Family vs Non-Family Owned Enterprises in Tourism:

Examining business owners commitment to their town

Rob Hallak*
Centre for Tourism & Leisure Management, School of Management, University of South
Australia, Adelaide, Australia
Mailing address: GPO Box 2471, Adelaide SA 5001, Australia.
rob.hallak@unisa.edu.au
Tel: +61883020474
Fax: + 61883020512
Guy Assaker
Centre for Tourism & Leisure Management, School of Management, University of South
Australia, Adelaide, Australia
Abstract
This research examines differences between family and non-family owned small and
medium tourism enterprises (SMTEs) in regional tourism destinations. The study
examines the long term ambitions of SMTE owners with regard to their commitment to
stay in their town and maintain their business operations. Data was collected from 298
SMTE owners operating in small towns across regional South Australia. The sample
comprised of family (n = 157) and non-family owned (n= 141) businesses. Using a
four-item measure of commitment to stay in the town, results of the t-test analysis
indicate significant differences between the two business groups. Family business
owners have a stronger commitment to staying in their town and to continue operating
their business for as long as possible. These results contribute to our understanding of
the strategies and behaviours of family businesses in tourism and present important
implications to destination managers aiming to support sustainable entrepreneurial
development.

Key words: Small and Medium Tourism Enterprises, Family Businesses, Commitment
to Stay, South Australia, T-test
Introduction
The tourism sector in Australia is predominantly comprised of small and medium
enterprises. Recent figures suggest 93% of all tourism businesses employ less than 20
staff (Tourism Research Australia 2010). Thus, these enterprises play a key role in
tourism destinations with regard to ensuring tourist satisfaction as well as creating a
positive destination image (Kozak & Rimmington 1998). SMTEs act as economic

264

engines for tourism destinations (Getz et al. 2004) and play a critical role in the
interface between tourism communities and tourists (Shaw & Williams 1998).
Research focussing on small and medium tourism enterprises has developed over the
past two decades. Studies have focussed on SMTE management practices (Dimmock
1999; Friel 1999; Harris & Watkins 1998; Morrison 1996; Wu 2004), business
performance (Haber & Reichel 2005; Hallak 2009), growth strategies (Webster 1998),
entrepreneurial self-efficacy (Hallak, Lindsay & Brown 2011) and the characteristics and
motivations of SMTE owners (Dewhurst & Horobin 1998; Getz & Carlsen 2000;
Kokkranikal & Morrison 2002).
Small tourism and hospitality businesses in rural and regional tourism destinations are
generally family owned businesses (Getz & Carlsen 2000). However, studies conducted
on family businesses in tourism remains at the infancy stage (see, Craig & Lindsay
2002; Getz et al 2004; Getz & Carlsen 2005; Peters & Buhalis 2004;). Previous research
suggests that there are significant differences between family and non-family
businesses (see, Dyer 2006; Martinez et al. 2007), however, a comparison of these
businesses in tourism and hospitality is yet to be explored. This is surprising
considering that 80% of all Australian businesses are, in fact, family owned businesses.
In South Australia, where this study take place, there are 52 000 family businesses
employing 55% of the private sector workforce (Jaffe 2008).
The successful performance and continuity of family businesses is critical for regional
tourism destinations as their closure has a great social cost and can lead to loss in
important services and facilities. The loss of a business, resulting in loss of jobs and
livelihood is greater than the gaining of a new business start-up (Jaffe 2008). Therefore,
understanding the dynamics and distinct characteristics of family businesses is critical,
as well exploring the issue of family business continuity, transition and succession
(Jaffe 2008).
This research examines differences between family-owned and non-family owned small
and medium tourism enterprises (SMTEs) operating in regional tourism destinations.
The study examines the long term ambitions of SMTE owners with regard to their
commitment to stay in their town and to maintain their business operations.
Understanding the long term commitments of SMTE owners is important for destination
managers aiming to support sustainable entrepreneurial development within the
tourism and hospitality sector.
Family Businesses
Getz et al. (2004) argue that one cannot understand the dominant small-business
component of tourism and hospitality without understanding the individual and family
dimensions (p.173). Family businesses have certain characteristics that make them
distinct from non-family business. For example, the familys involvement in the
business, its pattern of ownership, governance, management and succession affect the
business goals, strategies and structure (Chua et al. 1999). Therefore, family
businesses are a complicated phenomenon (Craig & Lindsay 2002) because of the
interaction of the family and the business.
265

Studies on family businesses in tourism and hospitality have focused on business

owners characteristics (Evans & Ilbery, 1989; Getz & Garlsen, 2000), attitudes and
goals (Andersson, et al. 2002; Getz & Peterson 2005) and managerial practices (Craig
& Lindsay 2002; Peters & Buhalis, 2004). Getz and Carlsen (2000) explored the
characteristics and goals of 198 family businesses in rural Western Australia and
identified two distinct categories of family businesses: family first and business first
enterprises. The majority of businesses were identified as family first businesses where
the goals of the family came first. Moreover, Getz and Carlsen (2000) found that family
business owners must deal with the tension arising from pursuing business growth
while at the same time trying to keep the business manageable.
Craig and Lindsay (2002) reported a case study of a successful family-owned guest
house in Australia. They examined this family-owned business within an entrepreneurial
framework and explored the interaction between entrepreneurship and family business
dynamics. The interaction between family goals and business goals creates unique
challenges for family business owners as they aim to achieve multiple complex goals
due to the family effect (Craig & Lindsay, 2002).
Andersson et al. (2002) examined and compared the goals of tourism family business
owners across three countries: Australia, Canada, and Sweden. They discovered that
the business is used as a way to support and improve the livelihood of the family; but in
doing so, the business must be successful in generating profits and in achieving
specific business objectives. Therefore, family and lifestyle goals cannot be achieved
unless the business operates in a profitable manner (Evans & Ilbery 1989).
Peters and Buhalis (2004) in their study of 156 small family-owned hotel businesses in
Austria discovered that the products and services offered by family businesses were
more personalized to the customer than in non-family businesses. Moreover, while
there is evidence to suggest that family members working in a family business had a
higher motivation to work, they face a demanding workload and conflicts among family
members can occur (Peters & Buhalis 2004).
Andersson et al. (2002) and Getz et al. (2004) argue that family tourism business
owners wish to create a family legacy and pass on the business to the next generation.
This suggests the family business owners have long term ambitions for their business
and envisage the continuity of the enterprise for many years to come. This long-term
view suggests that family business owners may differ from their non-family counterparts
with regard to their commitment to staying in their town and to continue the operation of
the business.
Running a family business appears to be a long term project as the business provides
the livelihood for the business owner and the family. It also provides employment
opportunities for family members and helps build a family legacy where family
members can inherit and take over the business. The question therefore is whether or
not family businesses are more committed to staying in the town and continuing to run
the business as compared to non-family businesses. Family businesses have particular
objectives that are influenced by family and lifestyle determinants (Peters & Buhalis).
266

Stability in business is related to stability in the family as the business is providing the
familys livelihood. Beyond that, the family business plays an important role in servicing
visitors and ensuring the sustainability of the tourism destination especially in regional
communities dependent on tourism revenues.
Research Design
The population for this research covered all independently-owned SMTEs operating in
regional South Australia. These businesses were considered to be small and mediumsized operations as they employed fewer than 200 full-time and part-time staff
(Australian Bureau of Statistics 2002). The sample frame included: hotel, motel, and
bed and breakfast providers; restaurants / cafes; pubs; tour operators; visitor
attractions; travel agencies; and souvenir shops. Business owners from these sectors
were deliberately chosen in order to survey a broad section of the industry and
minimise any non-coverage error (see, Dillman 1991). In total, surveys were sent to
957 business owners. The method used for identifying family businesses was based on
previous work of Getz & Carlsen (2000) where a self-selection method is used, i.e. is
your business a family owned business. Thus, respondents were asked to indicate if
their business is a family owned business.
Commitment to the town reflects business owners desires to remain in the town and
continue operating their business. Commitment was measured using a scale
developed by Lalli (1992). The scale consists of four items: 1) I would like to stay in this
town for as long as possible, 2) I am looking forward to witnessing this towns future
developments, 3) This town plays an important role in my future plans, 4) My personal
future is closely tied up in this town. All items were measured on a Likert scale (1 =
Strongle Disagree, 7 = Strongly Agree). The internal consistency and reliability of the
commitment scale is satisfactory with Cronbachs alpha of .883, .891, and .870, for the
entire dataset, family businesses and non-family businesses respectively. These are
greater than 0.7 cutoff as suggested by Nunnally (1978). The factor loadings for each
observed variable were also satisfactory ( > .7), suggesting that responses to
commitment items load consistently on their underlying scale/factor at the level of the
pooled dataset and across the two sample groups, respectively, thus rendering the
choice of items consistent and sufficient for defining the underlying commitment
scale/factor in the context of this study (this is referred to as convergent validity [Bollen
1989]).
The survey sent to 957 businesses resulted in a total of 298 usable responses (32%).
This response rate is considered satisfactory in the context of surveys of hospitality
organisations (Keegan & Lucas 2005). It is also higher than previous studies conducted
on family tourism businesses (e.g. 26% achieved by Getz & Carlsen 2000). The survey
resulted in a fairly even spread of family (n = 157) and non-family businesses (n = 141)
which provides sufficient data for group comparisons (Table 1).

267

Table 1. Details of Sample Responses

Female
Male
Born in the town
Business Size (no. employees)
<10 staff
>10 staff
First business
Currently own other businesses

Family Business
(N= 157)
54.1%
45.9%
7.6%

Non Family Business

(N= 141)
44.7%
55.3%
10.6%

77%
23%
47%
28.7%

67%
33%
42.6%
29.1%

Analysis of Results
An independent sample t-test was performed to compare family and non-family owned
tourism business owners with regard to their commitment to remain in the current town
and maintain their business operations. The Levenes test for equality of variances was
performed to test whether the variance of scores for the two groups is similar regarding
the four commitment items: 1) I would like to stay in this town for as long as possible, 2)
I am looking forward to witnessing this towns future developments, 3) This town plays
an important role in my future plans, and 4) My personal future is closely tied up in this
town. The four items were found to meet the requirements for equal variances (see
Table 2). Consequently, the output lines for equal variances were used to test for
equality of means for the four commitment factor items. Results of the t-values, degrees
of freedom (d.f.), and probabilities suggested that for three of the four items (i.e., item
1, I would like to stay in this town for as long as possible; item 3, This town plays an
important role in my future plans; and item 4, My personal future is closely tied up in
this town) there were significant differences in the mean scores between family- and
non-family-owned businesses (see Table 2).

268

Table 2. Independent sample t-test results

I would like to stay in this town for as

long as possible

Equal variances
assumed

Levene's Test for Equality of

Variances

t-test for Equality of Means

Sig.

df

Sig. (2-tailed)

0.616

0.433

-2.272

296

0.024a

-2.275

293.895

0.024

-0.688

296

0.492

-0.691

295.584

0.49

-3.327

296

0.001a

-3.317

288.61

0.001

-3.045

296

0.003a

-3.049

293.841

0.003

Equal variances
not assumed
I am looking forward to witnessing this
towns future developments

Equal variances
assumed

0.332

0.565

Equal variances
not assumed
This town plays an important role in my
future plans

Equal variances
assumed

0.526

0.469

Equal variances
not assumed
My personal future is closely tied up in
this town

Equal variances
assumed

0.076

0.783

Equal variances
not assumed

Note: The Levene's test for equality of variances tells us that variances for family and
non-family owned businesses are not significantly different at the .05 level for all four
items; a Indicate significant differences at.05 significance level.

Table 3. Mean scores comparison for commitment to stay in their town and maintain
their business operations between family and non-family owned
Items

Family owned

Non-family owned

t-value

2-Tail Sig

1.9133

-2.272

0.024

5.3817

1.5426

-0.688

0.492

1.7894

4.4850

1.8856

-3.327

0.001

1.9540

4.2344

1.9112

-3.045

0.003

Mean

S.D.

Mean

S.D.

I would like to stay in this town for as long as

possible

4.7093

1.9583

4.1987

I am looking forward to witnessing this

towns future developments

5.5096

1.6549

This town plays an important role in my

future plans

5.1935

My personal future is closely tied up in this

town

4.9177

269

For the first item (I would like to stay in this town for as long as possible), family-owned
SMTEs showed a significantly higher score of commitment as compared to non-familyowned ones. For the third item (This town plays an important role in my future plans),
family-owned SMTEs seemed to have a significantly greater level of commitment as
compared to non-family-owned SMTEs. For the fourth item (My personal future is
closely tied up in this town), family business owners reported significantly higher levels
of commitment than non-family owners. Finally, for the second item (I am looking
forward to witnessing this towns future developments) no significant difference was
found between family and non-family-owned businesses (see Table 2); thus, this
suggests that both family and non-family owners show similar interest in witnessing
their towns future development given the profits this would generate to them
regardless of the level of commitment they may show to the destination.
Discussion and Conclusions
The above analysis provides further evidence that there are significant differences
between family and non-family owned businesses (Chua et al. 1999; Dyer 2006;
Martinez et al. 2007). This study has identified significant differences between family
and non-family owned tourism businesses with regard to the owners commitment to
stay in the town in which the business is embedded. Using a four item measure of
commitment to stay (Lalli 1992), this research found that family business owners had
significantly higher levels of commitment than non-family business owners on three of
the four items: 1) I would like to stay in this town for as long as possible, 3) This town
plays an important role in my future plans, 4) My personal future is closely tied up in this
town.
Results of this analysis suggest that family business owners are more committed to the
town in which they are embedded. The difference between family and non-family
businesses may be due to the family effect (Craig & Lindsay 2002) whereby the
objectives of the family and their involvement in the business influence the objectives of
the business. Thus, findings from this study suggest that family business owners
appear to have long term ambitions for the business and aim to ensure its continuity in
that location. These results support previous findings by Andersson et al. (2002) and
Getz et al. (2004) who argue that family tourism business owners wish to create a family
legacy and pass on the business to the next generation. Therefore, the owners lifestyle
objectives, which include living in desired a place, raising a family in that place, and
ensuring the long term continuity of the business in that place, influence the long term
objectives of the business and the owners commitment to their town.
These results should be of interest to destination managers and policy makers since
family businesses play a dominant role in the tourism sector, especially in regional and
rural areas (Getz et al. 2004; Getz & Carlsen 2000). The continuity of family owned
tourism businesses is critical for the livelihood and sustainability of regional destinations
that rely on the tourism industry. Considering that family business owners have a long
term commitment to their town, destination managers need to support these
businesses achieve their goals. The continuity of family businesses depends on the

270

business performance, thus, while business owners have the intention to stay, this is
only possible if the business can perform at a certain level that ensures its continuity.
Limitations and Future Research
Since the sample for this research was limited to tourism business owners operating in
regional South Australia, there may be certain economic, political and social factors that
are unique to this sample and hence affect the generalisability of these results. Future
studies should focus on family business involvement in the local community; not only
their commitment to stay in the town but also the extent to which family business
owners engage in activities aimed at supporting the town and its residents.
Furthermore, since family businesses have higher levels of commitment to the town
than non-family businesses, policy makers need to identify ways in which they can
foster entrepreneurship within the town and encourage and support local families to
create tourism businesses that will continue to operate for many years to come.

271

References
Andersson, T., Carlsen, J. & Getz, D. (2002). Family business goals in the tourism and
hospitality sector: Case studies and cross-case analysis from Australia, Canada, and
Sweden. Family Business Review, 15(2), 89-106.
Australian Bureau of Statistics. (2002). Small business in Australia 2001, Cat. no. 1321.0,
viewed on 10/04/2006,
<http://www.abs.gov.au/ausstats/abs@.nsf/0/97452F3932F44031CA256C5B00027F19
?OpenDocument>.
Bollen, K.A. (1989). Structural equations with latent variables. New York: Wiley.
Chua, J.H., Chrisman, J.J. & Sharma, P. (1999). Defining the family business by
behaviour. Entrepreneurship Theory & Practice, 23, 19-39.
Craig, J. & Lindsay, N.J. (2002). Incorporating the family dynamic into the
entrepreneurship process. Journal of Small Business and Enterprise Development, 9(4),
416-430.
Dewhurst, P. & Horobin, H. (1998). Small business owners. In R. Thomas (Ed.), The
management of small tourism and hospitality firms (pp. 19-38). London: Cassell.
Dillman, D.A. (1991). The design and administration of mail surveys. Annual Review of
Sociology, 17, 225-249.
Dimmock, K. (1999). Management style and competitive strategies among tourism
firms in the Northern Rivers. Tourism Management, 20(3), 323-339.
Dyer, W.G. Jr. (2006). Examining the family effect on firm performance. Family
Business Review, 19(4), 253-373.
Evans, N. & Ilbery ,W. (1989). A conceptual framework for investigating farm-based
accommodation and tourism in Britain. Journal of Rural Studies, 5(3), 257-266.
Friel, M. (1999). Marketing practices in small tourism and hospitality firms. International
Journal of Tourism Research, 1(2), 97-109.
Getz, D. & Carlsen, J. (2000). Characteristics and goals of family and owner-operated
businesses in the rural tourism and hospitality sectors. Tourism Management, 21(6),
547-560.
Getz, D. & Carlsen, J. (2005). Family business in tourism: State of the art. Annals of
Tourism Research, 32(1), 237-258.
Getz, D. & Peterson, T. (2005). Growth and profit-oriented entrepreneurship among
family business owners in the tourism and hospitality industry. International Journal of
Hospitality Management, 24, 219-242.
Getz, D., Carlsen, J. & Morrison, A. (2004). The family business in tourism and
hospitality. Wallingford, UK ; Cambridge, MA: CABI Pub.
272

Haber, S., & Reichel, A. (2005). Identifying performance measures of small ventures
the case of the tourism industry. Journal of Small Business Management, 43(3), 257286.
Hallak, R. (2009). Examining the place identity performance relationship among
tourism entrepreneurs. PhD Thesis, University of South Australia.
Hallak, R., Lindsay, N.J. & Brown, G. (2011). Examining the role of entrepreneurial
experience and entrepreneurial self-efficacy on SMTE performance. Tourism Analysis, in
press.
Harris, L.C. & Watkins, P. (1998). The impediments to developing a market orientation:
An exploratory study of small UK hotels. International Journal of Contemporary
Hospitality Management, 10(6), 221-226.
Jaffe, D. (2008). The future of family business in South Australia., Department of the
Premier and Cabinet, Government of South Australia. ISBN: 978-0-9804829-0-4.
Keegan, S.N. & Lucas, R. (2005). Hospitality to hostility: Dealing with low response
rates in postal surveys. International Journal of Hospitality Management, 24(2), 157-169.
Kokkranikal, J. & Morrison, A. (2002). Entrepreneurship and sustainable tourism: The
houseboats of Kerala. Tourism and Hospitality Research, 4(1), 7-20
Kozak, M. & Rimmington, M. (1998). Benchmarking: Destination attractiveness and
small hospitality business performance. International Journal of Contemporary
Hospitality Management, 10(5), 184-188.
Lalli, M. (1992). Urban-related identity: Theory, measurement, and empirical findings.
Journal of Environmental Psychology, 12(4), 285-303.
Martinez, J.I., Stohr, B.S.& Quiroga, B.F. (2007). Family ownership and firm
performance: Evidence from public companies in Chile. Family Business Review, 20(2),
83-94.
Morrison, A. (1996). Marketing the small tourism business. In A.V. Seaton, & M. Bennett
(Eds.), Marketing tourism products: Concepts, issues, cases (pp. 399-420). London:
Thomson.
Nunnally, J.C. (1978). Psychometric theory. New York: McGraw-Hill.
Peters, M. & Buhalis, D. (2004). Family hotel businesses: strategic planning and the
need for education and training. Education + Training, 46(8/9), 406-415.
Shaw, G. & Williams, A. (1998). Entrepreneurship, small business, culture and tourism
development. In D. Ioannides & K. Debbage (Eds.), The economic geography of the
tourism industry: A supply-side analysis (pp. 235-255). London: Routledge.
Tourism Research Australia (2010). State of the Industry 2010, viewed on 16/05/2011,
<http://www.ret.gov.au/tourism/tra/Pages/default.aspx>
273

Webster, M. (1998). Strategies for growth. In R. Thomas (Ed.). The management of

small tourism & hospitality firms (pp. 207-218). London: Cassell.
Wu, J. (2004). Influence of market orientation and strategy on travel industry
performance: An empirical study of e-commerce in Taiwan. Tourism Management,
25(3), 357-365.

274