.4 23.6 41.1 72.6

By Country of Origin (per cent)

ASEAN 70.2 76.7 73.8 72.9 70.4 76.8 76.6 China - - - - 4.2 3.8 4.6 Japan 3.8 3.9 6.8 5.8 4.5 1.9 1.7 Australia 3.7 2.7 2.0 2.0 2.3 1.5 2.4 United Kingdom 2.5 2.5 2.6 2.3 2.3 1.5 1.7 Taiwan 0.9 0.4 0.8 1.6 2.1 1.3 0.8 India 1.7 1.8 n/a n/a 1.3 1.2 2.8 West Asia - - - 11.5 0.5 1.0 0.9 Others 16.8 11.9 14.8 17.0 12.4 11.0 8.5

Source: Economic Planning Unit (1986, 1996), Tourism Malaysia (2013c)

The industry not only creates considerably high multiplier effects and linkages in the

Malaysian economy, but it also fosters national integration and unity (GOM, 1991).

Presently, with continuous efforts to stimulate tourism industry performance, the

tourism industry in Malaysia has become the second highest foreign exchange earner to

the national economy and is experiencing tremendous growth from year to year. The

revenue earned from international tourism plays a pivotal role in directing the

Malaysian economy to higher growth (Sadi & Bartels, 1997).

2.7 TSMEs in Malaysia

The continuous efforts to stimulate the tourism industry by the Malaysian government

has created a positive effect on the business activities of TSMEs. With the increase in

international tourist arrivals, the tourism industry has created business potential and

60

diversification of tourism products and services, particularly by TSMEs in MalaysiaIn

Malaysia, SMEs contributed only 28.5 per cent to the country’s Gross Domestic

Product (GDP) in 2010 compared to the same firms in Singapore and Canada, which

contributed over 50 per cent of their countries’ GDP (Industry Canada, 2013; Spring

Singapore, 2013). Nevertheless, SMEs in Malaysia form the bulk of the businesses in

three major sectors in Malaysia: manufacturing, services and agriculture. Based on the

recent Economic Census Survey 2011, with the reference year 2010 conducted by the

Malaysian Department of Statistics (2011), there are 645,136 SMEs, representing 97.3

per cent of total businesses in 2010 and providing employment to 52.7 per cent of the

total workforce. Table 2.10 lists the key indicators of SMEs in the country for 2010.

Table 2.10: Key Indicators of SMEs in Malaysia, 2010

Indicators Total Large SMEs Number of establishments 662,939 17,803 645,136Gross output (RM million) 1,777,317 1,270,228 507,089Value added (RM million) 707,489 493,568 213,921Employment (persons) 6,963,973 3,294,714 3,669,259

Percentage (%) Number of establishments 100.0 2.7 97.3Gross output 100.0 71.5 28.5Value added 100.0 69.8 30.2Employment 100.0 47.3 52.7

Source: Department of Statistics. Census 2011(2012b)

Table 2.11 presents the distribution of SMEs in Malaysia according to sector. Many of

the SMEs in Malaysia are in the services sector, with more than a third of the firms

involved in the tourism industry in 2010. SMEs in the manufacturing and agricultural

sectors make up more than 86.6 per cent of overall SMEs in 2005, and increased to 90

per cent in 2010 (Department of Statistics, 2012b).

61

SMEs in the services sector, particularly in the tourism industry increased from 100,637

firms (or 21.1 per cent of overall SMEs) in 2005, to 239,110 firms (41.1 per cent of

growth) in 2010. Thus, TSMEs make a significant portion of SMEs in Malaysia, and

play a big role as the backbone in Malaysia tourism industry.

Table 2.11: Distribution of SMEs by Sectors, 2005 and 2010

Sector 2005 % 2010 % Manufacturing 39,373 7.2 57,144 8.9 Agriculture 34,188 6.2 7,007 1.1 Services: -Other services 374,069 68.2 341,875 52.9 -Tourism services 100,637 18.4 239,110 37.1

Total 548,267 100.0 645,136 100.0 Source: Malaysian Department of Statistics, Census 2005, 2011 (2012b; 2006)

Generally, the investment by the government during the Malaysian Plans particularly

the Sixth, Seventh and Eighth Malaysia Plans has played an important role in the

growth of TSMEs because Malaysian government aggressively invested in hotels and

relevant tourism and recreation projects. Government investment increased to RM 8.8

billion in the Sixth Malaysian Plan (1991–1995), and to RM 18.2 billion during the

Seventh Malaysian Plan (1996–2000) (Economic Planning Unit, 1991, 1996). During

the Seventh Malaysian Plan (1996–2000), the government implementation of the

expansion of a range of tourism activities, products and marketing by spending RM

484.2 million increased the number of middle-cost hotels operated by TSMEs

(Economic Planning Unit, 1996). This was the result of the need to support the

increasing demand from both and foreign domestic tourists because of the aggressive

actions taken by the government to increase the number of tourists in Malaysia. The

number of small-sized and medium-sized hotels increased from 1,220 in 1996 to 1,492

in 2000, the average hotel occupancy also increased by 55 per cent in 2000 because of

this aggressive action (Economic Planning Unit, 2006

62

In line with the country’s vision to become a developed country by 2020 (Economic

Planning Unit, 1991), the Government realises the importance of developing a group of

diverse and competitive SMEs as a fundamental part of the national economy including

in tourism industry. The Government is committed to develop competitive and resilient

SMEs across all sectors, and an SME development framework has been developed and

implemented during the Second Industrial Master Plan (IMP2) (1996–2005) in 1996

(MITI, 1996). Following on this commitment, under the Eighth Malaysia Plan (2000-

2005), the Government provided a wide range of assistance programmes for TSMEs

(Economic Planning Unit, 2008). Under the 15-year blueprint of the Third Industrial

Master Plan (IMP3) (2006-2015), the Government outlined five strategies particularly

focused to support the development of diverse and competitiveness of SMEs in all

sectors (MITI, 2006; Small and Medium Enterprise Corporation Malaysia, 2011) .

These national development agendas are geared to SMEs in all sectors in the country’s

stride towards broadening the sources of growth and sustaining the growth momentum.

These SME policies have contributed to significant growth on TSMEs from 2005 to

2010, as indicated in Table 2.13. TSMEs in Malaysia are engaged in tourism-related

businesses. They offer tourism products and services, and have unique characteristics

compared to tangible manufactured products. Following the guidelines introduced by

international organisations such as the United Nations World Tourism Organization

(UNWTO), Eurostat, and the Organization of Economic Co-Operation and

Development (OECD), the Malaysian Government applies the Tourism Satellite

Accounts (TSA) to characterise tourism-specific products from suppliers’ perspectives.

The categorisation of tourism products are as follows:

• accommodation services,

63

• food and beverage serving services,

• passenger transport services,

• travel agency, tour operator and tourism guide services,

• cultural services, recreation and other entertainment services, and

• miscellaneous tourism services (i.e., Personal care and salus Per Aqua (SPA),

camping sites, Zoo, museum and theme parks).

Table 2.12 presents TSMEs activities in 2010. TSMEs are the backbone of the

country’s tourism industry with 239,110 active establishments. There are 142,721 firms

(59.7 per cent) offering food and beverage services, 40,025 firms (16.7 per cent)

offering transportation services and other miscellaneous tourism services. Meanwhile

,accommodation services; arts, entertainment and recreation services; and travel agency,

tour operator and tourism guide services are offered by 19,643 TSMEs (8.2 per cent of

total TSMEs).

Table 2.12: Distribution of TSMEs, 2010

TSMEs % Accommodation services 2,817 1.2 Transportation services 40,025 16.7 Art, entertainment and recreation services 6,217 2.6 Food and beverage service 142,721 59.7 Miscellaneous tourism services 36,721 15.4 Travel agency, tour operator and tourism guide services 10,609 4.4

TOTAL 239,110 100.0 Source: Malaysian Department of Statistics, Census 2011(2012b)

Table 2.13 compares TSME performance indicators with those of other SMEs in the

services sector in Malaysia in 2010. TSME gross output was relatively low at RM

70,846 (24.7 per cent of total output) compared to that of other SMEs in the services

sector (RM215,794 million or 75 per cent of total output). TSMEs contributed

64

RM31,043 (18.7 per cent of total value added). In 2010, of the 2.6 million workers in

SMEs in the services sector, TSMEs employed about 991,419 workers (38.1 per cent of

total employment in SMEs in the services sector). The tourism industry employs more

than a third of employees in the services sector, is the second highest earner in foreign

exchange and national income (MOTOUR, 2011). TSMEs thus play a big part in

contributing income to the industry and the nation.

Table 2.13: Key Performance Indicators of TSMEs, 2010

Source: Malaysian Department of Statistics, Census 2011(2009, 2012b)

Table 2.14 shows the number of TSMEs based on size in 2003 and 2010. The number

of TSMEs establishments showed an apparent increase from 2003 to 2010. One of the

factors that contribute to this increase are the Government’s incentives such as the

special fund for tourism on SMEs-sized related projects during the 6th Malaysia Plan

(1991 – 1995) and the range of tourism activities, products and markets during the 7th

Malaysia Plan (1996 – 2000). The tourism industry saw an increase of more than 80 per

cent of establishments of various sizes. The dominance of micro-sized firms in the

tourism industry in 2003 continued in 2010, with 66.1 per cent and 83.8 per cent of

micro firms respectively. In terms of the proportion of small and medium-sized

enterprises, in 2010 the percentage is getting smaller compared to 2003.

Indicators

Total SMEs in the Services

Sector TSMEs Other SMEs

services

Total % Total % Total % Number of establishments 580,985 100.0 239,110 41.1 341,875 58.9 Gross output (RM million) 286,640 100.0 70,846 24.7 215,794 75.3 Value added (RM million) 165,284 100.0 31,043 18.7 134,241 81.3 Employment (persons) (million) 2,600,000 100.0 991,419 38.1 1,608,518 61.9

65

Table 2.14: Distribution of TSMEs by Size, 2003 and 2010

Source: Malaysian Department of Statistics, Census 2011(2012b)

2.8 Concluding Remarks

This section has discussed the multiethnic population, culture, and natural attractions of

Malaysia that have served as Malaysia’s competitive advantage in positioning Malaysia

as the best worldwide holiday tourism destination. To develop and sustain the tourism

industry’s performance in Malaysia, the Malaysian government has played the vital role

in planning, gearing and developing the industry. The government has implemented

various and continuous tourism-specific initiatives through its five-year economic plans

since the Second Malaysia Plan (1971–1975) until the recent Tenth Malaysia Plan

(2011–2015).

The Sixth Malaysia Plan (1991–1995) played a particularly prominent role in

developing the tourism industry in Malaysia because of the establishment of the first

National Tourism Policy (NTP), which served as the guiding principle for planning,

developing and marketing the tourism industry in Malaysia. The National Eco-tourism

Plan (1996) was established during the Seventh Malaysia Plan (1996–2000); the Rural

Tourism Master Plan (2001) was established during the Eighth Malaysia Plan (2001–

2005); and the second NTP (2003–2010). Each of these tourism-specific policies was

established to focus on the needs to increase tourism industry performance based on

tourism products and services.

Size 2003 2010 Total % Total %

Micro 7,233 66.1 200,402 83.8 Small 3,033 27.8 35,098 14.6 Medium 674 6.1 3,610 1.6 Total TSMEs 10,940 100.0 239,110 100.0

66

Besides focusing on tourism products and services, the Malaysian government has

acknowledged the importance of TSMEs in the tourism industry’s performance. Lists of

financial and non-financial programmes have been established to equip TSMEs’

performance. This action was taken to further prosper Malaysian TSMEs’ performance

and to increase business longevity to realise the government’s plan for the tourism

industry in Malaysia.

67

CHAPTER THREE

LITERATURE REVIEW

3.1 Introduction

The tourism industry’s business environment is continuously changing due to global

phenomena such as the transformation of information technology, terrorism, global

warming and natural disasters. These factors have increased the demand for

environmentally friendly holidays, and differentiated and niche tourism products for

travellers. These significant changes in the tourism industry have contributed to

increased competition among tourism firms, particularly TSMEs. The management and

operation of TSMEs has changed quite dramatically. The implication of these changes

has created a demand for TSMEs to seek manners in which to increase their competitive

advantage to survive in the tourism industry’s business environment.

Despite the low survival rate among TSMEs, based on the empirical studies, TSMEs

have been acknowledged for the role they play in economic contribution and social

development. Thus, government intervention is crucial to support TSMEs’ performance.

As discussed in Chapter 2, the Malaysian government has implemented extensive

tourism economic development plans to support TSMEs’ performance to realise the

country’s tourism industry growth. There is a range of factors, both internal and

external, that influence the performance and development of TSMEs. Therefore,

determining which factors are influential is crucial for TSMEs’ survival and

performance.

The aim of this chapter is to provide a theoretical platform for the analysis of factors

affecting the performance of TSMEs. First, the chapter begins by providing definitions

68

to classify SMEs in Section 3.2. Next, this chapter discusses on the contribution of

TSMEs to the community development and national income in Section 3.3. It then

discusses the TSMEs challenges in Section 3.4. The theoretical platforms of TSME

performance are discussed in Section 3.5. Next, the chapter provides an overview of

empirical studies in both internal and external factors affecting the performance of

TSMEs in Section 3.6. After describing the theoretical platforms and empirical studies

in the factors affecting TSMEs, Section 3.7 reviews the established theory on the

success-factor models. Next, the chapter discusses the limitation of previous studies that

are relevant to the TSMEs development. Finally, Section 3.8 concludes the key point of

this chapter.

3.2 Definition of SMEs

There is no common international definition for SMEs. The definition of an SME

depends on a country’s physical and economic size, cultural situation, government

policy, and data collection measures to produce SME statistics (Chittithaworn, Islam,

Keawchana & Yusuf, 2011; Mohammad, 2012).

Table 3.1: Definitions of SMEs in Selected Countries

Country Definition of SMEs Sector Number of employees Assets

Australia Between 5 and 199 employees - New Zealand

Less than 20 full-time employees

-

Hong Kong Manufacturing Less than 100 employees - Others Less than 50 employees Japan Manufacturing Less than 300 employees Wholesaling Less than 100 employees - Retailing Less than 50 employees China Between 500 and 2000

employees Between Yuan$30 million and Yuan$300 million of annual sales

Singapore Less than 200 employees Less than $100 million of annual sales turnover

Philippines Less than 200 employees Less than P$60million on fixed assets

69

Indonesia Less than 100 employees² Less than Rp$ 5 billion of fixed assests³

Malaysia Agriculture Between 5 and 50 employees Between RM$200,000 and less than RM$1 million of annual sales turnover

Manufacturing Between 5 and 150 employees Between RM$250,000 and less than RM$25 million of annual sales turnover

Services Between 5 and 50 employees Between RM$200,000 and less than RM$5 million of annual sales turnover

Thailand Manufacturing Less than 200 employees Less than THB$200 million of fixed assets

Services Less than 200 employees Less than THB$200 million of fixed assets

Wholesaling Less than 50 employees Less than THB$100 million of fixed assets

Retailing Less than 30 employees Less than THB$60 million of fixed assets

Sources: Schaper et al (2011); SPRING (2011), SMIDEC (2011), Hall (2011)

Table 3.1 compiles the definitions of SMEs used in selected countries. Some countries,

like Japan, Hong Kong, Malaysia and Thailand, define SMEs in various sectors to

differentiate the SMEs’ business activities such as manufacturing, wholesaling,

retailing, agriculture and services. This is because different sectors have different

characteristics, particularly in terms of the number of employees. Other countries such

as Australia, New Zealand, China, Singapore, the Philippines and Indonesia define

SMEs by the number of employees and assets value.

Most countries use the number of employees to categorise firms into small and medium

sizes. However, the number of employees what makes up small and medium-sized firms

differs across the countries. China, for instance, considers firms with employees

between 500 to 2000 employees to be small and medium-sized, while other countries

such as Australia, Singapore and Philippines consider firms with 5 to 200 employees to

be small and medium-sized. Countries such as China, Singapore, the Philippines,

Indonesia, Malaysia and Thailand have an additional measure of SMEs, which is assets

70

value, but differ in terms of the range of assets value in differentiating the size of the

firms.

In Malaysia, SMEs are defined based on the number of full-time employees or the total

sales or revenue. Table 3.2 summarises the definitions of SMEs in Malaysia and these

definitions apply to the tourism industry, under the services category. SMEs are further

categorised into micro, small and medium enterprises.

Table 3.2: Definition of SMEs in Malaysia

Category Micro-enterprise Small enterprise Medium enterprise Manufacturing, Manufacturing-Related Services and Agro-based industries

Sales turnover of less than RM250,000 or fewer than five full-time employees.

Sales turnover between RM250,000 and RM10 million or between five and 50 full-time employees.

Sales turnover between RM10 million and RM25 million or between 51 and 150 full-time employees.

Services, Primary Agriculture and Information & Communication Technology (ICT)

Sales turnover of less than RM200,000 or fewer than five full-time employees.

Sales turnover between RM200,000 and RM1 million or between five and 19 full-time employees.

Sales turnover between RM1 million and RM5 million or between 20 and 50 full-time employees

Source: SMIDEC (2011)

The definitions are obtained from the National SME Development Council (NSDC), a

government agency primarily responsible for SME development in the country.

Malaysia follows countries such as Hong Kong, Japan and Thailand that define SMEs

according to sector. This study adopts the definition of SMEs by the NSDC to define

TSMEs.

71

3.3 Contributions of TSMEs

3.3.1 Employment Creation

Operations of TSMEs, which include offering accommodation services, food and

beverages, guide services, recreational activities and other entertainment services

among others, are labour-intensive. Thus, the establishment of TSMEs at a particular

tourist destination creates job opportunities for the local community (Narayan & Prasad,

2010; Scheyvens & Russell, 2012). For instance, Wanhill’s (2000) study covering 216

projects over the period 1990-1995 in Wales, reveal that job creation in the principle

sectors of serviced accommodation, caravan and camping, restaurants, activity

attractions, and general attractions on the whole exceeded the employment targets

during UK’s economic recession. Overall, the European tourism industry depended on

TSMEs with over 99 per cent of firms employing fewer than 250 individuals.

3.3.2 Economic Growth and Development to Tourism Country

In terms of economic contribution, TSMEs play a crucial role in foreign exchange

earnings activities. This is why tourism countries such as European United (EU), China

and Australia focused on TSME performance (World Tourism Organisation, 2013).

This is because tourism worldwide is dominated by small businesses (Ateljevic, 2009;

Gartner & Lime, 2000; Peters & Buhalis, 2005). For instance, in EU countries there are

almost 99 per cent or 18 million companies in the tourism industry are classified as

SMEs (Cavlek, 2002) and 91 per cent in Australia (Australian Tourism Export Council,

2007). Thus, the dominancy of TSMEs in tourism will lead to higher tourist expenditure

in the industry. Furthermore, the predominance of TSMEs also will create prospects of

investment, notably in rural areas (Causevic & Lynch, 2013; Thomas, 2004; 2000).

72

TSMEs have numerous economic and social benefits, as illustrated in Wanhill’s (2000)

study from Bali’s hotel industry. Three scales of tourism enterprises exist in Bali’s hotel

industry: large industrial, small industrial, and craft tourism. Various economic effects

in terms of increased earnings, foreign exchange, investment, job opportunities,

entrepreneurship, infrastructure, as well as the minimization of adverse social and

cultural effects were best met through small hotels (Wanhill, 2000). They are more

likely to market their services directly to guests rather than the tourism trade. Due to the

low entry barriers in the tourism industry, there is more local ownership of small hotels

and these hotels have better local supply connections.

Furthermore, a study conducted in Fiji on the impact of small-scale tourism enterprises

towards poverty alleviation in the country shows that small scale tourism enterprises

make positive contributions to revenue generation, job creation and community

development (Scheyvens & Russell, 2012). This indicates that tourism industry is

targeted as a development option because it is labour-intensive and shows a creditable

performance which gives weight to the importance of TSMEs in job creation and the

partnership approach (Ladkin, 2011; Scheyvens & Russell, 2012).

3.3.3 Diversification on Tourism Products

Compared to large companies, TSMEs are in a good position to cater to consumers’

increasing demand for more personalised services. Standardised tourism products are no

longer appealing to consumers, and tourists expect providers to tailor products and

services to their specific needs and tastes. TSMEs have greater flexibility to adapt their

services and products to tourists’ changing requirements and preferences compared to

larger companies (Akbaba, 2012; Sampaio, Thomas, & Font, 2012). TSMEs can play a

73

key role to be a part of the output experience for tourists through their ability to initiate

introductions to their neighbours, advise visitors about itineraries, provide narratives on

local history, culture, folklore and landscape, and play an active role in the advancement

of the community (Thomas, et al., 2011; Wanhill, 2002). Rafting activities in remote

areas and ATV tracks in deep jungle territory have made destinations more attractive

and appealing. These new attractions have enticed potential tourists (who are searching

for adventure activity) into visiting the destinations.

3.4 TSMEs Challenges

Even though TSMEs contribute to the growth of the tourism industry growth and the

national economy, they are bounded by significant limitations and barriers. The

following section details the challenges faced by TSMEs.

3.4.1 High Labour Turnover

High labour turnover is one of the main challenges faced by tourism enterprises within

the industry, where the relationship between employees and customers is critical

(Iverson & Deery, 1997; Kim, 2012). A high rate of turnover is also a significant factor

in decreased customer satisfaction, resulting in the loss of regular customers and the

good reputation of a business (Chen & Wallace, 2011; Choudhury & McIntosh, 2013).

Thus, labour turnover is often accepted as an inevitable part of the industry. It is

considered as a hindrance to achieving high levels of productivity and efficiency in

business operations (Alverén, Andersson, Eriksson, Sandoff, & Wikhamn, 2012; López-

Fernández, Serrano-Bedia, & Gómez-López, 2011). Furthermore, according to Cho,

Woods, Jang and Erdem (2006), employee turnover in the tourism industry is

consistently higher than in other industries, and is therefore the most problematic

74

managerial topic. This is because people who leave represent a lost source and labour

turnover increase administrative costs for tourism businesses, creating severe

operational difficulties and reducing profitability (Marchante & Ortega, 2012). This

then reflects a symptom of poorly-managed organizations, affects organizational

morale, creates poor images in the labour market and makes it harder to recruit good

performers in the future (Bresciani, Thrassou, & Vrontis, 2012; Subramaniam,

Shamsudin, & Ibrahim, 2011; Yang, Wan, & Fu, 2012) .

3.4.2 Shortage of Financial Resources

According to Wanhill (2002), finance becomes an issue because TSMEs do not

engender confidence in lenders. In addition, they are susceptible to slumps in property

values because in many cases, TSMEs owners’ houses or business premises are put up

as collateral on their bank overdraft or loan. Commercial banks finance business

expansion with the intention of bringing the business to market flotation rather than ‘a

way of life’, which leaves TSMEs with high cost of finance from the retail banking

sector(G. Jennings, 2010). This also has relevance to public funding mechanisms, as

they tend to stress financial performance, which may demand a level of commitment

that owner-managers with lifestyle goals are unwilling to provide (Medina, 2005;

Olawale & Garwe, 2010).

3.4.3 Business Failure Rate

Wanhill (2000) warns of the controversial evidence about TSMEs and their high failure

rates. According to the Best Practice Forum, one in eight UK hospitality businesses fails

every year, suggesting hospitality is an extremely vulnerable business sector (Deakin,

2004). In its 1996 publication Tourism – Competing with the Best, the United

75

Kingdom’s Department of National Heritage (1996) stated that TSMEs are more

vulnerable than larger firms to market pressure and so are less likely to invest in long-

term human resource strategies, which may cause short-term financial difficulties. This

is illustrated by Shaw and Williams (1990, cited in Wanhill, 2000), who identified many

family enterprises with little market stability, low levels of capital investment, weak

management skills and are resistant to change, all of which are barriers to successful

tourism development.

3.4.4 Limited Business Skills

TSMEs often have severe limitations with regards to marketing, delivering quality,

price policy, cost control and re-adjustment ability. For TSMEs, marketing may simply

consist of one or two advertisements in tourist brochures whose effectiveness is

unknown. Often, there is a profusion of literature, which does no more than ‘clutter’ the

marketplace so that its impact is dissipated through internal competition. The high exit

or marginal survival levels in the tourism sector is an indication of the magnitude of the

problem. TSMEs are often ‘price takers’ in the manner of the perfectly competitive

economic model because they are unaware of market trends.

It appears that transactions and information costs are taken as major barriers for TSMEs

in obtaining knowledge of their demand curves. This forces them to behave in a cost-

oriented manner in what is a market-oriented industry (Kotas & Wanhill, 1981). Their

ability to track market is limited to their weekly booking patterns and year-on-year

sales. When demand falls, they do not have a pro-active stance, unlike larger operators

who are able to get back into the marketplace with improved product offers. TSMEs

resort to cost-cutting, particularly staff hours, with owners and family labour putting in

more time to make up the differences. They may often have little empathy in managing

76

staff or dealing with customers, and much of management time is spent ‘fire fighting’,

rather than developing the business.

3.4.5 Lifestyle Entrepreneur

Tourism entrepreneurs are labelled lifestyle entrepreneurs as they reject economic and

business growth. Self-employment and control are more important motives for these

entrepreneurs and disparities occur among TSMEs in relation to the aims and objectives

of the individual business, which are not always consistent with economic profit

objectives (Beaver, Lashley, & Steward, 1998; Strobl & Peters, 2013). Morrison and

Teixeira (2004) and Skokic and Morrison (2011) assert that the motivations among

tourism entrepreneurs are associated with family lifecycles, rejection of the corporate

way of life, and the general pursuit of a work/life balance, all of which contribute to the

majority of the TSMEs set up mainly to satisfy personal and family goals.

3.4.6 Supply Dominated by Family Business

A family-run business often consists of relatives as employees. Similarly in the tourism

industry, most TSMEs employ their own relatives as employees. This approach is

preferable as it is one way of offering jobs to relatives and at the same time a solution to

the difficulties in hiring casual and permanent staff. Getz and Carlsen’s study (2000)

focused on examining goals pertaining to enterprise start-ups by family and owner-

operated TSMEs, and they identified lifestyle and family related-goals as predominant.

However, there is also recognition that the business should be profitable. From the

survey, most respondents were uncertain about the ultimate disposition of their

businesses; only about one-third had definite succession plans to involve children or

other family members. Furthermore, half of the respondents did not have formal

77

business goals and this fact supports high rates of failure among small business in

general. Many respondents did appear to be under-performing in the context of their

own performance targets. Their economic objectives seem to be being able to make

enough earnings to support the family. One major point of contention within the family

business relates to the benefit of being together on the job but this finding entails risk of

disharmony and often results in less free time to spend together on desired leisure

pursuits.

To date, research on TSME performance and operations is done extensively in

developed Western countries, particularly in the UK. Empirical studies from these

countries have highlighted and distinguished the outstanding characteristics of TSMEs.

The significance of social and non-economic factors in tourism entrepreneurship within

developed countries is a significant finding that is raised by tourism scholars. Several

managerial characteristics have been identified as distinguishing the operations of

TSMEs from larger enterprises. Among the most important of these features is TSMEs’

limited knowledge of the business environment.

Even though tourism industries in many tourism-focused countries are dominated by

TSMEs, and the growth of business establishments among lifestyle entrepreneurs is

increasing, they still face major barriers in handling the businesses. The challenges and

limitations faced by TSMEs as discussed above affect their growth and performance,

and should be addressed.

78

3.5 Theoretical Foundations

3.5.1 Resource-based Theory

Resource-based theory has been applied by strategic management scholars as the

foundation for studying small business performance. According to the resource-based

theory, venture resources in the form of capabilities, assets, and skills provide

competitive advantage and underpin firm’s performance (Barney, 1991; Grant, 1991;

Peteraf, 1993). In other words, resource-based theory hinges on the resources and

capabilities of the firm as an underlying factor of performance. Findings from Chandler

and Hank’s study (1994) on small manufacturing businesses demonstrate the link

between the availability of resource-based capabilities and venture performance. An

abundance of capabilities in the firm ensures survival, rapid growth and profitability

(Chandler and Hanks, 1994). The centrality of the business owner in the operation of

the firm cannot be overemphasised (Lerner and Haber, 2000). To the extent that the

business owner makes all the important decisions, his/her skills become a critical asset

on which the success of the firm depends. Implicitly, when the skill set is stronger, the

performance of the business will be higher (Lerner and Almor, 2002).

The resource-based perspective argues that sustained competitive advantage is

generated by the unique bundle of resources at the core of the firm (Barney, 1991;

Conner and Prahalad, 1996). In other words, the resource-based view describes how

business owners build their businesses from the resources and capabilities that they

currently possess or can acquire (Dollinger, 1999). The term “resources” is broadly

conceptualised as “anything that can be thought of as a strength or a weakness” of the

firm (Wernerfelt, 1984, p. 172). The theory addresses the central issue of how superior

performance can be attained relative to other firms in the same market and posits that

79

superior performance results from acquiring and exploiting unique resources of the

firm.

Implicit in the resource-based perspective is the centrality of the venture’s capabilities

in explaining a firm’s performance. Resources have been found to be important

antecedents to products and ultimately to performance (Wernerfelt, 1984). According to

resource-based theorists, firms can achieve sustainable competitive advantage from

such resources as strategic planning (Michalisin et al 1997; Powell 1992), management

skills (Castanis and Helft 1991), tacit knowledge (Polanyi, 1962, 1966), capital, and

employment of skilled personnel (Wernerfelt, 1984) among others. Resource-based

theorists (e.g. Barney 1991; Grant 1991; Peteraf 1993) contend that the assets and

resources owned by companies may explain differences in performance. Resources may

be tangible or intangible and are harnessed into strengths and weaknesses by

companies, which in turn lead to competitive advantage. The resource-based theory

continues to be refined and empirically tested (Bharadwaj, 2000; Hadjimanolis, 2000;

Medcof, 2000). Given that the resource-based view addresses the resources and

capabilities of the firm as an underlying factor of performance, it is found to be a

suitable theory to use in this study.

Because TSMEs belong to the service-based industry, they require tangible and

intangible resources to produce varied services and activities, such as accommodation,

transportation, shopping and recreation activities (McIntosh, Goeldner, & Ritchie,

1995). Considering tourism activities are highly related to physical and spatial factors

such as view, infrastructures and superstructures (Mill and Morrison, 1992), the type

and location of the venture are interrelated. Tangible resources such as venture location,

80

attractiveness, and facilities are vital resources in tourism (Lundberg et al., 1995).

Furthermore, the capabilities of the tourism entrepreneurs in managing TSMEs and

exploiting these bundles of resources by creating niche markets within the tourism

industry are seen as creating the firm’s competitive advantage (Leonidou, Leonidou,

Fotiadis, & Zeriti, 2013). This activity is founded to be explicable with the RBV theory.

As such, many tourism researchers use the RBV theory to explain the importance of

these resources and the capabilities of TSMEs.

Researchers such as Saffu, Apori, Elijah-Mensah and Ahumatah (2008) use the RBV

theory in order to assess TSMEs’ resources and performance. Grounded in the human

capital theory and resource-based view, they examined the effect of entrepreneurs’

human capital and the venture’s resources on the performance of TSMEs in Ghana.

Results show that weak relationship between business resources and TSME

performance in Ghana. Owner-managers’ managerial skills have no influence on TSME

performance in Ghana because tourism entrepreneurs are more concerned on surviving

and maintaining sufficient income to ensure that firms produce satisfactory income.

However, their findings may be due to the fact that in Ghana, small tourism ventures

(especially those in rural areas) are micro-enterprises owned by families whose

decision-making processes are flexible, informal and unstructured. In such an

environment, more emphasis is on personal—and by implication, informal—approach,

and less emphasis is put on a formal, managerial approach. This study asserts that

higher education and previous entrepreneurial experience guarantee success for TSMEs,

and profitability in the tourism industry is contingent on innovation, customer service,

financial resources and cost control (Saffu, et al., 2008).

81

Urbano and Yordanova (2008) proposed a conceptual model to explore the factors of

HRM practices in TSMEs in Spain. The conceptual model is based on the RBV of the

firm, and presents several characteristics of the firm and the person responsible for

HRM within the firm as determinants of the adoption of HRM practices in TSMEs.

According to RBV, resources that are valuable, rare, imperfectly imitable and not

substitutable by other resources can be sources of sustained competitive advantage.

They also argue that the adoption of HRM practices may lead to establishing sustained

competitive advantage by facilitating the development and utilisation of organisational

competence that are presumed to yield over competitors. The findings explain that in

the presence of an HR department, cooperation with other firms and possession of

previous experience in similar positions by the person responsible for HRM are

associated with greater adoption of HRM practices. Furthermore, in SMEs, the person

responsible for HRM is the owner/manager of the company and is also more likely to

adopt HRM practices. Their findings have added knowledge about the factors

influencing the adoption of HRM practices in TSMEs.

Das and Teng (2000) examined the role of firm resources in strategic alliances and put

forward a general resource-based theory of strategic alliances, synthesising the various

findings in the literature on alliances from the RBV theory. They used the

organisational learning model, which explains that most firms engage in strategic

alliances either to acquire the other’s organisational know-how, or to maintain one’s

own know-how while benefiting from others’ resources. The nature of the firm’s

resource characteristics - imperfect imitability, and imperfect substitutability - makes

strategic alliances an important involvement for firms. RBV suggests that the rationale

for alliances is the value-creation potential of firm resources that are pooled together.

82

Thus, according to Das and Teng’s findings, partner resource alignment directly affects

collective strengths, and ultimately contributed to alliance performance.

Bharadwaj (2000) has provided arguments on how the resource-based view of the firm

attributes superior financial performance and organisational resources and capabilities.

The study developed the concept of IT as an organisational capability and empirically

examined the association between IT capability and firm performance. Firm specific IT

resources are classified as IT infrastructure, human IT resources, and IT-enabled

intangibles. Results indicate that firms with high IT capability tend to outperform a

controlled sample of firms on a variety of profit and cost-based performance measures.

3.5.2 Theories on Entrepreneurship

The achievement of SMEs brings great interest among researchers from different

perspectives to understand the role and nature of the entrepreneur. This has led to a

research on entrepreneurship since the early 1960s from economic, psychological and

sociological perspectives. The following sub-sections highlight entrepreneurship studies

from the economic, psychological, sociological, and tourism perspectives.

3.5.2.1 Entrepreneurship from an Economic Perspective

Profit maximisation is the primary goal of any firm. From the economic perspective, the

objective of an entrepreneur embarking on an economic activity is to achieve the most

profit possible from its production and sale of goods or services. As such, profit

maximization requires decision from entrepreneurs to anticipate based on their best

judgment and requires some degree of expertise to make choices that maximise the sum

of current and future profits.

83

Entrepreneurs are also characterised as risk-takers and innovators. They create new

things in the act of pursuing the businesses. They are always in the act of endowing

resources with a new capacity to create wealth. Those who are motivated by financial

gain and profit maximisation may be stimulated to take risks as the essence of

commitment of present resources to future expectations and that means to uncertainty

and risk (Drucker, 1994). Entrepreneurship from the economics perspective has sought

to define qualities that characterise entrepreneurial acts as being different from those of

the small business owner/manager. Carland et al. (1984) distinguished entrepreneurs

from small business owner/managers. They note that there is considerable overlap

between small business and entrepreneurship although they are not entirely the same.

Not all new ventures are entrepreneurial in nature, while entrepreneurial firms may

begin at any size and are keen on business growth over time. Small firms

owned/managed by ‘small business owners’ may grow on the one hand, but many will

remain small throughout their organisational lifetime. This distinguishes entrepreneurs

from non-entrepreneurs, whereby an entrepreneur is characterised by a preference for

creating activities, manifested by some innovative combination of resources for profit.

Scholars have examined the impact of entrepreneurial motivational aspects on an

economy. Cantillion, Say and Schumpeter are the pioneer economists who explained

the motivation of entrepreneurs in the early stage of an entrepreneurship evolution in

Western countries (seeCarland, et al., 1984; Chell, Haworth, & Brearley, 1991;

Drucker, 1994). Economists view enterprises as important for the health and growth of

an economy. Many jobs have been created by SMEs and many of these SMEs are new

businesses that did not exist before (Drucker, 1994, p. 19). A few economists try to

differentiate between an entrepreneur and a small business owner or founder, arguing

84

that not all business owners are entrepreneurs. Carland, et al. (1984) proposes that a

small business owner establishes and manages a business for the purpose of personal

goals and as a source of income and as such the business is bounded by family needs.

An entrepreneur establishes and manages a business for the purpose of profit and

growth and is characterised by innovative motivations (see Carland et al., 1984).

According to Drucker (1994), to be entrepreneurial, an enterprise has to have special

characteristics over and above being new and small. Furthermore, entrepreneurs are a

minority among new businesses. They create something new and/or different, and they

change or transmute values (p. 20).

Despite the growing interest in entrepreneurship studies, there is no generally accepted

definition or model on what an entrepreneur is or does. Models of entrepreneurship are

almost as numerous as the authors who write about entrepreneurs (Cunningham &

Lischeron, 1991). “Entrepreneur” typically refers to a person who is creative,

innovative, passionate and a risk taker to lead the way to a greater economic

development (Kuratko & Hodgetts, 2004) as commonly understood in the modern day

business context. In this new era, successful entrepreneurship requires more than merely

luck and money. Entrepreneurship is a cohesive process of creativity, risk taking and

planning. Entrepreneurship has become synonymous or at least closely linked to free

enterprise and capitalism. Many people now regard entrepreneurship as a pioneer ship

on the frontier of business.

Reviewing the development of economists’ work, it is clear that there is an increasing

tendency to separate the entrepreneur from the small business owner. The entrepreneur

85

is increasingly recognised as an agent of change, having the willingness to take risks

and the ability to make confident and judgemental decisions (Casson, 2003).

3.5.2.2 Entrepreneurship from the Psychological Perspective

The majority of entrepreneurship studies from the psychological perspective focus on

the personality traits of entrepreneurs. Like economists, who argue that not all small

business owners are entrepreneurs, entrepreneurship from this stream highlights the

differences between the traits of entrepreneurs and those of small business owners.

The trait approach seems to be the most promising approach, and the significance of

psychological attributes for entrepreneurial activity and economic growth are

considered to be important and vital for a person’s possibility and interest in acting in

an entrepreneurial way. Consequently, based on the psychological perspective, an

entrepreneur is someone who demonstrates a marked use of enterprising attributes such

as initiative, persuasive powers, moderate risk-taking, flexibility, creativity,

independence, problem solving, need for achievement, imagination, leadership, hard

work and internal locus control (Gibb, 1987).

The literature provides a list of an entrepreneur’s personality traits that show the

connection between an entrepreneur and small business owner. At the same time, there

are critics of the attempt to identify personality traits as characteristics of entrepreneurs.

Some studies have not succeeded in demonstrating the differences in the locus of

control between entrepreneurs and small business owners (Brockhaus, 1980). The

discrepancies are due to methodological difficulties inherent in the identification of

personality characteristics and the conflicting findings of different studies. To some

86

extent, it is suggested that the trait approach in entrepreneurship studies should be

abandoned (Stanworth & Gray, 1991). The most common traits identified from the

literature are the need for achievement (McClelland, 1965), risk-taking propensity

(Caird, 1990), locus of control (Caird, 1990), independence (Collins & Moore, 1970),

and innovation or creativity (Kanter, 1992).

McClelland (1965) in his study discussed the influential factors of an individual’s need

for achievement to the growth of the firm. The achievement motive will push the

individual to come out with a strategy and business plan for growth. This has suggested

that an entrepreneur can be trained, as the achievement motive is based on the

expectation of doing something better. The achievement motive will occur when an

individual organises it and puts it into strategic planning and strives for excellence.

However, the relation between the need for achievement and other attributes is

complicated to measure due to methodological difficulties (Stanworth & Gray, 1991).

The risk-taking trait of an entrepreneur was noted as early as 1755 by Cantillon (in

Caird, 1990). There are three levels of risk preferences: low, intermediate or moderate,

and high. These levels of risk affect an individual’s decision to start a business venture.

The relationship between motivation and risk taking reveals that moderate risk taking is

a function of the strength of the motive to achieve or avoid failure. However, the

significance of risk taking as a primary entrepreneurial trait is modified with suggestion

that the entrepreneur is a risk avoider and not a risk taker. Research examining the

relative risk-taking propensities of entrepreneurs and managers has produced conflicting

findings and posed an impediment to the development of entrepreneurship theory.

However, according to Brockhaus (1980), the general risk-taking propensities of

87

entrepreneurs and small business owners can be compared empirically to determine

whether this component of risk distinguishes entrepreneurs from small business owners.

Internal locus of control appears to be an important psychological concept that

differentiates entrepreneurs from small business owners. It is called the internal locus of

control because the individual has direct control or influence on its outcome. The

internal locus of control theory states that human motivation is not only a function of

reinforcement, but also depends on people’s conception of the locus of control of

reinforcement. People will attribute the reason why something happens either to

themselves or to the external environment. Those who appear to have control over

occurrences have an internal locus of control and will be referred to as internal. People

who seem to think the control over what happens is situated with external forces have

an external locus of control and will be referred to as external (Caird, 1992).

3.5.2.3 Entrepreneurship from the Sociological Perspective

Entrepreneurship from the sociological perspective focuses on the differences between

types of business owners by creating different name and categories. This typology

approach has reduced the number of profiles and contributed to more sophisticated

descriptions of entrepreneurs and their motivations. Chell et al. (1991) cited Smith’s

(1967) work who has grouped business owners into three groups, labelled as craftsman

entrepreneurs, opportunistic entrepreneurs and business hierarchy. Craftsman

entrepreneurs come from blue-collar backgrounds, have relatively narrow education,

possess a good record as successful workers and identify in the past with plant

operations rather than top management. Opportunistic entrepreneurs come from a

middle-class background, possess broader education and a variety of work experience,

and have a past identification with management. Firms founded by opportunistic

88

entrepreneurs experience higher growth rates compared to those by craftsmen

entrepreneurs.

Dukelbenrg and Cooper (1982) produced a classification of three types of business

owners. Type 1 business owners are primarily oriented towards growth and see their

businesses changing rapidly. Type 2 owners are oriented towards independence and

they are strongly driven to avoid working for others. Type 3 owners possess a craftsman

orientation. They are strongly oriented to doing the work they want to do and are most

comfortable selling or handling technical problems rather than working on management

issues.

Stevenson et al. (1985) rejected both the idea of entrepreneurship as an economic

function and the identification of the personal characteristics of entrepreneurs. They

argue that ‘entrepreneurship was an approach to management’ which they define as the

pursuit of opportunity without regard to currently controlled resources. They conceive a

spectrum of business behaviours ranging from entrepreneurial at one extreme and

personified in the form of the ‘promoter’ and administrative at the other extreme. The

‘promoter’ is the person who is confident of his or her ability to seize opportunity

regardless of the resources under current control, whereas the trustee emphasizes the

efficient use of existing resources.

Based on the research that attempts to group or categorize business owners, three types

of small business owner can be identified. This includes ‘craft’ owners, who pursue

personal satisfaction and are therefore motivated to do the work when they want. The

second type comprises ‘promoters’ who seek personal wealth and/or financial return

89

and the third type is made up of ‘professional managers’ who seek to build a successful

firm which they can manage (Hornaday, 1990).

3.5.2.4 Entrepreneurship from the Tourism Perspective

Entrepreneurship specifically from the tourism perspective has not been looked into. In

fact, in terms of economic contribution, the tourism industry has flourished through the

entrepreneurial activities and the establishments of TSMEs. However, very limited

empirical studies on entrepreneurship provide little information on the influence of

tourism entrepreneurship on economic development. Thus, little is known about the

economic behavioural characteristics of entrepreneurs and its impact on economic

development (Shaw & Williams, 1990).

Tourism and hospitality firms have also received scant attention within the general area

of small firms research. Other economic sectors, such as manufacturing, have attracted

a lot of attention due to its huge impact on economic development. Only recently, a few

studies have focused on owners of TSMEs. Research done by Dewhurst and Horibin

((1998) and Carlsen, Morrison and Weber (2008) have provided valuable insights in

identifying business motivations among TSME owner-managers. The work on small

firm owners by Stallinbrass (1980) and Brown (1987) identified that many small firm

owners have non-economic motives for entering the business. This finding is also

confirmed by Shaw and Williams (1990). Non-economic reasons for owner-managers

to venture into tourism businesses include semi-retirement and to stay at the place

where the business was established. For some business owners, tourism

entrepreneurship can be seen as a form of consumption rather than production (Rodhi

Thomas, et al., 1997)

90

For many small business owner-managers, the pursuit of growth and business expansion

is not a priority (Smallbone, Leigh, & North, 1995). The evidence from tourism and

hospitality industries appears to indicate that a significant percentage of entrepreneurs

are driven by social as well as by non-economic motives (Shaw & Williams, 1998).

According to Ateljevic and Doorne (2000), a growing number of studies on

entrepreneurs have found that the often conscious rejection of economic and business

growth opportunities by entrepreneurs in the tourism industry is an expression of their

socio-political ideology.

TSME owner-managers often have no working experience or formal qualification in

tourism industry (Page, et al., 1999). They also have a major portion of their wealth

invested in the firm, but lack financial, managerial, and marketing skills to run such

businesses (Getz & Carlsen, 2005). In the context of the significant change in tourist

consumption as mentioned earlier, the importance of TSMEs has been widely

recognised (Buhalis, 1998; Page, et al., 1999). As emphasised by Ateljevic and Doorne

(2000), the ability of businesses to position products in a highly segmented marketplace

is dependent on the creative and innovative capacity of individual entrepreneurs to

identify and take advantage of the changing landscape. In a review of tourism

entrepreneurs, Williams (1998) argues that the small business culture, limited capital,

lack of skills, lifestyle motivations and the acceptance of suboptimal profits constrain

regional economies and create problems for firms’ survival.

Ateljevic and Doorne (2000) and Dewhurst and Horobin (1998) in a study of

entrepreneurial activity within tourism, conclude that the traditional economic definition

of entrepreneur cannot be used to describe entrepreneurs in the tourism industry. There

91

is a growing recognition, although not well established, that the entrepreneurial

behaviour within the tourism industry is characterised by the lack of motivation to

pursue the goal of maximising economic gain with managerial decisions based on

highly personalised criteria.

The above findings have led Shaw and Williams (1990) to conclude that the theoretical

or conceptual qualities of entrepreneurship, including innovation, responding to

uncertainty and adjusting to disequilibrium, are precisely the qualities that appear to be

poorly developed among small tourism firms. However, with reference to arguments

advanced earlier, such characteristics are acknowledged to be limited to the place where

the research has been undertaken. Thus, there is an emphasis on a move from a purely

economic definition to developing a definition of entrepreneurship in a wider context.

There are a number of perspectives that can be used to understand the characteristics of

small firm owner-managers. The above discussions are derived from three perspectives:

economics, psychology, sociology and tourism. Concepts and findings on small firm

owner-managers from these perspectives are not directly applicable in the context of

TSMEs. The tourism perspective has offered an understanding of the characteristics of

ownership from new tourism and hospitality specific insights (Dewhurst & Horobin,

1998). Based on the above discussions, there is a need for a broad body of works on the

nature and characteristics of small firm owner-managers within the tourism context.

92

3.6 Factors Affecting the Performance of TSMEs

Next, factors that affect the operations and performance of small enterprises particularly

within the tourism context are presented. These factors include both internal and

external factors that influence the success or failure of the enterprises.

3.6.1 Internal Factors

Internal factors are controllable elements of the business environment (Hunger and

Wheelen, 2003) and the predominant causes of business failures. The following internal

factors have been shown to a strong impact on business performance.

3.6.1.1 Socio-economic Characteristics

A various of studies have identified ways in which cultural factors shape values,

attitudes and behaviours of people (Alves et al 2006; Hofstede 1991, 2001,2003,2006)

and that different cultures influence views and expectations with respect to the ways

things ‘ought to be done’. Such influences affect organisational behaviours. The

following discuss certain socio-economic characteristics, which were identified by

previous researchers to influence entrepreneurial behaviour in business operations.

3.6.1.1.1 Ethnicity of Tourism Entrepreneur

According to Petersen (1980), ‘ethnic’ is an adjective that refers to differences between

categories of people. Ethnicity has historically played an important role in

entrepreneurship. There is substantial information about the extent to which various

ethnic groups or new immigrants engage in entrepreneurial behaviour in the Asia-

Pacific region. According to Schaper et al. (2007), the main explanation of ethnic

entrepreneurship is based on its motivation factor. Entrepreneurship triggered by ethnic

93

discrimination in the host society, lack of recognition of qualifications, poor use of local

language and limited opportunities are the push factors. The presence of role models in

the family, the perception of good entrepreneurial opportunities in the family, the

presence and belongingness to and availability of resources in ethnic networks are all

pull factors to entrepreneurship.

3.6.1.1.2 Owner-Manager’s Age

Entrepreneur age has been studied as a factor of entrepreneurial activity. Reynolds et al.

(2000) found that individuals aged 25 to 44 years are the most entrepreneurially active.

Findings from another study in India by Sinha (1996) disclosed that successful

entrepreneurs are relatively younger in age. Kristiansen, Furuholt and Wahid (2003)

found a significant correlation between age of entrepreneurs and business success, with

older (more than 25 years old) entrepreneurs being the more successful ones. Another

study conducted by Valdez (2009) found that most tourism entrepreneurs in Vigan City

are in the middle-age bracket. Because of their age, they are more experienced in going

into the tourism business.

3.6.1.1.3 Working Experience

Kolvereid (1996)) found that individuals with prior entrepreneurial experience possess

significantly higher entrepreneurial intentions that those without such experience.

Conversely, Mazzarol et al. (1999) found that respondents with previous government

employment experience are less likely to be successful founders of small businesses.

Due to the ease of entry into the industry, many owner-managers are reported to have

various types of occupation and experience prior to their venture into this sector

(Ateljevic et al., 1999; Szivas 2001). In New Zealand, however, previous job experience

94

in tourism and hospitality is not particularly represented, but the most common

experiences possessed by tourism entrepreneurs are related to farming, teaching,

marketing and construction (Altejevic et al., 1999). In the UK, about one-third of

owner-managers have working experience in the tourism and hospitality industry, while

others hail from agriculture, retail, education, and various other sectors (Szivas, 2001).

It is emphasised that individual experience is paramount in generating knowledge

(Huber 1996) and can itself engender and encourage innovation (Hayness, 2003). Grant

and Romanelli (2001) argue that the prior experience of the founder of a firm is the

source of knowledge assets critical for the creation of new routines and capabilities to

innovate new products. It also equips managers with the skills and knowledge of

combining or organising and exploiting resources for innovation (Alvarez and Busenits,

2001). Furthermore, according to Brockhaus (1980), Goedhuys and Sleuwaegan (2000)

and Jones-Evans (1996) previous business experience often equips decision makers

with a positive attitude towards business risks and entrepreneurship. For example, in the

case of international business, prior exposure to or involvement in an international

environment removes some of the fears and uncertainties inherently associated with the

‘uncertain’ international market (Ibeh and Young, 2001). Decision makers thus focus

less on risks and more on the exploitation of opportunities. An added bonus of previous

experience is a much-improved personal network that reduces the risk of engaging in

entrepreneurial activities (Basu and Gosmawi, 1999; Ibeh, 2004).

3.6.1.1.4 Education Level

The empirical evidence of the Global Entrepreneurship Monitor project shows that the

relationship between education and entrepreneurial activities is not unclear (Bosma and

95

Harding, 2007). However, in theory, prior knowledge is a crucial antecedent of different

dimensions of entrepreneurial orientation, including innovation (Carneiro, 2000; Dove,

1999;Nonaka and Takeuchi, 1995), proactiveness (Clercq and Arenius, 2006) and risk

taking (Knight et al., 2003; Xia et al., 2001). More specifically, acquisition and

exploitation of knowledge, knowledge dissemination and responsiveness to knowledge

have been identified as the components that have the most impact on a firm’s ability to

innovate, act proactively and take risks (Day, 1994; Fahey and Prusak, 1998; Grant,

1996; Teece, 1998). Following this line of argument, the educational background of the

entrepreneur plays an important role in this endeavour.

In his study of Greek-owned businesses in Sydney, Walker (1988) found that the

businesses underwent expansion when university-educated sons joined the firms.

Similarly, Peters (2002) discovered that the Greek Kailis brothers attributed their

success as exporters of lobster and other seafood to their educational attainments. Their

qualifications equipped them with the skills and mindsets to remain flexible and open to

market forces and opportunities.

3.6.1.1.5 Gender

Gender differences between males and females have been widely researched to compare

the differences in performance of female- and male-owned business firms, especially in

western countries (Shim & Eastlink, 1998). Furthermore, gender factor also influential

in shaping an entrepreneurial perceptions and intention (Hofstede, 1998). It is generally

accepted that men have stronger entrepreneurial intentions than women (de Bruin,

Brush, & Welter, 2007; Diaz-Garcia & Jimenes-Moreno, 2010).Yet, based on the

research conducted by Shinnar, Giacom and Janssen (2012), it is suggested that cultural

96

values can also act to shape societal gender roles and stereotypes in terms of the

occupations considered appropriate for men and women. This has led to each gender

being prone to select the ‘appropriate’ occupations or career based on the femininity

and masculinity of the working environment.

This is explained by the research of Wagener (2007) and Langowitz and Minniti

(2007)on the gender factor. The fact that women entrepreneurs are less self-assured in

their perception of their own abilities than men depends on the hostility of business

environment which may constrain the entrepreneurial spirit among women. This

indicates that gender can shape entrepreneurial attitudes, intentions and motivation to be

an entrepreneur and create a new business (Mitchell et al., 2002).

3.6.1.1.6 Family Business Background

A family business background also influences the entrepreneurial behaviour of

individuals (Basu & Goswami, 1999; Duchesneau & Gartner, 1990; Gurel, Altinay, &

Daniele, 2010). People who have a parent or close family member who is self-employed

are more likely to follow an entrepreneurial career (Matthews and Moser, 1996,

Drennan et al, 2005). A family business background leads perhaps to lower barriers to

entrepreneurial entry, since those having it may capitalize on their social ties and social

capital (Greve and Saleff, 2003). Family capital refers to the totality of resources of the

owning family members and has three components: human, social, and financial (Danes

et al, 2009). Research has shown that family social capital (described as non-financial

resources and support offered by family members to the entrepreneur) positively affects

the start-up decision (Chang et al, 2009).

97

The family embeddedness perspective describes the impact and the importance of

parents on the entrepreneurial career of their offspring (Aldrich and Cliff, 2003). Both

the breadth and quality of family business experience matter (Krueger, 1993).

Experiences during early childhood and socialization at home and in school probably

shape the attitudes of young people towards entrepreneurship (Basu and Virick, 2008).

Parents act as initial role models, and parents active in a family business influence the

future entrepreneurial intentions through changing attitudes and beliefs, e.g. self-

efficacy (Shapero and Sokol, 1982, Krueger et al, 2000).

3.6.1.1.7 Motivation

The expression of being either ‘pulled’ or ‘pushed’ into starting a business has been

used extensively in the literature regarding owner-managers’ motivation to start a

business (Brodie and Stanworth, 1998; Burtner and Moore, 1997; Gray, 1994;

Hamilton, 1987). The ‘pull’ motivation factor is associated with the individual’s strong

positive internal desire to start a business venture. The opposite ‘push’ motivation factor

is associated with a possible equally strong desire to start a business venture, but based

on external negative reasons. Personal freedom, independence gained from being one’s

own boss, personal satisfaction, a less rigid and more flexible lifestyle and greater job

satisfaction are pull motivation factors identified in the literature (Birley and Westhead,

1994; Brush 1992; LeCornu et al., 1996; Loscocco, 1997).

A study by Fielden et al. (2000) indicated that a large proportion of their sample (88 per

cent) listed making money as a motivator for their business ventures. However, 71 per

cent mentioned that job satisfaction, greater independence, creating opportunities,

encountering new challenges and pursuing one’s own interests are also important

98

factors that led them to open their own business. According to Glancey and Pettigrew

(1997), motivations for founding a business fall into two broad groups, which are (1)

those that reflect the ‘push’ factors, such as redundancy and job insecurity, and the need

for supplementary income, and (2) those that reflect the ‘pull’ factors, such as the desire

to be his/her own boss, high levels of profit, and spotting a business opportunity, or

retirement.

In Australia, Bransgrove and King (1996) reported that the top goals of owners of small

tourism business in both urban and rural settings are challenge or stimulus, business

opportunity, lifestyle and long-term financial gain. According to Getz and Carlsen

(2000), 34 per cent of their respondents suggest that an appealing lifestyle is the major

reason for venturing into business, and this is followed by business opportunities and

investments. Glancey and Pettigrew (1997) found that the behaviour of the majority

(65%) of their respondents adhered to the pull factors, and this provided evidence for

categorising them as opportunistic entrepreneurs. Rural entrepreneurs, as reported by

Schroeder (2003), are motivated by multiple pull factors such as providing employment

for family members, generating additional income, meeting the need of the market,

companionship with guests, fulfilling their interest or hobby, and providing employment

to communities.

3.6.1.2 Business Skills

Business skills are the management skills and knowledge of the owner-managers.

According to Mckercher and Robbins (1998), lack of skills is a major impediment for

tourism entrepreneurs. They found that new tourism entrepreneurs have no formal

business skills, no management background and no prior industry experience. Other

99

related research also shows that entrepreneurs’ management skills contribute to venture

performance and growth (Lerner and Almor, 2002; Bird, 1995; Cooper and Gimeno-

Gascon, 1994). The propensity of entrepreneurs to employ and apply a variety of skills

is recognised (Hunger and Wheelen, 1996). According to Hood and Young (1993),

some of the important skills of successful entrepreneurs include accounting, marketing,

sales and financial management. Comparing male and female entrepreneurs, Brush

(1993) demonstrated that women business owners often rate themselves lower than men

in terms of financial skills. Also, Hisrich and Brush (1984) found that American women

entrepreneurs scored themselves high on generating ideas, product innovation and

dealing with people, average on marketing and operations, and weak on financial skills.

3.6.1.3 Business Planning

Research has shown an association between planning in small businesses and

performance. The literature suggests that planning is a good management practice, and

may be beneficial to business (Gibson et al., 2002; Schwenk and Shrader, 1993).

According to Berman, Gordon and Sussman (1997:14) “firms that plan produce better

financial results than firms that do not plan.”Bracker et al. (1986, 1988) found that firms

that undertook strategic planning performed better financially. Lerner and Almor (2002)

contend that planning lays the groundwork for developing the strategic capabilities

needed for high performance.

Various scholars have studied strategic planning (Mintzberg, 1973, 1994; Brush and

Bird, 1996; Bracker and Pearson, 1986; Braker, Keats and Pearson, 1988). Previous

research shows a positive relationship between strategic planning and firm performance.

According to Miles and Snow (1978), successful, proactive firms have the propensity to

100

invest time in strategic planning. On the contrary, unsuccessful, reactive firms fight

fires instead of investing time in strategic planning.

Li (1998) investigated SMEs providing travel agent services in Taiwan. Taiwan’s

TSMEs have contributed significantly to the country’s economic growth and this study

explored the factors that underpin their relative success. The study was grounded in a

framework that focused on structure, technology and people, and examined the major

management practices of successful TSMEs and the roles of successful TSME owner-

managers. Based on 43 TSMEs in Taiwan, results show that in a global economic

environment, TSMEs face increased competition from multinational companies both at

home and abroad. Successful TSMEs should emphasize structure and technology, such

as rearranging its internal systems or managerial hierarchy rather than people issues

such as changing the behaviour of employees by focusing attention on their skills,

attitudes, perceptions and expectations. These findings reveal the unique coping

strategies of TSMEs in Taiwan. Management skills and management concepts of

TSMEs owner-managers are more important than their technical skills and their concern

about production. Employees’ skills are of crucial concern and these successful TSMEs

have thrived under keen competition in an environment of meagre resources.

3.6.1.4 An Adoption of Internet

Karanasios and Burgess (2006) explored the use of the Internet by TSMEs. The

objectives of the study were to improve knowledge on how STEs use and to overcome

typical hurdles to adopt Internet use. The study sought to identify how TSMEs exploit

the information, communication, and transactions spaces created by the Internet. The

study sampled 14 semi-rural and urban TSMEs in Malaysian Borneo, and used semi-

101

structured questionnaires. The results suggest that TSMEs in the region adopt the norm

of using the Internet in their businesses. Most TSMEs have a web site and have been

using email for more than three years. The study indicates that entrepreneurs’ awareness

and adoption of the Internet as business tools has significant benefits to TSMEs and

those that are not online are placing themselves at a disadvantage.

Nodder et al. (2003) analysed the use of Information Communication Technology (ICT)

in highly competitive tourism industry in Auckland, New Zealand. The study focused

on the degree to which national and local governments are providing a policy

framework to support the uptake and use of ICT among TSMEs in the Auckland region.

Using qualitative research design and in depth interviews with local governments and

small business owner/managers of TSMEs, findings revealed that local governments are

beginning to embrace ICT in the tourism industry. Policies regarding the adoption of

ICT among tourism businesses can affect relationships, drive visionary business

strategy development, establish and build networks, and add new dimensions to the

capabilities of network organizations. Nodder et al. (2003) stated that connectivity

optimised the exchange of knowledge and sharing of resources for those whose aim is

to foster a more effective way of doing business to achieve regional economic growth.

General marketing activities and communication with customers are major reasons for

using e-commerce. However, as recommended by the APEC Tourism Working Group

(2002), TSMEs should utilize e-commerce for various other functions such as business

to business (B2B) transactions, market research, after-sales service, and competitor

analysis. The extent to which e-commerce is integrated throughout the business value

chain is crucial to determine the benefits that can be gained. Making a more proactive

102

and comprehensive utilization of e-commerce is far more beneficial than adopting e-

commerce for specific functions such as receiving orders or ordering goods and services

(Frías, Rodríguez, Alberto Castañeda, Sabiote, & Buhalis, 2012). From the survey, the

APEC Tourism Working Group identified that TSMEs can use more advanced solutions

that are applied to B2B and business to consumer (B2C) transactions with reasonable

prices by using the Internet. The results were gathered through research undertaken by

the APEC Tourism Working Group of TSMEs within APEC member economies. The

survey was held in 2002 and was based on data and information provided by more than

50 experts from several APEC member economies.

Matlay (2004) focused on issues related to the emergence of e-businesses and Internet

trading in e-Europe and the effect that these developments could have on small tourism

firms operating in Western, Central and Eastern Europe. According to Matlay (2004),

tourism represents the largest economic activity in Europe with potentials for further

and sustainable growth. This is partly due to the inherent socio-economic and cultural

diversity of the continent, which incorporates a wide variety of national and regional

identities. In addition, local business, demographic and geographic variations can

impact significantly upon tourism related demand and supply. Importantly, however,

although the main developments in the tourism industry tend to be dominated by large

firms, the vast proportion of related business activities involve SMEs operating in local

and regional markets (Mistilis & Buhalis, 2012; Nodder, et al., 2003).

The recent ICT-related developments in the tourism industry have ensured that more

individuals and firms become connected electronically, resulting in a dramatic change

in competitive drive, from traditional business towards e-business. Entrepreneurship has

103

been identified as the main factor that determines whether a firm, industry or region will

succeed in exploiting the opportunities inherent in e-business (Law, Qi, & Buhalis,

2010; Mistilis & Buhalis, 2012). Hence, official support for e-business is evident not

only at the firm level, but is increasingly promoted at local, regional and national levels

(Neuhofer, et al., 2012). Thus, tourism industry in Europe is positioned to take

advantage of the on-going advances in ICT where strategic change is closely related to

the drive for sustainable competitive advantage (Matlay, 2004).

3.6.1.5 Business Alliance

Braun (2002) discussed how the fostering of a culture of connectivity, networking,

learning, and trust between regional Australian TSMEs may offer potential solutions to

the possible loss of competitive advantage in the new economy. She justifies that

networking and cooperative relationships are considered prime determinants of

commercial success. As such, Australian TSMEs have the opportunity to both

collaborate and compete by joining a regional marketing portal founded on cooperative

principles such as sharing resources and exchanging industry knowledge.

One consistent pattern in the new economic business process is the complex networks

of interaction, whereby emphasis on collaboration between firms is placed as the key

for new models of innovation. Research indicates that network building is not only a

major new source of competitive advantage for any company, but a crucial asset to

business survival and an essential global and, indeed, regional management

requirement.

104

Australian SMEs, on their involvement in business networks, noted a significant level

of interest in networking or formulating networks in the future, indicating that

networking is likely to become important in the business future of Australian SMEs

(Dean, Holmes, & Smith, 1997). Two types of business networks were identified:

formal and informal. The formal networks constituted formal arrangements between

companies to consolidate resources and informal networks were seen as loose

arrangements facilitating information exchange. Service companies were notably more

likely to be involved in formal and informal networking than manufacturing companies.

3.6.2 External Factors

External factors are made up in the societal environment, and generally affect the long

run decision of an organisation. They include political/legal forces, economic forces,

socio-cultural forces and technological changes. External factors are not controllable by

small firms compared to larger organisations. Nevertheless, it is critical for small firms

to be attuned to these forces as they also affect performance of small firms.

3.6.2.1 Government Assistance Programmes

Wanhill (2004) examined the theory and practice of government intervention in the

tourism industry to understand market failure. The study focused on issues of

investment strategy, and principal instruments for implementation, namely investment

incentives. Results show that small businesses, which dominate the sector, face

numerous problems to guarantee success. These difficulties relate to: (1) structuring

small business finance, (2) upgrading standards, (3) improving communications

channels, and (4) a lack of market intelligence. The rationale for government

intervention lies in the complex nature of tourist products, which makes it unlikely for

105

the private sector to assist in implementing the country’s tourism policy objectives by

producing conditions and facilities that meet the needs of visitors, benefit the host

community and are compatible with the wishes of the same community. According to

Wanhill (2004), therefore, market mechanism and governance should not be seen as

mutually exclusive activities, but rather complementary actions. Besides that, Wanhill

(2004) also added that an action program is needed to create the right business

environment for SMEs in order to improve their quality, diversity, competitiveness and

profitability.

Sharma and Sneed (2008) investigated performance efficiency of small hotels in three

major cities in Tanzania. Spatial performance analysis and comparison of small hotel in

Tanzania’s key tourism location were used to seek out the factors that affect small

hotels. To look at the performance efficiency of the hotels, Sharma and Sneed evaluated

factors such as the scale, location effects and employee skills and their effect on hotels’

performance. Results show that the biggest challenge facing small hotels in Tanzania is

increasing capacity to capitalize on cost-saving associated with larger operations. This

requires the government to provide education and training for the industry. The above

measures may also improve critical infrastructure in certain parts of the key tourism

locations to allow the industry to increase tourist and visitor traffic. Thus, marketing

and promotion effort of hospitality and tourism require the industry to partner with the

government.

Wanhill (2002) discussed the weaknesses of TSMEs that can prevent successful tourism

development. Among of the recognized weaknesses of TSMEs are family businesses,

lack of entrepreneurial drive, limited business skills, shortage of finance and tendency

106

to free ride. To provide continuous support for tourism development, evidence suggests

that only government intervention can sustain the tourism industry because of the high

degree of fragmentation in the industry and asymmetric information flows. Hence, a

practical approach to development should involve legislative control and the provision

of public money and technical support to channel the energies of the private sector in

directions that are both sustainable and profitable. Thus, tourism authorities must

evaluate the viability of firms targeted for government assistance. A general action

programme for SMEs is needed to improve the competitiveness of tourism economy

such as improving communication channels, raising the level of market intelligence,

upgrading standards and structuring small business finance. Therefore, given the

fragmented nature of the industry, a pro-active role from public bodies in the form of a

coordinated tourism strategy is required to give a sense of direction and engender

confidence through local community involvement. Based on the survey results, Wanhill

(2002) concluded that an action programme is needed to target SMEs to improve their

quality, diversity, competitiveness and profitability, within the context of sustainable

development to account for the cultural and environmental aspects of tourism.

3.6.2.2 Technology

In tourism, the Internet as a channel of distribution has become one of the most

successful channels used by consumers to research travel options, compare prices and

make reservations for airline tickets, hotel rooms and car rental services. The Internet

also has a profound effect on the internal and external operating procedures within the

hospitality industry (Cheng and Piccoli, 2002).

107

Despite all of the benefits to be achieved, the Internet and new technologies have failed

to make a major impact on the majority of TSMEs in the hospitality industry. TSMEs

have been slow to adopt and to realise the actual benefits of applying ICT to their

business (Standing et al., 1999, Buhalis, 2003; Morrison et al., 1999). However,

according to Anckar and Walden (2001), there is evidence that a small minority of

TSMEs are taking full advantage of the electronic marketplace and benefiting from the

many opportunities that it provides.

3.6.2.3 Global Event

Terrorism acts have had a major effect on the global tourism industry. The impacts of

terrorism on tourism destinations from an economic perspective have been studied and

documented in numerous studies. For instance, the September 11, 2001, terrorism act in

the United States has had an enormous negative effect on tourism demand worldwide

and a devastating impact on the tourism industry of the United States. Airlines, tour

operators, theme parks and attractions, and car rental and hotel companies, to name just

a few, have all reported drastic cancellations of existing reservations and extensive

declines in future bookings (Pizam and Fleischer, 2002). It is found that these impacts

of terrorism on tourism can occur up to three months after the event took place and last

for a relatively long time - six to nine months after the event (Sonmez 1994; Enders,

Sandler, & Parise 1992). To TSMEs, these impacts bring great damages on their

business performance and also survival.

3.6.2.4 Consumer Behaviour

Consumer behaviour in tourism consumption is changing extensively, developing a

more segmented, specialised and sophisticated market mainly aiming at unique

108

activities available at the destinations (Nylander & Hall, 2005; Robinson & Novelli,

2005). Consumer behaviour is also influence by the image of tourism destinations. For

instance, terrorism acts at a certain destination bring negative consequences on the local

tourism industry. Thus, tourists can easily choose other safer destinations. In an era

when tourism is dominated by requests for tailored experiences, TSMEs play a key role

in providing adequate products and services to tourists by responding to their most

specific interests and needs.

Both internal and external factors among tourism business environment have an

influence on the performance of TSMEs. The tourism industry is highly vulnerable to

natural (i.e., hurricanes, volcanic eruptions, torrential rains) and human caused disasters,

both social and political (i.e., riots, insurgency, terrorism, crime, political upheaval, war,

regional tensions). Regardless of their nature, disasters create difficult, often tragic

situations for the afflicted area and its residents. However, these external factors are

beyond the control of the owner-managers of TSMEs. But, according to Lee and

Peterson (2000) and Coetzee et al. (1993), owner-managers must develop closer

relations with these external environments because their opportunities and resources

emanate from this environment.

Based on the above discussion, internal factors are more likely controllable by owner-

managers of TSMEs, and are more likely related to the central role of an entrepreneur in

the small firms. Furthermore, the internal perspectives can be used as the approach for

measuring firm performance.

109

3.7 The Conceptual Framework of the Factors to Influence the Success of TSMEs

The earlier sections have discussed on a wide range of factors affecting the performance

of SMEs in the context of the tourism industry. This section concerns the development

of a model that attempts to conceptualise the relationship between the underlying

factors that influence SME performance in the tourism industry. However, the factors

influencing TSMEs are expected to differ from SMEs in other industries.

Merely, earlier studies on factors affecting the performance of SMEs have focused on

looking into a limited set of variables, and others look into more holistic profiles of

successful SMEs in manufacturing industry. For instance, Gosh and Kwan (1996) made

a cross national inter sectoral study in Singapore and Australia of the key success

factors of SMEs in the manufacturing industry. Gadenne (1998) focused on the effect of

management practices of SMEs by studying 369 businesses in the retail, service and

manufacturing industries in Australia. Wijewardena and Coray (1996) investigated the

success factors of SMEs in Japan’s manufacturing industry. Kauranne (1996) also

focused on SMEs in manufacturing in Finland, and also carried out a follow up study by

looking at firm success in the short and long terms.

Pelham (2000) focused on SMEs in manufacturing to explore the relationship between

market orientation and SME performance in eight industry sectors. Based on the above

research, the findings of the factors affecting SMEs business success were based on the

direct relationship of internal and external factors. In Storey’s (1994) work, the factors

are group into three components: the characteristics of entrepreneurs, the characteristics

of the SMEs, and the type of strategy associated with growth. Table 3.1 lists these three

components, which are important factors in analysing the growth of SMEs.

110

Table 3.1: Factors Influencing Growth in SMEs

The entrepreneur/resources The firm Strategy

1. Motivation 1. Age of the firm 1. Workforce training 2. Unemployment 2. Sector 2. Management training 3. Education 3. Legal form 3. External equity 4. Management experience 4. Location 4. Technological sophistication 5. Number of founders 5. Size 5. Market positioning 6. Prior self-employment 6. Ownership 6. Market adjustments 7. Family history 7. Planning 8. Social marginality 8. New products 9. Functional skills 9. Management recruitment 10. Training 10. State support 11. Age of the entrepreneur 11. Customer concentration 12. Prior business failure 12. Competition 13. Prior sector experience 13. Information and advice 14. Prior firm size

experience 14. Exporting

15. Gender Source: Storey (1994)

Based on Storey’s (1994) framework, Indarti and Langerberg (2004) have examined the

factors affecting Indonesian SMEs based on the modified framework from Storey’s

(1994) research. In their study, Indarti and Langerberg classified the factors affecting

the SMEs performance into three dimensions: entrepreneur characteristics, SME

characteristics and contextual variables of SMEs that were hypothesised to have a direct

bearing on SMEs’ success. They recommend that based on the results of the study,

education and source of capital were related significantly to business success, while

capital access, marketing and technology are not influential to the performance of SMEs

in Indonesia. Figure 3.1 shows the direct relationship of three components as the factors

affecting the performance of SMEs.

111

Figure 3.1: Factors Affecting SMEs' Success

Source: Indarti and Langenberg (2004)

3.8 Limitation of Previous Studies

Research on factors affecting SMEs’ success is highly discussed in manufacturing

industry, but not in the tourism industry, which may have differences in terms of factors

affecting TSME performance. Furthermore, previous research has only looked into the

direct relationship between factors affecting SMEs and the performance of SMEs. Less

research has investigated the antecedents’ factors, which might also influence the

performance of SMEs.

The existing research on entrepreneurship in tourism and on the operations of tourism

firms originates from the developed economies, particularly Western European

countries. In Malaysia, despite the fact that SMEs have been playing an important role

Characteristics of entrepreneur -Age -Gender -Work experience -Education

Characteristics of SMEs -Origin of enterprise -Length time in operation -Size of enterprise -Capital source

Contextual variables -Marketing -Technology -Information access -Entrepreneurial readiness -Social network -Legality -Capital access -Government support -Business plan

Business success

112

in the development process of the national economy (Bank Negara Malaysia, 2005),

research involving SMEs particularly in the context of service sector seems to be

neglected. Many researchers have concentrated on SMEs in the manufacturing sector

while limited research has focused on SMEs in the tourism industry.

Since the Malaysian tourism industry is a key driver of its social, economic, and

regional development, there is an urgency to examine the entities that play significant

roles in tourism growth and success performance. Given the significance of Malaysia’s

tourism industry and the fact that TSMEs dominate this industry, the importance of

research on issues that underpin the development of TSMEs in Malaysia cannot be

underestimated.

Reviewing other studies related to TSME performance and tourism entrepreneurs, most

of the sample come from the accommodation and hotel sectors (Morrison, 1996;

Morrison, Rimmington, & Williams, 1999; Nuntsu, Tassiopoulos, & Haydam, 2004;

Poutziouris, Wang, & Chan, 2002; Shane, Locke, & Collins, 2003). Focusing solely on

such data does not represent the true colours of TSMEs. Aside from the accommodation

and hotel sectors, tourism businesses encompass other services such as facilitation,

transportation, food and beverage and travel related retails businesses (Koh &Hayyen,

2002).


The review of the literature conducted in this chapter has demonstrated that TSMEs

play a significant role in tourists’ perceptions of their experience in their destinations.

113

The theoretical basis for this research, RBV, focuses on a firm’s unique resources and

capabilities to underpin its performance, while theories on entrepreneurship highlight

the differences that exist in the economic, psychological, sociological and tourism

perspectives regarding the entrepreneur. Each of the perspectives discussed attempted to

provide justifications to understand the characteristics of small firm owner–managers.

However, the reasons for these characteristics of entrepreneurs within the tourism

context still require a broad body of work.

Besides the importance of the entrepreneur in business performance, the internal and

external factors of the business environment have been extensively discussed in

previous research as the predominant causes of small business success or failure. Of the

internal factors, socio-economic characteristics such as ethnicity, owner–manager’s age,

employment experience, education level, gender, family business background,

motivation, business skills, business planning, adoption of the internet and business

alliances are regarded as controllable elements of the small business environments. The

external factors, which consist of the societal environment, generally affect the long-

term decisions of small business. Besides technology, global events and consumer

behaviour, government assistance programmes are crucial in influencing the

performance of TSMEs.

The final section of this chapter has reviewed a number of conceptual frameworks

explaining the factors affecting the performance of firms, particularly their effects on

SMEs. Despite the differences among the models about the determinants of success

factors for SMEs, it can be concluded that different sets of the internal and external

114

factors influence the performance of SMEs and these factors are expected to assist in

the improvement of TSMEs’ performance in Malaysia.

115

CHAPTER FOUR

STUDY METHODOLOGY

4.1 Introduction

Chapters 2 and 3 presented the literature review, incorporating various theories and factors

that are relevant in this study. It has highlighted a number of justifications to support the need

to examine success factors of TSME in Malaysia. Previous studies could significantly vary

from nation to nation and from one business environment to the other due to economical,

geographical and cultural disparities and variations. This chapter will provide the underlying

framework constructed for this study.

This chapter is organised as follows. Section 4.2 describes the critical linkage between the

proposed of three dimensions which are considered as the key factors and TSMEs

performance. Section 4.3 looks in the operationalisation of variables and research hypothesis

of the study. Section 4.4 presents the data sources and description. Section 4.5 focuses on the

statistical techniques for data analysis. The chapter draws its conclusion in Section 4.6.

4.2 Internal Resource Factors and TSME Success – the Critical Linkages

Based on the review of related literature discussed in Chapter 3, there is a common set of

underlying success factors towards the performance of SMEs. However, the effectiveness of

this set of factors varies, depending on the cultural context in which the business operates.

Furthermore, most previous studies in this regard were conducted in different countries all

over the world and the majority focused on SMEs in the manufacturing industry (see Feindt,

116

Jeffcoate, & Chappell, 2002; Ghosh, Liang, Meng, & Chan, 2001; Hashim, 2000; Henry

Pribadi & Kazuyori Kanai, 2011; Lin, 1998; Sebora, Lee, & Sukasame, 2009), very few of

which were conducted in developing countries and focused on TSMEs. Hence, the essence of

this study is to contribute to the literature of small business success of TSMEs by identifying

key success factors on business operations in Malaysia.

In this study, three key resource factors have been chosen to investigate as key success

factors to TSMEs in Malaysia. These are: socio-economic characteristics, tourism

entrepreneurs’ motivation, and management practices. This study identifies how socio-

economic characteristics influence tourism entrepreneurs’ motivation. The study will also

examine the outcomes of management practices, focusing on business planning, business

alliances, adoption of Internet, and utilisation on government assistance programmes on the

performance of TSMEs. Furthermore, since the RBV addresses these resources and

capabilities of the firms as an underlying factor of performance, it is therefore a suitable

theory to use within the framework of this study. The purpose of this section is to justify why

these internal and external resources in particular were chosen to assess small business

performance and to explain the framework of the relationship between these resources

towards TSME success.

117

Figure 4.1: The Proposed Conceptual Framework

The proposed conceptual framework for this study, as depicted in Figure 4.1, shows all the

predictors belonging to the internal environment of TSMEs resources: socio-economic

characteristics factors, tourism entrepreneur’s motivation, business planning, business

alliances, adoption on Internet and government assistance programmes utilisation. The

correlation between each specific internal factor will determine the firm success performance

of TSMEs. Using the framework from Indarti and Lagenberg (2004), based on the suitability

with the Malaysian context, some new variables were included; ethnicity, family business

background, tourism entrepreneurial behaviour and utilisation of government assistance as

components in the adopted framework. With the new variables, the framework is modified

Socio-economic

characteristics

Tourism entrepreneur’s

motivation

Business planning

Business alliances

Adoption on Internet

Government assistance

programmes

TSMEs performance

118

and improved on the older technique used by using structural equation approaches to solve

the correlations and relationships between each variable of the model.

4.3 Operationalisation of Variables and Research Hypotheses

This study examines the theoretical constructs known as latent variables (Byrne, 2010). As

latent variables are not observed directly, these variables cannot be measured directly.

Therefore, ‘the researcher must operationally define the latent variable of interest in terms of

behaviour believed to represent it’ (Byrne, 2010, p. 4). The approach employed is to generate

scale items derived from previous work conducted by other researchers. These items are

widely used in this research area and have been tested for scale validity in these studies.

However, a number of items have been modified for this study and some items were

generated based on variable definitions. This section describes the manner in which the

constructs that emerged from the literature were operationalised.

4.3.1 Socio-economic Characteristics

The entrepreneur is recognised by many researchers due to their role in starting the business

enterprise, managing the business and being responsible for its success or failure. This

undoubtedly explains the sustainability of SMEs being dependent on entrepreneur

motivation. Several previous studies have identified socio-economic characteristics that are

triggering factors of entrepreneurial motivation. Age, gender, education level, work

experience, ethnicity, family business background are found to be important drivers of

entrepreneurial behaviour and motivation (Arenius & Minniti, 2005; Curiel-Piña, González-

Pernía, Jung, López-Trujillo, & Peña-Legazkue, 2013; Galloway, Brown, & Arenius, 2002)

119

and help to explain firms’ strategic behaviour as they a manifestation of managerial

psychological dimensions (Wiersema & Bantel, 1992). The emphasis on demographic

characteristics was also justified by Mazzarol (2005; 1999) and Kolvereid (1996). The

following sections will discuss the significance of each of the selected demographic

characteristics made operational in this study.

4.3.1.1 Age of the Owner-Manager

In an attempt to explain the motivation of tourism entrepreneurs, age has been seen as one

determinant factor of the socio-economic characteristics to influence the motivations of an

entrepreneur. For example, findings from Kristian, Furoholt and Wahid (2003) found a

significant relationship between age of an entrepreneur and business success. They indicated

that older entrepreneurs were more successful compared to younger entrepreneur. Other

findings from Reynolds et al. (2000) found that individuals aged 25-44 years are the most

entrepreneurially active. However, findings from another study in India by Sinha (1996)

disclosed that successful entrepreneurs are in a relatively younger age group . This is

supported by Reijonen and Komppula (2007) in their study on TSMEs’ barriers to growth.

They found a negative link between age of tourism entrepreneur and business growth.

Entrepreneurs whose age is above 41 years old are less motivated to grow their business

compared to younger entrepreneurs. Based on the arguments above, it is hypothesised that:

H1a: Age contributes to tourism entrepreneur’s motivation.

120

The tourism entrepreneur’s age is made operational based on Reijonen and Komppula’s

(2007) findings from gathering data from respondents in the following age groups: younger

than 30 years of age, between 31 and 40 years age, between 41 and 50 years of age, and older

than 50 years age. Respondents’ ages were required to evaluate the age factor on tourism

entrepreneurs’ motivation. These items required respondents to classify their age according

to the age groups provided.

4.3.1.2 Gender

Generally, small firms are owned and managed by men (Morrison, Breen, & Ali, 2003).

According to Ahmad (2005), 81.1 per cent male owner/managers dominate the small

business. Furthermore, in Kristian, Furoholt and Wahid’s (2003) study, it was indicated that

women entrepreneurs were less ambitious to grow and were also less optimistic. Likewise,

according to Kolvereid (1996) and Tominc and Rebernik (2012) male entrepreneurs also

have significantly higher entrepreneurial intentions compared to females. However, many

studies on tourism entrepreneurship identified that the prominence of lifestyle motives is the

foremost reason to get involved in the tourism industry. The research also characterised such

entrepreneurs as having a lack of growth orientation, possessing non-economic motives and

not wanting to grow the business (Dewhurst & Horobin, 1998; Getz & Carlsen, 2000). Getz

and Carlsen (2000) found that there was no significant difference between genders among

tourism entrepreneurs in Bornholm, Canada. This somehow reflects the influence of the

lifestyle motives among tourism entrepreneurs; hence male and female tourism entrepreneurs

likely show no difference. Nevertheless, female entrepreneurs often possess unique

circumstances and characteristics compared to males in terms of motivations for start-up

121

business and for business growth. At the same time, female entrepreneurs maintain

traditional domestic roles alongside their professional ones (Galloway, et al., 2002). Thus, it

would be reasonable to hypothesise that:

H1b: Gender contributes to tourism entrepreneur’s motivation.

The respondents on this variable are transformed through dummy variable coding 0 for male

and 1 for female in order to enable statistical techniques to be carried out to the test direction

and magnitude of dependent/independent variable relationships.

4.3.1.3 Education Level

The finding of the formal educational level on the owner/managers is inconsistent. In

Australia and Tanzania, respondents with university education form only the minority of the

total sample of the study conducted by Getz and Carlsen (2000) and Sharma and Upneja

(2008). However, Glancey and Pettigrew (1997) find that there is an equal balance between

respondents with secondary education and those with university-level education in Scotland.

In the UK and Turkey, the percentage of respondents with tertiary education is higher, that is

70per cent (Szivas, 2001) and more than 50 per cent (Avcikurt, 2003). In terms of expanding

a business, recent research found a positive effect of individual educational level on the

likelihood to perceive entrepreneurial opportunities (Clercq and Arenius, 2006). A higher

level of education develops both the analytical ability and the computational skill of the

entrepreneur as well as communication skills. Those who attain a higher level of education

are better equipped to communicate with customers, gather market intelligence and develop

122

proactive strategies which then lead to higher growth (Casson, 2003). Education could also

enhance an individual’s capacities for creativity, flexibility, self-direction and the ability to

respond to widely different situations and thus contribute to innovative behaviour within a

firm (Rauchand Frese, 2000; Collinson and Quinn, 2002; Shook et al., 2003; Llewellyn and

Wilson,2003; Walton, 2003).Therefore, this study hypothesises that:

H1c: Education level contributes to tourism entrepreneur’s motivation.

The tourism entrepreneur’s educational level is made operational based on Passannen (2003)

by the inclusion of a variable that collects educational level in four options: primary,

secondary, tertiary and other.

4.3.1.4 Ethnic group

The role of ethnicity as an antecedent of entrepreneurial motivation could be explained

through self-efficacy differences or differences in family and household characteristics,

including human and financial capital across ethnic groups (Krueger, Reilly, & Carsrund,

2000; Rodriguez, Tuggle, & Hacket, 2009). This is due to the closeness of the entrepreneur

and specific society traits which influence the entrepreneurs’ mindset and behaviour (Gamini

de Alwis & Senathiraja, 2003). The positive link between Asian ethnicity and the work

setting and culture is highlighted by Henry, Durganard and Wilpert (1999).Furthermore, the

differences of culture on each ethnicity are pervasive and entrenched in all societies. These

differences also play a role in personal values and decision-making ((Chu & Katsioloudes,

2001; Kennedy & Drennan, 2002; Lee & Peterson, 2000).

123

In the Malaysian context, the Malays are very hierarchical and lack individual decision-

making. The idea of entrepreneurship is not favoured in Malay society due to the uncertain

nature of entrepreneurship (Mueller & Thomas, 2001). This also implies the same to Indian

and other minority ethnic groups in Malaysia. In terms of business ownership across

industries in Malaysia, data from the SME (Small and Medium Enterprise Corporation

Malaysia, 2011) demonstrates that there is a low number from Indian and other minority

group in Malaysia compared to Malays and Chinese, which indicates that they have low

interest in entrepreneurial activity. Furthermore, as Malays are Muslim, their definition of

success is not associated with only wealth (Al-Omar &Abedl-Haq, 1996). Likewise, studies

conducted by Turan and Kara (2007), Muslims are more likely to be pulled into business than

non-Muslim. In contrast on a global scale, Chinese are known for their business tradition.

They have positive association with power and wealth and place high value on materialism

(Chong, Syed and Roselina, 2003). Profit is their business goal and monetary reward is a

great motivator for Chinese to enter into a business (Chong, 2012).

Malaysia is multi-ethnic, with Malays comprising the dominant ethnic group. However,

Malaysian Chinese and Indians (as well as other minority ethnic groups) have differences in

various aspects (such as cultural values and religious background) which may influence their

entrepreneurial motivation. Thus, this study hypothesises that:

H1d: Ethnic group contributes to tourism entrepreneur’s motivation.

124

The tourism entrepreneur’s ethnicity is based on the Malaysia’s classification of ethnic

groups according to Department of Statistics, Malaysia (2009) census, by inclusion of a

variable that collects the majority of Malaysia ethnic groups: Malay; Chinese; Indian and

others.

4.3.1.5 Family Business Background

The importance of family business background as the influential factor on entrepreneurial

motivation of individuals has been highlighted by previous studies (Altinay, Madanoglu,

Daniele, & Lashley, 2012; Basu, 2004). According to Getz and Carlsen (2005), as most of

TSMEs is dominated by family businesses, thus children’s intention to continue with an

existing business or to start a new business have strong influence from their parents.

Furthermore, Asian communities have stronger family ties and family involvement in

business in comparison with Western communities (Basu, 2004). Likewise, Mueller and

Thomas (2001) point out that family backgrounds of individuals acts as stimulator and/or

motivator of their entrepreneurial behaviours where the family business tradition helps an

individual to acquire business knowledge and skills. According to Altinay and Altinay (2006)

those acquired business knowledge and skills if harnessed with their personality traits can

stimulate entrepreneurial activity. Therefore, the following hypothesis is:

H1e: Family business background contributes to tourism entrepreneur’s motivation.

The respondents on this variable are transformed through dummy variable coding 0 for no

family business background and 1 for with family business experience in order to enable

125

statistical techniques to be carried out to the test direction and magnitude of

dependent/independent variable relationships.

4.3.1.6 Working Experience

Previous working experience is one of the key factors that influences level of

entrepreneurship (Hayton et al., 2002; Morrison 2000). The entrepreneur’s previous work

experience prior to opening a new venture is an important factor that influences how the

entrepreneur handles the start-up and the growth of the business (Hatch and Dyer, 2004). It

creates a ‘cognitive framework’ that facilitates pattern recognition and contributes to the

management of risks associated with entrepreneurial motivation. Furthermore, according to

Basu (2004) and Westhead et al, (2001) the working experience can assist in building up the

entrepreneur’s knowledge base, developing access to market information and business

networks, improving managerial capability and thus diversifying products and services. In

addition, in circumstances where the context of the new business is similar to the one where

the entrepreneurs gained earlier, it will help the operations of the business (Haber & Reichel,

2007). Based on these findings, this study proposed the following hypothesis:

H1f: Working experience contributes to tourism entrepreneur’s motivation.

The operation of previous working experience is based on Pasanen’s (2003) study; the

respondents have to indicate their previous working experience from four options:

No experience

Experience mainly as an employee

126

Experience mainly as a manager

Much experience as an employee and as a manager

The respondents on this variable are transformed through dummy variable coding 0 for no or

without experience and 1 for yes or with experience in order to enable statistical techniques

to be carried out to the test direction and magnitude of dependent/independent variable

relationships.

4.3.2 Tourism Entrepreneur Motivation

According to Delmar (1996), entrepreneur behaviour is defined as actions taken by the

entrepreneur to reach desired goals, and can be measured and determined by the

entrepreneur’s motivation to enter the business. In the context of RBV, the actions taken by

the entrepreneurs are defined as the intangible resources of the firms. According to McGrath

(1996) the intangible resources are embedded in the venture in the form of entrepreneurial

capital conceptualised as the present value of an infinite series of shadow options. Thus, a

tourism entrepreneur has full authority to make a decision on how to manage the firm. The

entrepreneur also utilises the firm’s internal and external resources to ensure the performance

of the business.

Nevertheless, even though previous studies have signified that most tourism entrepreneurs’

motivation is oriented on ‘push’ motives, providing employment for family members,

generating additional income, meeting market need, companionship with guests and

appealing lifestyle (Getz &Carlsen, 2000; Schroeder, 2003) has led to lack of motivation to

127

achieve profit in business and less entrepreneurial activity (Smallbone, Leigh & North, 1995;

Shaw & Williams, 1990; Dewhurst &Horibin 1988). Such motives havealso led to constraint

of regional economies and create problems for firms’ survival (Williams, 1988). This is

argued by Ateljevic and Doorne (2000) where the lifestyle motivations of tourism

entrepreneurs have created the ability to position their business in a highly segmented

marketplace or niche market with this unique behaviour of tourism entrepreneurs in their

business goal. Thus, this study hypothesises that utilising business planning, business

alliances, internet adoption and government support will determine the performance of

TSMEs:

H2: Tourism entrepreneur’s motivation will have a positive impact on business planning

H3: Tourism entrepreneur’s motivation will have a positive impact on business alliances

H4: Tourism entrepreneur’s motivation will have a positive impact to TSMEs performance

H5: Tourism entrepreneur’s motivation will have a positive impact to Internet adoption

H6: Tourism entrepreneur’s motivation will have a positive impact to utilisation on

government assistance programmes

This construct was measured using seven items. All items were developed based on Walker

and Brown’s (2004) study (see Table 4.1), which emphasised ‘lifestyle motivation’. The

operation of tourism entrepreneurs’ motivation uses a five-point Likert scale from ‘Strongly

agree’ (1), ‘Disagree’ (2), ‘In between’ (3), ‘Agree’ (4) and ‘Strongly agree’ (5). The

respondents were required to specify the extent to which they agree with the five statements.

128

To shed light on the significance of possible differences in perceptions of motivation based

on socio-economic factors, chi-square, independent sample t-test and Analysis of Variance

(ANOVA) will be utilised. The reason for using these tests is that they allow for the analysis

of rank data used in measuring this variable.

Table 4.1: Measurement Items for Tourism Entrepreneur’s Motivation

Entrepreneur motivation’s items

Personal satisfaction is more important than making lots of money Having a flexible lifestyle is more important than making lots of money As a small business I have responsibility to the wider community When I first started the business I was more money oriented than today I think of my business as something that my children can be involved in I would rather keep the business modest and under control than have it grows too big I feel I am running a successful business

Source: Walker and Brown (2004)

4.3.3 Business Planning

Research in small businesses has shown an association between planning and performance.

The literature suggests that planning is a good management practice, and may be beneficial

to business (Gibson et al 2002; Schwenk and Shrader, 1993). According to Berman, Gordon

and Sussman (1997:14) ‘firms that plan produce better financial results than firms that do not

plan. ’Bracker et al. (1986, 1988) also found that firms that undertook strategic planning

perform better financially. Lerner and Almor (2002) contended that planning lays the

groundwork for developing the strategic capabilities needed for high performance. Strategic

planning has been studied by various scholars, including Mintzberg (1973, 1994), Brush and

Bird (1996), Bracker and Pearson (1986), and Bracker, Keats and Pearson (1988). Findings

from these studies agree that there is a positive relationship between strategic planning and

firm performance.

129

According to Miles and Snow (1978), successful, proactive firms have the propensity to

invest time in strategic planning. On the contrary, unsuccessful, reactive firms do not invest

time in strategic planning; rather, they ‘fight fires’. Rue and Ibrahim’s study involving 253

small firms in the United States (US) found a positive link between planning sophistication

and growth in sales. A recent study of 168 manufacturing SMEs in Sri Lanka found that

planning and control sophistication led to increased sales (Wijewardena et al., 2004). Their

study concluded that greater sophistication in planning contributed to greater sales.

Therefore, this study hypothesises that:

H7: Business planning will have a positive impact on performance of TSMEs.

Five items were utilised to measure the construct of the importance of business planning and

this is based on Chung’s (2006) study (see Table 4.2). The importance of business planning

on firm performance was measured by evaluating the level of business planning’s importance

on a five-point Likert scale from ‘Not important (1), ‘Least important’ (2), ‘In between’ (3),

‘Important’ (4) and ‘Very important’ (5). The respondents were required to specify the extent

to which they agree with the five statements.

Table 4.2: Operational Variables for Importance of Business Planning

Business planning’s items

Business plan is an effective way of setting business goal and targets Business plan is a useful business strategy to track the business development Business plan improves business performance in term of sales revenue and/or profits Business plan is an effective way to organise the business operations Business plan simplify your role as a manager

Source: Chung (2006)

130

4.3.4 Business Alliance

In the small business context, business alliance activity is relevant due to the firms’ limited

resources including goods, information, technology and products as well as limited market

presence (Barnir and Smith, 2002). Building business alliances is a strategic move by SMEs

to overcome limited resources. Having business alliances allows SMEs to acquire financial

resources, technological know-how, market position, reputation, or unique managerial or

human resources.

Alliances reflect the collective use resources and cross-organisational information flows to

assist alliance partners in achieving a future desired strategic position. From the RBV

perspective, this describes how business owners build their businesses from the resources and

capabilities that they currently possess or can acquire (Dollinger, 1999).This activity

provides SMEs with plenty of opportunities to partner in and establish cooperative

arrangements. Research indicates that network building is not only a major new source of

competitive advantage for any company, but a crucial asset to business survival and an

essential global tool. According to Jarrat (1998), alliances enhance the capability of

businesses to perform various activities along the value chain, and deliver superior customer

value through developing and integrating business processes. On the other hand, business

alliance activity that develops due to the limited resources of an organisation will then turn

into an opportunity to expand business performance. It is therefore hypothesised that:

H8: Business alliances will have a positive impact on performance of TSMEs.

131

This construct was newly developed for this study based on studies of business alliance (e.g.

Braun, 2002; Lee, 2007; Pansiri, 2009). This item assesses the influence of business alliance

on firm performance. Content validity is conducted in order to ensure the internal consistency

and reliability of these newly developed items. Respondents were asked to rate these items

based on a five-point Likert scale from ‘Not important (1), ‘Least important’ (2), ‘In

between’ (3), ‘Important’ (4) and ‘Very important’ (5). The respondents were required to

specify the extent to which they agree with the five statements. Table 4.3 displays the

importance of the business alliances variables used in this study

Table 4.3: Operational Variables for Importance of Business Alliances

Business alliance’s items

An organisation can actually experience competitive advantage through business alliance Business alliance activity simplifies roles as manager Business alliance activity improves the organizational relationship with customers and/or suppliers Business alliances among businesses is an economic way of delivering services Business alliances is an effective way to gather market- and competitor-related information Business alliances improve business performance in terms of sales revenue and/or profits

Source: Developed by the candidate

4.3.5 Adoption on Internet

ICT is believed to be the most cost-efficient tool to help companies gain bigger markets and

the ability to compete with larger organisations in attracting customers to their products,

services and information (Tan et al, 2009). In the tourism industry, ICT (particularly the

application of the Internet) has proven its consolidating effect on the performance of TSMEs.

Findings by Atlejevic, (2009) showed that tourism operators in Wairarapa, New Zealand are

132

taking advantage of ICT and have developed their own in-house ‘research-centre’,

incorporating marketing activities, extensive customer information and analysis.

The initiative has opened up a direct relationship between TSME operators and tourists.

Tourists can make their own travel arrangements on their own computers. Hence, tourism

entrepreneurs must provide value-added services, in utilizing information technology

particularly from the use of the Internet, which enable them to provide value for money for

tourists and increase competency with other industry players. The use of the Internet has

been identified as the main factor that determines whether a firm, industry or region will

succeed in exploiting the opportunities inherent in e-business (Matlay, 2004). In his study,

Matlay concludes that official support for encouraging the use of the Internet among tourism

SMEs is evident, as it will increase the performance of tourism SMEs and create

competitiveness among them. Nodder (2003) found that the adoption of the Internet among

tourism SMEs will boost industry yield, manage information, improve decision-making and

enhance planning processes for the business. From the foregoing arguments, it is

hypothesised that:

H9: The adoption of the internet will have a positive impact on performance of TSMEs.

Five items were utilised to measure this construct. These items examine the advantages of

adopting the internet in business operations. The items were developed based on Chung’s

(2006) study. Respondents were required to rate these items based on a five-point Likert

scale from ‘Strongly disagree’ (1), ‘Disagree’ (2), ‘In between’ (3), ‘Agree’ (4) and ‘Strongly

133

agree’ (5). The respondents were required to specify the extent to which they agreed with the

five statements (see Table 4.4).

Table 4.4: Operational Variables for an Adoption on Internet

Internet’s items

The Internet is an efficient way of communicating with customers and/or suppliers An organization can actually experience competitive advantage through Internet technologies The Internet simplify your role as a manager The Internet improves the organizational relationship with customers and/or suppliers The Internet is an economic way of answering customer and/ or suppliers queries

Source: Chung (2006)

4.3.6 Government Assistance Programmes

Based on a review of previous empirical studies, government involvement also factors as one

of the important resources for SMEs’ success (Park & Kim, 2010) and is regarded as an

external resource toward factors affecting SME success (Chittithaworn, et al., 2011). Some

studies have identified the ineffectiveness of government support toward SMEs performance.

According to Storey (2008), government influence on SMEs can exert either a positive or a

negative influence. According to Kozan, Oksoy and Ozsoy (Kozan, et al., 2006)2006),

Turkish SMEs suffer from a lack of financial support, a high burden of taxes and regulations,

and too few government programs.

A study conducted by the Korea Institute for Industrial Economics and Trade (2008) it was

found out that the Korean government supporting policy on R&D has limited effect on SME

performance and it was performed neither effectively nor efficiently. In Iran, the failure rate

134

of SMEs is alarming due to the inability of the Iranian government to successfully offer the

necessary support for SMEs (Sorooshian, et al., 2011). In spite of that, in general,

government support has a positive impact on the performance of SMEs because government

support has been shown to be important for small firm success (Yusuf, 1995). Likewise, the

effect of government policy is needed for SME success (Porter, 1980). It was also supported

by other studies that there is a positive association of external supports by the government

toward the success business growth among SMEs (Johnson, Conway, & Kattuman, 1999;

Storey, 1994; Trau, 1996). Despite the ambiguous relationship between government support

and the positive performance of SMEs in general, in the context of this study and the

rigorous commitment and continuous support of the Malaysian government towards TSMEs’

performance through its TSME and tourism policies, this study hypothesises that:

H10: Government assistance programmes will have a positive impact on performance of

TSMEs.

This construct was measured using items that were developed based on Wanhill’s (2004)

study and assess the influence of government assistance programmes on TSMEs’

performance. Respondents were required to rate these items based on a five-point Likert

scale from ‘Strongly disagree (1), ‘Disagree’ (2), ‘In between’(3), ‘Agree’(4) and ‘Strongly

agree’ (5). The respondents were required to specify the extent to which they agree with the

five statements (see Table 4.5).

135

Table 4.5: Operational Variables of Government Assistance Programmes

Government’s assistance programmes items

The programmes designed by the government have improved the performance of TSMEs and its competitiveness There is adequate financial assistance in Malaysia to enable those interested in venturing into tourism business activities There is adequate non-financial assistance in Malaysia to enable those interested in venturing into tourism business activities The government has put in place adequate tourism incentives to support the growth and development of TSMEs

Source: Developed by the candidate

In measuring the level of awareness and use of government assistance programmes, this

study adopted a list of assistance programmes from SME (2011) (see Table 5.20). This

allows for the analysis of rank data in measuring this variable.

4.3.7 TSMEs Performance

In investigating the performance of SMEs, issues relating to the type of measurement have

been discussed extensively. Traditionally, financial performance measurement such as profit

margin, turnover, return on investment, return on equity, market share, debt to equity,

earning per share, sales growth and asset growth are some of the key financial ratios that are

particularly used as criteria for measuring organizational performance (David, 1999, p. 287).

This approach has been applied in investigating the performance of big companies and SMEs

in manufacturing. This traditional measure of business success has been based on either

employee numbers or financial performance such as profit, turnover or return on investment.

Economic measures of performance have generally been popular due to the ease with which

they can be administered and applied since they are very much ‘hard’ measures (Barkham et

136

al., 1996; Gibb and Davies, 1992; Ibrahim and Goodwin, 1986). Furthermore, as Marlow and

Strange (1994:180) state, ‘all businesses must be financially viable on some level in order to

continue to exist’. However, recent studies have identified that this approach is only

applicable for measuring businesses that aim for profit maximisation (Akbaba, 2012).

Implicit in these measures is an assumption of growth that presupposes all small business

owners want or need to ‘grow’ their businesses.

Nevertheless, not all small business owners want to grow and prefer to keep their size small.

Despite this, their businesses are successful. Thus, non-financial measurement is another tool

in the performance measurement of an organization, particularly in a small-business context.

Since small business owners are motivated to start a business on the basis of lifestyle or

personal factors - and this applies particularly in the tourism industry - non-financial

performance is used to reflect a combination of the personal characteristics and attributes of

owners-managers together with their reasons for starting the business (Walker & Brown,

2004)

As the majority of small-business owners work on a full-time basis within their businesses,

then logically most business decisions are taken by the owners, either individually or with a

partner. Therefore, implying financial criteria alone is not viable to measure success among

businesses that are not keen to maximize profit. Therefore, non-financial criteria are used to

measure businesses that are motivated for lifestyle or personal factors. In order to measure

lifestyle business performance, the intrinsic measures are referred to as ‘psychic rewards’ by

Owen et al., (1992) or psychic income by Wheelock and Baines (1998) and are helpful in

137

explaining personal objectives and goals of small business owners. They are often used by

people who have not necessarily been as financially successful, yet are still happy with other

types of rewards such as personal satisfaction. These affective measurements are not

necessarily substitutes for, but are complementary to financial goals.

The firm performance is resultant from the implementation and execution of its strategy

contributing to the bottom-line improvement of the firm. In any business, regardless of the

size of the firm, performance is measured to determine how effective and efficient the firm

actually is. The results then will allow for critical comparisons to compare the firm’s

performance over different time periods, over competitors and compared to industry averages

(David, 1999). In measuring the performance of a firm, financial criteria are usually the most

appropriate measure of business success. However, as discussed previously, many small

enterprise owners and entrepreneurs, specifically in the tourism industry, are motivated to

venture into tourism businesses on the basis of lifestyle or personal factors.

Thus, non-financial performance measurement is also needed to measure the performance of

small enterprise. Furthermore, recent studies that have investigated performance in a small

business context have included both financial and non-financial measurement. For that, this

study will apply both financial and non-financial factors as the performance indicators in

measuring success in TSME performance through number of employees and

owner/managers’ business satisfaction using tested items from research undertaken by

Walker and Brown (2004) and Pasanen (2003). Table 4.6 shows the financial and non-

financial performance measurement of TSMEs.

138

Table 4.6: Operational Variables of TSMEs Performance

TSME Performance items

Please estimate the number of full-time employee in 2008 Please estimate the number of full-time employee in 2009 I consider my business succeeded compare to my competitor I am satisfied with my business success Source: Walker and Brown (2004) and Pasanen (2003)

There are four items measuring TSMEs’ performance. The operation of TSME performance

utilises a five-point Likert scale. Items 1 and 2 are based on the number of full-time

employees from ‘1–10’ (1), ’11–20’ (2), ’21–30’ (3), ’31–40’ (4) and ’41–50’ (5). Items 3

and 4 are ranked from ‘Strongly disagree’ (1), ‘Disagree’ (2), ‘In between’ (3), ‘Agree’ (4)

and ‘Strongly agree’ (5). The respondents were required to specify the extent to which they

agree with the statements. These four items were developed for this study based on studies by

Walker and Brown (2004) and Pasanen (2003).

The summary of research questions, research objectives and hypotheses of the study are

presented in Table 4.7.

Table 4.7: Summary of Research Questions, Research Objectives and Hypotheses of the

Study

Subsidiary research questions Hypotheses

1. What is the impact of socio-economic characteristics to tourism entrepreneur’s motivation?

H1a Age contributes to tourism entrepreneur’s motivation.

H1b Gender contributes to tourism entrepreneur’s motivation.

H1c Education contributes to tourism entrepreneur’s motivation.

H1d Ethnicity contributes to tourism entrepreneur’s motivation.

139

H1e Family business background contributes to tourism entrepreneur’s motivation.

H1f Working experience contribute to tourism entrepreneur’s motivation.

2. How does tourism entrepreneur’s motivation affect the management practices of Malaysian TSMEs?

H2 Tourism entrepreneur’s motivation will have a positive effect on business planning.

H3 Tourism entrepreneur’s motivation will have a positive effect on business alliances.

H4 Tourism entrepreneur’s motivation will have a positive effect to TSME performance.

H5 Tourism entrepreneur’s motivation will have a positive effect to Internet adoption.

H6 Tourism entrepreneur’s motivation will have a positive effect to utilisation on government assistance programmes.

3. What is the impact of management practices to Malaysian TSMEs performance?

H7 Business planning will have a positive effect on performance of TSMEs.

H8 Business alliances will have a positive effect on performance of TSMEs.

H9 The adoption of the internet will have a positive effect on performance of TSMEs.

4. What is the impact of government assistance programmes on the performance of Malaysian TSMEs?

H10 Government assistance programmes will have a positive effect on performance of TSMEs.

4.4 Data Sources and Description

The secondary data used in this study was obtained sourcing extensively from the Ministry of

Tourism (MOTOUR), Tourism Malaysia, DOS and SME Corp located in Putrajaya and

Kuala Lumpur, Malaysia. These sources are reliable as they are the key provider of related

statistic data and information associated with tourism and TSMEs in Malaysia. However,

besides the above authorities, in order to gather information and compile data on TSMEs

establishments in Malaysia, this study also obtained secondary data from Malaysian

Association of Hotels (MAH) and Malaysian Association of Tour and Travel Agents

140

(MATTA) in order to assemble the number of TSMEs in Malaysia, which is not listed on the

official sites.

In terms of primary sources of data, this study was obtained from the owner-managers of

TSMEs to provide related information on socio-economic characteristics, management

practices and TSMEs’ business performance through the administered questionnaires

distributed during the survey. Further discussion on primary data of this study is discussed in

Section 4.4.4.

4.4.1 Survey Area

The study focused on five localities in Malaysia, namely: Kuala Lumpur, Kedah, Pahang,

Pulau Pinang and Sabah. These locations are considered to be representative due to their

higher number of tourist arrivals than other locations in Malaysia. As shown in Table 4.8,

this was confirmed through the statistical data derived from Tourism Malaysia.

Table 4.8: Number of Tourist Arrival, 2009

Location Tourist Arrival

(million) Kuala Lumpur 15.7 Pahang 9.6 Pulau Pinang 5.9 Sabah 5.6 Kedah 4.7 Sarawak 3.9 Melaka 3.7 Johor 3.5 Selangor 2.8 Perak 2.5 Negeri Sembilan 1.6

141

Terengganu 1.2 Kelantan 0.8 Labuan 0.2 Perlis 0.1 Putrajaya 0.1

Source: Tourism Malaysia (Tourism Malaysia, 2013c)

The five selected locations of Kuala Lumpur, Pahang, Pulau Pinang, Sabah and Kedah are

considered to be representative due to each of the locations representing each region in

Malaysia except for Southern Region (due to the low of tourist arrivals compared to other

locations in Malaysia). Northern Region is represented by Pulau Pinang and Kedah; Central

Region is represented by Kuala Lumpur; East Coast Region is represented by Pahang; and

Sabah, Sarawak and Labuan (collectively known as East Malaysia) is represented by Sabah.

4.4.2 Population and Sampling Frame

The sample population in this study comprises small- and medium-sized firms providing

products and services of tourism activities (TSMEs). TSMEs are the focus in this study

because they play a role in boosting the tourism industry which generates considerable

income for the country (Ateljevic, 2007; Morrison & Thomas, 1999). TSMEs have a huge

impact in delivering the products and services directly to tourists and it is through this

channel that tourists receive their memorable experience in Malaysia.

In this study, certain tourism characteristic activities of TSMEs will be selected to assure

international comparability of the data. The tourism characteristics for this study are based on

Tourism Satellite Accounts (TSA) established by international organizations: the United

Nations (UN), the World Tourism Organization (WTO), Eurostat and the Organization for

142

Economic Co-operation and Development (OECD). However, due to the fragmented nature

of the activities of TSMEs in Malaysia and the nature of available data, the sample will be

limited to TSMEs that provide the following characteristics:

1. Accommodation services

2. Travel agency services, tour operator and tourism guide services.

The sampling frame is developed from MOTOUR, Tourism Malaysia and DOS in order to

achieve the most comprehensive list possible. However, due to the nature of available data on

TSMEs in Malaysia and this study, the characteristics and the total number of TSMEs in each

state and federal territories in Malaysia have not been categorically identified. Furthermore,

some of the TSMEs in Malaysia have not registered with MOTOUR thus creating a

deficiency in compiling the total population of this study. In addition, there are differences

in terms of TSMEs’ statistical data gathered from MOTOUR, MATTA and MAH on the total

number of tourism enterprises providing accommodation services and travel agency services,

tour operator and tourism guide services in all sizes.

In ensuring the sample shares the same attributes, the following criteria are used to select

tourism enterprises into the final sampling frames:

1. Tourism enterprises must have between at least one to 50 employees. This is meeting

the SME definition in Malaysia which is defined and practiced by National SMEs

Development Council (2005). All other sizes above this number will be considered

as larger enterprises.

143

2. TSMEs must have operated for more than two years. Longevity is one of the

determinants for being a successful operator in a small business context (Rogerson,

2000; Walker & Brown, 2004) and is perceived as one of the key indicators of small

business success and overall performance (Cuba, Decenzo, & Anish, 1983; A. B.

Ibrahim & Goodwin, 1987).

3. Key informants for this study are primarily the owner–managers of the businesses. In

small business, owner–managers or entrepreneurs have a great deal of influence on

enterprise growth (Tharenou, Donohue & Cooper, 2007). The questionnaire was

designed to be completed by the owner–managers (or entrepreneurs). This is in line

with Campbell’s (1995) suggestion that the key informant should not be chosen for

statistical representativeness but for the knowledge they have that is relevant to the

study.

4.4.3 Sampling Method and Sample Size

In order to select TSMEs from the lists in the five major tourist destinations, the study used

the stratified sampling technique. This technique was adopted for this study because the

stratification process will provide greater effectiveness in controlling extraneous sampling

variation and all-important sub-populations are represented in the sample. It is a two-step

process in which the population is partitioned into sub-populations or strata. The strata

should be mutually exclusive and collectively exhaustive in that every population element

should be assigned to one and only one stratum and no population elements should be

omitted (Maholtra, 2010).

144

It is important to avoid extraneous sampling variation because if the characteristics of the

sample are not met, the research objective will not be achieved since the sample is

heterogeneous. For this study, the stratification is based on the selected major tourist

destinations in Malaysia and the subpopulation in this study is the selected tourism

enterprises that provide accommodation services, travel agency services, tour operator

services or tourism guide services.

As the tourism enterprises currently registered in the five locations are of all sizes, the study

was stratified into micro, small and medium size businesses, and then finally into a smaller

sample, a simple random sample of TSMEs was taken on each of the five locations. Each

TSME was assigned with numbers and then selected completely at random. Therefore, each

TSME in this study was equally likely to be chosen. According to Tharenou, Donohue and

Cooper (2007), random sampling the selection of any given participant has no effect on

inclusion or exclusion from the sample, as the choice of participants is independent.

As the study encountered a deficiency on the statistics of TSMEs’ population in the chosen

five locations (Kuala Lumpur, Pahang, Pulau Pinang, Kedah and Sabah), this study used the

Raosoft Sample Size Calculator in order to determine the sample size. The Raosoft calculator

is based on the normal distribution statistical method given by:

x = Z(c/100)2r(100-r)

n = N x/((N-1)E2 + x)

E = Sqrt[(N - n)x/n(N-1)]

145

Where n is the sample size, E is the margin of error, N is the population size, r is the fraction

of responses of interest, and Z(c/100) is the critical value for the confidence level c.

Raosoft recommended to use 20,000 as the population, since the sample size difference does

not change for a population larger than 20,000 (Raosoft Inc, 2004). Based on the calculation,

Raosoft provided a sample size of 377 to show a statistical significance at a 5 per cent margin

of error, 95 per cent confidence level and a response distribution of 50 per cent.

4.4.4 Data Collection Methods

4.4.4.1 Personally-Administered Questionnaire Approach

A self-administered questionnaire was design to collect data for this study. This type of

questionnaire was chosen because of its ease of use and it provides the most plausible

alternative for measuring unobservable constructs such as attitudes, values and personalities

(Walker & Brown, 2004). However, as self-administered questionnaires have a low response

rate, the completed questionnaire was collected at the respondent’s premises to increase

participation among the participants. At the same time, the respondents were also provided

with the consideration to return the completed questionnaire via post to increase the freedom

of participants’ decision to participate in this research.

4.4.4.2 Data Collection Procedure

The questionnaire, which was designed, based on the information needed to test the

hypothesis. The choice of answer used in this study is Dichotomous ‘yes’ or ‘no’ and

multiple-choice answers. Besides that, Likert-scale approach is used extensively in this study.

The five-point Likert-scale with anchors such as ‘strongly disagree’ (1) and ‘strongly agree’

146

(5) is used to indicate the strength of agreement of their TSMEs performance. The standard

set and rules for item generation is used according to guidelines by Oppenheim (1993).

Then, with the approval from the University’s Human Research Ethics Committee (see

Appendix 4.1), a pilot survey was conducted on a small sample of 12 respondents who were

not part of this study in order to identify and eliminate potential errors. According to Polit

and Hungler (1997), a pre-test is a trial to determine whether an instrument solicits the type

of information envisioned by the researcher. As a result of the pilot test, a number of minor

changes were made to the wording of questions to improve clarity and the instruments

construct reliability. Finally with the finalised questionnaire (see Appendix 4.2), potential

respondents among owner-managers of TSMEs located in Kuala Lumpur, Kedah, Pahang,

Pulau Pinang and Sabah were then contacted and invited to participate in this study through

telephone.

4.5 Statistical Techniques and Data Analysis

The statistical methods employed to analyse the survey data of this study are comprised of

descriptive, inferential and multivariate techniques. Statistical Package for Social Science

(PASW) 18.0 (Coakes, Steed, & Ong, 2009) is used in this study to analyse on descriptive

and inferential analysis while Analysis of Moment Structure 18.0 (AMOS)(Arbuckle, 2006)

is used to run the multivariate techniques for Structural Equations Modelling (SEM) in this

study. This programme is an addition to the statistical package PASW 17.0. Each of these

methods is discussed in the following sections and the results of the analysis presented in

Chapter 5; descriptive and inferential analysis and Chapter 6; multivariate techniques for

147

SEM. The following discussion outlines the data processing and data analysis procedures

utilised in this study.

4.5.1 Validity and Reliability of a Construct

In order to ensure the internal consistency of items in constructs and to form the basis of

reliability estimates of the factor analysis, the scales used in this study were tested before

using them in the analysis. The following section discusses the validity and reliability

measurement used in this study.

4.5.1.1 Content Validity

One of the measures was through content validity. A scale has content validity to the extent

that its items represent a chosen subset of the universe of appropriate items (DeVellies,

1991). It is attained by defining precisely what must be measured via literature reviews,

expert panels and pre-testing, to ensure that all possible attributes are included in the scale

(Mcdaniel & Gates, 1999). In accordance with this process, a review of literature was used to

generate potential scale items. The subsequent survey draft was then submitted to a panel of

academics from the Newcastle Business School, University of Newcastle through the

University's Human Research Ethics Committee (HREC) and then to a pre-test sample. The

results of this process indicated that each of the constructs possessed content validity.

4.5.1.2 Constructs Validity

The second measure is construct validity, which refers to the confirmation of a relationship

by independent measurement procedures from a statistical perspective. For construct validity

148

to occur, methods measuring the same constructs should all have a high level of correlation

(Churchill, 1999; Hair, et al., 2010). Construct validity is established through the

determination of both convergent validity and discriminant validity.

4.5.1.3 Convergent Validity

Convergent validity refers to the confirmation of a relationship by independent measurement

procedures. Convergent validity of constructs in this study was tested by conducting the full

measurement Confirmatory Factor Analysis (CFA). This is done by examining the t-values

and the satisfactory factor loadings (SFL) where these values should exceed 1.96 and 0.50

respectively (Dunn, Seaker, & Waller, 1994). The results of convergent validity for all items

in this study is further discussed in Section 6.4.1.1

4.5.1.4 Discriminant Validity

Discriminant validty refers to the degree to which measures of conceptually distinct

constructs differ from other constructs (Hair, et al., 2010). It looks at the degree of difference

between constructs tested in a model. Evaluating discriminant validity is vital to ensure that

constructs are not interrelated. Values greater than 0.80 indicate large correlations between

constructs, and this implies a lack of discriminant validity (Campbell & Fiske, 1959). Fornell

and Larckner’s (1981) approach was also utilized to test the discriminant validty. According

to this test, the square root of the AVE for a given construct should exceed the absolute value

of the standardized correlation of the given construct with any other construct in the analysis.

Section 6.4.2.2 has further discussion on the square root AVE results for all construct in this

study.

149

4.5.1.5 Constructs Reliability

Reliability measures the extent to which a group of different items are consistent with one

another and whether every measure is free from measurement error (Leech, Barrett, &

Morgan, 2005). It is assumed that each item comprised a true score measuring an underlying

construct. Based on the recommendation from Garver and Mentzer (1999), this study

calculated three estimates of reliability for each constructs: Cronbach’s alpha, composite

reliability and average variance extracted (AVE). The preferred value was equal to or higher

than 0.50, although values exceeding 0.30 are usually adopted as standard (Cunningham,

2007). Composite reliability, also known as construct reliability, measures the internal

reliability of a set of items (Bollen, 1989). Meanwhile, AVE reveals the overall amount of

inconsistency in the indicators of the latent construct. The accepted value for composite

reliability and AVE should be equal to or greater than 0.70 and 0.50 respectively (Hair,

Anderson, Tatham, & Black, 2003).

4.5.2 Descriptive and Inferential Analyses

Using SPSS, the descriptive and inferential analysis is used to identify patterns and general

trends in the dataset of this study. Descriptive analyses such as those for distribution

(variable frequency counts, percentages and cumulative percentages), the central tendency

(mean, median, mode), the dispersion (standard deviation) and the chi-square test (Uma

Sekaran & Bougie, 2009) are employed in this study to describe the TSMEs’ descriptive

statistics and relationship that could explain TSMEs distribution (type of TSMEs businesses,

TSMEs firm size structure, TSMEs ownership structure, TSMEs firm age structure) and

tourism entrepreneurs’ characteristics (demographic factors such as age, gender, level of

education, ethnic group and employment and entrepreneurial experience) in Malaysia.

150

Inferential analysis was used to test the relationship among the variables in the data set

(Andereck, 2011). Some of the inferential analyses employed in this study were t-tests and

ANOVA. These analyses were used to investigate the first research question of this study,

investigating the effect of socio-economic characteristics on tourism entrepreneurs’

motivation. The results from these analyses will determine whether the means of socio-

economic characteristics (age, gender, education, ethnic groups, family and employment

experience) differ in the observation groups.

4.5.3 Multivariate Analysis

According to Hair, Black, Babin and Anderson (2010), multivariate analysis refers to all

statistical techniques that simultaneously analyse multiple measurements on individuals or

objects under investigation. It is used to measure, explain and predict the degree of

relationship among variates. Thus, in this study, SEM was utilised to investigate the second

and third research question of this study, the effect of tourism entrepreneurs’ motivation on

management practices (creation of a business plan, business alliance, internet adoption and

government assistance) of Malaysian TSMEs and the effect of management practices on

TSME performance. SEM will examine the causal relationships of Malaysian tourism

entrepreneurs’ perceptions of management practices and the relationship between TSMEs’

management practices and TSMEs’ performance based on statistical fit (for further

discussion see Section 4.5.4.1). Further, SEM was used because of its rigorous approach in

conducting multivariate analysis (Kline, 2005).

151

4.5.4 Data Analysis Procedure for SEM

SEM comprises two categories of model: the measurement model and the structural model

(Schumacker & Lomax, 2004). The purpose of the measurement model is to measure the

relationship between observed variables and latent variables in order to determine whether

the theoretical model is consistent with the observed data. The structural model, on the other

hand, is to test the hypothesised relationships between the constructs. The measurement

model is examined using confirmatory factor analysis (CFA) to determine the adequacy of

model fit and then proceeds to the structural model. In determining the adequacy of fit for

both the measurement model and the structural model, several fit indices were applied. The

following discussion outlines the data processing of measurement model using CFA

throughout the analysis of this survey.

4.5.4.1 Measurement Model Procedures

The measurement model was first analysed using CFA. The CFA’s objective is to finalise the

variables listed in the constructs of the framework with the adequate statistical fit and to

ensure the variables make theoretical or substantive sense. The finalised variables with

smaller constructs will represent better variables for the study. First, a full model is specified

based on current theory and practice. Secondly, before testing this full measurement model, a

series of one-factor congeneric models for each construct (which consists of four or more

indicator items) are tested and evaluated separately before being tested in combination with

other constructs. Constructs with two or three indicators should be tested in pairs (Jöreskorg,

1993), as a construct with fewer than four items will lead the degrees of freedom (df) to be

zero. This will generate a zero chi-square value, which is meaningless. If the chi-square

152

statistic is unsatisfactory, testing and changes of the models are done one step at a time,

provided that the changes make substantive sense. Once constructs have been examined

singly, in pairs, or both, a full measurement model comprising all the constructs of interests

is then evaluated.

CFA analysis using AMOS is performed by the maximum likelihood (ML). ML assumes

multivariate normality and continuity of the data being analysed. Another estimation method

that makes no distributional assumptions is also available when the data violates the

assumption (i.e. weighted least squares (WLS) or asymptotically distribution-free (ADF);

(Browne 1984). However, this method of distribution-assumption-free estimation requires

very large sample sizes and is usually not achievable in social science research (Muthén

1993). Therefore, to account for this non-normality, the Bollen-Stine bootstrap p (Bollen&

Stine 1992) may be applied as a post-hoc adjustment in producing the correct p value for the

assessment of model fit. The Bollen-Stine p-value is a bootstrap modification of the normal

theory χ2, and is based on generating an adjusted chi-square distribution that takes into

account the extent to which the data depart from normality. Therefore, ML estimation

together with the Bollen-Stine bootstrap p will be utilised in assessing model fit in this

research. This is most useful when the data indicate departures from normality, and

particularly departures from multivariate normality.

153

Table 4.9: Index Category and the Level of Acceptance

Fitness category

Index Level of acceptance

Explanation

Absolute fit

Discrepancy Chi Square (Chisq)

P > 0.05 Sensitive to sample size > 200. If the sample obtained for the study is greater than 200, the minimum value of Chisq could be ignored (Hair, Anderson, Tatham, & Black, 1995; Joreskorg & Sorbom, 1984)

Root Mean Square of Error Approximation (RMSEA)

RMSEA < 0.08 Range 0.05 to 1.00 acceptable (Browne & Cudeck, 1993)

Goodness of Fit Index (GFI)

GFI > 0.90 GFI = 0.95 is a good fit (Byrne, 2010)

Incremental fit

Adjusted Goodness of Fit (AGFI)

AGFI > 0.90 AGFI = 0.95 is a good fit (Byrne, 2010)

Comparative Fit Index (CFI)

CFI > 0.90 CFI = 0.95 is a good fit (Byrne, 2010)

Tucker-Lewis Index (TLI)

TLI > 0.90 TLI = 0.95 is a good fit (Byrne, 2010)

Normed Fit Index (NFI)

NFI> 0.90 NFI = 0.95 is a good fit (Byrne, 2010)

Parsimonious fit

Chi Square/Degrees of Freedom (Chisq/df)

Chi Square/df < 5.0 The value should be less than 5.0 (Marsh & Hocevar, 1985)

Source: Modified from Awang (2012)

In determining the adequacy of fit for the measurement model, several fit indices were

applied. Hair et al (1995, 2010) and Holmes-Smith (2006) recommended the use of at least

three fit indices by including at least one index from each category of model fit. The three

categories are absolute fit, incremental fit and parsimonious fit. Table 4.9 presents the level

of acceptance and an explanation for each of the fitness categories.

154

In this study, Chisq, RMSEA, CFI, TLI and Chisq/df are selected for the purpose of

measuring the model fit indices that represent the three-fitness category. Following is a

discussion on the mentioned fit indices.

• Chisq

The significance value of χ² test of p-value should be more than 0.05 to indicate the model

fits well (Kline, 2005). The χ2 statistic is a test of whether the matrix of implied variances

and covariances is significantly different from the matrix of empirical sample variances and

covariances. When the probability is more than .05, it indicates that there is no discrepancy

between the matrix of implied variances and covariances and the matrix of empirical sample

variance and covariances. This implies that the data fit the model well, as the parameter

estimates raised by this model yield such a small value for the discrepancy function.

• RMSEA

Root-mean-square-error of approximation (RMSEA), with values of 0.08 or less is

considered to indicate a good fit between data and the hypothesised model (Hu & Bentler,

1998).The RMSEA was originally proposed by Steiger and Lind (1980) and was developed

by Browne and Cudeck (1993) as an absolute index that does not require a baseline

comparison. RMSEA assumes that there will be no perfect model to fit any population.

Therefore, it takes into account the closest approximation to reality (Browne & Cudeck

1993). The χ2 statistic, degrees of freedom, and sample size for the target model are required

to calculate this index (Rigdon 1996). When the value of RMSEA is close to zero, this

indicates perfect fit, and as the value increases, the model fit deteriorates. A nice

155

characteristic of the RMSEA is the confidence interval associated with this fit index (Browne

& Cudeck 1993). Within a hypothesis-testing framework, a ‘test of close fit’ is examined by

testing the null hypothesis (i.e. RMSEA ≤ .05) and an alternative hypothesis (i.e. RMSEA ≥

.05). For confidence interval with the value of more than .05, the null hypothesis is rejected,

indicating that the data are not a close fit to the model. A close fit is still acceptable if the

confidence interval does not exceed .05 (Hancock & Freeman 2001). If the RMSEA value is

more than .05 but still equal to or below .08, then the data indicate a reasonable fit to the

model (Browne & Cudeck, 1993). Researchers are compelled to utilise the RMSEA fit index

because of the available confidence interval that gives essential information about the

accuracy of the estimate of fit, which is not available for most other fit indices (MacCallum&

Austin 2000). Hence, this study utilizes RMSEA with a value of .08 or less to indicate model

fit.

• CFI

The CFI incremental fit index was proposed by Bentler (1990) based on the χ2 statistic. CFI

measures the improvement in the change from target model to independence model (i.e. a

model in which all variables are assumed to be uncorrelated and only error variances are

estimated). Similar to NFI, the value of CFI ranges from 0 to 1. A CFI value that is closer to

1 indicates a satisfactory fit of the data. CFI is one of the most popular fit indices reported in

SEM analysis, as it is relatively independent of sample size (Bentler 1990).

156

• TLI

TLI also known as non-normed fit index (NNFI) was originally proposed by Tucker and

Lewis (1973) and was further developed by Bentler and Bonett (1980). TLI compares the

lack of fit between target model and independence model that is calculated by the χ2 statistic

(Hu & Bentler 1998). TLI examines the relative improvement for each degree of freedom of

the target model over the independence model, which is scaled to an estimate range of 0-1. A

TLI value of .95 is favoured to indicate a good-fitting model. Nevertheless, a TLI value of

more than 1 specifies an over-fitting model. TLI has been consistently shown to be unrelated

to sample size (Anderson & Gerbing 1984; Marsh, Balla & McDonald 1988). Consequently,

TLI is more sensitive to the occurrence of model misspecification than the comparative fit

index (Hutchinson & Olmos 1998). This will be discussed further in the next section.

• Chisq/df

Chisq/df, also known as Normed chi-square (Schumacker & Lomax, 2004) is a simple ratio

of chi-sq to the degrees of freedom for a model. Generally, Chisq/df associated with better-

fitting models, except in circumstances with larger samples (greater than 750). Chisq/df is

widely used because if it is not provided directly by the software program, it is easily

calculated from the model results (Hair, et al., 2010).

Following the CFA procedure, besides meeting the statistical fit of measurement model, the

following condition is also fulfilled throughout this study.

1. The standardised factor loadings (SFL) on every item should be more than 0.5. For

any items with factor loadings below 0.5, the deletion of items is done one item at a

157

time. This procedure is repeated until all the factor loadings for each item exceeded

0.5 (Byrne, 2010).

2. The squared multiple correlation (or R2) for every item should be more than 0.4. Any

items that had R2 less than 0.4 should be deleted, and the deletion of items is done

one time at a time. This procedure is repeated until all R2 for each item are more than

0.4 (Awang, 2012).

3. The modification indices (MI) with value above 15 indicate the correlated error

between items. The deletion of items with the lower factor loading or set identified

pair of correlated error as ‘free parameter estimate’ is done one item at a time. This is

repeated until the model meets the statistical fit of model fitness (Awang, 2012)

Finally, the CFA results indicate that the measurement model possesses good fit, thereby

demonstrating that analysis can proceed to the structural model.

4.5.4.2 Structural Model Procedures

After conducting CFA analysis to the both measurement and full measurement model, the

finalised constructs were then used to proceed to the structural model to examine and analyse

the hypothesised between constructs in this study. In determining the adequacy of fit for the

structural model, similar fit indices were applied as measurement and full measurement

models: Chi-square, RMSEA, CFI, TLI, and Chisq/df.

158


This chapter outlined and discussed the research methodology to be applied in the study. The

operationalisation of each variable utilised in this study to generate the research instrument

was also discussed. This chapter indicated the procedures in soliciting the target population

and the ways in which potential respondents were contacted and invited to participate in this

research. Furthermore, the analysis procedures utilised in this research were explained.

Finally this chapter highlighted the methodology of SEM and the ways that the model fit

indices were used to indicate whether the proposed model fits with the empirical data. The

next chapter presents the descriptive analysis and results of this study.

159

CHAPTER FIVE

AN EMPIRICAL INVESTIGATION ON THE CHARACTERISTICS OF TSMEs AND MANAGEMENT PRACTICES OF TOURISM ENTREPRENEURS IN

MALAYSIA

5.1 Introduction

Tourism represents an increasingly important industry in the Malaysian economy. TSMEs

now play a greater role in Malaysian tourism industry and contribute to its overall

performance. Various policies and strategies have been implemented to enhance TSMEs’

business performance. Therefore, a review of TSME characteristics and management

practices will help to provide better insight on TSME development in Malaysia. This chapter

reports and discusses the findings of the characteristics of TSMEs and the management

practices of tourism entrepreneurs in Malaysia. This chapter will also investigate the

differences and similarities that exist in organisational and managerial styles among TSMEs

in Malaysia.

The organisation of this chapter is as follows: Section 5.2 discusses the structures of TSMEs

based on the responding firms. Section 5.3 examines the TSMEs’ entrepreneurial

characteristics. Section 5.4 explores on the characteristics of TSMEs management practices.

Section 5.5 summarizes the findings in this chapter.

160

5.2 Structure of TSMEs in Malaysia

This section reports the characteristics of TSMEs in Malaysia to better understand their

distinctiveness between each location. The discussion looks at the following TSME

characteristics: type of business, size, ownership and year of establishment to examine and to

provide some insight on TSMEs’ organisational characteristics in Malaysia.

5.2.1 Type of TSMEs’ Businesses

There were 750 questionnaires distributed to a random sample of TSMEs.370 were returned,

yielding a 49.3 per cent response rate. Only 346 (or 46.1 per cent) were found useable for this

study. The findings of this study are based on a sample of 346 TSMEs in Malaysia.

Table 5.1 depicts the type of TSMEs surveyed in this study. TSMEs offering accommodation

services make up 51 per cent (or 176 TSMEs), while the other 49 per cent (or 170 TSMEs)

are travel agents, tour operators and other tourism guide services providers. Respondent

TSMEs are evenly distributed in terms of the types of tourism services they offer.

Location plays a role in terms of the type of tourism businesses at tourist attractions planned

by the State Tourism Actions Department (STAD) in each state. As discussed in Chapter 2,

the natural resources are one of the factors in promoting local tourist attractions. In addition

to the natural resources, each state also extends its local attractions by offering man-made

attractions such as museums, shopping complexes, historical places and festival celebrations.

Diversifying the attractions creates attention from tourists (Weaver & Lawton, 2001) and

these man-made (created) and socio-cultural (cultural events and festivals) attractions show

161

positive impact to tourist arrivals and the overall tourism industry (Jafari & Ritchie, 1981).

Two states, Pahang and Penang, show dominance on certain types of tourism businesses:

Pahang on nature and adventure, and Pulau Pinang on City Excitements.

Table 5.1: Distribution of TSMEs by Location and Type of Business

Location Total TSMEs

Type of business Travel agency services, tour operator, and tourism guide

services

Accommodation services

Freq. %a Freq. %a Freq. %a Pahang 70 20.3 40 11.5 30 8.7 Pulau Pinang 69 19.9 28 8.1 41 11.8 Kedah 71 20.5 36 10.4 35 10.2 Kuala Lumpur 72 20.8 34 9.8 38 11.0 Sabah 64 18.5 32 9.2 32 9.3

Total 346 100.0 170 49.0 176 51.0 Note: a% refers the number of type of businesses express as a percentage of the total

number of TSME

Source: Data derived from survey

Pahang shows the highest number of TSMEs involved in travel agency services, tourist

operations and tourism guide services. This is reflected in Pahang’s location, which is in the

East Coast Region of Malaysia. It has a variety of eco-tourism attractions compared to other

states in Malaysia. It is surrounded by the highlands, rainforest which covers 66 per cent of

the state’s area, and lakes full of various flora and fauna. Pahang has been extensively

promoted as the key tourism attractions by MOTOUR and Pahang STAD. These natural

resources of Pahang have led to the wide promotion of eco-tourism activities by the STAD of

Pahang, which focuses primarily on its niche tourism products. This may imply the higher

162

number of registered travel agency services, tour operator and tourism guide services in

Pahang compared to other locations in Malaysia.

Meanwhile, Pulau Pinang has the highest establishment of accommodation services in this

study, with 41 TSMEs or 60 per cent of TSMEs. Only 40 per cent were travel agency

services, tour operator and tourism guide services. This again may reflect its key tourism

attractions and promotions carried out by Pulau Pinang STAD on its highly focused tourism

products: City Excitements, and Islands and Beaches. Thus, many resorts are primarily

located along the Pulau Pinang, including famous beaches such as Tanjung Bungah, Batu

Feringhi and Teluk Bahang. The state also continuously refurbishes its city attractions,

particularly at Gurney Drive, a famous place offering a variety of Penangite delicious local

foods.

The other locations of Kedah, Kuala Lumpur and Sabah do not focus on niche tourism

products but concentrate on both natural-resource attractions and city excitements attractions.

This justifies the equal distribution of the type of TSME businesses: travel agency services,

tour operators and tourism guide services and accommodation services established in these

locations.

In order to find out whether the location of TSMEs and type of TSME business had a

relationship that could be used to explain the distribution above, the Pearson Chi-Square (χ²)

test for independence was carried out. Prior to performing the test throughout the chapter, the

163

underlying assumptions of the test were investigated. A contingency table generated by SPSS

fulfilled the following conditions (Coakes, et al., 2009):

1. Observations should be randomly sampled from the population of all possible

observations.

2. Each observation should be generated by a different subject, and no subject is counted

twice.

3. When the number of cells is less than ten and particularly when the total sample size is

small, the lowest expected frequency required for a chi-square test is five. However, the

observed frequencies can be any value, including zero.

Following the test for independence and given the calculated value of χ² (DF = 4, N = 346) =

4.01 and a p-value of 0.40 which is more than the critical value of 0.05, the study accepts the

null hypothesis and concludes that there is no significant relationship between location and

type of business at the 5 per cent significance level (see Appendix 5.1). The statistical result

indicated that there is no difference in terms of the TSMEs’ location and its type of business.

This indicates that regardless of the fact that certain locations such as Pahang and Pulau

Pinang have advantages on its natural resources which contribute to their tourism attractions

compared to other locations in Malaysia, it has no influence on the preferences on type of

tourism businesses established in the location. This implies that travel agents, tour operators

and other tourism guide services providers and accommodation services are the main services

providers in tourism industry (Hills & Cairncross, 2011).

164

5.2.2 TSMEs Firm Size Structure

Firm size in this study is measured by the total number of full-time employees. Respondent

TSMEs in this study are primarily small-sized TSMEs with 62 per cent, while medium-sized

TSMEs make up the remaining 38 per cent. Table 5.2 depicts the respective frequency

distribution of the TSMEs by location and size.

According to Table 5.2, 213 firms (or 62 per cent of the total sample)are of small size; that is,

they have 5 to 19 full-time employees.133 firms (or 38 per cent) are of medium size and have

20 to 50 full time employees. Reviewing the data in terms of TSME size distribution across

locations, Pahang has the highest number of small-sized enterprises with 67 firms or 19.5 per

cent; followed by Pulau Pinang with 45 firms or 13.0 per cent; and Kuala Lumpur with 44

firms or 12.8 per cent. Kedah dominates the medium-size enterprises with 44 firms or 12.6

per cent; followed by Sabah with 34 firms or 9.6 per cent of medium-size enterprises from

the total of TSMEs in this study.

Table 5.2: Distribution of Firm Size by Location


TSMEs firms size (Full Time Employee)

Small (5-19)

Medium (20-50)


Total 346 100.0 213 62.0 133 38.0 Note: a% refers the number of firm size express as a percentage of the total number of TSME


165

Further analysis was carried out to explain the distribution above. The results from the test

for independence showed the calculated value of χ² ( DF = 4, N = 346) = 57.35 and a p-value

of 0.00, which is less than the critical value of 0.05 (see Appendix 5.2). The study therefore

rejects the null hypothesis and concludes that there is a significant relationship between

TSMEs’ locations and firm size, at the 5 per cent significance level. This can be related to the

preference to keep the business small in order to avoid the complexities in handling bigger

tasks in business operation (Jaafar, Abdul-Aziz, Maideen, & Mohd, 2011).

5.2.3 TSMEs Ownership Structure

TSMEs ownership structure is important because previous research conducted on SMEs in

other industries indicates that small family firms are positively associated to SME

performance (Davis, Dchoorman, & Donaldson, 1997; Wenyi, 2009).

Figure 5.1a and Figure 5.1b illustrate the ownership type by location in the sample firms.

Ownership type in this study is categorized into family and non-family business, and each

category is further differentiated in terms of sole proprietorship, partnership or private

limited firms. Figure 5.1a indicates that the majority of TSMEs in this study are family

owned with 231 firms or 67 per cent. Out of this 67 per cent, 82 firms or 39 per cent are

registered as private limited firms. The findings of the higher number of family-owned

TSMEs is in line with the structure of SME ownership surveyed by Rachagan and

Satkunasingam (2009) and Rahman (2006) who also found a dominance of family owned

SMEs in Malaysia. Findings in this study also indicate that the majority of TSMEs’

respondents with 208 firms or 59 per cent operate as sole proprietorships and partnerships.

166

Figure 5.1a: TSMEs by Type of Family Business and Type of Ownership

Note: Percentage is refers the types of ownership express as a percentage of the total number

of TSME


The family TSMEs in Pahang, Kuala Lumpur and Sabah prefer to register their firms as

private limited companies. This is quite interesting because only the non-family TSMEs from

the northern region (Pulau Pinang and Kedah) prefer to register their firms as sole

proprietorships and partnerships. Based on the Pearson Chi-Square analysis, there is no

significant relationship between type of family business and type of ownership. χ² (DF = 2, N

= 346) = 3.0, and p-value = 0.22, which is more than the critical value of 0.05 (see Appendix

5.3).

3%

7% 7%

3%4%4%

11%

9%

5%

7%

11%

5%6%

11%

7%

0%

2%

4%

6%

8%

10%

12%

Pahang Pulau Pinang Kedah Kuala Lumpur Sabah

Sole Propriertorship Partnership Private Limited Company

167

Figure 5.1b: TSMEs by Type of Non-Family Business and Types of Ownership

Note: Percentage isrefers the types of ownership express as a percentage of the total number

of TSME


However, in terms of the location and type of ownership, the study rejects the null hypothesis

and concludes that there is a significant relationship at the 5 per cent significance level. The

calculated value of χ² (DF = 8, N = 346) = 26.92, and p-value =0.00, which is less than the

critical value of 0.05 (see Appendix 5.4). The simplicity in establishing and terminating sole

proprietorships and partnerships compared to private limited companies, has made these two

types of business ownership the most common ownership among Malaysian SMEs (Small

and Medium Enterprise Corporation Malaysia, 2011).Similar empirical studies by Wibowo

(2007) and Pidani (2011) found out a similar pattern of SMEs ownership structure in

Indonesia.

4%

6%

1%

3%2%

9%

4%

11%

9% 9%

11%

8%

6%

9%10%

0%

2%

4%

6%

8%

10%

12%


Sole Propriertorship Partnership Private Limited Company

168

5.2.4 TSMEs Firm Age Structure

TSMEs in this study are also reported in terms of the years they are established. The number

of years in operation can explain the extent of accumulated knowledge, experience and

capabilities in managing the business operation (Graner & Isaksson, 2002). Thus in the

context of firm performance, older firms relatively will show higher capabilities from

experience than younger firms which are still new and emerging in the industry (Camison-

Zomoza, Lapierda-Alcami, Segarra-Cipres, & Boronat-Navarro, 2004).

Figures 5.2a and 5.2b show the majority of TSMEs in Malaysia are considered experienced

firms. More than 197 firms or 57.0 per cent have been in operation for more than 30 years.

About 120 firms or 34.6 per cent were established in between 1992– 2002. 59 firms or 17.0

per cent and 18 firms or 5.2 per cent of the sampled TSMEs in Malaysia are the longest

running in the business, established before 1980. There are 149 firms or 43 per cent that were

established in between 2003 – 2009. Pulau Pinang and Kuala Lumpur contains

predominantly older firms, as many have been in the industry longer compared to other

TSMEs in Malaysia. This can be attributed to the early tourism programs and promotions

carried out in these two states by the Malaysian Government since the Second Malaysian

Plan (1971-1975) (Economic Planning Unit, 1971).

169

Figure 5.2a: Proportion of TSMEs Travel Agency, Tour Operator and Tourism Guide

Service by Year of Establishments

Note: Percentage is travel agency, tour operator and tourism guide services express as a

percentage of the total number of TSME


Figure 5.2b: Proportion of TSMEs Accommodation by Year of Establishments

Note: Percentage is accommodation services express as a percentage of the total number of

TSME


0.3%

0.9%

0.0%0.9%

0.0%

2.0%

0.3%

2.3%1.7% 1.7%

3.2%

4.0%3.5% 3.5%

4.9%

6.1%

2.9%

4.6%3.8%

2.6%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%


Before 1980 1981-1991 1992-2002 2003-2009

0.0%

1.7%

0.6%0.9%

0.0%

1.7%1.2%

0.3%1.7%

4.0%

2.0%

3.2%

4.0%

3.2% 2.9%

4.9%

5.8%5.2% 5.2%

2.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%


Before 1980 1981-1991 1992-2002 2003-2009

170

Further analysis was conducted to test for independence to find out whether TSMEs ‘location

and year of the business established had a relationship to explain the distribution above. The

results from the Pearson Chi-Square test showed the calculated value of χ² (DF = 12, N =

346) = 39.93 and a p-value of 0.00 which is less than the critical value of 0.05 (see Appendix

5.5). The study therefore rejects the null hypothesis and concludes that there is a significant

relationship between the location and year of establishment at the 5 per cent significance

level.

Based on the data, the number of newly established TSMEs in 1992 onwards increased for

both types of TSMEs businesses: travel agency and tour operator and tourism guide services

and accommodation services. The periods between 1992 – 2002 and 2003 – 2009 saw more

than 100 being established in the tourism industry: 120 firms or 34.6 per cent in between

1992 – 2002, and 149 firms or 43 per cent in 2003 – 2009. Compare the figures to only 77

firms or 22.2 per cent of TSMEs established before 1991. The government’s tourism-specific

programs and policies (especially during the Sixth, Seventh and Eighth Malaysia Plans)

contribute to the high number of TSMEs. During these periods, Malaysia government

emphasized a highly integrated approach and implementation on tourism planning which

increased the number of TSME establishments. For example, during the Sixth Malaysia Plan

(1991-1995), the government has set up a special fund for tourism of RM 200 million,

focusing on small and medium-sized projects. The government also introduced a new clause

of the Investment Incentive Act of 1968,which provided an income tax exemption for tour

operators (Economic Planning Unit, 1991).

171

During the Seventh Malaysia Plan (1996 – 2000), the government focused on expanding the

country’s tourism activities, products and market (Economic Planning Unit, 1996). In the

Eighth Malaysia Plan, the government focused on specialised tourism products and services

such as eco-tourism, agro-tourism, homestay programmes, cultural heritage tourism, thematic

events, MICE, sports and recreation, education tourism and the Malaysia My Second Home

programme (Economic Planning Unit, 2008). In the Ninth Malaysia Plan, the government

promoted the country as a preferred location for feature films, television commercials and

documentaries in addition to the specialised tourism products and services (Economic

Planning Unit, 2006). These Malaysia Plans have expanded tourism business opportunities

among Malaysians and boosted the establishments of TSMEs during these periods.

5.3 Tourism Entrepreneur Characteristics in Malaysia

In order to better understand tourism entrepreneur behaviour and to find out the similarities

or differences that exist among Malaysian tourism entrepreneurs, this study looked into

certain tourism entrepreneurs’ characteristics. This includes the following demographic

factors: age, gender, level of education, ethnic group, and their work and entrepreneurial

experience. The following sections will discuss each of the characteristics surveyed in this

study.

5.3.1 Age of Tourism Entrepreneur

Age has some influence on the behaviour of an entrepreneur. Many empirical studies have

found that certain age groups have an influence entrepreneurial activity. In Malaysia, the

working population is between 15 to 64 years old and it comprises 67 per cent of Malaysia’s

172

total population (Department of Statistics, 2012c). Table 5.3 presents tourism entrepreneurs

sampled in this study in terms of age and location. The majority of tourism entrepreneurs are

in a relatively mature age group. About 180 of respondents or 85.2 per cent are at least 41

years old, with 42.2 per cent aged between 41 and 50 years. Approximately 14.8 per cent of

the tourism entrepreneurs belong to the younger age group (21 to 30 years old). This finding

is similar with other studies where themajority of adults above 30 years of age were more

active in entrepreneurship than any other age group (eg Chittithaworn, et al., 2011;

Kristiansen, et al., 2003; Reynolds, et al., 2000; Roland, Noorseha, Leilanie, & Mohar, 2010)

Table 5.3: Distribution of TSMEs by Age of Tourism Entrepreneur by Location

Note: a % refers age of tourism entrepreneur express as a percentage of the total number of

TSME

Source: Derived from survey


Age group 21- 30 %a 31-40 %a 41-50 %a Above

51 %a

Freq. %a Freq. %a Freq. %a Freq. %a Freq. %a Pahang 70 20.3 7 2.0 22 6.4 34 9.8 7 2.0 Pulau Pinang

69 19.9 5 1.4 31 9.0 29 8.4 4 1.2

Kedah 71 20.5 10 2.8 24 7.0 32 9.2 5 1.4 Kuala Lumpur

72 20.8 18 5.3 21 6.2 26 7.4 7 2.0

Sabah 64 18.5 11 3.3 16 4.6 26 7.4 11 3.2 Total 346 100.0 51 14.8 115 33.2 146 42.2 34 9.8

Younger age group (30 years

below)

Mature age group (31 years above)

Total 346 100.0 51 14.8 295 85.2

173

The Pearson Chi-Square (χ²) test for independence was carried out to find out whether

location of TSMEs and age of tourism entrepreneurs had a relationship to explain the

distribution above. The results from the test for independence showed a calculated value of χ²

(DF = 12, N = 346) = 20.53 and a p-value of 0.05 which is more than the critical value of

0.05 (see Appendix 5.6). The study therefore accepts the null hypothesis and concludes that

there is no significant relationship between the locations and age of tourism entrepreneurs at

the 5 per cent significance level.

The findings reflect that the younger population in Malaysia is not heavily involved in the

country’s tourism industry. This can be due to the trend of the younger population (18-30

years old) in Malaysia preferring to stay in a college or university or to work in the private

sector, rather than owning a business after their secondary education. Data from the Ministry

of Higher Education indicated that in 2007, there were approximately 748,793 of Malaysians

aged between 18 to 30 years old in public and private education institutions (Ministry of

Higher Education of Malaysia, 2010) which were 13 percent of the Malaysian population

(Department of Statistics, 2012c). Those who are aged 31 or above are more financially

stable have work experience and have the interest to start a business. Thus, the majority of

tourism entrepreneurs belong to this group.

In order to address the first research question of investigating the impact of socio-economic

characteristics (age factor has an impact on tourism entrepreneur’s motivation), a one-way

analysis of variance (ANOVA) was carried out in an attempt to determine whether the means

of a variable differ from one group of observations to another. Prior to performing the

174

ANOVA test throughout the chapter, the following underlying assumptions of the test were

carried out (Coakes, et al., 2009):

1. The dependent variable data should be at the interval or ratio level of measurement.

2. The populations from which the samples have drawn should be normal.

3. The scores in each group should have homogeneous variances. Levene’s test determined

whether the variances are equal or unequal.

4. The post-hoc comparison (Tukey HSD) value with the asterisks (*) identify which group

are significantly different from one another.

Table 5.4 depicts the results on Hypothesis H1a – Age contributes to tourism entrepreneur’s

motivation. The Levene’s test results (F-value = 0.88 , p-value = 0.44, p>0.05) were not

significant and the assumption of homogeneity of variances was not violated. Then, based on

the ANOVA’s test, the overall F is statistically significant (F-value = 1.22, p-value = 0.03,

p<0.05). This indicates there are some differences between the age of groups on tourism

entrepreneur’s motivation. Hence, post-hoc test or known as Tukey HSD, will provide

information on the differences in means among the groups by the asterisks (*) next to the

value of the group that identify which group are significantly higher than the other. Based on

the Tukey HSD results, it shows there are differences in means among the group of age.

Entrepreneurs aged between 31 – 40 years old (M = 3.15, SD = 0.88, F-value = 1.22, p-value

= 0.03) where p is less than the critical value of 0.05 is significantly different from any other

age group. The study therefore reject the null hypothesis and concludes that there is a

significant relationship between age and motivation where at certain ages there is a

considerable impact on entrepreneurs’ motivation to enter tourism businesses. In order to

175

investigate the correlation significant relationship, since one of the data is on ordinal scales,

the Spearman’s rank-order correlation (rs) was used throughout the chapter. Based on the

correlation analysis results, a significant positive correlation was found between motivation

and age, rs = 0.20, p-value = 0.00, which is less than critical value of 0.05 (see Appendix

5.7). Further discussion on these results is provided in Section 6.6.

Table 5.4: ANOVA Results of Hypothesis H1a Relating Tourism Entrepreneur’s Age

and Motivation

Characteristics Mean sd

Levene’s Test for Equality of

VariancesANOVA’s Test

Results H1a

F Sig. F Sig.

Motivation Under 30 3.02 0.89

0.88 0.44 1.22 0.03 Supported Between 31-40 3.15* 0.88 Between 41-50 2.85 0.76 Above 50 2.59 0.70


5.3.2 Gender

The gender of an entrepreneur is important, as some studies have found that gender

influences business operations and to a certain extent causes low business performance.

Furthermore, it is generally accepted that males have stronger entrepreneurial intentions than

females. However, based on Zhao, Seibert and Hills (2005) the business environment can be

a barrier to female entrepreneurs whereby it limits their ability to access necessary resources

or receive necessary support to become successful entrepreneurs. In the context of tourism

business environments in Malaysia, the gender factor may have different implications.

176

Table 5.5 presents the findings in terms of gender of tourism entrepreneurs. Respondents in

this study from all tourism destinations are predominantly male entrepreneurs, (251 male

respondents, or 73 per cent of total respondents) while the rest are female with only 95 (27

per cent). A possible explanation for the higher number of male tourism entrepreneurs can be

attributed to the influence of Malaysia’s traditional culture, where males normally act as the

head of the family and the primary decision maker, and enjoying more privileges than

females. There are more male tourism entrepreneurs in all locations compared to females

except in Kedah.

Table 5.5: Distribution of Tourism Entrepreneurs by Location and Gender

Locations Total TSMEs

Gender Male Female


TOTAL 346 100.0 251 72.5 95 27.5 Note: a% refers gender of tourism entrepreneurs express as a percentage of the total

number of TSME Source: Data derived from survey

According to Jaafar et al (2011), the involvement of women in this industry is indirect and

many of them do not hold positions in the company. Furthermore, Jimenez (2012) reported

that the relationship between gender and entrepreneurship is linked to culture and people’s

habits. In developed countries, the people enjoy greater equality between men and women. In

other countries, it is unusual for women to work or develop their own projects. In general, the

ratio between male and female entrepreneurs in this study is in line with other similar

empirical studies (eg Carlsen, et al., 2008; Gartner, 2004; Morrison, et al., 1999)

177

Further analysis was conducted to test the relationship and to explain the distribution above.

The results from the Chi-Square test showed a calculated value of χ² (DF = 4, N = 346) =

15.77 and a p-value of 0.003 which is less than the critical value of 0.05 (see Appendix 5.8).

The study therefore rejects the null hypothesis and concludes that there is a significant

relationship between the location and gender of tourism entrepreneurs in Malaysia, at the 5

per cent significance level.

Independent t-tests were carried out in an attempt to address and determine the impact of the

following socio-economic characteristics: gender factor toward the motivation of tourism

entrepreneur. Prior to performing independent t-tests throughout the chapter, the following

assumptions of the test were carried out (Coakes, et al., 2009):

1. The independent variable should be at the dichotomous nominal data and dependent

variable should be at interval or ratio level of measurement.

2. The dependent variable should be randomly sampled from the population of interest.

3. The dependent variable should be normally distributed in the population.

4. The homogeneity of variance should be equal between groups. This can be done by using

the Levene test for equality of variances.

In order to investigate the first research question (i.e. the socio-economic characteristics on

tourism entrepreneur’s motivation), independence sample t-test analyses were carried out to

investigate hypothesis H1b – Gender contributes to tourism entrepreneur’s motivation, given

the assumption of homogeneity of variances was judged to have been violated (F-value =

7.91, p-value = 0.00) with p is less than the critical value of 0.05. Hence, the results indicate

178

there is no significance difference between male and female tourism entrepreneur on their

motivation to enter tourism. Based on the t-test results (t-value = 0.74, p-value = 0.46), with

p is more than the critical value of 0.05, it indicate the t statistics is not significant. Therefore,

the study accepts the null hypothesis and concludes gender has no impact on tourism

entrepreneur’s motivation. Based on the correlation analysis results, a significant positive

correlation was found between motivation and gender, rs = 0.32, p-value = 0.00, which is less

than critical value of 0.05 (see Appendix 5.9). Further discussion on this result is provided in

section 6.6.

Table 5.6: T-test Results of Hypothesis H1b Relating Gender and Tourism

Entrepreneur’s Motivation

Characteristics Mean sd

Levene’s Test for Equality of Variances

t-test for Equality of Means Results

H1b F Sig. t Sig.

(2-tailed) Motivation Male 3.97 0.51

7.91 0.00 0.74 0.46 Not

supported Female 3.92 0.70 Source:Data derived from survey

5.3.3 Level of Education

The level of education is an important factor in the behaviour of tourism entrepreneurs, as it

equips the entrepreneur with the skills and mindset to remain flexible and open to market

forces and opportunities. Entrepreneurs with low education may negatively affect the

business capability as they lack critical thinking and reasoning skills required in business

decision-making.

179

The level of education among Malaysian tourism entrepreneurs in this study is presented in

Table 5.7. The findings show that 40 per cent of the entrepreneurs had obtained primary

education level, and 60 per cent have tertiary education. The majority of tourism

entrepreneurs in Malaysia are Diploma holders (153 respondents, 44 per cent) and followed

by Secondary School graduates with 130 respondents or 36 per cent. 49 tourism

entrepreneurs or 16 per cent have university and postgraduate degrees.

Table 5.7: Distribution of TSMEs by Education Background and Location

Location

Education backgroundPrimary school

Secondary school Diploma Degree Masters Phd

Freq %a Freq %a Freq %a Freq %a Freq %a Freq %a

Pahang 3 0.8 15 4.3 41 11.8 8 2.3 2 0.6 1 0.3 Pulau Pinang

4 1.2 29 8.4 30 8.6 4 1.1 2 0.6 0 0.0

Kedah 6 1.8 34 9.8 22 6.3 8 2.3 0 0.0 0 0.0 Kuala Lumpur

0 0 32 9.3 28 8.1 6 1.7 3 0.8 3 0.8

Sabah 0 0 20 5.7 32 9.2 8 2.4 3 0.8 1 0.3 TOTAL 13 4.6 130 36.0 153 44.0 34 9.8 10 2.8 5 1.4

Note: a % refers the education backgrounds express as a percentage of the total number of TSME

Source: Derived from survey data

In terms of locations distributions, all tourism entrepreneurs in Sabah have completed

secondary school, while entrepreneurs in other locations completed at least their primary

education except for one tourism entrepreneur in Kedah, who had only completed primary

school. Further analysis reveals that those with tertiary educations have undertaken tourism

education prior to setting up tourism business, with 68 per cent doing so. This indicates that

tourism entrepreneurs with higher levels of education are more prepared to be in the business

180

by equipping themselves with tourism knowledge compared to those with lower levels of

education.

Independence tests were conducted to find out whether location and education level of

tourism entrepreneurs had a relationship to explain the distribution above. The results from

the Person Chi-Square test showed the calculated value of χ² (DF = 8, N = 346) = 24.10 and a

p-value of 0.002 which is less than the critical value of 0.05 (see Appendix 5.10). The study

therefore rejects the null hypothesis and concludes that there is a significant relationship

between location and level of educations had by Malaysian tourism entrepreneurs at the 5 per

cent significance level.

In order to investigate the impact of socio-economic characteristics (education level factor on

tourism entrepreneur’s motivation), ANOVA test were carried out to test hypothesis H1c –

Education level contributes to tourism entrepreneur’s motivation. Based on the Levene’s

test, the homogeneity assumption has been violated which indicated the population variances

of education level for each group are approximately unequal (F-value = 3.67, p-value = 0.02)

which indicates there is no differences across the level of education background had by

tourism entrepreneurs. Further tests on ANOVA and Tukey HSD indicates H1c is

statistically not significant (F-value = 0.71, p-value = 0.49, which is more than the critical

value of 0.05) and Tukey HSD’s results show no differences in means exist among the

education level. Thus, it is concluded that the study accept the null hypothesis and concludes

that educational level of tourism entrepreneurs had no influence on their motivation to enter

tourism businesses. Based on the correlation analysis results, a negative correlation was

found between motivation and education level, rs = 0.74, p-value = 0.17, which is more than

181

critical value of 0.05 (see Appendix 5.11). Further discussion of these results is provided in

Section 6.6.

Table 5.8: ANOVA Results of Hypothesis H1c Relating Education Level and Tourism


Characteristics Education Level Mean sd


ANOVA’s Test Results H1c

F Sig. F Sig. Motivation Primary 3.87 0.74

3.67 0.02 0.71 0.49 Not supported

Secondary 4.00 0.48 Tertiary 3.96 0.60 Source: Data derived from survey

5.3.4 Ethnic Group

Ethnic group is an important role to understand the motivation of an entrepreneur. as ethnic

groups are defined by different underlying value systems specific to a group or society and

motivate individuals to behave in certain ways (Hofstede & McCraem, 2004). Thus, this may

influence and contribute to tourism entrepreneurial behaviour toward management practices.

Table 5.9: Tourism Entrepreneurs by Location and Ethnic Group

Location Total TSMEs Ethnic group

Malay Chinese Indian Others Freq. %a Freq. %a Freq. %a Freq. %a Freq. %a

Pahang 70 20.3 54 15.7 9 2.6 5 1.5 2 1.1 Pulau Pinang

69 19.9 27 7.9 27 7.8 14 4.0 1 0.2

Kedah 71 20.5 20 5.7 35 10.1 15 4.4 1 0.2 Kuala Lumpur

72 20.8 32 9.3 33 9.5 7 2.0 0 0.0

Sabah 64 18.5 21 6.0 29 8.4 10 2.8 4 1.1 TOTAL 346 100.0 154 44.5 133 38.4 51 14.7 8 2.3

Note: a % refers the ethnic group express as a percentage of the total number of TSME

Source:Data derived from survey

182

In Table 5.9, the majority of TSMEs’ owner-managers are Malay (154 respondents, 45 per

cent) followed by Chinese (133 respondents, 38 per cent). There is low involvement from

both Indians (51 respondents, 15 per cent) and other ethnic groups, which consist of Kadazan

- Dusun, Siamese and Burmese (8 respondents, 2 per cent). The majority of Malays in the

tourism business can be related to the objective of the Malaysia Plans to reduce economic

disparity among ethnic groups and encourage and provide incentives to Bumiputeras to

participate in business in any industry, including tourism.

Meanwhile, half of Chinese owner-managers are located in Kedah and Kuala Lumpur.

Historically, the Chinese are dominant in trade and business and they form the majority of

the entrepreneurs in Kedah, a state is highly populated with Malays and Indians(Department

of Statistics, 2012c). Meanwhile, findings for Kuala Lumpur are as predicted as the Chinese

form the second largest community. Despite being the only Chinese majority state in

Malaysia, Pulau Pinang shows a low number of tourism entrepreneurs. This can be explained

by the fact that the majority of Chinese in the state prefer to venture into manufacturing

activities rather than tourism businesses. 78 per cent of SMEs in Pulau Pinang are in the

manufacturing industry, while only 12 per cent belong to the tourism industry (Small and

Medium Enterprise Corporation Malaysia, 2011).

Based on the Pearson Chi-Square test, the calculated value of χ² (DF = 12, N = 346) = 53.26

and the p-value = 0.000 which is less than the critical value of 0.05 (see Appendix 5.12).

Thus, statistically it is proven that there is a significant relationship between location and

183

ethnicity of tourism entrepreneurs in Malaysia. Therefore, the study rejects the null

hypothesis at the 5 per cent significance level.

In order to investigate the impact of ethnic group on tourism entrepreneur’s motivation,

ANOVA were carried out to test the relationship. Table 5.10 depicts the ANOVA results on

hypothesis H1d –Ethnic group contributes to tourism entrepreneur’s motivation. Based on

the Levene’s test, the homogeneity assumption has been violated which indicated the

population variances of ethnic group are approximately unequal (F-value = 3.36, p-value =

0.01, which is less than the critical value of 0.05). Further tests on ANOVA and Tukey’s

HSD shows the results are not significant (F-value = 0.24, p-value = 0.86, which is above the

critical value of 0.05) and there is no significance differences across the ethnic group. It is

concluded that this study accept the null hypothesis of H1d , indicating that the ethnic group

of tourism entrepreneurs has no influence on their motivation to enter tourism businesses.

Based on the correlation analysis results, a significant positive correlation was found between

motivation and ethnic group, rs = 0.12, p-value = 0.01, which is less than critical value of

0.05 (see Appendix 5.13). Further discussion of these results is provided in Section 6.6.

Table 5.10: ANOVA Results on Hypothesis H1d Relating Ethnic Group and Tourism


Characteristics Ethnic Group Mean sd

Levene’s Test for Equality of

Variances ANOVA’s Test Results

H1d F Sig. F Sig.

Motivation Malay 3.94 0.53

3.36 0.01 0.24 0.86 Not supported

Chinese 3.99 0.52 Indian 3.92 0.77 Others 3.93 0.52


184

5.3.5 Family Business Background

Family business background is important in shaping the entrepreneurial behaviour as it acts

as the stimulator of motivations and helps an individual to acquire business knowledge and

skills from their families. These all help increase the entrepreneurial activity of an individual.

Figure 5.3 depicts the findings of tourism entrepreneurs in Malaysia in terms of family

business background. Most tourism entrepreneurs (257 respondents, 74.3 per cent) in this

survey indicated that they have not been raised in a family business environment and only a

quarter (89 respondents, 25.7 per cent) has a family business background. Despite the strong

family-run business culture of the ethnic Chinese, only 25 tourism entrepreneurs (29 per

cent) were born in a business family compared to 44 respondents (51 per cent) of Malay

tourism entrepreneurs who have family business background.

Figure 5.3: Tourism Entreprenuers by Location and Family Business Background

Note: % refers the family business background express as a percentage of the total number

of TSME


7.5%

12.7%

4.6%

15.3%

1.4%

19.1%

6.6%

14.2%

5.5%

13.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

With family business background Without family business background


185

From the respondents with non-family business background, 176 respondents (68 per cent)

are the founders of the firms indicating that most tourism entrepreneurs in Malaysia are risk

takers and they do not rely on their family to start a business. Another 76 respondents (29.5

per cent) have purchased all or part of the TSMEs, while 5 respondents (1.95 per cent) are

leasing the business. With regard to location, Kedah has the highest number of self-

developed entrepreneurs with no family business background while Pahang has the most

tourism entrepreneurs who have been exposed to business environment in their family.

Based on the Pearson Chi-Square test, it showed there was no relationship between location

and family business background of tourism entrepreneurs. The calculated value of χ² (DF =

4, N = 5346) = 5.66 and a p-value = 0.224 which is more than the critical value of 0.05 (see

Appendix 5.14).

In order to address the first research question, the impact of socio-economic characteristics

and tourism entrepreneur’s motivation, independence sample t-tests were carried out in

determining the relationship and testing hypothesis H1e –Family business background

contributes to tourism entrepreneur’s motivation, the Levene’s test has been not been

violated. This indicates the population variances of family business background’s group are

approximately equal (F-value = 3.00, p-value = 0.08) with p value is more than the critical

value of 0.05. Table 5.11 indicates the mean for tourism entrepreneurs with family business

background (M = 3.89, SD = 0.68) is significantly higher from that who do not have family

business background (M = 3.98, SD = 0.52). The t-test results however indicated that

Hypothesis H1e is not supported, t–value = 1.24, p-value = 0.21 with p-value is above the

critical value of 0.0. Hence, the study accepts the null hypothesis and concludes family

186

business background does not motivate entrepreneurs. Based on the correlation analysis

results, a significant positive correlation was found between motivation and family business

background, rs = 0.10, p-value = 0.04, which is less than critical value of 0.05 (see Appendix

5.15). Further discussion of the results is provided in Section 6.6.

Table 5.11: T-test Results of Hypothesis H1e Relating Family Business Background and

Tourism Entrepreneur’s Motivation

Characteristics Family Business

Background Mean sd



H1e F Sig. t Sig.

(2-tailed) Motivation Yes 3.89 0.68

3.00 0.08 1.24 0.21 Not

supported No 3.98 0.52 Source: Data derived from survey

5.3.6 Working Experience

Previous working experience is one of the important factors to influence the behaviour of an

entrepreneur. Having previous work experience can influence the way an entrepreneur

handles the business operation particularly during start-ups. Prior working experience brings

in a business knowledge base, market information and business networks.

In this study, respondents were asked if they had any previous working experience prior to

setting up the business, and if yes, the duration of their working experience. Table 5.12

presents the findings. The majority (302 respondents, 87.3 per cent) have worked elsewhere

prior to setting up their tourism businesses, while the rest (44 respondents, 12.7 per cent)

have no prior working experience.

187

Table 5.12: Tourism Entrepreneurs by Location and Working Experience

Location Total TSMEs Without Experience With Experience

Freq. %a Freq. %a Freq. %a

Pahang 70 20.3 0 0.0 70 100.0 Pulau Pinang 69 19.9 6 1.7 63 91.3 Kedah 71 20.5 6 1.7 65 91.5 Kuala Lumpur 72 20.8 9 2.6 63 87.5 Sabah 64 18.5 23 6.6 41 64.0

Total 346 100.0 44 12.7 302 87.3 Note: a% refers the working experience express as a percentage of the

total number of TSME Source: Data derived from survey

In further analysis, Table 5.13 shows that out of the 302 respondents who have prior working

experience, close to half (49.7 per cent) obtained them in the tourism industry. Most of the

tourism entrepreneurs have working experience in Sales and Marketing (96 respondents, 32.6

per cent), followed by Banking (90 respondents, 29 per cent), General management (85

respondents, 28.1 per cent), Planning (30 respondents, 10 per cent) and Accounting with only

1 respondent (0.3 per cent).

In terms of location, more tourism entrepreneurs from Pahang have working experience (70

respondents, 20.2 per cent) compared to those in other locations, while Sabah shows the

lowest number of entrepreneurs with working experience prior to setting up their tourism

business. Further analysis was conducted to test for independence to find out whether there

was a relationship between TSME location and working experience had by tourism

entrepreneurs.

188

Table 5.13: Tourism Entrepreneurs by Location and Working Experience

Location With

Experience Planning Sales

& Marketing

General Manage-

ment

Banking &

Financing

Accounting &

Auditing Freq. %a Freq %a Freq %a Freq %a Freq %a Freq %a

Pahang 70 20.3 5 1.7 14 4.6 17 5.6 34 11.3 0 0.0 Pulau Pinang 63 19.9 4 1.3 34 11.4 16 5.3 9 2.9 0 0.0

Kedah 65 20.5 4 1.3 24 7.9 23 7.6 14 4.6 0 0.0

Kuala Lumpur 63 20.8 6 1.9 12 3.9 22 7.3 23 7.6 0 0.0

Sabah 41 18.5 5 1.7 12 3.9 7 2.3 16 5.3 1 0.3 Total 302 100.0 24 7.9 96 31.7 85 28.1 96 31.7 1 0.3 Note: a % refers the working experience by department express as a percentage of the total

number of TSME Source:Data derived from survey

The results from the Chi-Square test showed the calculated value of χ² (DF = 4, N = 346) =

43.46 and a p-value of 0.000 which is less than the critical value of 0.05 (see Appendix 5.16).

The study therefore rejects the null hypothesis and concludes that there is a significant

relationship between the locations and previous working experience of tourism entrepreneurs

in Malaysia.

Additional questions were also asked to respondents. The largest group of them obtained

their working experience in the private sector (119 respondents, 39.4 per cent), followed by

self-employment (108 respondents, 35.8 per cent), and the public sector (75 respondents,

24.9 per cent). Many of the tourism entrepreneurs had various types of occupations and

experience prior to setting up tourism businesses due to the ease of entry to this industry

(Ateljevic & Doorne, 2000; Szivas, 2001).

189

In determining whether working experience contributed to tourism entrepreneur’s

motivation, a independence sample t-test were carried out to test Hypothesis H1f –Working

experience contribute to tourism entrepreneur’s motivation. Table 5.14 indicates t-test

findings and found that no significant correlation between entrepreneurs’ previous working

experience (t-value = 1.16, p-value = 0.24, which is above than the critical value of 0.05)

with the tourism entrepreneur’s motivation. Table 5.14 shows the t-test results and revealed

Hypothesis H1f is not supported. Hence, this study accepts the null hypothesis and concludes

that working experience does not motivate entrepreneurs. Based on the correlation analysis

results, a significant positive correlation was found between motivation and working

experience, rs = 0.11, p-value = 0.04, which is less than critical value of 0.05 (see Appendix

5.17). Further discussion of these results is provided in Section 6.6.

Table 5.14: T-test Results of Hypothesis H1f Relating Working Experience and

Tourism Entrepreneur’s Motivation

Characteristics Working Experience Mean sd



H1f F Sig. t df Sig.

(2-tailed) Motivation Yes 3.86 0.61

1.07 0.30 1.16 344 0.24 Not

supported No 3.97 0.56 Source: Data derived from survey

5.3.7 Motivation to Start a Business

Motivation to start a business can be based either on ‘pull’ or ‘push’ factors. Table 5.15 ranks

tourism entrepreneurs’ motivation to start a business according to mean. Tourism

entrepreneurs’ personal need for growth is the top motivation for setting up the business

(Mean = 4.14), while the lowest motivation for setting up the business is because they either

190

could not find work or they lost their jobs (Mean = 3.25). The findings reinforce previous

empirical findings suggesting that most entrepreneurs were motivated primarily by pull

factors rather than push factors (Kirkwood, 2009; Shane, et al., 2003; Wang, Walker, &

Redmond, 2006)

Table 5.15: Tourism Entrepreneurs' Motivation to Start a Business

Motivational Factors Mean rank s.d Rank

1. To provide personal needs for growth 4.14 0.784 1 2. Opportunity to use own knowledge and experience 4.01 0.779 2 3. To utilise business opportunity in tourism industry 3.90 0.821 3 4. To keep my family together 3.86 0.910 4 5. To utilise the Government support availability 3.70 0.891 5 6. Influenced by family and/or friends 3.61 1.029 6 7. To gain prestige by operating a business 3.53 0.997 7 8. Could not find work/loss a job 3.25 1.221 8


A one-way analysis of variance (ANOVA) was conducted between location and tourism

entrepreneur’s motivation to start a tourism business. Levene’s test showed the calculated

value of F (DF = 4, N = 341) = 2.24, and a p-value of 0.064 which is more than the critical

value of 0.05, and so the assumption of homogeneity of variances was judged to have not

been violated. A significant effect was found for location of TSMEs, F (DF = 4, N = 345) =

5.83, and a p-value of 0.000 which is less than the critical value of 0.05. Thus, the study

rejects the null hypothesis. The post-hoc comparison (Tukey HSD) results was found to

display Kedah, Pahang, Pulau Pinang and Kuala Lumpur have significantly different mean of

motivation to start a tourism business compared to tourism entrepreneurs in Sabah (see

Appendix 5.18).

191

5.4 Management Practices of TSMEs in Malaysia

Previous studies have investigated the effect of various management practices on small

performance. For this study, in order to fit suitability with the Malaysian context, four

management practices (use of business plan, business alliances, the Internet, and government

assistance) were examined and described in this section.


As found in Table 5.16, the majority of tourism entrepreneurs in this study do plan their

business strategy. About 72.3 per cent of respondents do exercise formal business planning,

while only 27.3 per cent do not organise their business operations. Of those with a plan,

about half were formal (written) and half were informal (i.e unwritten/’in my head’).

Additional questions were also asked on their business plan.

Table 5.16: TSMEs and Business Planning

Location Total TSMEs Business Planning Formal Informal

Freq. %a Freq. %a Freq. %a

Pahang 70 20.3 52 15.0 18 5.2 Pulau Pinang 69 19.9 58 16.8 11 3.2 Kedah 71 20.5 56 16.2 15 4.3 Kuala Lumpur 72 20.8 49 14.2 23 6.6 Sabah 64 18.5 35 10.1 29 8.4 Total 346 100.0 250 72.3 96 27.7

Note: a% refers the number of business planning express as a percentage of the total number of TSME


About 44.5 per cent stated that their plan is on an annual-term plan, 31.8 per cent had a

quarterly-term plan, and another 22.5 per cent operated on a monthly basis. Of those with

192

plans, 90 per cent reviewed their plans half-yearly while another 10 per cent did not. These

findings provide similar empirical research findings by Wang et. al (2006) where most SMEs

in Western Australia exercise informal business plans.

In terms of TSME business planning distributions across locations, generally all TSMEs in

Malaysia organised their business operations. Pulau Pinang indicated the highest meanwhile

Sabah ranked the highest TSMEs not practising formal planning in business operations.

Further analysis was conducted to test for independence to find out whether TSMEs location

and types of business planning had a relationship to explain the distribution above. The

results from the Pearson Chi-Square test showed the calculated value of χ² (DF = 4, N = 346)

= 16.76 and a p-value of 0.002 which was less than the critical value of 0.05 (see Appendix


relationship between location and type of business planning practiced by tourism

entrepreneurs at the 5 per cent significance level.


A little over half (53.5 per cent) of the surveyed TSMEs have informal business alliances,

while the rest (46.5 per cent) do not have any business alliances. Pahang records the highest

proportion of TSMEs that have business alliances (13 per cent) while Sabah hosts TSMEs

(11.3 per cent) that have no business alliance activity compared to other locations in

Malaysia.

193

Table 5.17: Business Alliance Activity of TSMEs in Malaysia


Table 5.17 ranks the means and standard deviations in terms of the motives for engaging in

business alliances. TSMEs are mostly forming business alliances for information sharing

(Mean = 3.72) and knowledge sharing (Mean = 3.70). This type of alliance formation is

categorised as organisational learning and the main concern for the alliance formation is to

improve individual and collective organisational actions via improved knowledge and

understanding (Peter & Gunasekaran, 1999). TSMEs indicated that the least motivational

factor to form business alliances are subcontracting, human resource support (Mean=3.43)

and equipment sharing (Mean = 3.40). According to Zakarija (2003), in Croatia, the lack of

reliability and trust towards other firms are a hindrance to business alliances formation and

can also explain why human resource support and equipment sharing are the least-alliance

activity for TSMEs in the Malaysian context. Because the assumption of homogeneity has

been violated, F-value = 4.92, and a p-value of 0.00. Further tests on ANOVA and Tukey’s

HSD shows the results are significant (F-value = 8.34, p-value = 0.00, which is less than the

critical value of 0.05) and there is a significance difference across the location of TSMEs (see

Appendix 5.20).

Alliance activity Mean s.d Rank 1. Information sharing 3.72 1.05 1 2. Knowledge sharing 3.70 1.07 2 3. Economies of scale 3.66 1.09 3 4. Entering new market 3.63 1.04 4 5. Subcontracting 3.50 1.17 5 6. Human resource support 3.43 1.13 6 7. Equipment sharing 3.40 1.07 7

194

5.4.3 Adoption of Internet

In tourism industry, the Internet is regarded as an important tool for better management and

business operations and also provides many opportunities and advantages through the

electronic marketplace to attract customers. Some empirical studies have found that the use

of the Internet among SMEs increases the business and industry performance (Karanasios &

Burgess, 2006; Kristiansen, et al., 2003; Salman & Hasim, 2011; Tan, et al., 2009) .

Table 5.18: Distribution of TSMEs Based on Period of Starting to Use the Internet

Note: a% refers the number of use the internet express as a percentage of the total number of TSME


Table 5.18 depicts the period in which TSMEs first adopted and used the Internet. The

majority adopted use of the Internet between 2001-2005 (162 firms, 47 per cent). This was

during the 8th Malaysia Plan (2001-2005) when the main agenda of the plan was to

encourage SMEs in all industries to create online presence and emphasize ICT competencies.

The Government allocated RM1 billion to increase SMEs’ business capacity through e-

commerce activity (Economic Planning Unit, 2008) as the Internet provides TSMEs the

avenues to offer virtual tourism products and build relationships with potential customers.

Nevertheless, a few forward-looking TSMEs started using the Internet as early as 1996 to

Locations Total

TSMEs Year

1996-2000 2001-2005 After 2006 Freq. %a Freq. %a Freq. %a Freq. %a

Pahang 70 20.3 12 3.5 30 8.7 36 10.4 Pulau Pinang 69 19.9 14 4.0 34 9.8 21 6.1 Kedah 71 20.5 6 1.7 42 12.1 23 6.6 Kuala Lumpur

72 20.8 13 3.8 32 9.2 27 7.8

Sabah 64 18.5 5 1.4 24 6.9 28 8.1 Total 346 100.0 49 14.1 162 46.8 135 39.0

195

2000 (49 firms, 16 per cent). Many of the owners of these TSMEs are Diploma holders (27

respondents or 55 percent) and know the advantages of using the Internet in the business.

The results from the Pearson Chi-Square test showed the calculated value of χ² (DF = 8, N =

346) = 18.51 and a p-value of 0.0018 which less than the critical value of 0.05 (see Appendix


relationship between the location and year of Internet adoption by TSMEs at the 5 per cent

significance level. This can be attributed to the uneven distribution of ICT use between

TSMEs in Peninsular Malaysia and those in Sabah before 2005. TSMEs in Pahang, Pulau

Pinang, Kedah and Kuala Lumpur have higher Internet adoption than those in Sabah. Sabah’s

geographical condition and its isolated and mainly rural population may explain this trend.

The development of ICT infrastructure in Sabah has been challenging and in turn caused

delayed Internet adoption in the state. Nevertheless, from 1996 to 2006, TSMEs from Sabah

gradually adopted the Internet. This followed the continued and expanded efforts of the Ninth

Malaysia Plan (2006-2010) where various funds were made available for ICT development in

SMEs (Economic Planning Unit, 2006).

Table 5.19 presents the use of the Internet by TSMEs in this study. The three most common

uses of the Internet by the TSMEs are: to convey information to customers (Mean=3.78), use

emails (Mean=3.70), and search for information (Mean=3.61). Other uses of the Internet

include receiving orders from customers (Mean=3.57), obtain information from suppliers

(Mean=3.48) and to a lesser extent as an advertisement to place for job vacancies

(Mean=3.01). According to Moodley and Morries (2004), Palmer (2000) and Lal (2005),

those are the most common e-commerce practices adopted by businesses in both developed

196

and developing countries. In the tourism industry, the Internet is regarded as an important

means and the most cost-efficient tool to communicate with customers, particularly with

international tourists (Buhalis & Law, 2008; Salwani, et al., 2009a; Sebora, et al., 2009). The

assumption of homogeneity has been violated with F-value = 4.92, and p-value = 0.00 is less

than critical value of 0.05. Further tests on ANOVA and Tukey’s HSD shows the results are

not significant (F-value = 2.14, p-value = 0.75, which is above the critical value of 0.05) and

the results indicates there is no significance differences across the ethnic group (see

Appendix 5.22).

Table 5.19: The Internet Adoption Among TSMEs in Malaysia

The uses of Internet Mean Rank s.d Rank

Information to customer 3.7791 1.08422 1 Email 3.7093 1.17671 2 Looking for information 3.6163 1.10834 3 Receiving orders from customer 3.5727 1.12510 4 Information from supplier 3.4855 1.11957 5 Internal communication 3.4390 1.09959 6 Sending purchase order 3.4012 1.17882 7 Service and market research 3.3924 1.21940 8 Offering online payment options 3.3779 1.23938 9 Contact with governmental agencies 3.3430 1.12941 10 Placing job vacancies 3.0174 1.31364 11


5.4.4 Awarenes and Use of Government Assistance Programmes

Government assistance is regarded as one of SMEs’ important external resources. Both

financial and non-financial assistance from the government can have some influence on

197

SMEs’ performance, particularly during the start-up stage. Furthermore, some studies have

identified that lack of government support is one of the major reasons for SMEs’ failure.

Table 5.20: Level of Awareness and Use on the Government Assistance Programmes

Assistance provided Mean s.d RankFrequency %

Yes No Financial assistance: Tourism Special Fund 3.04 1.19 1 122(35..3) 224(64.7) MARA Business Financing Scheme 3.01 1.20 2 118(34.1) 228(65.9) Tourism Infrastructure Fund 2.93 1.18 3 109(31.5) 237(68.5) Graduate Entrepreneur Fund 2.87 1.18 4 106(30.6) 240(69.4) TEKUN Financing Scheme 2.84 1.24 5 111(32.1) 235(67.9) Bumiputera Entrepreneur Project Fund

2.82 1.18 6

108(31.2) 238(68.8)

Soft Loan for SMEs 2.81 1.19 7 112(32.4) 234(67.6) Fund for Small and Medium Industries 2

2.80 1.18 8

99(28.6) 247(71.4)

Special Fund for Tourism 2 2.79 1.14 9 105(30.3) 241(69.7) Initiative Financing Scheme 2.77 1.17 10 101(29.2) 245(70.8) New Entrepreneur Fund 2 2.76 1.18 11 103(29.8) 243(70.2) Rural Economy Financing Scheme 2.73 1.18 12 102(29.5) 244(70.5) Soft Loan for ICT Adoption 2.72 1.19 13 105(30.3) 241(69.7) Special assistance scheme for women entrepreneurs

2.69 1.18 14

100(28.9) 246(71.1)

Youth Business Scheme 2.68 1.17 15 104(30.1) 242(69.9) Tanmiah Scheme 2.65 1.17 16 108(31.2) 238(68.8) Non-financial assistance: Tourist Guide Course 3.09 1.22 1 139(40.2) 207(59.8) Marketing and promotion 2.99 1.20 2 152(43.9) 194(56.1) Strengthening skills of workforce 2.97 1.17 3 143(41.3) 203(58.7) Entrepreneurial development programmes

2.91 1.16 4

135(39) 210(60.7)

Budget Hotel Efficiency Improvement Course

2.87 1.25 5

133(38.4) 213(61.6)

Advisory Services 2.87 1.21 6 138(39.9) 208(60.1) Tourist Boat Operating Course 2.80 1.24 7 121(35) 225(65) Think Tourism 2.75 1.19 8 131(37.9) 215(62.1) Mesra Malaysia Course 2.74 1.21 9 126(36.4) 220(63.6)


198

Table 5.20 lists the financial and non-financial assistance provided by the Malaysian

Government to the TSMEs in the country. Most of the respondent SMEs have a low level of

awareness of both financial and non-financial assistance programmes, where most of the

programmes means ranged between 2.74 and 3.04. In term of the level of use of financial

assistance and the non-financial courses and training, the majority of TSMEs do not use both

assistance types provided by the government.

Further analysis shows that nearly half (157 respondent, 47 per cent) of the TSMEs in this

study are not members of any tourism associations in Malaysia, while a little over half (174

respondents, 53 per cent) are registered with a tourism association. This indicates that many

TSME owner–managers have a lack of information related to the government’s available

financial and non-financial programmes. A similar study by Salleh and Ndubisi (2006) has

identified that one of the challenges of Malaysian SMEs is poor access to financial assistance

due to differing criteria for eligibility for receiving funds and the bureaucracy that exists

within the government agencies.


This chapter has described Malaysian TSMEs’ and tourism entrepreneurs’ characteristics. A

number of interesting findings are reported on the similarities and differences of TSMEs

across the five selected locations for this study. With regard to the characteristics of tourism

entrepreneurs, the entrepreneurs in Pahang are dominant in terms of education level, gender,

working experience and family business background compared to other TSMEs’ locations in

this study. Findings show a few differences across the TSMEs in Peninsular Malaysia

199

(Pahang, Pulau Pinang, Kedah and Kuala Lumpur) and East Malaysia (Sabah) in terms of

their management practices. The majority of TSMEs in Malaysia practiced formal business

planning in their business operations. Regarding Internet adoption, TSMEs in Pulau Pinang,

Kedah and Kuala Lumpur started to adopt in between 2001 – 2005 while Pahang and Sabah

adopted Internet use after 2006. This provides new insights on Malaysian TSMEs’ profiles.

Besides that, this chapter has tested Hypothesis 1 which investigates the impact of socio-

economic characteristics on tourism entrepreneurs’ motivation. The F-test from ANOVA

analysis indicates that only age group has different impact on tourism entrepreneurs’

motivation while Spearman’s rank-order correlation analysis confirms a positive association

between socio-economic characteristics and motivation, except for education level. In

Chapter 6, a more detailed discussion of the hypotheses’ results is presented in Section 6.6.

Chapter 6 also focuses on testing the relationship between the variables in which all variables

were analysed simultaneously in the Structural Equation Modelling (SEM) using the AMOS

program. This step will finalize the framework model of the study based on statistical fit and

also whether the framework makes theoretical or substantive sense. These steps will be

covered in Chapter 6 and 7.

200

CHAPTER SIX

AN EMPIRICAL ANALYSIS OF CAUSAL RELATIONSHIPS: TSMEs’ MANAGEMENT PRACTICES AND PERFORMANCE

6.1 Introduction

The results of Chapter 5 discussed the characteristics of TSMEs, socio-economic

characteristics of tourism entrepreneurs, and management practices of tourism entrepreneurs

in Malaysia. A review of the literature in Chapter 2 revealed that from the First Malaysian

Plan (1966-1970) until the Tenth Malaysia Plan (2011-2015), there has always been a five-

year economic plan implemented for tourism. This includes TSME policies aimed at

improving the Malaysian tourism industry, at the same time minimising or reducing obstacles

that TSMEs face. An understanding of the interrelationships between TSMEs’ management

practices and firm performance in Malaysia is important in informing the formulation and

implementation of policies that will promote TSME performance and the tourism industry in

Malaysia. In order to empirically analyse these causal relationships, this chapter has two

parts. The first part investigates Malaysian tourism entrepreneur’s perceptions toward

management practices (business planning, business alliances, use of Internet, government

assistance). The second part investigates the relationship between TSMEs’ management

practices and performance.

This chapter is organised as follows: Section 6.2 explains the confirmatory factor analysis of

the variables in this study. Section 6.3 explores the measurement model of the framework.

201

Section 6.4 discusses the structural model and hypotheses testing. Section 6.5 concludes the

chapter.

6.2 Confirmatory Factor Analysis of Tourism Entrepreneur’s Motivation and TSMEs’

Management Practices

CFA is the first step before proceeding to the model measurement model analysis and

structural equation modelling (SEM). The next section looks into the CFA results on each of

the constructs listed in the framework of this study.

6.2.1 Tourism Entrepreneurs’Motivation

Table 6.1 presents the findings of TSMEs entrepreneurs’ motivation. In general, they

perceive non-financial goals to be more important to starting a business than financial goals.

Respondents scored highly on statements that described the non-financial goals of starting a

business (such as personal satisfaction and flexible lifestyle). Although the results in this

study were restricted to TSMEs offering accommodation services and travel agency services,

tour operators, and tourism guide services, they show that business owners who are

financially motivated are in the minority and that most TSME business owners in Malaysia

are content to stay small. Tourism entrepreneurs’ preferences for non-financial goals include

lifestyle factors, particularly the flexibility of self-employment, the freedom to arrange

professional and personal activities, the involvement of their children in the business and the

opportunities to connect with the local community. These lifestyle choices are the owner-

managers’ perceived advantages that are not available in larger organizations (Walker &

Brown, 2004)

202

Table 6.1: Mean and Standard Deviation Values of Entrepreneur's Motivation’s Items

Item Entrepreneurial Motivation’s Items Mean s.d

Mot1 Personal satisfaction is more important than making lots of money 4.03 0.62

Mot2 Having a flexible lifestyle is more important than making lots of money 3.51 0.94

Mot3 As a small business I have responsibility to the wider community 3.79 0.94

Mot4 When I first started the business I was more money oriented than today 3.86 0.75

Mot5 I think of my business as something that my children can be involved in 3.84 0.87

Mot6 I would rather keep the business modest and under control than have it grows too big 3.98 0.74

Mot7 I feel I am running a successful business 3.66 0.99 Source:Data derived from survey

CFA was carried out to determine whether all 7 constructs of entrepreneur motivation (see

Table 6.1) meet the statistical fit or could be grouped into smaller constructs. The item Mot7

(I feel I am running a successful business)has standardised loading less than 0.5 and hence

has been dropped from the analysis. The model is re-specified and the MI table produced by

SEM indicated that items Mot6 and Mot4 are highly correlated, with MI value of 16.85,

above the threshold value of 15. Based on these findings, two correlated errors were made to

be ‘free parameter estimate’ and the measurement model for tourism entrepreneurs’

behaviour were re-specified. Using the bootstrapping procedure, the data fit the measurement

model well with χ²( DF = 8, N = 346) = 24.65, Bollen-Stine p = 0.17, ChiSq/df = 3.08, TLI =

0.96, CFI = 0.98, RMSEA = 0.07 (see Figure 6.1).

203


Tourism Entrepreneurs’ Motivation Items



Table 6.2 illustrates tourism entrepreneurs’ perception of the importance of business planning

on business performance. Tourism entrepreneurs in Malaysia perceive that business planning

is important for business performance. Five items measure the constructs for business

planning. Almost all of the items in the business planning construct show mean values near

204

to 4.0 with the lowest mean of 3.82 (Plan2). Business planning conducted either formally or

informally by tourism entrepreneurs, is generally perceived to have a positive influence on

TSMEs’ performance. Business planning has always been associated with an objective to

expand the business (Ackelsberg & Arlow, 1985; Baker, Addams, & Davis, 1993; Delmar &

Shane, 2003). In the context of the lifestyle of tourism entrepreneurs, the objectives of

planning their business are related to achievement and a substitute source of income

(Matthews, Schenkel, & Hechavarria, 2009). Factors such as passing the business on to their

children, providing employment to the local community and protecting nature are among the

reasons for business planning among lifestyle entrepreneurs in this study.

Table 6.2: Mean and Standard Deviation Values of Business Planning’s Items

Item Business Planning’s Items Mean s.d

Plan1 Business plan is an effective way of setting business

goal and targets 4.04 0.71

Plan2 Business plan is a useful business strategy to track the

business development 3.82 0.90

Plan3 Business plan improves business performance in term

of sales revenue and/or profits 3.94 0.86

Plan4 Business plan is an effective way to organise the

business operations 4.03 0.76

Plan5 Business plan simplifies your role as a manager 3.92 0.82


Figure 6.2 shows the statistical fit following CFA. The MI value for the covariance between

items Plan4 and Plan5 is 72.33, more than the acceptance level of 15. This indicates that the

two items are redundant. Based on this, both items were set to be ‘free parameter estimate’

and the model was re-specified. The findings show that the five measures of business

205

planning did not fit the model well, with χ²(df = 4, n = 346) = 10.57, p = 0.03. A post-hoc test

was conducted showing an adjusted chi-square as a Bollen-Stine p value of 0.49. Other fit

indices are ChiSq/df = 2.64, TLI = 0.98, CFI = 0.98, RMSEA = 0.06 (see Figure 6.2).

Figure 6.2: Standardised Parameters Estimated in One-Factor Congeneric of Business

Planning’s Items



The business alliance construct was measured by six items. From the findings illustrated in

Table 6.3, all six items for business alliance show mean values greater than 3.73, indicating

206

that respondents are generally satisfied and agree with items representing the business

alliance construct. This indicates that TSMEs in Malaysia perceive business alliances to

bring positive performance. This implies an integrated, collaborative nature of the tourism

industry (Bullock, 1998). Business alliance scan be in the form of a joint venture or

franchising (Contractor & Kundu, 1998), marketing alliances (Glisson, Gunningham, Harris,

& Di Lorenzo-Aiss, 1996) or shared facilities (Bennett, 1997) to deliver and provide the

quality of service demanded by tourists (Peattie & Moutinho, 2000).

Table 6.3: Mean and Standard Deviation Values of Business Alliance’s Items

Item Business Alliance’sItems Mean s.d

Allia1 An organisation can actually experience competitive

advantage through business alliance 3.90 0.86

Allia2 Business alliance activity simplifies roles as manager 3.73 0.82

Allia3

Business alliance activity improves the

organisational relationship with customers and/or

suppliers

3.98 0.78

Allia4 Business alliances among businesses is an economic

way of delivering services 3.90 0.76

Allia5 Business alliances is an effective way to gather

market- and competitor-related information 3.80 0.84

Allia6 Business alliances improve business performance in

terms of sales revenue and/or profits 4.00 0.81


Based on the CFA results presented in Figure 6.3, one item, allia5 (Business alliances is an

effective way to gather market- and competitor-related information) has standardised factor

loading less than 0.5 and hence has been dropped from the analysis (Byrne, 2010). CFA was

207

conducted on five items (Allia1, Allia2, Allia3, Allia4, Allia6) and findings indicate that the

model did not fit the data well, χ²(df = 9, n = 346) = 34.23, p = 0.000. A bootstrapping

procedure was performed with the adjusted chi-square as Bollen-Stine p = 0.69, indicating a

good fit. The fit indices also support the model: ChiSq/df = 1.76, TLI = 0.98, CFI = 0.99,

RMSEA = 0.04.


Business Alliance’s Items


208

6.2.4 Adoption of Internet

Table 6.4 illustrates the means and standard deviations of five items to measure tourism

entrepreneurs’ use of the Internet. All five items show mean values above the ‘in between’

score of 3.55. This signifies that tourism entrepreneurs are aware of the importance and the

ability of the Internet to support the needs and boost performance of their businesses. This

positive perception of Internet use among Malaysian tourism entrepreneurs reflects the

continuous approaches of the Malaysian government to increase the level of Internet

penetration among SMEs in Malaysia (Junaidah, 2007; Karkoviata, 2001). SMEs have

increased their use of the Internet since the 8th Malaysia Plan (2001-2005), when the

Government allocated funding for computer systems upgrades, training programmes,

technology acquisition, consultancy fees and electronic commerce activities for SMEs. These

continuous efforts by the Government contribute to the high Internet penetration among

TSMEs in Malaysia.

Table 6.4: Mean and Standard Deviation Values of an Adoption of Internet’s Items

Item Adoption on Internet’s Items Mean s.d

Inter1 The Internet is an efficient way of communicating

with customers and/or suppliers 3.66 0.91

Inter2 An organisation can actually experience competitive

advantage through Internet technologies 3.55 0.98

Inter3 The Internet simplifies your role as a manager 3.55 0.99

Inter4 The Internet improves the organisational

relationship with customers and/or suppliers 3.64 0.92

Inter5 The Internet is an economical way of answering

customer and/ or suppliers’ queries 3.55 0.99


209

CFA indicates that the data did not fit the model well, with values of Chisq/df and RMSEA

above the acceptance level. Examination done on MI shows that the MI value between items

Inter4 and Inter5 of 30.51, more than the threshold value of 15. As shown in Figure 6.4, the

decision to solve the problem by setting them to be ‘free parameter estimate’ and re-specify

the model was made. Using the bootstrapping procedure, the data show a good model fit χ²

(df = 4, n = 346) = 15.52, Bollen-Stine p = 0.20. Other fit indices also support the model:

ChiSq/df = 3.88, TLI = 0.96, CFI = 0.98, RMSEA = 0.09.

Figure 6.4: Standardised Parameters Estimated in One-Factor Congeneric Models for

the Adoption on Internet’s Items


210

6.2.5 Government Assistance Programmes

Table 6.5 presents the mean and standard deviation values of the four items for the

government assistance construct. Most tourism entrepreneurs in the study do not perceive

Government support highly, as the mean values of all four items (Govt1, Govt2, Govt 3, and

Govt 4) are at most 3.47, lower than the ‘in between’ score. This indicates that tourism

entrepreneurs the Government’s financial and non-financial assistance have not been

supporting the needs and assistance of the TSMEs. The findings correspond to the descriptive

findings of the low level of awareness and use of financial and non-financial programmes

provided by the Malaysian government (see Section 5.4.4). The results has triggered

frustration of tourism entrepreneurs in Malaysia, as government support is crucial for the

success of small businesses (Rose, Kumar, & Yen, 2006).

Table 6.5: Mean and Standard Deviation Values of Government Assistance

Programmes’ Items

Item Government Assistance Programmes’ Items Mean s.d

Govt1

The programmes designed by the government have

improved the performance of TSMEs and its

competitiveness

3.47 0.95

Govt2 There is adequate financial assistance in Malaysia to enable

those interested in venturing into tourism business activities 3.28 1.10

Govt3

There is adequate non-financial assistance in Malaysia to

enable those interested in venturing into tourism business

activities

3.34 1.11

Govt4

The government has put in place adequate tourism

incentives to support the growth and development of

TSMEs

3.35 1.01


211

CFA analysis in Figure 6.5 was examined on the four measures of government assistance

programmes and found that the model fit the data well, with χ²(df = 2, n = 346) = 0.149, p =

0.928. Other fit indices were: ChiSq/df = 0.07, TLI = 1.0, CFI = 1.00, RMSEA = 0.00.


Government Assistance Programmes’ Items


6.2.6 Business Performance

Table 6.6 illustrates the mean and standard deviation values for the items for TSMEs’

performance. Based on the items in the business performance construct, most of the TSMEs

had 21 to 30 employees in 2008 and 2009. With regard to their perception toward their

business performance, most regard their business as stable, feel that their business is in a

212

good position compared to other competitors, and are somewhat satisfied with their business

performance.

Table 6.6: Mean and Standard Deviation Values of Business Performance’s Items

Item TSMEs’ Performances’ Items Mean s.d

Per1 Please estimate the number of full-time employees in 2008 3.66 0.98 Per2 Please estimate the number of full-time employees in 2009 3.64 0.85 Per3 I consider my business succeeded compared to competitor 3.76 0.86 Per4 I am satisfied with my business success 3.65 0.97


Figure 6.6 depicts the CFA results of business performance constructs and shows that the

data fit the model well with χ² (df =2, n =346) = 0.66, p = 0.71. Other fit indices

were:ChiSq/df = 0.33, TLI = 1.0, CFI = 1.00, RMSEA = 0.00

Figure 6.6: Standardised Parameters estimated in One-Factor Congeneric Model for

TSMEs’Performance


213

6.3 Full Measurement Model

This section shows the full measurement model of tourism entrepreneurial behaviour and

TSMEs’ management practices and performance. The items in each construct that were not

omitted were subjected to a comprehensive confirmatory factor analysis. Following the

earlier procedure adopted on the measurement model, the same fit indices used to assess

model fit were used in the full measurement model. In this stage, all six constructs (tourism

entrepreneur’s motivation, business planning, business alliance, use of the Internet,

government assistance and business performance) were simultaneously subjected to

confirmatory factor analysis.

Table 6.7: Confirmatory Factor Analysis of Full Measurement Model

Factor and item FL t- value

CronbachAlpha

Entrepreneur motivation Mot1 Personal satisfaction is more important than making

lots of money 0.81 13.90 0.84

Mot2 Having a flexible lifestyle is more important than making lots of money

0.76 14.81

Mot3 As a small business I have responsibility to the wider community

0.72 15.87

Mot4 When I first started the business I was more money oriented than today

0.79 a

Mot5 I think of my business as something that my children can be involved in

0.74 14.21

Mot6 I would rather keep the business modest and under control than have it grow too big

0.55 11.41

Business planning Plan1 Business plan is an effective way of setting business

goals and targets 0.89 12.21 0.80

Plan2 Business plan is a useful business strategy to track the business development 0.91 12.39

Plan3 Business plan improves business performance in terms of sales revenue and/or profits 0.79 11.36

Plan4 Business plan is an effective way to organise the business operations 0.60 a

Plan5 Business plan simplifies your role as a manager 0.60 12.78

214

Business alliance Allia1 An organisation can actually experience competitive

advantage through business alliance 0.81 12.59 0.81

Allia2 Business alliance activity simplifies roles as manager 0.64 10.40

Allia3 Business alliance activity improves the organisational relationship with customers and/or suppliers

0.69 a

Allia4 Business alliances among businesses is an economic way of delivering services 0.61 10.06

Allia6 Business alliances improve business performance in terms of sales revenue and/or profits 0.57 9.44

Adoption on Internet Inter1 The Internet is an efficient way of communicating

with customers and/or suppliers 0.84 12.39 0.83

Inter2 An organisation can actually experience competitive advantage through Internet technologies 0.90 12.77

Inter3 The Internet simplifies your role as a manager 0.78 11.70 Inter4 The Internet improves the organisational

relationship with customers and/or suppliers 0.59 11.41

Inter5 The Internet is an economical way of answering customer and/ or suppliers’ queries 0.63 a

Government assistance programmes Govt1 The programmes designed by the government have

improved the performance of TSMEs and its competitiveness

0.67 12.26 0.84

Govt2 There is adequate financial assistance in Malaysia to enable those interested in venturing into tourism business activities

0.81 a

Govt3 There is adequate non-financial assistance in Malaysia to enable those interested in venturing into tourism business activities

0.80 14.62

Govt4 The government has put in place adequate tourism incentives to support the growth and development of TSMEs

0.73 13.53

Business performance Per1 Please estimate the number of full-time employees

in 2008 0.81 12.99 0.83

Per2 Please estimate the number of full-time employees in 2009

0.80 12.88

Per3 I consider my business succeeded compared to competitor

0.70 11.55

Per4 I am satisfied with my business success 0.71 a

Note: N = 346; a = loadings are fixed to unity to scale the latent variable, FL = Factor loading


215

Results of the analysis reveal that the data did not fit the model well with χ²(df =359, n

=346) = 653.84, p = 0.00. Therefore, a bootstrapping procedure was performed, resulting in

an adjusted chi-square p value or Bollen-Stine p of 0.08, indicating the data fit the model

well. Other fit indices were: ChiSq/df = 1.82, TLI = 0.93, CFI = 0.94, RMSEA = 0.49.The

confirmatory factor analysis for the comprehensive model is shown in Table 6.7. Figure 6.7

depicts the full measurement models with the fit indices’ result.

216

Figure 6.7: Full Measurement Model for Identifying Key Success Factors Affecting

TSMEs’ Performance in Malaysia


217

6.4 Validity and Reliability of Constructs

This section discusses the results of validity and reliability analyses of the measurement

model. This is to ensure the constructs of the study measure the intended concept and that the

scale is free from any statistical or non-random error (Hair, et al., 2010; Sekaran, 2003). The

content validity has been discussed in Chapter 4 where the proposed scale items used in this

study (questionnaires) have been reviewed by a panel of academics from the Newcastle

Business School, University of Newcastle through the University's Human Research Ethics

Committee (HREC), and later pre-tested on a sample.

6.4.1 Construct Validity

Construct validity is established through the determination of both convergent validity and

discriminant validity. The following section discusses the results of both types of construct

validity in this study.

6.4.1.1 Convergent Validity

The analysis presented in Table 6.7 show that the items to measure the latent variables are

observed to be statistically convergent. This is done by examining the t-values and the

satisfactory factor loadings (SFL). Both values should exceed 1.96 and 0.50, respectively

(Dun, Seaker & Waller, 1994). Subsequent analysis using these measures revealed:

1. Satisfactory factor loadings, with each item’s factor loading ranging between 0.53

and 0.80 (see Table 6.7), exceeding the 0.50 benchmark, and

218

2. Satisfactory t-values, with each item’s t-values ranging between 8.79 and 14.49

(see Table 6.7), exceeding the 1.96 benchmark.

6.4.1.2 Discriminant Validity

Table 6.8 indicates that the square root AVE value for all constructs—entrepreneur’s

behaviour, business planning, business alliance, use of the Internet, government assistance

and TSME performance—are higher than the standardised correlation values, signifying

discriminant validity of the constructs.

Table 6.8: Discriminant Validity Test

Construct Mot Plan Allia Inter Govt Per Entrepreneur’s motivation (Mot) 0.72

Business planning (Plan) 0.60 0.76

Business alliance (Allia) 0.53 0.60 0.66

Adoption onInternet (Inter) 0.14 0.17 0.42 0.75

Government assistance programmes

(Govt) 0.05 0.49 0.17 0.02 0.74

Business performance (Per) 0.37 0.39 0.43 0.18 0.18 0.75

Note: The bold numbers in diagonal row are the square root of AVE


6.4.2 Reliability

Reliability test measures the extent to which a group of different items are consistent with

one another and whether each measure is free from measurement error (Leech, Barrett&

Morgan, 2005). It is assumed that each item comprises a true score measuring an underlying

construct. Based on the recommendation from Garver and Mentzer (1999), this study

219

calculated three estimates of reliability for each construct – the Cronbach’s alpha, the

composite reliability and the average variance extracted (AVE). Subsequent analysis using

these measures reveal that:

1. Satisfactory Cornbach’s alphas, with all constructs’ alphas exceeding 0.70 (see

Table 6.9);

2. Satisfactory composite reliability with all values exceeding the 0.70 benchmark

(see Table 6.9); and

3. Satisfactory AVE values, with all values exceeding the 0.5 benchmark (see Table

6.9).

Table 6.9: Reliability Analyses

Constructs Cronbach’s Alpha

Composite Reliability

Average Variance Extracted (AVE)

Entrepreneur’s motivation 0.84 0.87 0.53

Business planning 0.80 0.87 0.59

Business alliance 0.81 0.80 0.44

Adoption on Internet 0.83 0.86 0.57

Government assistance programmes 0.84 0.84 0.56

Business performance 0.83 0.84 0.57


6.5 Structural Model and Hypotheses’ Testing

The CFA and full measurement have tested the validity of the constructs for TSMEs’

management practices (business planning, business alliance, use of the Internet, government

assistance). The findings have highlighted the differences between the observed factor

structure and the overall structure suggested by the literature. As a result of the statistical

considerations, the model has changed in order to achieve the model fit. In this section,

220

structural equation modelling (SEM) analysis was used to examine the causal relationship

between tourism entrepreneurs’ motivation and key success factors (business planning,

business alliance, Internet adoption, and government assistance) with TSME business

performance. The advantages of using SEM include the ability to incorporate latent and

measured constructs into the analysis, the assessment of multiple relationships, and its

primary use to study consumer behaviour, psychology and management (Cunningham, 2008;

Hair, et al., 2003).

Figure 6.8 presents the structural model for Malaysian TSMEs’ key success factors and

business performance. The first saturated model did not fit the model well with χ² (df =365, n

= 346) =746.18, p = 0.00. None of the standardised residuals exceed a magnitude of 2;

hence, there is no indication of serious misfit between the data and the model. Therefore, a

bootstrapping procedure was performed, and the data fit the model well, with Bollen-Stine p

= .24. Other fit indices were: ChiSq/df = 2.04, TLI = 0.91, CFI = 0.92, RMSEA = 0.55.

221

Figure 6.8: AMOS Model Specification for Identifying Key Success Factors of TSMEs in Malaysia


222

Figure 6.9: Results of Path Analysis of Identifying Key Success Factors of TSMEs in

Malaysia

Source: Derived by candidate from empirical hypothesis results

The hypotheses for this study were tested by determining the statistical significance of the

path coefficients. To estimate the causal relation, the actual size of each parameter was

assessed in terms of the standardised ß coefficients and ρ-values. In summary, the findings

provide support for the structural model. Hypotheses H6, H8 and H9 are not supported,

while hypotheses H2, H3, H4, H5, H7and H10 are supported. These relationships are

H1 H2

H3

H4

H5

H7

H8

H9

H10

Entrepreneur’s motivation

Adoption on Internet

Business alliance

Business planning

Government assistance

programmes

TSMEs performance

Socio-economic

characteristics

H6

Notes: Significants

paths Non-significants paths

223

illustrated in Figure 6.9 and summarised in Table 6.10. Further discussion of these results is

found in section 6.6.

Table 6.10: Results of Hypotheses Testing

Predictor

variables

Criterion

variables ß

t-

value

p-

value

Hypo-

theses Results

Entrepreneur’s

motivation Business planning 0.05 11.05 *** H2 Supported

Entrepreneur’s

motivation Business alliance 0.05 8.45 *** H3 Supported

Entrepreneur’s

motivation

TSMEs’

performance 0.09 2.55 0.01 H4 Supported

Entrepreneur’s

motivation

Adoption on

Internet 0.05 2.95 0.00 H5 Supported

Entrepreneur’s

motivation

Government

assistance

programmes

0.07 0.92 0.35 H6 Not

Supported

Business

planning

TSMEs’


Business alliance TSMEs’

performance 0.08 1.29 0.19 H8

Not

Supported

Adoption on

Internet

TSMEs’

performance 0.06 1.03 0.30 H9

Not

Supported

Government

assistance

programmes

TSMEs’


Notes: * p<.05; ** p<.01, *** p<.001


224

6.6 Discussion of the Empirical Results

This section discusses the results based on the hypotheses tested and the analyses

conducted in this study. Table 6.11 summarises the research questions and key findings of

this research.

Table 6.11: Summary of Research Questions and Key Findings

Research questions Hypotheses Results 1. What is the impact of

socio-economic characteristics affects tourism entrepreneur’s motivation?

H1a Age contributes to tourism entrepreneur’s motivation.

Supported

H1b Gender contributes to tourism entrepreneur’s motivation.

Not supported

H1c Education level contributes to tourism entrepreneur’s behaviour.

Not supported

H1d Ethnic group contributes to tourism entrepreneur’s motivation.

Not supported

H1e Family business background contributes to tourism entrepreneur’s motivation.

Not supported

H1f Working experience contributes to tourism entrepreneur’s motivation.

Not supported

2. How does tourism entrepreneur’s motivation affect the management practices of Malaysian TSMEs?

H2 Tourism entrepreneur’s motivation will have a positive effect on business planning

Supported

H3 Tourism entrepreneur’s motivation will have a positive effect on business alliances

Supported

H4 Tourism entrepreneur’s motivation will have a positive effect to TSME performance

Supported

H5 Tourism entrepreneur’s motivation will have a positive effect to Internet adoption

Supported

H6 Tourism entrepreneur’s motivation will have a positive effect to utilisation on government assistance programmes

Not Supported

225

3. What is the impact of management practices to Malaysian TSMEs performance?

H7 Business planning will have a positive effect on performance of TSMEs. Supported

H8 Business alliances will have a positive effect on performance of TSMEs.

Not supported

H9 The adoption of the internet will have a positive effect on performance of TSMEs.

Not Supported

4. What is the impact of government assistance programmes on Malaysian TSMEs performance?

H10 Government assistance programmes will have a positive effect on performance of TSMEs. Supported


6.6.1 Relationship between Socio-economic Factors towards Tourism Entrepreneur’s

Motivation

H1a: Age contributes to tourism entrepreneur’s motivation.

A positive relationship between the age of tourism entrepreneurs and their motivation is

suggested as H1a. Results reveal that entrepreneurs who are in the middle age bracket (age

31 and above) have positive attitudes to manage the tourism business and are generally

more capable of starting and running a business. Furthermore, entrepreneurs in this age

group are financially stable and have an interest to start their own business. The findings

therefore support this hypothesis and other studies that link mature entrepreneurs and

positive entrepreneur motivation (Popa & Marghitas, 2011; Levesque & Minniti, 2003,

Valdez, 2009). This suggested that, in order to encourage entrepreneurial behaviour when

potential business owners reach the age of 31 or above, exposure to the business

environment could be done during secondary education and tertiary education. This is

when they are still younger than 30 years old.

H1b: Gender contributes to tourism entrepreneur’s motivation.

226

A positive association between gender and tourism entrepreneur’s motivation is suggested

as H1b. The findings did not support the hypothesis and other studies where males are more

likely to have a higher level of motivation than females (Matthews & Moser, 1996; Delmar

& Davidson, 2000; Jaafar et al; 2011). This is likely due to the tourism business

environment which is not too complex for women entrepreneur to handle the business

operations compare to other industry which requires extensive business skills in managing

the business operation. This findings also can be supported based on the pull factor motives

by tourism entrepreneurs in Malaysia which indicates both gender have no differences on

their motivation to start tourism business-for personal needs for growth, use own

knowledge and experience and to utilise business opportunity in tourism industry (see

Section 5.3.7)

H1c: Educationl evel contributes to tourism entrepreneur’s motivation.

A positive relationship between education level and tourism entrepreneur motivation is

suggested as H1c where by a higher education level will have an impact on tourism

entrepreneur motivation. The findings did not support this hypothesis and previous related

studies stating that a higher level of education develops analytical ability and the

computational skills of the entrepreneur as well as communication skills (Rauch & Frese,

2000; Collinson & Quinn, 2002; Clercq & Arenius, 2006). However, according to Lerner

and Haber (2001) and Valdez (2009), having higher education is unimportant because it

does not contribute to business success in the tourism industry.

H1d: Ethnic group contributes to tourism entrepreneurs’ motivation.

227

A positive association between ethnic group and tourism entrepreneur motivation is

suggested by H1d, whereby differences in family and household characteristics (including

human and financial capital across ethnic groups) will have an impact on tourism

entrepreneur motivation. However, the findings did not support this hypothesis or related

studies that signify the role of ethnicity on entrepreneurial motivation in the tourism

industry (Basu, 2004; Hitchcock, 2000).

Regardless of the differences in cultural values, religions and attitudes between Malays,

Chinese, Indians and other minority groups, Malaysian tourism entrepreneurs have similar

entrepreneurial motivation. This is reflected in the motivation factors to enter the tourism

industry, mainly to satisfy personal and family goals.

H1e: Family business background contributes to tourism entrepreneur’s motivation.

A positive association between family business background and tourism entrepreneur’s

motivation is suggested as H1e whereby entrepreneurs who have family business

background are more likely to exhibit positive tourism entrepreneur motivation. The results

did not support the hypothesis and suggest that early exposure to a family business have no

influences on the entrepreneur motivation. This findings did not support other studies that

signify the influence of family entrepreneurial background on entrepreneurial motivation of

an individual (Altinay, et al., 2012; Basu, 2004).

Furthermore, as tourism industry has a relatively low entry barriers, only required few

skills in business operations compare to other industry and few restrictions or regulations

imposed in setting up the business (Quinn, Larmour and McQuillan, 1992) has reflects on

228

the low number of tourism entrepreneurs who have family business background in this

study. This may justifies that family business background is not a strong indicator of

tourism entrepreneur’s motivation to enter tourism businesses instead due to less risk

involved and less complexity in business operation compare to other industry which

requires early exposure on the business environment and operational tasks.

H1f: Working experience contributes to tourism entrepreneur’s motivation.

A positive relationship between previous working experience and tourism entrepreneur

motivation is hypothesised as H1f. However, the finding is inconsistent with other studies

on the importance of prior working experience in shaping the motivation of lifestyle

tourism entrepreneurs. This can be justified by the ‘pull’ motivation factors of tourism

entrepreneurs’ involvement in the tourism industry in this study, as reported in Chapter 5.

Previous related studies found that tourism entrepreneurs often have strong desires to start a

tourism business to provide employment to family members, to fulfil their interests or

hobby, and (because of the flexible lifestyle) personal satisfaction, and companionship with

guests (Getz & Carlsen, 2000; Kirkwood, 2009; C. Wang, et al., 2006). These pull factors

confirm that previous working experience has no influence on the motivation of tourism

entrepreneurs. Also, previous working experience does not contribute to tourism

entrepreneur motivation because the industry has low barriers to entry, few restrictions and

regulations, and requires few skills to start a tourism business.

229

6.6.2 Relationship between Tourism Entrepreneurs’ Motivation and Business

Planning

H2: Tourism entrepreneurs’ motivation will have a positive effect on business planning.

In testing this hypothesis, we investigate the extent to which tourism entrepreneurs’

motivation influences business planning. The null hypothesis is that tourism entrepreneur

motivation has no impact on business planning against the alternative that it has a positive

impact on business planning. The result reported in Table 6.10 shows a t-value of 11.05 and

a p-value of less than 1%. Hence, we reject the null hypothesis in favour of the alternative

and conclude that tourism entrepreneur motivation has a positive impact on business

planning in Malaysia. In this study, based on the statistical results reported in Section 5.3.7

in Chapter 5, it was found that most Malaysian tourism entrepreneurs were motivated

primarily by pull factors rather than push factors. The expression of a strong positive

internal desire to start a business venture (such as ‘to keep personal needs for growth’,

‘opportunity to use own knowledge and experience’, ‘to utilise business opportunity in

tourism industry’) received higher mean rankings compared to push-factor motivations.

Push-factor motivations such as ‘could not find work/loss a job’ ranked with the lowest

means by Malaysian tourism entrepreneurs in this study. This explains why the regression

weight of tourism entrepreneur motivation was found to be significant on the perception of

the importance of business planning. Thus, hypothesis H2 has a direct effect on tourism

entrepreneurs’ motivation for business planning at the 5 per cent significance level. The

results establish that the relationship is supported, and suggest that positive internal desire

(which motivates entrepreneurs to venture into the tourism business) has influenced their

230

perception on the importance of exercising a business plan in their operations, either by

formal or informal business planning.

6.6.3 Relationship between Tourism Entrepreneurs’ Motivation and Business

Alliances

H3: Tourism entrepreneurs’ motivation will have a positive effect on business alliances.

A positive relationship between tourism entrepreneur motivation and business alliances is

hypothesised as H3 and the null hypothesis is that tourism entrepreneur motivation has no

impact on forming business alliances. The result reported in Table 6.10 shows a t-value of

8.45 and a p-value of less than 1 per cent. Hence, we reject the null hypothesis and

conclude that tourism entrepreneur motivation has a positive impact on business alliance in

Malaysia. The regression weight of tourism entrepreneur motivation was found to be

significant on the perception of the importance of business alliances. Thus, hypothesis H3

has a direct effect on tourism entrepreneur motivation to form business alliances at the 5

per cent significance level. Results indicate that most Malaysian tourism entrepreneurs

agree that business alliances are essential in operating tourism businesses. The opportunity

to utilise their past experience and knowledge, as well as other related pull motivation

factors have influenced Malaysia tourism entrepreneurs to become involved in business

alliance activity, due to the complexity of the tourism industry. It comprises more than a

few actors such as tourism operators, tourism support infrastructure, and public and private

organisations and associations (Russell & Faulkner, 2004), all for the purpose of providing

good tourism services to tourists. Thus, Malaysian tourism entrepreneurs perceive

231

networking within the industry in order to deliver quality tourism products and services as

essential to the tourism industry.

6.6.4 Relationship between Tourism Entrepreneurs’ Motivation and TSMEs’

Performance

H4: Tourism entrepreneurs’ motivation will have a positive effect on TSMEs’ performance.

A positive relationship between tourism entrepreneur motivation and TSME performance is

suggested as H4. The findings in the structural model indicated a significant relationship

between motivation of tourism entrepreneurs and TSME performance, and reject the null

hypothesis that tourism entrepreneur motivation has no impact on TSME performance.

Table 6.10 shows the results of hypothesis H4 indicates that the probability of getting a t-

value of 2.55 and a p-value of less than 1 per cent. This finding is consistent with other

studies which demonstrate that pull motivation factors lead to successful business

performance (Bellu & Sherman, 1995; Jennings & Beaver, 1997; Kolvereid & Bullvag,

1996; Miner, Smith, & Bracker, 1994).

The psychological perspective better explains why people take a broader view of

motivation than an economic one does. Bandura (1997) pointed that ‘people’s level of

motivation, affective status and actions are based more on what they believe than on what

he or she will act and how the available knowledge and skills will be utilised’ (p.14).

Consequently, people behave according to beliefs about their capabilities, rather than on

real facts based on their competence and capabilities. This perspective appears highly

232

appropriate in the TSMEs’ context, because this study provides evidence that tourism

entrepreneurs are motivated by factors other than simply the promise of financial reward.

6.6.5 Relationship between Tourism Entrepreneurs’ Motivation and Internet

Adoption

H5: Tourism entrepreneurs’ motivation will have a positive effect on Internet adoption.

H5 hypothesised a positive relationship between tourism entrepreneurs’ ‘push’ motivation

and use of the Internet. Table 6.10 shows the results of hypothesis H5, with a t-value of

2.95 and a p-value of less than 1 per cent. Hence, the regression weight of tourism

entrepreneurs’ motivation was found to be significant on the perception of the importance

of the Internet. Thus, the null hypothesis that tourism entrepreneur motivation has no

impact on Internet adoption is rejected, and it can be concluded that tourism entrepreneur

motivation has a positive impact on Internet adoption in Malaysia.

This indicates that Malaysian tourism entrepreneurs aware on the importance and

advantages of the Internet to business performance. This finding is supported by a study

conducted in Malaysia where most SMEs in Malaysia realize that ICT is critical to the

productivity and performance of their companies (Lim, 2006). In the context of the tourism

industry, the Internet is very influential in providing information and promoting tourism

products to potential tourists around the world.

233

6.6.6 Relationship between Tourism Entrepreneurs’ Motivation and Government

Assistance Programmes

H6: Tourism entrepreneurs’ motivation will have a positive effect on the importance of

government assistance programmes.

In testing this hypothesis, this study investigated the extent to which tourism entrepreneur

motivation influenced the importance of government assistance programmes. The null

hypothesis was that tourism entrepreneur motivation had no impact on government

assistance programmes, against the alternative hypothesis that it had a positive impact on

the importance of government assistance programmes in assisting TSMEs. Table 6.10

shows the results of hypothesis H6, with a t-value of 0.92 and a p-value of less than 1 per

cent. Hence, the study accepted the null hypothesis and concluded that tourism

entrepreneurs’ motivation had no direct effect on government assistance programmes.

This indicates that tourism entrepreneurs have a low perception of the available support

programmes provided by the Malaysian government. This can be supported by the

corresponding results on the tourism entrepreneurs’ low level of awareness on the financial

and non-financial tourism assistance programmes, with more than 47 percent of tourism

entrepreneurs being unaware of such assistance. Likewise, this also reflects Malaysian

entrepreneurs’ frustration of the Government’s support and assistance, and they are also

sceptical about obtaining funds and participating in the programs provided by the

Malaysian government (Rose, et al., 2006).

234

6.6.7 Relationship between Business Planning and TSMEs Performance

H7: Business planning will have a positive effect on TSMEs’ performance.

H7 hypothesised a positive relationship between business planning and TSME

performance, and the null hypothesis is that business planning has no impact on TSMEs

performance. Findings from the structural model confirm those of other studies, which

indicated that business planning guaranteed business success and reduced the risk of failure

(Baker, et al., 1993; Delmar & Shane, 2003; Peel & Bridge, 1998; Vasudevan &

Venkatraman, 1987). Table 6.10 shows the results of hypothesis H7, indicating a t-value of

2.70 and a p-value of less than 1 per cent. Hence, the null hypothesis is rejected and it can

be concluded that business planning was found to be significant on TSMEs’ business

performance.

This indicates that whether or not business planning is documented, it is crucial for

business growth, as it can assist entrepreneurs to analyse information, evaluate required

tasks, identify risks, formulate a strategy, and project financial developments. This activity

will help owner-managers to make better decisions more quickly, and to manage resource

supply and demand in ways that minimise time-consuming bottlenecks. This will more

efficiently turn abstract goals into concrete operational activities (Delmar & Shane, 2003).

6.6.8 Relationship between Business Alliance and TSMEs’ Performance

H8: Business alliances will have a positive effect on TSMEs’ performance.

In testing this hypothesis, this study investigated the extent to which business alliances

influence TSMEs performance. The null hypothesis is that business alliances have no

235

impact on TSMEs performance against the alternative that it has a positive relationship on

TSMEs performance. Table 6.10 shows the results of hypothesis H8, indicating a t-value of

1.29 and p-value of less than 1 per cent. Hence, we accept the null hypothesis and reject

H8, concluding that business alliance activity has no impact on TSMEs’ performance. The

findings in this study did not support this hypothesis or other studies that showed business

alliance activity would lead to positive outcomes on SME performance (Curran, Jarvis,

Blackburn, & Black, 1993; Hoffmann & Schlosser, 2001; Mehdi & Edward, 2011; Miles,

Preece, & Baetz, 1999; Pansiri, 2008).

6.6.9 Relationship between Internet Adoption and TSMEs’ Performance

H9: The adoption of the internet will have a positive effect on TSMEs’ performance.

Internet technology can bring great advantages to business performance; thus, this study

investigated the extent to which Internet adoption influences TSMEs performance. The null

hypothesis is that Internet adoption has no impact on TSMEs performance.H9 hypothesised

a positive relationship between Internet use and TSME performance. Findings indicate that

the Internet is not a crucial factor for TSMEs’ performance in Malaysia. The results are

contradictory with empirical studies indicating that the use of the Internet contributes

positively to SMEs’ performance (Feindt, et al., 2002; Karanasios & Burgess, 2006). Table

6.10 shows the results of hypothesis H9 indicates a t-value of 1.03 and a p-value of less

than 1 per cent. Hence, the null hypothesis is accepted, concluding that Internet adoption

was found not to be significant on TSMEs’ business performance.

236

However, these results are best explained due to the low level of technological adoption

and information and communications technology penetration by the Malaysian SME

industry (Salleh & Ndubisi, 2006). Furthermore, The Federation of Malaysian

Manufacturers (FMM) identified that one of the deemed factors for Malaysian IT use issue

is the lack of awareness among SMEs of the importance of IT. Even though Internet

services have been present in Malaysia since 1995, there was only a 21 percent application

of the Internet among TSMEs in the 2000s (Salwani, Marthandan, Norzaidi, & Chong,

2009b). Only 30 percent of Malaysian SMEs have their own websites, although these sites

are not regularly updated (Ramayah, Osman , Azizah, & Malliga, 2009).

6.6.10 Relationship between Government Assistance Programmes and TSMEs’

Performance

H10: The government assistance programmes will have a positive effect on TSMEs’

performance.

H10 posited a positive relationship between the Malaysian Government’s assistance and

TSMEs’ performance, and the null hypothesis is that government assistance programmes

have no impact on TSMEs performance. Results are congruent with other studies, which

suggest government’s crucial role in developing small businesses’ performance (Jenkins &

Henry, 1982; Ron Chuen Yeh, et al., 2008). Table 6.10 shows the results of hypothesis H10

indicates the t-value is 2.69 and the p-value is less than 1 per cent. Hence, the study rejects

the null hypothesis and concludes that government assistance programmes were found to be

significant on TSMEs’ business performance.

237

Governments can affect the nature and pace of SMEs. Macroeconomic policies, legislation,

regulations, direct support policies and programmes that are designed to assist TSMEs

bring great impact to their performance. This suggests that many TSMEs are set up, survive

and grow with the government’s involvement.


To summarize, this chapter evaluated the hypothesised relationship between dependent

variables and independent variables in one structural model. The SEM techniques were

used to evaluate the goodness-of-fit of the association of the socio-economic characteristics

factors affecting the motivation of tourism entrepreneurs in Malaysia. Key factors affecting

Malaysian TSMEs’ performance (and on which this study has focused) include: tourism

entrepreneurs’ motivation, business planning, business alliance, Internet adoption and

government assistance programmes. The model fit indices suggested a general fit to the

model.

The results also indicate key factors that have a positive relationship on Malaysian TSMEs’

performance. Tourism entrepreneur’s age and gender positively influenced tourism

entrepreneur’s motivation. Business planning and government assistance programmes are

also key management practices for TSMEs in Malaysia. The next chapter of this thesis,

Chapter 7, will look into the implication of these findings to the government tourism

policy. Chapter 7 will provide some policy recommendations to improve TSMEs

performance in Malaysia.

238

CHAPTER SEVEN

SUMMARY, CONCLUSIONS AND IMPLICATIONS OF THE FINDINGS

7.1 Summary

The Malaysian government has acknowledged the development of tourism industry since

the establishment of the Tourist Development Corporation in the 1970s. Then, it was taken

more seriously with the establishment of Ministry of Culture, Arts and Tourism (MOCAT)

in the 1980s. By the 2000s, tourism now had its own ministry to monitor its development.

The establishment of the Ministry of Tourism has a core objective of stimulating and

sustaining growth in the Malaysian tourism industry. A series of five-year development

plans (known as Malaysia Plans) were intended to establish development priorities and set

specific growth targets. The Malaysia Plans have explicitly espoused government

commitment toward TSMEs; however, in spite of the rigorous policies and programs

undertaken by the government, the tourism industry still faces challenges in sustaining the

life span and business growth of TSMEs, especially among tourism entrepreneurs who hold

non-economic motives in business. The purpose of this research is to undertake an

empirical study to investigate the key factors that will contribute to the longevity and

performance of TSMEs in Malaysia.

The specific objectives of the study were:

1. To critically evaluate the impact of government policy on TSMEs in Malaysia.

2. To empirically investigate the characteristics of TSMEs and management practices of

tourism entrepreneurs in Malaysia.

239

3. To empirically analyse the causal relationships between TSMEs management practices

and firm performance in Malaysia.

4. To identify the key success factors of TSMEs in Malaysia.

5. To provide policy recommendations for improving TSMEs performance in Malaysia.

The present study has synthesized and integrated aspects from each of the existing

determinants of controllable internal factors of TSME performance. These include the

social and cultural orientation of tourism entrepreneurs, management practices, and

available programs provided by the Malaysian government into the conceptual framework.

The study then employed a quantitative approach using multivariate data analysis.

The study was based on personally administered questionnaires on 346 TSME owner-

managers. It identified that controllable internal factors, social-cultural factors, business

alliances, tourism, motivation, business planning, and government assistance can all be

significantly exploited as a bundle of unique resources to ensure success performance of

TSMEs in Malaysia. These findings contribute to a better understanding of tourism

entrepreneurs’ motivation and management practices in a developing country context.

TSME performance in Malaysia has been the focus of the Malaysian government due to

key roles in facilitating tourism industry performance. Beginning with the 2nd Malaysia

Plan (1971-1975) until the current 10th Malaysia Plan (2011-2015), the Malaysian

government has been pursuing a policy and implementation framework for TSMEs. Since

then, the establishment of TSMEs across Malaysia has increased to support the growth and

development of the tourism industry. This has been attributed to the low entry barriers in

240

the tourism industry and the exhibition of a low degree of entrepreneurial behaviour. As a

result, TSMEs do not reach their full potential and fail to grow during the start-up phase or

the first three years of business (Hall., 1995).

Identifying key success factors of TSMEs can assist to avoid pitfalls during start-up, and

ensure survival in the industry. Several factors (both internal to the firm, and the external

environment) influence SME performance in all industries, including tourism. The

literature has proven that the individual entrepreneur cannot control the external

environment (Hunger & Wheelen, 2003). Thus, entrepreneurs must be aware of and take

actions via the internal factors, which include utilising available resources for small-sized

businesses and operation management to positively impact their businesses.

The remaining discussion in this chapter is organized around five objectives stated earlier.

The emphasis will be on drawing conclusions and outlining managerial and public policy

implications. The study’s contribution to the tourism entrepreneur literature and TSME

business management, its limitations, and its suggestions for future research are scrutinized

in the last two sections.

241

7.2 Conclusions

7.2.1 An Evaluation on the Impact of Government Policy on TSMEs in Malaysia

Within the context of this study, Malaysian government tourism policy has adopted both

short-term and long-term strategic planning on the performance of tourism industry. The

Malaysian government has developed such policies on its five-year economic plans, known

as Malaysia Plans, and has developed tourism-specific policies as guiding principles for the

planning, developing and marketing of tourism.

Essentially, the tourism policy planning on each of the five-year economic plans covered

tourism development in relation to the other economic sectors, manufacturing and

agriculture and services. On each of the five-year economic plans starting with the 1st

Malaysian Plan (1966-1970) until the 10th Malaysian Plan (2011-2015), Malaysia

government has organised its policy planning to increase tourist arrivals and receipts. It can

be seen that the policy planning of tourism development in Malaysia is comprehensive and

top-down in nature. As tourism is a federal matter, MOTOUR has provided the overall

framework and direction for tourism product development in Malaysia. However, since the

implementation of the tourism policy also involved three tiers of government organisation

(federal government, state government and local authorities), this has led to complexity,

redundancy in job implementation, and conflict in terms of which government organisation

is responsible for organising tourism activities at the state and national levels.

The tourism-specific policies—the National Tourism Policy (1992), the National Eco-

tourism Plan (1996), the Rural Tourism Master Plan (2001) and the Second National

242

Tourism Policy (2003-2010)—served as the guiding principles for the planning,

development and marketing of tourism. From then on, the major Unique Selling

Propositions (USPs) identified in the First National Tourism Policy were built—namely,

nature and culture. The National Eco-tourism Plan (1996) provided a blueprint for the

development of nature based on the principles of sustainability, with a strong emphasis on

local participation. The strategies and policies contained in the Rural Tourism Master Plan

(2001) call for the commoditisation of rural resources—notably, rural ambience and the

warm rural host. Finally, the Second National Tourism Policy (2003-2010) emphasised

Malaysia’s unique multiculturalism as its major selling point.

7.2.2 An Appraisal of the Relationship Between Socio-Economic Characteristics and

Tourism Entrepreneurs’ Motivation

The main part of the objective of this study is to understand the motivation of tourism

entrepreneurs in Malaysia and to bridge the knowledge gap in the Malaysian context by

undertaking a critical assessment of tourism entrepreneurs’ motivation. While numerous

studies on entrepreneurial intentions have examined only the impact age, gender,

educational background, and work experience to examine antecedent socio-economic

factors toward tourism entrepreneurial motivation, this study has also included the

importance of ethnicity and family business background due to its suitability with the

Malaysian context, comprised of multiracial community and the tourism industry.

Subsequent analysis revealed that the construct of age proved to be significantly and

positively associated with tourism entrepreneur motivation. The interesting finding of this

243

study is that no significant relationship was found out between gender, education level,

ethnicity, family background and tourism entrepreneurs’ motivation. Even though each

ethnic group may have unique differences in family, household characteristics such as

human and financial capital have a greater impact on tourism entrepreneurial motivation

(Basu, 2004; Basu & Goswami, 1999). It was also found that educational level and work

experience have no significant impact on shaping tourism entrepreneurial motivation. This

result implies that the involvement of tourism entrepreneurs in Malaysia is due to the low

entry barrier in the tourism industry, the strong presence of the Malaysian government in

encouraging Malaysians to participate in tourism with continuous government assistance

programs and incentives to support TSMEs. By contrast, other industries may require more

knowledge of the industry, extensive work experience and a higher education background.

7.2.3 An Evaluation on the Tourism Entrepreneurs’ Perception on the Importance of

Management Practices on TSMEs’ Performance

It is important to note that management practices are essential for business success,

particularly the SMEs (Munikrishnan & Veerakumaran, 2011). In the context of this study,

the focus of management practices has been on business planning, business alliances,

Internet adoption and government assistance programmes. It is important to examine the

tourism entrepreneurs’ perception of these management practices and their impact on the

business performance. In the context of the tourism industry, the entrepreneurs’ perception

of the importance of business planning, business alliances, adoption of the Internet and

government assistance programmes will help them identify the ability to position their

business in a highly segmented marketplace or niche market.

244

Based on the results, Malaysian tourism entrepreneurs perceived that business planning,

business alliances, motivations, and Internet adoption are crucial for determining the

performance of TSMEs. This provides some startling insights, since tourism

entrepreneurship is characterized as a “non-serious” business due to the lack of motivation

to achieve profit and growth in business. However, based on the results of the SEM

analysis, it appears that the typical tourism entrepreneur does believe that management

practices are important to be executed in business operations.

However, assistance programmes provided by the Malaysia government are perceived as

not important by Malaysian tourism entrepreneurs. Based on the results, the low awareness

of the related government assistance tourism programmes has implications for level of use

or application of the tourism assistance programmes. This interesting finding needs to be

further investigated in order to identify the reasons for this pessimistic perception among

tourism entrepreneurs on the available assistance programmes provided by the Malaysian

government.

7.2.4 An Assessment on the Causal Relationships between TSMEs’ Management

Practices and Firm Performance in Malaysia

The findings of this research are expected to provide a deeper understanding of the value

positions underlying small and medium enterprise entrepreneurial activity, particularly in

the tourism industry. The study also aims to provide important information for the

Malaysian government to formulate and implement effective policies aimed at sustaining

TSME growth within the tourism industry.

245

From this research, it is eminently clear that business planning and government assistance

programmes have a positive relationship on TSMEs’ performance. Since most TSMEs in

Malaysia practice informal business planning, the Malaysian Government should develop

awareness and educate tourism entrepreneurs on the importance of having a more

structured and proper business plan. This will enhance the capacity and capability of the

existing TSMEs in Malaysia by improving on their business planning practice.

In the context of government assistance programmes, in regard to the pessimistic

perception by tourism entrepreneurs on the importance of government assistance

programmes towards firms performance, the results shows that government assistance

programmes are an influential factor in contributing to the positive performance of TSMEs.

Thus, tourism entrepreneurs of TSMEs should utilise the available assistance programmes,

which are designed to promote TSME performance of Malaysia.

Thus, if TSMEs pay attention to these resources during the start-up phase of tourism

business operation, it will increase the chances of success and survival in their business

longevity. However, Internet adoption has to be emphasised by the Malaysian government

among TSMEs for use and penetration of the technology into the business. Globally, most

countries have used the Internet to their advantage in their respective tourism industries.

Malaysian TSMEs also should take this chance, and the government must play a big role to

encourage and ensure that Internet adoption is practised among TSMEs in Malaysia.

246

7.2.5 The Key Success Factors of TSMEs in Malaysia

In determining the key success factors for survival among TSMEs in Malaysia, this study

focused on internal resources of TSMEs: socio-economic characteristics and management

practices, which have a strong influence on small-business performance. This study

signified that certain characteristics of tourism entrepreneurs’ demographics and basic

management practices need to be encouraged by tourism entrepreneurs. Both factors are

statistically proven to contribute to TSMEs’ business performance during the start-up

phase.

Based on the statistical results, it is indicated that age has an impact on tourism

entrepreneurship. This study found out that tourism entrepreneurs who are 31 years or older

are highly motivated to enter the tourism business. This shows that in this age group,

tourism entrepreneurs are more likely to accept demands and obligations associated with

owner-manager responsibilities, and they see the potential to utilise the business

opportunity in tourism industry. Furthermore, this mature group is often well established in

terms of financial capability and the business environment.

Business planning, either formal or informal, shows positive results for the performance of

TSMEs. Thus, it indicates that business planning is very significant as one of the key

success factors for TSMEs. Well-planned activities and the arrangement of tourism

products or services will determine the satisfaction level among tourists. This also has a

great impact on the tourist experience in Malaysia, and it will influence Malaysia’s impact

on the global tourism industry. Therefore, business planning needs to be practiced by

247

TSMEs at the early stages of business operation, in the start-up phase, business operation

must be well organised, as TSMEs deal directly with the tourist visiting Malaysia.

Government assistance is regarded as an important resource for SMEs’ success.

Conversely, lack of government support will limit the performance of SMEs. In this study,

assistance programmes provided by the Malaysian Government through various agencies

are an effective influence on the success performance of TSMEs. The various programmes

offered to the TSMEs have helped tourism entrepreneurs to further improve their business

performance. The programmes also provide support in minimizing or reducing the barriers

that TSMEs face.

7.3 Policy Implications

This section presents the implication of the findings, and in so doing, addresses the study’s

final objective of providing policy recommendations for improving TSME performance in

Malaysia. Several managerial and policy-making implications are discussed in this section.

7.3.1 Managerial Implications

In the context of managerial implications, this study provides entrepreneurs of TSMEs with

the information on the importance of management practices affecting the performance of

their business. Based on the empirical results of this study, it was found out that most

tourism entrepreneurs lack the necessary training and experience. The majority of tourism

entrepreneurs in this study have no background in the tourism industry, either in terms of

previous work experience or education background. This indicates that most tourism

248

entrepreneurs enter the industry without early preparation to understand and gain

experience prior to setting up their tourism business operations. The tourism industry is

very complex, comprised of residential activities (hotels, apartments, camp sites),

transportation (by air, sea and overland), services in the place of origin (tour operators,

travel agencies, information services), and services at the place of destination

(accommodation, foodservice, sports, leisure, culture, banking, insurance, security)

(Argandona, 2010). All of these activities overlap and influence one another. Tourism

entrepreneurs who lack preparation will face big challenges in handling the tourism

business, particularly during the early stages of operation. Furthermore, in the tourism

business, meeting tourist demand is crucial as it brings a direct impact on business

performance. This limitation needs to be addressed by tourism entrepreneurs by attending

and utilising workshops, seminars and training programmes held by MOTOUR and/or

agencies. The workshops will equip the entrepreneurs with knowledge, and exposure to

tourism industry environment and specifically the tourism business environment. This will

facilitate business operations and provide a better understanding on the complexity of the

tourism industry.

In the context of forming business alliances, there is a low level of business alliance

activity among TSMEs in Malaysia. Most tourism entrepreneurs had a positive perception

on the importance of business alliance on performance; however, the level of networking

activity is still low among TSMEs in Malaysia. The low involvement in corporate

relationships will reduce the opportunity to share resources and exchange industry

knowledge (Braun, 2012). Collaboration with other TSMEs or organisations will improve

249

networking and provide new sources of competitive advantage for companies while also

ensuring business survival. This can be done via formal or informal networking.

The low level of Internet adoption among TSMEs has a big impact on the performance of

TSMEs. Internet in the tourism industry is now absolutely crucial, due to today’s society

lifestyle. Tourists now prefer to make their own travel arrangements, search information by

browsing the webpage, and contact TSMEs operators via email to get relevant information

for making a holiday decision. The inability to utilise the advantage of the Internet will

reduce a business’s potential to attract and receive potential customers while promoting the

business to a broader global market.

Low level of awareness and use of government assistance programmes will impede

business performance, particularly during the start-up phase of business. This study found

out that most TSMEs in Malaysia did not participate in tourism programmes provided by

the government. It was indicated that most tourism entrepreneurs had no awareness of the

relevant tourism programmes provided by the government to support and nurture TSMEs’

business performance in all areas of business operations. This includes financial support

and non-financial support such as advisory services, marketing and promotion courses and

entrepreneurial development programmes. Thus, tourism entrepreneurs need to be

proactive in seeking information and support from the related ministry and agency about

the available assistance provided by the Malaysian Government.

250

7.3.2 Implications for Policy Makers

Within the context of this study, the Malaysian government needs to realise that the well-

intentioned policies originally designed to encourage mass participation of Malaysians in

business also created unintended drawbacks. The 'lifestyle' aspirations, combined with low

entry barriers to business in the tourism industry, have led to declines in successful

performance among tourism entrepreneurs. Thus, it is important for the government,

through public and private educational institutions, to provide entrepreneurial programmes.

This could take the form of mentoring or incubator support programmes, where prospective

tourism entrepreneurs could understudy or serve an apprenticeship under a successful

tourism entrepreneur. It behoves prospective tourism entrepreneurs to take steps to acquire

experience before starting a TSME. By addressing the education and entrepreneurial

experience of tourism entrepreneurs as prerequisites for successfully running TSMEs, it

will play a greater role in poverty alleviation and employment creation at the national,

regional and district levels of government.

Regardless of the education background of the tourism entrepreneurs, it was found out that

most tourism entrepreneurs in Malaysia did not have a prior educational background in

tourism before entering the tourism industry. Thus, it is recommended that MOTOUR and

the Ministry of Higher Education collaborate to develop a tourism training policy that will

build a pool of resources for the tourism sector and continue to support training

accreditation programmes in the tourism industry.

251

This study also highlighted the ineffectiveness of disseminating information to Malaysian

TSMEs about the availability of financial and non-financial programs provided by the

governments. Most tourism entrepreneurs are unaware of the existing supports to which

they are entitled. This also explains why the majority of tourism entrepreneurs have not

applied for the available funds or attended the programme provided by MOTOUR and its

agency. Thus, MOTOUR together with SME Corp must take actions to ensure that

information is delivered to tourism entrepreneurs about financial and non-financial

programmes for TSMEs.

It was highlighted that there is insufficient data on TSMEs in Malaysia. This is because

TSMEs in tourism are classified as SMEs in the services sector. Since TSMEs are

recognised as the backbone of the tourism industry, and based on a review of empirical

studies of TSMEs in other tourism countries, it is suggested that MOTOUR, DOS and SME

Corp have to take the initiative to collaborate in providing sufficient data on Malaysian

TSME businesses based on business size, type of business and location. The lack of the

TSME data will limit the real potential of Malaysian TSMEs due to the difficulties faced by

researchers to gather extensive information to explore TSMEs’ economic contribution to

the Malaysian tourism industry and also to the national level.

The Malaysian government should encourage the involvement of younger age groups,

particularly the unemployed student graduated from higher education. The educational

attainment they acquired regardless of study major will help in terms of providing

diversification of TSME business products in Malaysia.

252

It is also suggested that government agencies should develop market intelligence systems to

understand the opportunities and demand challenges for TSMEs’ type of business, and put

them into a suitable market segment based on their niche market or location. Improvement

in the quality and accessibility of information gathered through market intelligence will in

turn solve the problem of determining the business products or services that TSMEs should

best provide.

The government also needs to increase TSME involvement in utilising the Internet to

market their business globally. It should also emphasise to TSMEs the distinct advantage of

using the Internet as a key marketing tool. For instance, this could be done by assisting

TSMEs to develop their business websites. The government could also help monitor

website development progress by checking that the business website is continuously

updated and by offering online payments.

Since most tourism entrepreneurs in Malaysia prefer to keep the business small and only a

minority of them are interested in expanding business, the Malaysian government should

consider focusing on how to utilise these lifestyle TSMEs in order to ensure that they can

still contribute to tourism industry performance.

7.4 Suggestions for Future Research

In conducting this study, some limitations have been recognised and create suggestions for

future research. This study has provided a range of insights into controllable success

factors; however, the quantitative method employed using a structured questionnaire

253

limited the potential to determine other possible controllable success factors of Malaysian

TSMEs. Thus, a qualitative approach is suggested for future research, based on in-depth

interviews with TSME owner–managers to confirm their views on all factors affecting

TSMEs’ performance identified in this study. By expanding the study to a longitudinal and

qualitative research design, insight into dynamic processes could also be gained. Multiple

case study methodology would be appropriate to investigate and chart the effects of internal

factors on decision making in TSMEs in Malaysia.

The sampling frame of this study is focused on small-sized and medium-sized firms dealing

in tourism businesses in two sub-sectors only: accommodation services and travel-agent

services. Thus, it is suggested that future research expand the type of tourism business

services involved in the research to better understand and identify tourism entrepreneurs’

motivation and the management practices that are influential in the performance of TSMEs.

Consequently, this research has made several of contributions of theory and practice of

tourism entrepreneurship and TSME performance. These are summarised below.

First, this study validates the resource-based theory that has previously been applied in

developed countries, within the context of a developing country, Malaysia. The finding

reveals some differences that exist between TSMEs in developed and developing countries

using a cross-sectional research design.

Secondly, this study formulates a new approach to TSMEs’ perceived performance by

adopting socio-economic factors in identifying the motivation of tourism entrepreneurs.

Extending the methodology proposed by Indarti and Langenberg (2004), this study defined

254

and validated that ethnicity factors have no impact on tourism entrepreneurial behaviour in

Malaysia.

Thirdly, the adoption of data analysis using the AMOS 18 platform provided a means for

simultaneously examining two subjects. The first subject was using a single model to

investigate the relationship between various internal factors (entrepreneur characteristics,

organisation characteristics and various management practices). The second subject was the

quantification of said relationships. This also provided a means for testing hypotheses using

multivariate and univariate data analysis techniques.

255

REFERENCES

Abdul Rahman, R. (2006). Effective Corporate Governance (1st ed.). Shah Alam,

Malaysia: University Publication Centre (UPENA).

Abdullah, Z., Ahmad, I., & Alam, S. S. (2007). A Preliminary Study of Web Site Usage by

SMEs Based in Kuala Lumpur, Malaysia. Journal of International Business

Disciplines, 2(1), 1-10.

Ackelsberg, R., & Arlow, P. (1985). Small Business Do Plan And It Pays Off*. Long

Range Planning, 18(5), 61-67.

Akbaba, A. (2012). Business Performance of Small Tourism Enterprises: A Comparison

Among Three Sub-sectors of the Industry. Anatolia, 23(2), 177-195.

Alam, S. S., Ahmad, I., Abdullah, Z., & Ishak, N. A. (2007). ICT Usage in SMEs:

Empirical Study of Services Sectors in Malaysia. Paper presented at the The 4th

SMEs In A Global Economy Conference 2007.

Altinay, L., & Altinay, E. (2006). Determinants of Ethnic Minority Entrepreneurial Growth

in the Catering Sector. The Service Industries Journal, 26(2), 203-221.

Altinay, L., Madanoglu, m., Daniele, r., & Lashley, C. (2012). The Influence of Family

Tradition and Psychological Traits on Entrepreneurial Intention. International

Journal of Hospitality Management, 31, 489-499.

Alverén, E., Andersson, T. D., Eriksson, K., Sandoff, M., & Wikhamn, W. (2012).

Seasonal Employees' Intention to Return and Do More Than Expected. Service

Industries Journal, 32(12), 1957-1972.

256

Andereck, K. L. (2011). Inferential Analysis of Data. In E. Sirkaya-Turk, M. Uysal, W. E.

Hammit & J. J. Vaske (Eds.), Resaerch Methods for Leisure, Recreation and

Tourism (pp. 213-225). UK: CABI.

Andriotis, K. (2003). Dependency on Tour Operators: Problem Faced by Cretan Tourism

Businesses and the Views of Their Owners/Managers. International Journal of

Hospitality and Tourism Administration, 4(3), 23-37.

APEC Tourism Working Group. (2002). Application of E-Commerce Strategies to Small

and Medium SIzed Tourism Enterprises in the APEC Region. Singapore.

Arbuckle, J. L. (2006). AMOS 7.0 User's Guide. Chicago: SPSS.

Arenius, P., & Minniti, M. (2005). Perceptual Variables and Nascent Entrepreneurship.

Small Business Economics, 24(3), 233-247.

Ateljevic, I., & Doorne, S. (2000). "Staying Within The Fence": Lifestyle Entrepreneurship

In Tourism. Journal of Sustainable Tourism, 8(5).

Ateljevic, J. (2007). Small Tourism Firms And Management Practices In New Zealand:

The Centre Stage Macro Region. Tourism Management, 28, 307-316.

Ateljevic, J. (2009). Tourism Entrepreneurship and Regional Development: Example from

New Zealand. International Journal of Behaviour & Research, 15(3), 282-308.

Ateljevic, J. (2009). Tourism Entrepreneurship and Regional Development: Example from

New Zealand. International Journal of Entrepreneurial Behaviour and Research,

15(3), 282-308.

Australian Tourism Export Council. (2007). The Missing Link: A Discussion Paper:

ATEC.

257

Awang, Z. (2012). Structural Equation Modelling: SEM Using AMOS Graphic (8th ed.).

Kota Bharu, Kelantan: Universiti Teknologi Mara (UiTM).

Baker, W. H., Addams, H. L., & Davis, B. (1993). Business Planning In Successful Small

Firms. Long Range Planning, 26(6), 82-88.

Bank Negara Malaysia. (2005). The Cencus of Establishments and Enterprises 2005.

Retrieved from http://www.bnm.gov.my/files/publication/sme/en/2006/chap_2.pdf.

Barney, J. (1991). Firm Resources and Sustained Competitive Advantage. Journal of

Management, 17(1), 99-120.

Barney, J., Wright, M., & Ketchen, D. J. (2001). The Resource-based View of the Firm:

Ten Years After 1991. Journal of Management, 27(6), 625-641.

Basu, A. (2004). Entrepreneurial Aspirations Among Family Business Owners: An

Analysis of Ethnic Business Owners in the UK. International Journal of

Entrepreneurial Behaviour & Research, 10(1/2), 12-33.

Basu, A., & Goswami, A. (1999). Determinants of South Asian Entrepreneurial Growth in

Britain: A Multivariate Analysis. Small Business Economics, 13, 57-70.

Baum, T., & Szivas, E. (2008). HRD in Tourism: A Role for Government? Tourism

Management, 29(4), 783-794.

Beaver, G., Lashley, C., & Steward, J. (1998). Management Development. In R. Thomas

(Ed.), The Management Of Small Tourism And Hospitality Firms (pp. 156-173).

London: Cassell.

Bellu, R. R., & Sherman, H. (1995). Predicting Business Success From Task Motivation

and Attributional Style: A Longitudinal Study. Entrepreneurship and Regional

Development, 349-363.

258

Bennett, M. M. (1997). Strategic Alliances in the World Airline Industry. Progress in

Tourism and Hospitality Research, 3(3), 213-223.

BERNAMA. (2012, 18 April 2012). E-Commerce Adoption Among SMEs Remains Low.

TheStar Online. Retrieved from

http://biz.thestar.com.my/news/story.asp?file=/2012/4/18/business/11123341&sec=

business

Bharadwaj, A. S. (2000). A Resource-Based Perspective on Information Technology

Capability and Firm Performance: An Empirical Investigation. MIS Quarterly,

24(1), 169-196.

Bollen, K. A. (1989). Structural Equations With Latent Variables. New York: Wiley.

Braun, P. (2002). Networking Tourism SMEs: E-Commerce and E-Marketing Issues in

Regional Australia. Information Technology & Tourism, 5, 13-23.

Bresciani, S., Thrassou, A., & Vrontis, D. (2012). Human Resource Management Practices,

Performance and Strategy in the Italian Hotel Industry. World Review of

Entrepreneurship, Management and Sustainable Development, 8(4), 405-423.

Brinckmann, J., Grichnik, D., & Kapsa, D. (2010). Should Entrepreneurs Plan or Just

Storm the Castle? A Meta-Analysis on Contextual Planning-Performance

Relationship in Small Firms. Journal of Business Venturing, 25(24-40).

Brockhaus, R. H. (1980). Risk Taking Propensity of Entrepreneurs. The Academy of

Management Journal23(3), 509-520.

Brouder, P., & Eriksson, R. H. (2013). Staying Power: What Influences Micro-firm

Survival in Tourism? Tourism Geographies, 15(1), 125-144.

259

Browne, M. W., & Cudeck, R. (1993). Alternative ways of Assessing Model Fit Testing

Structural Equation Models. Newbury Park, CA: KA Bollen & JS Long Sage.

Buhalis, D. (1998). Strategic Use Of Information Technologies In The Tourism Industry.

Tourism Management, 19(5), 409-421.

Buhalis, D., & Law, R. (2008). Progress in Information Technology and Tourism

Management: 20 Years On and 10 Years After the Internet- The State of eTourism

Research. Tourism Management, 29, 609-623.

Bullock, G. K. (1998). The UK Package Holiday Industry. Management Accounting:

Magazine for Chartered Management Accountants, 76(4), 36-38.

Byrne, B. M. (2010). Structural Equation Modelling with AMOS: basic Concepts,

Applications and Programming (2nd ed.). New York: Routledge.

Caird, S. (1990). What Does It Mean To Be Enterprising. British Journal of Management,

1, 137-145.

Camison-Zomoza, C., Lapierda-Alcami, R., Segarra-Cipres, M., & Boronat-Navarro, M.

(2004). A Meta Analysis of Innovation and Organisational Size. Organization

Studies, 25(3), 331-361.

Campbell, D. T., & Fiske, D. W. (1959). Convergent and Discriminant Validation by the

Multitrait-multimethod Matrix. Psychological Bulletin, 56, 81-105.

Carland, J. W., Hoy, F., Boulton, W. R., & Carland, J. A. C. (1984). Differentiating

Entrepreneurs From Small Business Owners: A Conceptualization. Academy of

Management Review, 9(2), 354-359.

Carlsen, J., Morrison, A., & Weber, P. (2008). Lifestyle Oriented Small Tourism Firms.

Tourism Recreation Research, 33(3), 255-263.

260

Casson, M. (2003). The Entrepreneur - An Economic Theory (Vol. Second Edition).

Cheltenham, UK: Edward Elgar Publishing, Inc.

Causevic, S., & Lynch, P. (2013). Political (In)tability and Its Influence on Tourism

Development. Tourism Management, 34, 145-157.

Cavlek, N. (2002). Business in Tourism: SMEs Versus MNCs. Zagreb International

Review of Economic & Business, 5(2), 39-48.

Cetindamar, D., Gupta, V. K., Karadeniz, E. E., & Egrican, N. (2012). What the number

tell: The Impact of Human, Family and Financial Capital on Women and Men's

Entry into Entrepreneurship in Turkey. Entrepreneurship and Regional

Development: An International Journal, 24(1-2), 29-51.

Chell, E., Haworth, J., & Brearley, S. (1991). The Entrepreneurial Personality: Concepts,

Cases And Categories. New York: Routledge.

Chen, L., & Wallace, M. (2011). Multiskilling of Frontline Managers in the Five Star Hotel

Industry in Taiwan. Research and Practice in Human Resource Management,

19(1), 25-37.

Chittithaworn, C., Islam, M. A., Keawchana, T., & Yusuf, D. H. M. (2011). Factors

Affecting Business Success of Small and Medium Enterprises (SMEs) in Thailand.

Asian Social Science, 7(5), 180-190.

Cho, S., Woods, R. H., Jang, S., & Erdem, M. (2006). Measuring the Impact of Human

Resource Management Practices on Hospitality Firms' Performances. International

Journal of Hospitality Management, 25(2), 262-277.

Chon, K.-S., Singh, A., & Mikula, J. R. (1993). Thailand's tourism and hotel industry. The

Cornell Hotel and Restaurant Administration Quarterly, 34(3), 43-49.

261

Choudhury, N., & McIntosh, A. (2013). Retaining Students as Employees: Owner Operated

Small Hospitality Businesses in a University Town in New Zealand. International

Journal of Hospitality Management, 32(1), 261-269.

Chu, M. H., & Katsioloudes, M. L. (2001). Cultural Context and the Vietnamese-American

Entrepreneurial Experience. Journal of Transnational Management Development,

7(2), 25-39.

Chung, K. N.-W. (2006). An Investigation of Internet Adoption Factors in New Zealand's

Small and Medium-Sized Enterprises - From an Industrial Perspectives. University

of Canterbury, New Zealand.

Churchill, G. A. (1999). Marketing Research: Methodological Foundations (Seventh ed.).

Dryden, Sydney.

Coakes, S. J., Steed, L., & Ong, C. (2009). SPSS Version 16.0 for Windows: Analaysis

without Anguish. Queensland: John Wiley & Sons.

Collins, O. F., & Moore, D. G. (1970). The organization makers; a behavioral study of

independent entrepreneurs. New York: Appleton-Century-Crofts.

Contractor, F. J., & Kundu, S. K. (1998). Model Choice in a World of Alliances: Analyzing

Organizational Forms in the International Hotel Sector. Journal of International

Business Studies, 29(2), 325-357.

Cuba, R., Decenzo, D., & Anish, A. (1983). Management Practices Of Successful Female

Business Owners. American Journal Of Small Business, 2(8), 40-46.

Cunningham, E. (2008). A Practical Guide to Structural Equation Modelling Using Amos.

Melbourne: Statsline.

262

Cunningham, J. B., & Lischeron, J. (1991). Defining Entrepreneurship. Journal of Small

Business Management, 29(1), 45.

Curiel-Piña, L., González-Pernía, J. L., Jung, A., López-Trujillo, M. A., & Peña-Legazkue,

I. (2013). The Relationship Between Firm Start-Up Rates and the Local

Development of an Entrepreneurship Education System. International Journal of

Entrepreneurial Venturing, 5(1), 84-103.

Curran, J., Jarvis, R., Blackburn, A., & Black, S. (1993). Networks and Small Firms:

Constructs, Methodological Strategies and Some Findings. International Small

Business Journal, 11(2), 13-25.

Das, T. K., & Teng, B.-S. (2000). A Resource-Based Theory of Strategic Alliances.

Journal of Management, 26(1), 31-61.

David, F. R. (1999). Strategic Management - Concepts and Cases. New Jersey: Prentice

Hall.

Davis, J. F., Dchoorman, D., & Donaldson, L. (1997). Toward a Stewarship Theory of

Management. Academy of Management Review, 22, 20-47.

de Bruin, A., Brush, C. G., & Welter, F. (2007). Advancing a Framework for Coherent

Research on Women's Entrepreneurship. Entrepreneurship Theory and Practice,

31(3), 323-339.

de Sausmarez, N. (2004). Malaysia's Response to the Asian Financial Crisis. Journal of

Travel & Tourism Marketing, 15(4), 217-231.

Dean, J., Holmes, S., & Smith, S. (1997). Understanding Business Network: Evidence from

the Manufacturing and Services Sector in Australia. Journal of Small Business

Management, 35(1), 78-85.

263

Delmar, F., & Shane, S. (2003). Does Business Planning Facilitate The Development Of

New Ventures? Strategic Management Journal, 24, 1165-1185.

Department of Statistics. (2009). Accommodation Services Kuala Lumpur: Department of

Statistics.

Department of Statistics. (2012a). Demographic Indicators, Malaysia. Retrieved 10th

January, 2013, from

http://www.statistics.gov.my/portal/index.php?option=com_content&view=article&

id=363&Itemid=169&lang=en

Department of Statistics. (2012b). Economic Census 2011: Profile of Small and Medium

Enterprises. Putrajaya: Department of Statistics, Malaysia.

Department of Statistics. (2012c). Population Distribution and Basic Demographic

Characteristics. Putrajaya: Department of Statistics, Malaysia.

Department of Statistics, M. (2009). Population Distribution and Basic Demographic

Characteristics 2009. Putrajaya: Department of Statistics, Malaysia.

Department of Statistics Malaysia. (2006). Census on Establishments and Enterprise 2005.

Retrieved 9 October, 2012, from

http://www.miti.gov.my/cms/content.jsp?id=com.tms.cms.section.Section_f4bb684

9-ac1c231a-64e5b200-e69f25a1

Department of Statistics Malaysia. (2011). Economic Census 2011 - Profile of Small and

Medium Enterprises. Retrieved from

http://www.statistics.gov.my/portal/index.php?option=com_content&view=article&

id=1721&Itemid=111&lang=en.

Department of Tourism Philippine. (2012). Tourism Statistics. Retrieved 6 November,

2012, from www.tourism.gov.ph/Pages/demand.aspx

264

Dewhurst, P., & Horobin, H. (1998). Small Business Owner. In R. Thomas (Ed.), The

Management of Small Tourism And Hospitality Firms (pp. 19-38). London: Cassell.

Diaz-Garcia, M., & Jimenes-Moreno, J. (2010). Entrepreneurial Intentions: The Role of

Gender. International Enterpreneurship and Management Journal, 6, 261-283.

Din, K. H. (1982). Tourism in Malaysia: Competing Needs in a Plural Society. Annals of

Tourism Research, 9(3), 453-480.

Dodds, R., & Butler, R. (2010). Barriers to Implementing Sustainable Tourism Policy in

Mass Tourism Destinations. Tourismos, 5(1), 35-54.

Drucker, P. F. (1994). Innovation And Entrepreneurship; Practice and Principles. Oxford:

Butterworth-Heinemann Ltd.

Duchesneau, D. A., & Gartner, W. B. (1990). A Profile of New Venture Success and

Failure in an Emerging Industry. Journal of Business Venturing, 5, 297-312.

Dunn, S. C., Seaker, R. F., & Waller, M. A. (1994). Latent Variables in Business Logostic

Research: Scale Development and Validation. Journal of business Logistics, 15(2),

145-172.

Economic Planning Unit. (1966). First Malaysia Plan 1966-1970. Kuala Lumpur:

Economic Planning Unit,.

Economic Planning Unit. (1971). Second Malaysia Plan 1971-1975. Kuala Lumpur:

National Printing Department.

Economic Planning Unit. (1976). Third Malaysia Plan 1976-1980. Kuala Lumpur:

Economic Planning Unit.

Economic Planning Unit. (1981). Fourth Malaysia Plan 1981-1985. Kuala Lumpur:


265

Economic Planning Unit. (1986). Fifth Malaysia Plan 1986 - 1990. Kuala Lumpur:

Percetakan Nasional Berhad.

Economic Planning Unit. (1991). Sixth Malaysia Plan 1991 - 1995. Kuala Lumpur:


Economic Planning Unit. (1996). Seventh Malaysia Plan 1996 - 2000. Kuala Lumpur:


Economic Planning Unit. (2006). Ninth Malaysia Plan 2006-2010. Putrajaya: The


Economic Planning Unit. (2008). Eighth Malaysia Plan 2000 - 2005. Kuala Lumpur:


Economic Planning Unit. (2011). Tenth Malaysia Plan 2011-2015. Putrajaya: Percetakan

Nasional Berhad.

Economic Planning Unit. (2012). Population by Sex, Ethnic Group and Age 2010.

Retrieved 20th January, 2011, from

www.epu.gov.my/html/themes/epu/images/common/.../1.2.5.pdf

Economic Planning Unit. (2013a). Economic Development. Retrieved 2nd February,

2013, from http://www.epu.gov.my/historyeconomic

Economic Planning Unit. (2013b). Economic History. Retrieved 3rd February, 2013, from

http://www.epu.gov.my/recenteconomichistory?p_p_id=56_INSTANCE_QcRO&p

_p_lifecycle=0&p_p_state=normal&p_p_mode=view&p_p_col_id=column-

4&p_p_col_count=1&page=5

Economic Planning Unit. (2013c). Socio-Economic Statistics: Malaysian Economy in

Figures. Retrieved 3rd February, 2013, from http://www.epu.gov.my/meif2012

266

Feindt, S., Jeffcoate, J., & Chappell, C. (2002). Identifying Success Factors for Rapid

Growth in SME E-commerce. Small Business Economics, 19(1), 51-62.

Fornell, C., & Larcker, D. F. (1981). Evaluating Structural Equation Models With

Unobserved Variables and Measurement Error. Journal of Marketing Research,

18(2), 39-50.

Frías, D. M., Rodríguez, M. A., Alberto Castañeda, J., Sabiote, C. M., & Buhalis, D.

(2012). The Formation of a Tourist Destination's Image via Information Sources:

The Moderating Effect of Culture. International Journal of Tourism Research,

14(5), 437-450.

Gadenne, D. (1998). Critical success factors for small business: An inter-industry

comparison. International Small Business Journal, 17, 36-57.

Galloway, L., Brown, W., & Arenius, P. (2002). A Comparative Examination of Scotland

and Finland. Entrepreneurship and Innovation, 2(May), 109-119.

Gamini de Alwis, W. P., & Senathiraja, R. (2003). The Impact of Socio-Cultural

Background of the Entrpreneur on Management and Business Practices of Selected

Small and Medium Scale Businesses in Sri Lanka. Paper presented at the 9th

International Conference on Sri Lanka Studies, Matara, Sri Lanka.

Gartner, W. C. (2004). Factors Affecting Small Firms In Tourism: A Ghanaian Perspective.

In R. Thomas (Ed.), Small Firms In Tourism: International Perspectives. Oxford:

Elsevier Ltd.

Gartner, W. C., & Lime, D. W. (2000). Trends in Outdoor Recreation, Leisure and

Tourism. Oxon, New York: CABI Publishing.

267

Garver, M. S., & Mentzer, J. T. (1999). Logistics Research Methods: Employing Structural

Equation Modelling to Test for Construct Validity. Journal of business Logistics,

20(1), 33-57.

Getz, D., & Carlsen, J. (2000). Characteristics And Goals Of Family And Owner-Operated

Businesses In The Rural Tourism And Hospitality Sectors. Tourism Management,

21, 547-560.

Getz, D., & Carlsen, J. (2005). Family Business In Tourism, State Of The Art. Annals of

Tourism Research, 1, 237-258.

Getz, D., & Petersen, T. (2005). Growth and Profit Oriented Entrepreneurship Among

Family Business Owners in the Tourism and Hospitality Industry. Hospitality

Management, 24, 219-242.

Ghosh, B. C., Liang, T. W., Meng, T. T., & Chan, B. (2001). The Key Success Factors,

Distinctive Capabilities, and Strategic Thrust of Top SMEs in Singapore. Journal of

Business Research, 51, 209-221.

Glisson, L. M., Gunningham, W. A., Harris, J. R., & Di Lorenzo-Aiss, J. (1996).

International Journal of Physical Distribution & Logistics Management, 26(3), 26.

Gomez, E. T., & Jomo, K. s. (1999). Malaysia's Political Economy: Politics and Patronage

and Profits (2nd ed.). Cambridge: Cambridge University Press.

Gosh, B., & Kwan, W. (1996, June 16-19). An Analysis of Key Success Factors of SMEs: A

Comparative Study of Singapore/Malaysia and Australia/New Zealand. Paper

presented at the The 41st ICSB World Conference Proceedings I, Stockholm,

Sweden.

268

Graner, M., & Isaksson, A. (2002). Export Performance in the Kenyan Manufacturing

Sector. In A. Bigsten & P. Kimuyu (Eds.), Structure and Performance of

Manufacturing in Kenya. Oxford: University of Oxford.

Gupta, V. K., Turban, D. B., Wasti, S. A., & Sikdar, A. (2009). The Role of Gender

Stereotypes in Perceptions of Entrepreneurs and Intentions to Become an

Entrepreneur. [Article]. Entrepreneurship: Theory & Practice, 33(2), 397-417.

Gurel, E., Altinay, L., & Daniele, R. (2010). Tourism Students's Entrepreneurial Intentions.

Annals of Tourism Research, 37(3), 646-669.

Haber, S., & Reichel, A. (2007). The cumulative nature of the entrepreneurial process: The

contribution of human capital, planning and environment resources to small venture

performance. Journal of Business Venturing, 22(1), 119-145.

Hair, J., .F., Anderson, R. E., Tatham, R. L., & Black, W. C. (2003). Multivariate Data

Analysis. Singapore: Pearson Education.

Hair, J., Anderson, R. E., Tatham, R. L., & Black, W. C. (1995). Multivariate Data

Analysis (Fifth ed.). Upper Saddle River, NJ, USA: Prentice Hall, Inc.

Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2010). Multivariate Data

Analysis: A Global Perspective (7th ed.). New Jersey: Pearson.

Hall, C. (2011). APEC and SME Policy: Suggestions for an Action Agenda. Retrieved

19th October, 2011, from www.apec.org.au/docs/iss1.htm

Hall., G. (1995). Surviving and Prospering in the Small Firm Sector. London: Routledge.

Hamzah, A. (2004). Policy And Planning Of The Tourism Industry In Malaysia. Paper

presented at the The 6th ADRF General Meeting, Bangkok, Thailand.

269

Hashim, M. K. (2000). Distinctive Capabilities and Performance: Empirical Evidence from

Malaysian SMEs. Malaysian Management Journal, 4, 51-64.

Helen Reijonen, & Rajja Komppula. (2007). Perception of Success and its effect on Small

Firm Performance. Journal of Small Business and Enterprise Development, 14(4),

689-701.

Henry Pribadi, & Kazuyori Kanai. (2011). Examining and Exploring Indonesia Small and

Medium Enterprise Performance: An Empirical Study. Asian Journal of Business

Management, 3(2), 98-107.

Henry, S. R. K., Durganard, S., & Wilpert, B. (1999). Management and Cultural Values.

New Delhi: Sage Publications.

Hills, J. R., & Cairncross, G. (2011). How Small Regional Accommodation Providers View

and Respond to Online Intermediaries. Journal of Vacation Marketing, 17(4), 249-

262.

Hitchcock, M. (2000). Ethnicity and Tourism Entrepreneurship in Java and Bali. Current

Issues in Tourism, 3(3), 204-225.

Hoffmann, W. H., & Schlosser, R. (2001). Success Factors of Strategic Alliances in Small

and Medium-sized Enterprises--An Empirical Survey. Long Range Planning, 34(3),

357-381.

Hofstede, G. (1998). Masculinity/Feminity as a Dimension of Culture. In G. Hofstede

(Ed.), Masculinity and Feminity: The Taboo Dimension of National Cultures (pp. 3-

28). Thousand Oaks: CA: Sage.

Hofstede, G., & McCraem, R. R. (2004). Personality and Culture Revisited: Linking Traits

and Dimensions of Culture. Cross-Cultural Research, 38(52-88).

270

Hornaday, J. A. (1990). Dropping The E-Words From Small Business Research. Journal of

Small Business Management, 28(4), 22-33.

Hornaday, J. A., & Aboud, J. (1971). Characteristics Of Successful Entrepreneurs.

Personnel Psychology, 24(2), 141-153.

Hu, L., & Bentler, P. M. (1998). Fit Indices in Covariance Strucutre Modelling: Sensitivity

to Unerparameterised Model Misspecification. Psychological Methods, 3, 424-453.

Hunger, J. D., & Wheelen, T. L. (2003). Essentials of Strategic Management (3rd ed.).

New Jersey: Prentice Hall.

Ibrahim, A. B., & Goodwin, J. R. (1987). Perceived Causes Of Success In Small Business.

American Journal Of Small Business, Fall.

Ibrahim, M. H. (2009). Encountering the Outflow of Trained and Educated National

Talents in the Tourism Industry. Paper presented at the 5th UNWTO International

Conference on Tourism Statistics.

Industry Canada. (2013). Key Small Business Statistics. Retrieved 1st January, 2013, from

http://www.ic.gc.ca/eic/site/061.nsf/eng/h_02711.html

Iverson, R. D., & Deery, M. (1997). Turnover Culture in the Hospitality Industry. Human

Resource Management Journal, 7(4), 71-82.

Jaafar, M., Abdul-Aziz, A. R., Maideen, S. A., & Mohd, S. Z. (2011). Entrepreneurship in

the Tourism Industry: Issues in Developing Countries. International Journal of

Hospitality Management, doi:10.1016/j.ijhm.2011.01.003.

Jafari, J., & Ritchie, J. (1981). Toward A Framework For Tourism Education: Problems

And Prospects. Annals of Tourism Research, 8, 13-34.

271

Jenkins, C. L., & Henry, B. M. (1982). Government Involvement In Tourism In

Developing Countries. Annals of Tourism Research, 9, 499-521.

Jennings, G. (2010). Tourism Research (Vol. null).

Jennings, P., & Beaver, G. (1997). The Performance and Competitive Advantage of Small

Firms: A Management Perspective. International Small Business Journal, 15(2),

63-75.

Jeong, M., Oh, H., & Gregoire, M. (2003). Conceptualizing Web Site Quality and Its

Consequences in the Lodging Industry. International Journal of Hospitality

Management, 22(2), 161-175.

Jimenez, G. (2012). Enterepreneurship in Chile. In E. R. R. Brenes & J. Haar (Eds.), The

Future of Entrepreneurship in Latin America (pp. 106-138). London: Palgrave

Macmillan.

Johnson, P., Conway, C., & Kattuman, P. (1999). Small Business Growth in the Short Run.

Small Business Economics, 12, 103-112.

Jomo, K. S. (1990). Growth and Structural Change in Malaysian Economy. London:

Macmillan.

Jöreskorg, K. (1993). Testing structural equation models. In K.A. Bollen & J. S. Long

(Eds.), Testing structural equation models (pp. 294-316). Newbury Park: Sage.

Joreskorg, K. G., & Sorbom, D. (1984). LISREL-VI User's Guide (3rd ed.). Mooresviller,

IN: Scientific Software.

Jovicic, D. (2011). The Environmental Management Systems and Contemporary Tourism

Development. Tourismos, 6(2), 377-391.

272

Junaidah, H. (2007). ICT Adoption Among SME Owners in Malaysia. International

Journal of Business and Information, 2(2), 221-240.

Kamaruddin, R., & Masron, T. A. (2010). Sources of Growth in the Manufacturing Sector

in Malaysia: Evidence from ARDL and Structural Decomposition Analysis. Asian

Academy of Management Journal, 15(1), 99-116.

Kanter, R. M. (1992). The Change Masters : Corporate Entrepreneurs At Work. London

Routledge.

Karanasios, S., & Burgess, S. (2006). Exploring The Internet Use Of Small Tourism

Enterprises: Evidence From A Developing Country. The Electronic Journal On

Information Systems In Developing Countries, 27(3), 1-21.

Karkoviata, L. (2001). SME's Reluctant to Go Online. Asian Business, 37(4), 75-76.

Kennedy, J., & Drennan, J. (2002). Entrepreneurial Intentions of Women. Small Enterprise

Research, 10(1), 75-87.

Khalifah, Z., & Tahir, S. (1997). Malaysia: Tourism In Perpective. In F. Go & C. L.

Jenkins (Eds.), Tourism And Economic Development In Asia And Australasia.

London: Cassell.

Kim, N. (2012). Employee Turnover Intention Among Newcomers in Travel Industry.

International Journal of Tourism Research, n/a-n/a.

Kirkwood, J. (2009). Motivational factors in a push-pull theory of entrepreneurship.

Gender in Management: An International Journal, 24(5), 346-364.

Kline, R. B. (2005). Principles and Practice of Structural Equation Modelling (2nd ed.).

New York: Guilford Press.

273

Koh, K. Y., & hayyen, T. S. (2002). The Tourism Entrepreneur: The Ovelooked Player in

Tourism Development Studies. International Journal of Hospitality and Tourism

Administration, 3(1), 26-62.

Kolvereid, L. (1996). Prediction of Employment Status Choice Intentions.

Entrepreneurship Theory and Practice, Fall, 47-57.

Kolvereid, L., & Bullvag, E. (1996). Growth Intentions and Actual Growth: The Impact of

Entrepreneurial Choice. Journal of Enterprising Culture, 4(1), 1-17.

Kotas, R., & Wanhill, S. (1981). PSA: Its Nature, Significance and Applications.

International Journal of Tourism Management, 2(3), 176-188.

Kozan, M., Oksoy, D., & Oszoy, O. (2006). Growth Plans of Small Business in Turkey:

Individual and Environmental Influences. Journal of Small Business Management,

4(11), 114-129.

Krippendorf, J. (1987). Understanding the Impact of Leisure and Travel. London:

Heinemann.

Kristiansen, S., Furuholt, B., & Wahid, F. (2003). Internet Cafe Entrepreneurs: Pioneers in

Information Dissemination in Indonesia. The Internetional Journal of

Entrepreneurship and Innovation, 4(4), 251-263.

Krueger, N. J., Reilly, M., & Carsrund, A. (2000). Competing Models of Entrepreneurial

Intentions. Journal of Business Venturing, 15(5/6), 411-532.

Kuratko, D. F., & Hodgetts, R. M. (2004). Entrepreneurship; Theory, Process and Practice

(6 ed.). Ohio: Thomson Learning.

274

Kuruvilla, S. (1995). Industrialization Strategy and Industrial Relations Policy in Malaysia.

In S. Frenkel & J. Harrod (Eds.), Industrial and Labour Relations: Contemporary

Research in Seven Countries (pp. 37-63). Ithaca, NY: ILR Press.

Ladkin, A. (2011). Exploring Tourism Labor. Annals of Tourism Research, 38(3), 1135-

1155.

Lal, K. (2005). Determinants of the Adoption of E-Business Technologies. Telematics and

Informatics, 22(3), 181-199.

Langowitz, N., & Minniti, M. (2007). The Entrepeneurial Propensity of Women.

Entrepreneurship Theory and Practice, 31(3), 341-364.

Lashley, C., & Rowson, B. (2010). Lifestyle Businesses: Insights into Blackpool's Hotel

Sector. International Journal of Hospitality Management, 29(3), 511-519.

Law, R., Qi, S., & Buhalis, D. (2010). Progress in Tourism Management: A Review of

Website Evaluation in Tourism Research. Tourism Management, 31(3), 297-313.

Lee, S. M., & Peterson, S. J. (2000). Culture, entrepreneurial orientation, and global

competitiveness. Journal of World Business, 35(4), 401-416.

Leech, N. L., Barrett, K. C., & Morgan, G. A. (2005). SPSS Intermediate Statistics: Use

and Interpretation (2nd ed.). Mahwah, New jersey: Lawrence Erlbaum Associates.

Leong, H. K. (1992). Dynamics of Policy-Making in Malaysia: The Formulation of the

New Policy and The National Development Policy. Asian Journal of Public

Administration, 14(2), 204-227.

Leonidou, L. C., Leonidou, C. N., Fotiadis, T. A., & Zeriti, A. (2013). Resources and

Capabilities as Drivers of Hotel Environmental Marketing Strategy: Implications

for Competitive Advantage and Performance. Tourism Management, 35, 94-110.

275

Li, C. Y. Y. (1998). Success Factors of Small And Medium Sized Enterprises In Taiwan:

An Analysis Of Cases*. Journal of Small Business Management, 36(4), 43-56.

Lin, C. Y.-Y. (1998). Success Factors of Small- and Medium-Sized Enterprises in Taiwan:

An Analysis of Cases. [Article]. Journal of Small Business Management, 36(4), 43-

56.

López-Fernández, M. C., Serrano-Bedia, A. M., & Gómez-López, R. (2011). Factors

Encouraging Innovation in Spanish Hospitality Firms. Cornell Hospitality

Quarterly, 52(2), 144-152.

Maholtra, N. K. (2010). Marketing Research: An Applied Orientation: Pearson Education.

Malaysia, S. a. M. E. C. (2011). Definitions of SMEs. Retrieved 19th October, 2011, from

http://www.smecorp.gov.my/v4/node/14

Malhotra, N. K. (1999). Marketing Research (Third Edition). New Jersey: Prentice Hall,

Inc.

Marchante, A. J., & Ortega, B. (2012). Human Capital and Labor Productivity: A Study for

the Hotel Industry. Cornell Hospitality Quarterly, 53(1), 20-30.

Marsh, H., & Hocevar, D. (1985). The Application of Confirmatory Factor Analysis to the

Study of Self-Concept:First and Higher Order Factor Structures and Their

Invariances Across Age Groups. Psychological Bulletin, 97, 562-582.

Marzuki, A. (2010). Tourism Development in Malaysia. A Review on Federal Government

Policies. Theoretical and Empirical Researches in Urban Management, 8(17), 85-

97.

276

Matlay, H. (2004). Small Tourism Firms In e-Europe: Definitional, Conceptual and

Contextual Considerations. In R. Thomas (Ed.), Small Firms in Tourism:

International Perspectives. UK: Elsevier Ltd.

Matthews, C. H., Schenkel, M. T., & Hechavarria, D. M. (2009). Antecedents of Planning

in Small and Medium Entrepreneurial Ventures: Strategic Implications For Nascent

Entrepreneurs. Frontiers of Entrepreneurship Research, 29(4 (1)), 1-15.

Mazzarol, T. (2005). A Proposed Framework For The Strategic Management Of Small

Entrepreneurial Firms. Small Enterprise Research, 13(1).

Mazzarol, T., Volery, T., Doss, N., & Thein, V. (1999). Factors Influencing Small Business

Start-ups. International Journal of Entrepreneurial Behaviour & Research, 5(2),

48-63.

McClelland, D. C. (1965). N achievement and entrepreneurship: A longitudinal study.

Journal of Personality and Social Psychology, 1(4), 389-392.

McIntosh, R., Goeldner, C., & Ritchie, J. B. (1995). Tourism: Principles, Practices

Philosophies. New York: Wiley.

McKercher, B., & Robbins, B. (1998). Business Development Issues Affecting Nature-

Based Tourism Operators in Australia. Journal of Sustainable Tourism, 6(2), 173-

188.

Medina, L. K. (2005). Ecotourism and Certification: Confronting the Principles and

Pragmatics of Socially Responsible Tourism. Journal of Sustainable Tourism,

13(3), 281-295.

Mehdi, M. P., & Edward, W. S. K. (2011, 13-14 June, 2011). Profile of SME's Strategic

Alliance in Malaysia. Paper presented at the International Conference on

Management, Pulau Pinang, Malaysia.

277

Miles, G., Preece, S. B., & Baetz, M. C. (1999). Dangers of Dependence: The Impact of

Strategic Alliance Use by Small Technology-Based Firms. Journal of Small

Business Management, 37(2), 20-29.

Miner, I. B., Smith, N. R., & Bracker, J. S. (1994). Role of Entrepreneurial Task

Motivation in the Growth of Technologically Innovative Business: Interpretations

from Follow-Up Data. Journal of Applied Psychology, 79(4), 627-630.

Ministrry of Tourism Malaysia. (2013a). List of Institutions Offerering Tourist Guide

Courses. Retrieved 10th January, 2013, from

http://www.motour.gov.my/bm/faq/142-senarai-institusi-yang-menawarkan-kursus-

asas-pemandu-pelancong-tahap-3.html

Ministrry of Tourism Malaysia. (2013b). Ministry's Programme. Retrieved 9th January,

2013, from http://www.motour.gov.my/

Ministry of Finance Malaysia. (2013). Economy: Economic Report. Retrieved 3rd

February, 2013, from

http://www.treasury.gov.my/index.php?option=com_content&view=category&id=7

3&Itemid=174&lang=en

Ministry of Higher Education of Malaysia. (2010). Total number of Students in Public and

Private Educational Institutions in Malaysia Retrieved 2012, from Ministry of

Higher Education: http://www.mohe.gov.my/web_statistik/#top

Ministry of International Trade and Industry. (2009). MITI Weekly Bulletin. from Ministry

of International Trade and Industry:

http://www.miti.gov.my/storage/documents/2fc/com.tms.cms.document.Document_

edd54085-c0a81573-44fa44fa-

8d4d89cf/1/MITI%20WEEKLY%20BULLETIN%20(Vol.%2034)%2004%20Marc

h%202009.pdf

278

Ministry of Tourism and Creative Economy of The Republic of Indonesia. (2013). Statistic

of International Visitor. Retrieved 3 January, 2013, from

www.budpar.go.id/asp/ringkasan.asp?c=119

Ministry of Tourism Malaysia. (2013). Tourism Products. Retrieved 9th January, 2013,

from http://www.motour.gov.my/

Mistilis, N., & Buhalis, D. (2012). Challenges and Potential of the Semantic Web for

Tourism. e-Review of Tourism Research, 10(2), 51-55.

Mitchell, R. K., Smith, J. B., Morse, E. A., Seawright, K. W., Peredo, A. M., & McKenzie,

B. (2002). Are Entrepreneurial Cognitions Universal? Assessing Entrepreneurial

Cognitions Across Cultures. [Article]. Entrepreneurship: Theory & Practice, 26(4),

9.

MITI. (1996). Second Industrial Master Plan, 1996-2005. Putrajaya: Ministry of

International Trade and Industry,

MITI. (2006). Third Industrial Master Plan (IMP3) 2006-2020. Putrajaya.

MOCAT. (2001). Rural Tourism Master Plan. Kuala Lumpur: Ministry of Culture, Arts

and Tourism.

Mohammad, A. F. (2012). Sizing up Malaysia's Manufacturing SMEs. Journal of

Statistical Modelling and Analytics, 3(1), 1-10.

Moodley, S., & Morries, M. (2004). Does E-commerce Fullfil its Promies for Developing

Country (South African) Garment Export Producers. Oxford Development Studies,

32(2), 155-178.

279

Morrison, A. (1996). Markerting The Small Tourism Business. In A. V. Seaton & B. M.

(Eds.), Marketing Tourism Products: Concepts, Issues, Cases. London:

International Thomson Publishing.

Morrison, A., Breen, J., & Ali, S. (2003). Small Business Growth: Intention, Ability and

Opportunity. Journal of Small Business Management 41(4), 417-425.

Morrison, A., Carlsen, J., & Weber, P. (2010). Small Tourism Business Research Change

and Evolution. International Journal of Tourism Research, 12(6), 739-749.

Morrison, A., Rimmington, M., & Williams, C. (1999). Entrepreneurship In The

Hospitality, Tourism And Leisure Industries. Jordon Hill, Oxford: Butterworth-

Heinemann.

Morrison, A., & Teixeira, R. (2004). Small Business Performance: A Tourism Sector

Focus. Journal of Small Business and Enterprise Development, 11(2), 166-173.

Morrison, A., & Thomas, R. (1999). The Future of Small Firms in the Hospitality Industry.

International Journal of Contemporary Hospitality Management, 11(4), 148-154.

Morrison, A., & Thomas, R. (Eds.). (2004). SMEs in Tourism: An International Review:

ATLAS Special Interest Group (SIG).

MOTOUR. (2011). Ministry Of Tourism Malaysia (Ministry's Profile). Retrieved 10th

February, 2011, 2011, from

http://www.motour.gov.my/index.php/english/kem_profil.html

Mueller, S. L., & Thomas, A. S. (2001). Culture and Entrepreneurial Potential: A Nine

Country Study of Locus Control and Innovativeness. Journal of Business Venturing,

16(51-55).

280

Munikrishnan, U. T., & Veerakumaran, B. (2011). A Survey on Business Success Factors

Influencing Budget Hotels in Klang Valley. Paper presented at the International

Conference on Management.

Musa, G. (2000). Tourism in Malaysia. In C. M. Hall & S. Page (Eds.), Tourism in South

and Southeast Asia: Issues and Cases. Oxford: Butterworth-Heinemann.

Musa, I. J., & Ndawayo, B. A. (2011). The Role of Transportation in the Development of

Tourism in Nigeria. Tourismos, 6(1), 297-305.

Narayan, P. K., Narayan, S., Prasad, A., & Prasad, B. C. (2010). Tourism and Economic

Growth: A Panel Data Analysis for Pacific Island Countries. Tourism Economics,

16(1), 169-183.

Nathan, D. M. (2003). SARS Impact on Industries. The Star. Retrieved from

http://netinc.net.my/health/s/011.htm

National SME Development Council. (2005). Definitions For Small And Medium

Enterprises In Malaysia. Retrieved from

http://www.smeinfo.com.my/pdf/sme_definitions_ENGLISH.pdf.

Neuhofer, B., Buhalis, D., & Ladkin, A. (2012). Conceptualising Technology Enhanced

Destination Experiences. Journal of Destination Marketing and Management, 1(1-

2), 36-46.

Nodder, C., Cate, N., Slater, K., & Milne, S. (2003). ICT, Local Government and Tourism

Development: Cases from Auckland, New Zealand. Auckland: New Zealand

Tourism Research Institute.

Nuntsu, N., Tassiopoulos, D., & Haydam, N. (2004). The Bed And Breakfast Market Of

Buffalo City (BC), South Africa: Present Status, Constraints And Success Factors.

Tourism Management, 25(4), 515-522.

281

Nurul Indarti, & Marja langenberg. (2004). Factors Affecting Business Success Among

SMEs: Empirical Evidences From Indonesia. Paper presented at the The Second Bi-

annual European Summer University, University of Twente, Enschede, The

Netherlands.

Office of Tourism Development Thailand. (2012). Facts and Figures. Retrieved 6

November, 2012, from www.tatnews.org/facts-figures

Olawale, F., & Garwe, D. (2010). Obstacles to the Growth of New SMEs in South Africa:

A Principal Component Analysis Approach. African Journal of Business

Management, 4(5), 729-738.

Oppenheim, A. N. (1993). Questionnaire Design, Interviewing and Attitude Measurement.

London: Printer.

Page, S. J., Forer, P., & Lawton, G. R. (1999). Small Business Development And Tourism:

Terra Incognita?Tourism Management, 20, 435-459.

Palmer, J. J. (2000). Internet Access in Bahrain: Business Patterns and Problems.

Technovation, 20(8), 451-458.

Pansiri, J. (2008). The Effects of Characteristics of Partners on Strategic Alliance

Performance in the SME Dominated Travel Sector. Tourism Management, 29(1),

101-115.

Park, J. Y., & Kim, S. W. (2010). An Empirical Model to Assess the Influence of the

Government's Research and Development Program on Korean Small and Medium

Enterprise (SME) Performance. The Asian Journal on Quality 11(3), 1598-2688.

Pasanen, M. (2003). In Search of Factors Affecting SME Performance: The Case of

Eastern Finland. University of Kuopio.

282

Paul D. Reynolds, Michael Hay, William D. Bygrave, S. Michael Camp, & Autio, E.

(2000). Global Entrepreneurship Monitor 2000: Babson College, Kauffman Center

for Entrepreneurial Leadership and London Business School.

Peattie, K., & Moutinho, L. (2000). The Marketing Environment for Travel and Tourism.

In L. Mautinho (Ed.), Strategic Management in Tourism (pp. 17-37). Glasgow:

CABI Publishing.

Peel, M. J., & Bridge, J. (1998). How planning and capital budgeting improve SME

performance. Long Range Planning, 31(6), 848-856.

PEMANDU. (2011). Reviving Up Tourism Industry. Economic Transformation Program

Retrieved April 29, 2011, from http://etp.pemandu.gov.my/Download_Centre-@-

Download_Centre.aspx

PEMANDU. (2013). Economic Transformation Programme. Retrieved 3rd February,

2013, from http://etp.pemandu.gov.my/Overview_of_NKEAs_-@-

Overview_of_NKEAs.aspx

Peter, E. D. L., & Gunasekaran, A. (1999). Learning Alliances: A Customer-Supplier Focus

for Continuous Improvement in Manufacturing. Industrial and Commercial

Training, 31(3), 88-96.

Peters, M., & Buhalis, D. (2005). Small Family Hotel Business: The Need for Education

and Training. Journal of Education and Training, 46(8-9), 406-416.

Pidani, R. R. (2011). Identifying Export Barriers and Export Development of Indonesian

Manufacturing Small and Medium Enterprises (SMEs). University of Newcastle,

Australia, Newcastle.

Porter, M. E. (1980). Competitive Strategy: Techniques for Analysing Industries and

Competitors. New York: The Free Press.

283

Poutziouris, P., Wang, Y., & Chan, S. (2002). Chinese Entrepreneurship:The Development

Of Small Family Firms In China. Journal of Small Business and Enterprise

Development, 9(4), 383-399.

Rachagan, S., & Satkunasingam, E. (2009). Improving Corporate Governance of SMEs in

Emerging Economies: A Malaysia Experience. Journal of Enterprise Information

Management, 22(4), 468-484.

Ramayah Thurasamy, Osman Mohamad, Azizah Omar, & Malliga Marimuthu. (2009,

May). Technology Adoption Among Small and Medium Enterprises (SMEs): A

Research Agenda. Paper presented at the World Academy of Science, Engineering

and Technology

Ramos-Rodríguez, A. R., Medina-Garrido, J. A., & Ruiz-Navarro, J. (2012). Determinants

of Hotels and Restaurants Entrepreneurship: A Study Using GEM data.

International Journal of Hospitality Management, 31(2), 579-587.

Raosoft Inc. (2004). Sample Size Calculator. Retrieved 3rd February, 2010, from

Http://www.raosoft.com.samplesize.html

Rodriguez, P., Tuggle, C., & Hacket, S. (2009). An Exploratory Study of How Potential

'Family and Social Capital' Impacts New Venture Start-Up Rates. Family Business

Review, 22(3), 259-272.

Rogerson, C. M. (2000). Successful SMEs in South Africa: The Case Of Cloting Producers

In The Witwatersrand. Development Southern Africa, 17(5), 687-716.

Roland, X., Noorseha, A., Leilanie, M. N., & Mohar, Y. (2010). Entrepreneurship in

Malaysia: The Global Entrepreneurship Monitor (GEM) Malaysian Report, 2010.

United Kingdom: Global Entrepreneurhsip Research Association.

284

Ron Chuen Yeh, Analberto Paulino Manuel dos Santos, Pansy Chung, & Wan-Ju Tsai.

(2008). Government Policy Toward SME's in Taiwan and Mozambique. Retrieved

6th November, 2011, from http://dmlab.mis.ttu.edu.tw/conference/2008-

Business_And_Information(BAI_2008)/Papers/B1/573.doc

Rose, R. C., Kumar, N., & Yen, L. L. (2006). Entrepreneurs Success Factors And

Escalation Of Small And Medium-Sized Enterprises In Malaysia. Journal of Social

Sciences, 2(3), 74-80.

Russell, R., & Faulkner, B. (2004). Entrepreneurship, Chaos and the Tourism Area

Lifecycle. Annals of Tourism Research, 31(3), 556-579.

Saffu, K., Apori, S. O., Elijah-Mensah, A., & Ahumatah, J. (2008). The Contribution of

Human Capital and Resource-Based View to Small and Medium-Sized Tourism

Venture Performance in Ghana. International Journal of Engineering Markets, 3(3),

268-284.

Salleh, A. S., & Ndubisi, N. O. (2006). An Evaluation of SMEs Development in Malaysia.

International Review of Business Research Papers, 2(1), 1-14.

Salman, A., & Hasim, M. S. (2011). Internet Usage in a Malaysian Sub-Urban Community:

A Study of Diffusion of ICT Innovation. The Innovation Journal: The Public Sector

Innovation Journal, 16(2), 1-15.

Salwani, M. I., Marthandan, G., Norzaidi, M. D., & Chong, S. C. (2009a). E-commerce

Usage and Business Performance in the Malaysian Tourism Sector: Empirical

Analysis. Information Management & Computer Security, 17(2), 166-185.

Salwani, M. I., Marthandan, G., Norzaidi, M. D., & Chong, S. C. (2009b). E-commerce

Usage and Business Performance in the Malaysian Tourism sector: Empirical

Analysis. Information Management & Computer Security, 17(n), 166-185.

285

Sampaio, A. R., Thomas, R., & Font, X. (2012). Why are Some Engaged and Not Others?

Explaining Environmental Engagement among Small Firms in Tourism.

International Journal of Tourism Research, 14(3), 235-249.

Schaper, M., Volery, T., Weber, P., & Lewis, K. (2007). Small Business: Definitions and

Characteristics Entrepreneurship and Small Business. Queensland: John Wiley and

Sons Australia, Ltd.

Scheyvens, R., & Russell, M. (2012). Tourism and Poverty Alleviation in Fiji: Comparing

the Impacts of Small and Large-Scale Tourism Enterprises. Journal of Sustainable

Tourism, 20(3), 417-436.

Schroeder, T. (2003). Background And Motivations Of Resource-Based Tourism Operators

In The Northern Great Plains: A Qualitative Study. Retrieved 12th October, 2008:

www.und.edu/instruct/tschroed/nattour1.pdf

Schumacker, R. E., & Lomax, R. G. (2004). A Beginner's Guide to Structural Equation

Modelling (Second ed.). USA: John Wiley & Sons, Inc.

Sebora, T., Lee, S., & Sukasame, N. (2009). Critical success factors for e-commerce

entrepreneurship: an empirical study of Thailand. Small Business Economics, 32(3),

303-316.

Sekaran, U. (2003). Research Methods for Business (4th ed.). USA: John Wiley & Sons,

Inc.

Sekaran, U., & Bougie, R. (2009). Research Methods for Business: A Skill Building

Aprroach (5th ed.). UK: Wiley.

Shane, S., Locke, E. A., & Collins, C. J. (2003). Entrepreneurial motivation. Human

Resource Management Review, 13, 257-279.

286

Shari, I. (2000). Economic Growth and Income Inequality in Malaysia, 1971-95. Journal of

the Asia Pacific Economy, 5(1-2), 112-124.

Sharma, A., & Sneed, J. (2008). Performance Analysis Of Small Hotels In Tanzania.

Journal of Services Research, February(Special Issue), 83-100.

Shaw, G., & Williams, A. M. (1990). Tourism, Economic Development And The Role Of

Entrepreneurial Activity. In C. P. Cooper (Ed.), Progress In Tourism, Recreation

And Hospitality Management (pp. 67-81). London: John Wiley and Sons.

Shaw, G., & Williams, A. M. (1998). Entrepreneurship, Small Business Culture And

Tourism Development. In D. Ioannides & D. K. (Eds.), Economic Geography Of

The Tourist Industry: A Supply Side Analysis (pp. 235-255). London: Routledge.

Shepherd, D. A., & Wiklund, J. (2005). The Motivation to Grow a Small Business

Entrepreneurial Small Businesses: A Resource-Based Perspective. UK: Edward

Elgar Publishing.

Shim, S., & Eastlink, A. (1998). Characteristics of Hispanic female Business Owners: An

exploratory Study. Journal of Small Business Management, 36(3), 18-34.

Shinnar, R. S., Giacomin, O., & Janssen, F. (2012). Entrepreneurial Perceptions and

Intentions: The Role of Gender and Culture. Entrepreneurship Thoery and

Practice(May), 465-493.

Siddiqui, K. (2012). Malaysia's Socio-Economic Transformation in Historical Perspective.

International Journal of business and General Management, 1(2), 21-50.

Singapore Tourism Board. (2013). Tourism Statistics Publications. Retrieved 18 October,

2012, from https://app.stb.gov.sg/asp/tou/tou03.asp

287

Sinha, T. N. (1996). Human Factors in Entrepreneurship Effectiveness. The Journal of

Entrepreneurship, 5(1), 23-39.

Skokic, V., & Morrison, A. (2011). Conceptions of Tourism Lifestyle Entrepreneurship:

Transition Economy Context. Tourism Planning and Development, 8(2), 157-169.

Small and Medium Enterprise Corporation Malaysia. (2011). SME Development

Programmes. Retrieved 16 February, 2011, from http://www.smidec.gov.my

Small and Medium Enterprise Corporation Malaysia. (2012). SME Annual Report 2011/12.

Retrieved 14th February, 2013, from http://www.smecorp.gov.my/v4/node/2946

Smallbone, D., Leigh, R., & North, D. (1995). The Characteristics and Strategies of High

Growth SMEs. International Journal of Entrepreneurial Behavior & Research,

1(3), 44-62.

Sorooshian, S., Norzima, Z., Yusof, I., & Rosnah, Y. (2011). Relattionship Between Drives

of Performance in Smaller Firms. Middle-East Journal of Scientific Research, 9(4),

452-455.

SPRING Singapore. (2011). SME Defitition. Retrieved 19th October, 2011, from

http://www.spring.gov.sg/NewsEvents/PR/Pages/New-SME-Definition-and-

Launch-of-New-Online-Tools-and-E-Services-20110322.aspx

Spring Singapore. (2013). Performance Indicators. Retrieved 1st January, 2013, from

http://www.spring.gov.sg/aboutus/pi/pages/performance-indicators.aspx

Stanworth, J., & Gray, C. (1991). Bolton 20 Years On : The Small Firm In The 1990s.

London: P. Chapman Pub.

Stanworth, J., & Gray, C. (1991). Bolton 20 Years on: The Small Firm in 1990. In P.

Dewhurst & H. Horobin (Eds.), Small Busines Owner. New York: Cassel.

288

Storey, D. (1994). Understanding the Small Business Sector. London: Routledge.

Storey, D. (2008). Entrepreneurship and SME Policy: Warwick Business School.

Strobl, A., & Peters, M. (2013). Entrepreneurial Reputation in Destination Networks.

Annals of Tourism Research, 40(1), 59-82.

Subramaniam, C., Shamsudin, F. M., & Ibrahim, H. (2011). Linking Human Resource

Practices and Organisational Performance: Evidence from Small and Medium

Organisations in Malaysia. Jurnal Pengurusan, 32, 27-37.

Szivas, E. (2001). Entrance Into Tourism Entrepreneurship: A UK Study. Tourism and

Hospitality Research, 3(2), 163-172.

Tan, K. S., Chong, S. C., & Uchenna, C. E. (2009). Factors Influencing the Adoption of

Internet-based ICT's: Evidence from Malaysian SMEs. International Journal of

Management and Enterprise Development.

Tharenou, P., Donohue, R., & Cooper, B. (2007). Management Research Methods. New

York: Cambridge University Press.

The Department of Survey and Mapping Malaysia. (2011). Malaysia Map.

Thomas (Ed.). (2004). Small Firms in Tourism: International Perspectives. Oxford, United

Kingdom: Elsevier Ltd.

Thomas, R. (1998). An Introduction To The Study Of Small Tourism And Hospitality

Firms. In R. Thomas (Ed.), The Management Of Small Tourism And Hospitality

Firms (pp. 1-16). London: Cassell.

Thomas, R. (2000). Small Firms in the Toursm Industry: Some Conceptual Issues.

International Journal of Tourism Research, 2, 345-353.

289

Thomas, R., Friel, M., & Jameson, S. (1997). The National Survey Of Small Tourism And

Hospitality Firms: Annual Report 1996-1997. Leeds: Leeds Metropolitan

University.

Thomas, R., Shaw, G., & Page, S. J. (2011). Understanding small firms in tourism: A

perspective on research trends and challenges. Tourism Management, 32(5), 963-

976.

Tominc, P., & Rebernik, M. (2012). Gender Differences in Entrepreneurial Education and

Entrepreneurial Activity in Part of the Danube Region. Actual Problems of

Economics, 138(12), 496-505.

Tourism Malaysia. (2013a). Contact Us: List of Offices. Retrieved 9th January, 2013,

from http://www.tourism.gov.my/en/Master/Web-Page/Footer/Contact-

Us/Overseas-Offices

Tourism Malaysia. (2013b). Facts and Figure on Tourist Arrival and Receipt. Kuala

Lumpur: Research Division of Tourism Malaysia.

Tourism Malaysia. (2013c). Facts and Figures. Retrieved 29th November, 2012, from

http://corporate.tourism.gov.my/research.asp?page=facts_figures

Trade, K. I. f. I. E. a. (2008). Urgent Issues of Korean Small and Medium Enterprises:

R&D Policy. Seoul: Korea Institute for Industrial Economics and Trade.

Trau, F. (1996). Why Do Firms Grow? : University of Cambridge.

UNWTO. (2001). eBusiness for Tourism: Practical Guidelines for Destinations and

Businesses. Madrid: World Tourism Organisation.

Urbano, D., & Yordanova, D. (2008). Determinants of the Adoption of HRM Practices in

Tourism SMEs in Spain: An Exploratory Study. Service Business, 2(3), 167-185.

290

Valdez, E. B.-. (2009). The Socio-Economic Impact of Tourism and Entrepreneurship in

Vigan City. E-International Scientific Research Journal, 1(1), 25-33.

Vasudevan, R., & Venkatraman, N. (1987). Planning and Performance. Business Horizons,

30(3), 19-25.

Vila, N., & Kuster, I. (2012). The Role of Usability on Stimulating SME's On-Line Buying

Intention: An Experiment Based on a Ficticius Web Site Design. Quality and

Quantity, 46(1), 117-136.

Wagener, J. (2007). What Difference a Y Makes - Female and Male Nascent Entrepreneurs

in Germany. Small Business Economics, 28, 1-21.

Walker, E., & Brown, A. (2004). What Success Factor Are Important to Small Business

Owners? International Small Business Journal, 22(6), 577-594.

Wan Abdullah, W. A. (1994). Transnational Corporations and Human Resource

Development: Some Evidence from the Malaysian Manufacturing Industries.

Personnel Review, 23(5), 4-20.

Wang, C., Walker, E. A., & Redmond, J. (2006). Ownership Motivation and Strategic

Planning in Small Business. Journal of Asia Entrepreneurship and Sustainability,

11(4), 1-21.

Wang, H. (2011) Website Characteristics and Online Consumers' Repurchase Behavior: An

Empirical Study. Vol. 225-226 (pp. 917-920).

Wanhill, S. (2000). Small and Medium Tourism Enterprises. Annals of Tourism Research,

27(1), 132-147.

291

Wanhill, S. (2002). Sustaining Tourism SMEs. Paper presented at the VII Congreso

Internatiocional del CLAD sobre la Reforma del Estado y de la Administracion

Publica.

Wanhill, S. (2004). Government Assitance For Tourism SMEs: From Theory to Practice. In

R. Thomas (Ed.), Small Firms In Tourism: International Perspectives. UK:

Elsevier.

Weaver, D., & Lawton, L. (2001). Resident Perceptions in the Urban-Rural Frindge.

Annals of Tourism Research, 28, 439-458.

Wenyi, C. (2009). The influence of family ownership on SME performance: evidence from

public firms in Taiwan. [Article]. Small Business Economics, 33(3), 353-373.

Wernerfelt, B. (1984). A Resource-Based View Of The Firm. Strategic Management

Journal, 5, 171-180.

Wiersema, M. F., & Bantel, K. A. (1992). Top Management Team Demography and

Corporate Strategic Change. [Article]. Academy of Management Journal, 35(1), 91-

121.

Williams, A., Shaw, G., & Greenwood, J. (1989). From Tourist To Tourism Entrepreneur,

From Consumption To Production:Evidence From Cornwall, England. Environment

and Planning A, 21, 1639–1653.

World Tourism Organisation. (2013). International Tourism to Continue Robust Growth in

2013. 2013, from http://www2.unwto.org/

World Travel and Tourism Council. (2008). The 2008 Travel And Tourism Economic

Research: Malaysia. Retrieved 21st August, 2008, from

www.wttc.org/bin/pdf/original_pdf_file/malaysia.pdf

292

World Travel and Tourism Council. (2011). The Tohoko Pacific Earthquake and Tsuname.

Retrieved 15 July, 2011, from http://www.wttc.org/search/results.php

Yang, J. T., Wan, C. S., & Fu, Y. J. (2012). Qualitative Examination of Employee

Turnover and Retention Strategies in International Tourist Hotels in Taiwan.

International Journal of Hospitality Management, 31(3), 837-848.

Yusoff, M. N. H. (2011). The Source of Information of The Government Sponsored

Business Assistances Among Micro-sized Entrepreneurs in Kelantan, Malaysia.

International Journal of Business and Social Science, 2(3), 106-114.

Yusuf, A. (1995). Critical Success Factors For Small Business: Perceptions Of South

Pacific Entrepreneurs. Journal of Small Business Management, 33(2), 68-73.

Zakarija, M. (2003, 22-24 May). Benefits of Collaborations by Tourist Enterprises in

Croatia. Paper presented at the Fifth International Conference Enterprise in

Transition, TuCepi.

Zhao, H., Seibert, S. E., & Hills, G. E. (2005). The Mediating Role of Self-Efficacy in the

Development of Entrepreneurial Intentions. Journal of Applied Psychology, 90(6),

1265-1272.

293

APPENDIX 2.1

Tourism Malaysia Offices

Local Offices Overseas Offices 1. Alor Setar, Kedah 1. Australia – Perth and Sydney 2. Ipoh, Perak 2. Brunei 3. Johor Bahru, Johor 3. Canada 4. Kangar, Perlis 4. China – Beijing and Shanghai 5. Kota Bharu, Kelantan 5. France 6. Kota Kinabalu, Sabah 6. Germany 7. Kuantan, Pahang 7. Hong Kong 8. Kuching, Sarawak 8. India – New Delhi, Chennai and

Mumbai 9. Melaka 9. Indonesia – Medan and Jakarta 10. Pulau Pinang, Pulau Pinang 10. Italy 11. Shah Alam, Selangor 11. Japan – Tokyo and Osaka 12. Seremban, Negeri Sembilan 12. Kingdom of Saudi Arabia 13. Netherlands

14. New Zealand 15. Philipines 16. Republic of Korea 17. Russia 18. Singapore 19. South Africa 20. Sweeden 21. Taiwan 22. Thailand – Bangkok and Phuket 23. Turkey 24. United Arab Emirates 25. United Kingdom

Marketing Representatives

Offices 1. Bangladesh 2. Cambodia 3. China – Chengdu 4. Dublin 5. Iran 6. Laos 7. Pakistan 8. Vietnam

294

Tourist Information Centre

States/Federal Territories Locations 1. Kedah • Bukit Kayu Hitam,

• Langkawi International Airport, • Kuah, • Jetty Point

2. Johor • Tanjung Belungkor, • Tanjung Pengelih, • Johor Bahru Sentral, • Johor Bahru

3. Terengganu • Kemaman, • Kuala Besut

4. Kuala Lumpur • Kuala Lumpur Sentral 5. Sarawak • Kuching International Airport 6. Labuan • Labuan 7. Perak • Lumut 8. Melaka • Menara Taming Sari 9. Negeri Sembilan • Mambau 10. Pulau Pinang • Georgetown, Pulau Pinang International

Airport 11. Sabah • Kota Kinabalu International Airport 12. Selangor • Low Cost Carrier Terminanl Sepang

295

APPENDIX 4.1

Approval from University of Newcastle’s Human Research Ethics Committee

297

APPENDIX 4.2

Questionnaires

305

APPENDIX 5.1

Location * Type of business Crosstabulation

Type of business

Total Travel agent Accommodation

Location Pahang Count 40 30 70

% within Location 57.1% 42.9% 100.0%

% of Total 11.6% 8.7% 20.2%

Pulau Pinang Count 28 41 69

% within Location 40.6% 59.4% 100.0%

% of Total 8.1% 11.8% 19.9%

Kedah Count 36 35 71

% within Location 50.7% 49.3% 100.0%

% of Total 10.4% 10.1% 20.5%

Kuala Lumpur Count 34 38 72

% within Location 47.2% 52.8% 100.0%

% of Total 9.8% 11.0% 20.8%

Sabah Count 32 32 64

% within Location 50.0% 50.0% 100.0%

% of Total 9.2% 9.2% 18.5%

Total Count 170 176 346

% within Location 49.1% 50.9% 100.0%

% of Total 49.1% 50.9% 100.0%

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)

Pearson Chi-Square 4.011a 4 .404

Likelihood Ratio 4.030 4 .402

Linear-by-Linear Association .183 1 .668

N of Valid Cases 346

a. 0 cells (.0%) have expected count less than 5. The minimum expected

count is 31.45.

306

APPENDIX 5.2

Location * FirmSize Crosstabulation

FirmSize

Total small Medium


% within Location 95.7% 4.3% 100.0%

% of Total 19.4% .9% 20.2%


% within Location 65.2% 34.8% 100.0%

% of Total 13.0% 6.9% 19.9%


% within Location 38.0% 62.0% 100.0%

% of Total 7.8% 12.7% 20.5%


% within Location 61.1% 38.9% 100.0%

% of Total 12.7% 8.1% 20.8%


% within Location 46.9% 53.1% 100.0%

% of Total 8.7% 9.8% 18.5%


% within Location 61.6% 38.4% 100.0%

% of Total 61.6% 38.4% 100.0%

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)



Linear-by-Linear Association 30.039 1 .000



count is 24.60.

307

APPENDIX 5.3

A family business * Type of ownership Crosstabulation

Type of ownership

Total

Sole

proprietorship Partnership

Private limited

company

A family

business

Yes Count 40 54 58 152

% within A

family

business

26.3% 35.5% 38.2% 100.0%

% of Total 11.6% 15.6% 16.8% 43.9%

No Count 36 77 81 194

% within A

family

business

18.6% 39.7% 41.8% 100.0%

% of Total 10.4% 22.3% 23.4% 56.1%

Total Count 76 131 139 346

% within A

family

business

22.0% 37.9% 40.2% 100.0%

% of Total 22.0% 37.9% 40.2% 100.0%

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)






count is 33.39.

308

APPENDIX 5.4

Location * Type of ownership Crosstabulation

Type of ownership

Total

Sole

proprietorship Partnership

Private limited

company

Location Pahang Count 12 19 39 70

% within

Location

17.1% 27.1% 55.7% 100.0%

% of Total 3.5% 5.5% 11.3% 20.2%

Pulau

Pinang

Count 23 31 15 69

% within

Location

33.3% 44.9% 21.7% 100.0%

% of Total 6.6% 9.0% 4.3% 19.9%

Kedah Count 18 33 20 71

% within

Location

25.4% 46.5% 28.2% 100.0%

% of Total 5.2% 9.5% 5.8% 20.5%

Kuala

Lumpur

Count 12 23 37 72

% within

Location

16.7% 31.9% 51.4% 100.0%

% of Total 3.5% 6.6% 10.7% 20.8%

Sabah Count 11 25 28 64

% within

Location

17.2% 39.1% 43.8% 100.0%

% of Total 3.2% 7.2% 8.1% 18.5%

Total Count 76 131 139 346

% within

Location

22.0% 37.9% 40.2% 100.0%

% of Total 22.0% 37.9% 40.2% 100.0%

309

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)






count is 14.06.

310

APPENDIX 5.5

Location * Business Founded Crosstabulation

Business Founded

Total >1980 1981-1991 1992-2002 2003-2009

Location Pahang Count 1 13 18 38 70

% within Location 1.4% 18.6% 25.7% 54.3% 100.0%

% of Total .3% 3.8% 5.2% 11.0% 20.2%

Pulau

Pinang

Count 0 5 30 34 69

% within Location .0% 7.2% 43.5% 49.3% 100.0%

% of Total .0% 1.4% 8.7% 9.8% 19.9%

Kedah Count 2 9 26 34 71

% within Location 2.8% 12.7% 36.6% 47.9% 100.0%

% of Total .6% 2.6% 7.5% 9.8% 20.5%

Kuala

Lumpur

Count 6 12 23 31 72

% within Location 8.3% 16.7% 31.9% 43.1% 100.0%

% of Total 1.7% 3.5% 6.6% 9.0% 20.8%

Sabah Count 9 18 23 14 64

% within Location 14.1% 28.1% 35.9% 21.9% 100.0%

% of Total 2.6% 5.2% 6.6% 4.0% 18.5%

Total Count 18 57 120 151 346

% within Location 5.2% 16.5% 34.7% 43.6% 100.0%

% of Total 5.2% 16.5% 34.7% 43.6% 100.0%

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)





a. 5 cells (25.0%) have expected count less than 5. The minimum

expected count is 3.33.

311

APPENDIX 5.6

Location * Age4grup Crosstabulation

Age4grup

Total below 30 31-40 41-50 51 above


% within Location 10.0% 31.4% 48.6% 10.0% 100.0%

% of Total 2.0% 6.4% 9.8% 2.0% 20.2%

Pulau

Pinang

Count 5 31 29 4 69

% within Location 7.2% 44.9% 42.0% 5.8% 100.0%

% of Total 1.4% 9.0% 8.4% 1.2% 19.9%


% within Location 14.1% 33.8% 45.1% 7.0% 100.0%

% of Total 2.9% 6.9% 9.2% 1.4% 20.5%

Kuala

Lumpur

Count 18 22 25 7 72

% within Location 25.0% 30.6% 34.7% 9.7% 100.0%

% of Total 5.2% 6.4% 7.2% 2.0% 20.8%

Sabah Count 11 16 26 11 64

% within Location 17.2% 25.0% 40.6% 17.2% 100.0%

% of Total 3.2% 4.6% 7.5% 3.2% 18.5%

Total Count 51 115 146 34 346

% within Location 14.7% 33.2% 42.2% 9.8% 100.0%

% of Total 14.7% 33.2% 42.2% 9.8% 100.0%

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)






count is 6.29.

312

APPENDIX 5.7

Correlations

Motivation Age4grup

Spearman's rho Motivation Correlation Coefficient 1.000 .202**

Sig. (2-tailed) . .000

N 346 346

Age4grup Correlation Coefficient .202** 1.000

Sig. (2-tailed) .000 .

N 346 346

**. Correlation is significant at the 0.01 level (2-tailed).

313

APPENDIX 5.8

Location * Gender Crosstabulation

Gender

Total Male Female


% within Location 82.9% 17.1% 100.0%

% of Total 16.8% 3.5% 20.2%


% within Location 68.1% 31.9% 100.0%

% of Total 13.6% 6.4% 19.9%


% within Location 56.3% 43.7% 100.0%

% of Total 11.6% 9.0% 20.5%


% within Location 77.8% 22.2% 100.0%

% of Total 16.2% 4.6% 20.8%


% within Location 78.1% 21.9% 100.0%

% of Total 14.5% 4.0% 18.5%


% within Location 72.5% 27.5% 100.0%

% of Total 72.5% 27.5% 100.0%

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)






count is 17.57.

314

APPENDIX 5.9

Correlations

Motivation Gender

Spearman's rho Motivation Correlation Coefficient 1.000 .326**


N 346 346

Gender Correlation Coefficient .326** 1.000


N 346 346

**. Correlation is significant at the 0.01 level (2-tailed).

315

APPENDIX 5.10

Location * Edu Crosstabulation

Edu

Total Primary Secondary Tertiatry


% within Location .0% 21.4% 78.6% 100.0%

% of Total .0% 4.3% 15.9% 20.2%

Pulau Pinang Count 0 32 37 69

% within Location .0% 46.4% 53.6% 100.0%

% of Total .0% 9.2% 10.7% 19.9%


% within Location 1.4% 53.5% 45.1% 100.0%

% of Total .3% 11.0% 9.2% 20.5%

Kuala Lumpur Count 0 33 39 72

% within Location .0% 45.8% 54.2% 100.0%

% of Total .0% 9.5% 11.3% 20.8%


% within Location .0% 31.3% 68.8% 100.0%

% of Total .0% 5.8% 12.7% 18.5%

Total Count 1 138 207 346

% within Location .3% 39.9% 59.8% 100.0%

% of Total .3% 39.9% 59.8% 100.0%

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)






expected count is .18.

316

APPENDIX 5.11

Correlations

Motivation Edu

Spearman's rho Motivation Correlation Coefficient 1.000 .074


N 346 346

Edu Correlation Coefficient .074 1.000


N 346 346

317

APPENDIX 5.12

Location * Ethnicity Crosstabulation

Ethnicity

Total Malay Chinese Indian Others


% within Location 77.1% 12.9% 7.1% 2.9% 100.0%

% of Total 15.6% 2.6% 1.4% .6% 20.2%

Pulau

Pinang

Count 27 27 14 1 69

% within Location 39.1% 39.1% 20.3% 1.4% 100.0%

% of Total 7.8% 7.8% 4.0% .3% 19.9%


% within Location 28.2% 49.3% 21.1% 1.4% 100.0%

% of Total 5.8% 10.1% 4.3% .3% 20.5%

Kuala

Lumpur

Count 32 33 7 0 72

% within Location 44.4% 45.8% 9.7% .0% 100.0%

% of Total 9.2% 9.5% 2.0% .0% 20.8%


% within Location 32.8% 45.3% 15.6% 6.3% 100.0%

% of Total 6.1% 8.4% 2.9% 1.2% 18.5%

Total Count 154 133 51 8 346

% within

Location

44.5% 38.4% 14.7% 2.3% 100.0%

% of Total 44.5% 38.4% 14.7% 2.3% 100.0%

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)





318

Location * Ethnicity Crosstabulation

Ethnicity

Total Malay Chinese Indian Others


% within Location 77.1% 12.9% 7.1% 2.9% 100.0%

% of Total 15.6% 2.6% 1.4% .6% 20.2%

Pulau

Pinang

Count 27 27 14 1 69

% within Location 39.1% 39.1% 20.3% 1.4% 100.0%

% of Total 7.8% 7.8% 4.0% .3% 19.9%


% within Location 28.2% 49.3% 21.1% 1.4% 100.0%

% of Total 5.8% 10.1% 4.3% .3% 20.5%

Kuala

Lumpur

Count 32 33 7 0 72

% within Location 44.4% 45.8% 9.7% .0% 100.0%

% of Total 9.2% 9.5% 2.0% .0% 20.8%


% within Location 32.8% 45.3% 15.6% 6.3% 100.0%

% of Total 6.1% 8.4% 2.9% 1.2% 18.5%

Total Count 154 133 51 8 346

% within

Location

44.5% 38.4% 14.7% 2.3% 100.0%


expected count is 1.48.

319

APPENDIX 5.13

Correlations

Motivation Ethnic

Spearman's rho Motivation Correlation Coefficient 1.000 .126*


N 346 346

Ethnic Correlation Coefficient .126* 1.000


N 346 346

*. Correlation is significant at the 0.05 level (2-tailed).

320

APPENDIX 5.14

Location * A family business Crosstabulation

A family business

Total Yes No


% within Location 34.3% 65.7% 100.0%

% of Total 6.9% 13.3% 20.2%


% within Location 49.3% 50.7% 100.0%

% of Total 9.8% 10.1% 19.9%


% within Location 52.1% 47.9% 100.0%

% of Total 10.7% 9.8% 20.5%


% within Location 43.1% 56.9% 100.0%

% of Total 9.0% 11.8% 20.8%


% within Location 40.6% 59.4% 100.0%

% of Total 7.5% 11.0% 18.5%


% within Location 43.9% 56.1% 100.0%

% of Total 43.9% 56.1% 100.0%

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)






count is 28.12.

321

APPENDIX 5.15

Correlations

Motivation

FamilyBusBack

ground



N 346 346

FamilyBusBackground Correlation Coefficient .108* 1.000


N 346 346


322

APPENDIX 5.16

Location * WorkExp Crosstabulation

WorkExp

Total Yes No


% within Location .0% 100.0% 100.0%

% of Total .0% 20.2% 20.2%



% of Total 1.7% 18.2% 19.9%

Kedah Count 6 65 71


% of Total 1.7% 18.8% 20.5%


% within Location 12.5% 87.5% 100.0%

% of Total 2.6% 18.2% 20.8%


% within Location 35.9% 64.1% 100.0%

% of Total 6.6% 11.8% 18.5%


% within Location 12.7% 87.3% 100.0%

% of Total 12.7% 87.3% 100.0%

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)






count is 8.14.

323

APPENDIX 5.17

Correlations

Motivation WorkExp



N 346 346

WorkExp Correlation Coefficient .110* 1.000


N 346 346


324

APPENDIX 5.18

Descriptives

Motivation

N Mean

Std.

Deviation Std. Error

95% Confidence Interval for

Mean

Minimum Maximum Lower Bound Upper Bound

Pahang 70 3.8518 .64349 .07691 3.6984 4.0052 1.75 5.00

Pulau Pinang 69 3.8152 .50576 .06089 3.6937 3.9367 2.25 5.00

Kedah 71 4.1972 .45003 .05341 4.0907 4.3037 2.88 5.00

Kuala Lumpur 72 3.8872 .66182 .07800 3.7316 4.0427 2.13 5.00

Sabah 64 4.0508 .46490 .05811 3.9347 4.1669 3.13 5.00

Total 346 3.9595 .56984 .03063 3.8993 4.0198 1.75 5.00

Test of Homogeneity of Variances

Motivation

Levene Statistic df1 df2 Sig.

2.244 4 341 .064

ANOVA

Motivation

Sum of Squares df Mean Square F Sig.

Between Groups 7.170 4 1.792 5.829 .000

Within Groups 104.858 341 .308

Total 112.027 345

325

Post Hoc Tests

Multiple Comparisons

Motivation

Tukey HSD

(I) Location (J) Location

Mean Difference

(I-J) Std. Error Sig.

95% Confidence Interval

Lower

Bound Upper Bound

Pahang Pulau Pinang .03657 .09407 .995 -.2214 .2946

Kedah -.34540* .09340 .002 -.6015 -.0893

Kuala Lumpur -.03537 .09308 .996 -.2906 .2199

Sabah -.19900 .09590 .233 -.4620 .0640

Pulau Pinang Pahang -.03657 .09407 .995 -.2946 .2214

Kedah -.38197* .09374 .001 -.6390 -.1249

Kuala Lumpur -.07194 .09342 .939 -.3281 .1843

Sabah -.23556 .09624 .105 -.4995 .0284

Kedah Pahang .34540* .09340 .002 .0893 .6015

Pulau Pinang .38197* .09374 .001 .1249 .6390

Kuala Lumpur .31003* .09275 .008 .0557 .5644

Sabah .14640 .09558 .543 -.1157 .4085

Kuala

Lumpur

Pahang .03537 .09308 .996 -.2199 .2906

Pulau Pinang .07194 .09342 .939 -.1843 .3281

Kedah -.31003* .09275 .008 -.5644 -.0557

Sabah -.16363 .09527 .424 -.4249 .0976

Sabah Pahang .19900 .09590 .233 -.0640 .4620

Pulau Pinang .23556 .09624 .105 -.0284 .4995

Kedah -.14640 .09558 .543 -.4085 .1157

Kuala Lumpur .16363 .09527 .424 -.0976 .4249

*. The mean difference is significant at the 0.05 level.

326

APPENDIX 5.19

Location * Business strategy Crosstabulation

Business strategy

Total Formal informal


% within Location 74.3% 25.7% 100.0%

% of Total 15.0% 5.2% 20.2%


% within Location 84.1% 15.9% 100.0%

% of Total 16.8% 3.2% 19.9%


% within Location 78.9% 21.1% 100.0%

% of Total 16.2% 4.3% 20.5%


% within Location 68.1% 31.9% 100.0%

% of Total 14.2% 6.6% 20.8%


% within Location 54.7% 45.3% 100.0%

% of Total 10.1% 8.4% 18.5%


% within Location 72.3% 27.7% 100.0%

% of Total 72.3% 27.7% 100.0%

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)






count is 17.76.

327

APPENDIX 5.20


BusinessAllianceActi


4.917 4 341 .001

ANOVA



Between Groups 22.302 4 5.575 8.344 .000


Total 250.170 345

Descriptives


N Mean

Std.



for Mean

Minimum Maximum

Lower

Bound Upper Bound

Pahang 70 3.7490 .59099 .07064 3.6081 3.8899 2.00 5.00

Pulau Pinang 69 3.7660 .82247 .09901 3.5685 3.9636 1.00 4.86

Kedah 71 3.3883 .90001 .10681 3.1753 3.6014 1.00 4.57

Kuala Lumpur 72 3.1944 .97579 .11500 2.9651 3.4237 1.00 5.00

Sabah 64 3.8482 .72882 .09110 3.6662 4.0303 1.00 5.00

Total 346 3.5813 .85155 .04578 3.4913 3.6714 1.00 5.00

328

Post Hoc Tests Multiple Comparisons


Tukey HSD

(I) Location

(J)

Location

Mean

Difference

(I-J) Std. Error Sig.


Lower Bound Upper Bound

Pahang Pulau Pinang -.01707 .13868 1.000 -.3974 .3632

Kedah .36065 .13769 .069 -.0170 .7382

Kuala Lumpur .55454* .13721 .001 .1782 .9308

Sabah -.09923 .14138 .956 -.4870 .2885

Pulau

Pinang

Pahang .01707 .13868 1.000 -.3632 .3974

Kedah .37772 .13819 .051 -.0013 .7567

Kuala Lumpur .57160* .13772 .000 .1939 .9493

Sabah -.08217 .14187 .978 -.4712 .3069

Kedah Pahang -.36065 .13769 .069 -.7382 .0170

Pulau Pinang -.37772 .13819 .051 -.7567 .0013

Kuala Lumpur .19389 .13672 .616 -.1811 .5688

Sabah -.45988* .14090 .011 -.8463 -.0735

Kuala

Lumpur

Pahang -.55454* .13721 .001 -.9308 -.1782

Pulau Pinang -.57160* .13772 .000 -.9493 -.1939

Kedah -.19389 .13672 .616 -.5688 .1811

Sabah -.65377* .14044 .000 -1.0389 -.2686

Sabah Pahang .09923 .14138 .956 -.2885 .4870

Pulau Pinang .08217 .14187 .978 -.3069 .4712

Kedah .45988* .14090 .011 .0735 .8463

Kuala Lumpur .65377* .14044 .000 .2686 1.0389

*. The mean difference is significant at the 0.05 level.

329

APPENDIX 5.21

Location * Year of business first started use IT Crosstabulation

Year of business first started use IT

Total 1996-2000 2001-2005 >2006


% within Location 5.7% 42.9% 51.4% 100.0%

% of Total 1.2% 8.7% 10.4% 20.2%

Pulau Pinang Count 14 35 20 69

% within Location 20.3% 50.7% 29.0% 100.0%

% of Total 4.0% 10.1% 5.8% 19.9%


% within Location 8.5% 59.2% 32.4% 100.0%

% of Total 1.7% 12.1% 6.6% 20.5%

Kuala Lumpur Count 13 32 27 72

% within Location 18.1% 44.4% 37.5% 100.0%

% of Total 3.8% 9.2% 7.8% 20.8%


% within Location 18.8% 37.5% 43.8% 100.0%

% of Total 3.5% 6.9% 8.1% 18.5%

Total Count 49 163 134 346

% within Location 14.2% 47.1% 38.7% 100.0%

% of Total 14.2% 47.1% 38.7% 100.0%

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)






count is 9.06.

330

APPENDIX 5.22

Descriptives

InternetApplication

N Mean

Std.



for Mean

Minimum Maximum

Lower

Bound Upper Bound

Pahang 70 3.7026 .61149 .07309 3.5568 3.8484 2.27 4.91

Pulau Pinang 69 3.3347 .78350 .09432 3.1464 3.5229 1.64 4.82

Kedah 71 3.5621 .75394 .08948 3.3836 3.7406 1.73 4.91

Kuala

Lumpur

72 3.5581 .87228 .10280 3.3531 3.7631 1.64 5.00

Sabah 64 3.6591 .97307 .12163 3.4160 3.9022 1.27 5.00

Total 346 3.5623 .81037 .04357 3.4766 3.6480 1.27 5.00


InternetApplication


3.544 4 341 .008

ANOVA

InternetApplication


Between Groups 5.555 4 1.389 2.143 .075


Total 226.563 345

331

Post Hoc Tests Multiple Comparisons

InternetApplication

Tukey HSD

(I) Location (J) Location

Mean

Difference (I-J) Std. Error Sig.

95% Confidence

Interval

Lower

Bound

Upper

Bound

Pahang Pulau Pinang .36795 .13657 .057 -.0066 .7425

Kedah .14050 .13560 .838 -.2314 .5124

Kuala Lumpur .14452 .13513 .822 -.2261 .5151

Sabah .04351 .13923 .998 -.3383 .4253

Pulau

Pinang

Pahang -.36795 .13657 .057 -.7425 .0066

Kedah -.22745 .13609 .453 -.6007 .1458

Kuala Lumpur -.22343 .13563 .468 -.5954 .1485

Sabah -.32444 .13971 .140 -.7076 .0587

Kedah Pahang -.14050 .13560 .838 -.5124 .2314

Pulau Pinang .22745 .13609 .453 -.1458 .6007

Kuala Lumpur .00402 .13465 1.000 -.3652 .3733

Sabah -.09699 .13876 .957 -.4775 .2836

Kuala

Lumpur

Pahang -.14452 .13513 .822 -.5151 .2261

Pulau Pinang .22343 .13563 .468 -.1485 .5954

Kedah -.00402 .13465 1.000 -.3733 .3652

Sabah -.10101 .13831 .949 -.4803 .2783

Sabah Pahang -.04351 .13923 .998 -.4253 .3383

Pulau Pinang .32444 .13971 .140 -.0587 .7076

Kedah .09699 .13876 .957 -.2836 .4775

Kuala Lumpur .10101 .13831 .949 -.2783 .4803

DETERMINING THE KEY SUCCESS FACTORS OF TOURISM …

Documents

Transcript of DETERMINING THE KEY SUCCESS FACTORS OF TOURISM …