Abstract
This study explores the influence of political risk on firms in the tourism industry. It addresses a research gap regarding the impact of political risk on firm-level performance and failure, and uncovers the role of organizational slack in this relationship. Firm-level political risk is estimated from 2002–2019 financial data for firms across six tourism sectors in a developed economy, the USA. Such risk is found to be significantly associated with firm performance and business failure. From the perspectives of the resource-based view and the threat-rigidity hypothesis, the results support the moderating effects of absorbed and unabsorbed slack on links between risk, performance, and business failure. Given that the COVID-19 pandemic has highlighted the tourism industry’s vulnerability, this study will be of interest to tourism firms seeking to improve business sustainability and resilience.
| Original language | English |
|---|---|
| Pages (from-to) | 1-47 |
| Number of pages | 47 |
| Journal | Journal of Travel Research |
| Early online date | 1 Jun 2021 |
| DOIs | |
| Publication status | E-pub ahead of print - 1 Jun 2021 |
Keywords
- firm-level political risk
- business failure
- organizational slack
- firm performance
- tourism vulnerability