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IJCHM
29,6
The importance of destination
attractiveness and entrepreneurial
orientation in explaining firm
1684 performance in the Sardinian
Received 8 October 2015
Revised 26 January 2016
accommodation sector
7 July 2016
Accepted 5 October 2016 Nicoletta Fadda
Department of Economics and Business, University of Sassari,
Sassari, Italy, and
Jens Fyhn Lykke Sørensen
Department of Sociology, Environmental and Business Economics,
University of Southern Denmark, Esbjerg, Denmark

Abstract
Purpose – The purpose of this paper is to contribute to the understanding of successful business
performance among accommodation firms by focusing on entrepreneurial orientation (EO) and destination
attractiveness.
Design/methodology/approach – A web-based e-mail survey was undertaken in the Sardinian
accommodation sector in 2012. The sample included 224 accommodation firms and analyses were performed
using ordered logit regressions.
Findings – The results suggest no differential impact of EO on sales and profit depending on the
attractiveness of the location in which the accommodation firm operates. Both EO and destination
attractiveness were found to exert independent positive effects on firm performance. Furthermore, EO was
found to have a larger effect on firm performance than destination attractiveness.
Research limitations/implications – The study mainly considered hotels and camping
accommodations in Sardinia. Additional investigations across accommodation types and geographic contexts
are needed.
Practical implications – The findings suggest that accommodation firms should focus on implementing
entrepreneurial activities and not only, as frequently happens, concentrate on selecting attractive destinations
in which to conduct their business. Moreover, the findings also suggest that accommodation firms that are
located in less attractive areas may produce good performance if they are managed with an EO. Finally,
training programs should be developed to improve the entrepreneurial abilities of accommodation managers.
Originality/value – The specific topics of this paper have been understudied. The findings hold practical
implications for entrepreneurs and managers who are involved in the accommodation sector.
Keywords Entrepreneurial orientation, Sardinia, Moderation effect,
Accommodation firm performance, Destination attractiveness
Paper type Research paper

International Journal of
Contemporary Hospitality
Management 1. Introduction
Vol. 29 No. 6, 2017
pp. 1684-1702 Studies have shown that tourism firm performance is influenced by both external and
© Emerald Publishing Limited
0959-6119
internal factors (Molina-Azorin et al., 2010). Among the external factors, the environment in
DOI 10.1108/IJCHM-10-2015-0546 which a firm operates has been considered to be an essential factor. Hence, an attractive
tourist destination is likely to sustain revenue growth rates in the tourism industry (Lerner Destination
and Haber, 2001). attractiveness
Despite the importance of the external environment, the literature has found internal
factors to be even more important for firm performance (Molina-Azorin et al., 2010). Firm
resources, strategy-making, human resource capabilities and entrepreneurial behaviors are
some of the well-known internal elements that affect the competitive advantage of firms and
thus their performance (Barney, 1991; Collis and Montgomery, 1995; Teece et al., 1997;
Lumpkin and Dess, 1996).
1685
Among the internal factors, entrepreneurial activities have been considered to be
important drivers of firm performance. The term entrepreneurship holds many different
meanings and attitudes. Innovation, risk-taking and proactive inclinations are some of the
more acknowledged characteristics that have been used to define entrepreneurial firms.
According to the entrepreneurial orientation (EO) construct, these factors (among others) are
considered to be necessary dimensions for defining organizations as “entrepreneurial”.
EO concerns the strategy-making process and in this framework, only firms that are
endowed with entrepreneurial attitudes toward making and carrying out decisions are
considered to be entrepreneurial (Covin and Slevin, 1991; Miller, 1983). It has been shown that
having an EO may lead to good performance. The linkage between EO and firm performance
has been intensely investigated and such research has also included tourism firms (Rauch
et al., 2009).
The purpose of this paper is to contribute to the understanding of successful business
performance among accommodation firms by focusing on EO and destination
attractiveness. An appealing question is whether the attractiveness of the location in which
a firm operates might moderate the EO–performance relationship. This question is central to
this paper. Thus, the paper contributes to the understanding of the EO–performance
relationship in the accommodation sector by seeking to answer the following question:
RQ1. Does destination attractiveness moderate the relationship between EO and firm
performance?
Another interesting question concerns the differential impact of EO and destination
attractiveness on accommodation firm performance. In other words:
RQ2. What matters most for accommodation firm performance, EO or destination
attractiveness?
These questions are relevant for two main reasons.
First, although there are a number of studies that have examined whether environmental
factors moderate the EO–performance relationship, such as competition levels and market
dynamism in terms of unpredictable changes and the number of business opportunities, the
investigation of destination attractiveness as a contingency EO-performance variable has
not received attention in the previous research. Additionally, the question of whether EO or
destination attractiveness has the greatest impact on tourism and accommodation firm
performance has been understudied.
Second, the topic has practical implications for people who are involved in the
accommodation sector in terms of the strategy-making process. For example, if destination
attractiveness moderates the effect of EO on performance, business owners should take a
look at their chosen location and their chosen level of entrepreneurial activity. On the other
hand, the absence of a moderation effect would suggest the importance of focusing on the role
of EO to achieve good performance, regardless of whether the accommodation firm is located
in an attractive or less attractive tourist location.
IJCHM To answer the above-stated research questions, the paper uses data from a survey that
29,6 was undertaken in 2012 in the Sardinian accommodation sector. Sardinia is an interesting
case because of its large tourism potential that seems to have been somewhat underexploited,
possibly because of a lack of entrepreneurial abilities or efforts.
The paper is organized as follows. The second section presents the EO construct and
describes its relationship with firm performance as found in the literature. The third section
1686 briefly describes the case study. The fourth section describes the methodology and the fifth
section reports the results. Finally, in the sixth section, the findings are discussed and the
main conclusions are outlined.

2. Theory and empirical evidence

2.1 The entrepreneurial orientation construct
EO is a theoretical construct that addresses the entrepreneurial attitudes that characterize a
firm’s strategy-making process (Covin and Slevin, 1989; Lumpkin and Dess, 1996). It
encompasses the different entrepreneurial attitudes that represent the model’s five
dimensions: innovativeness, proactiveness, risk taking, competitive aggressiveness and
autonomy (Covin and Slevin, 1991; Dess and Lumpkin, 2005).
These dimensions have been extrapolated from the literature on entrepreneurship and the
strategy-making process and consist of consolidated measures (across time and space) to
encompass the most acknowledged entrepreneurial skills (Mintzberg, 1973; Miller, 2011).
Innovativeness involves a firm’s attitude toward supporting experimentation and
encouraging innovative processes that often leads to the development of new products,
services and technological discoveries (Lumpkin and Dess, 1996; Schumpeter, 1934).
Proactiveness involves a firm’s ability to seize market opportunities, e.g. to anticipate
customer trends and exploit business opportunities (i.e. a sort of Kirznerian alertness). In
particular, it requires an active orientation toward the pestle environment and the ability to
anticipate changes (Kirzner, 1973; Shane, 2003; Lumpkin and Dess, 1996). Risk taking
involves a firm’s inclination to undertake risky activities with unknown implications
(Knight, 1921), to increase exposure to debt and to make substantial risky investments
(Lumpkin and Dess, 1996). Competitiveness involves the way in which a firm addresses
competitors. A competitive firm continuously observes rivals’ strategies and attempts to
respond to them to reach a competitive advantage, as well as a better performance (Porter,
1985). Finally, autonomy involves the existence of a favorable environment inside a firm that
promotes innovative ideas and effectively carries them out. An organizational culture that
supports these types of activities and does not impose obstacles on individual creativity
could exhibit such an attitude (Lumpkin and Dess, 1996).
On the empirical side, these five attitudes have been frequently measured in questionnaire
surveys to obtain self-reported management perceptions about strategy and
decision-making processes (Miller, 1983; Covin and Slevin, 1989; Covin and Wales, 2012).
The EO measurements have been used for different research purposes, among which the
linkage between EO and firm performance has been one of the most investigated (Covin and
Slevin, 1989, 1991; Lumpkin and Dess, 1996). Thus, another important theoretical element of
the EO construct is the relationship between entrepreneurial attitudes and performance. The
hypothesis is that a firm’s performance is influenced by its decisions and actions that are
related to the above described entrepreneurial dimensions. A great number of empirical
studies have been carried out using EO measurements and most of them have found a
positive EO–performance relationship (Rauch et al., 2009; Wales et al., 2013), also among
tourism firms (Jogaratnam et al., 1999; Jogaratnam, 2002; Jogaratnam and Tse, 2006).
2.2 The contingency approach in the entrepreneurial orientation–performance relationship Destination
To better understand the EO–performance relationship, a contingency approach has been attractiveness
adopted (Lumpkin and Dess, 1996; Miller, 1988). The contingency theory states that a single
organizational model that is always successful in all contexts does not exist. A preferred
model depends on various factors that range from the external context, such as public
institutions, customers and competitive dynamism, to the internal context, such as strategy
and organizational structure (Child, 1972; Lawrence and Lorsch, 1967). Therefore, adopting
a contingency approach to the investigation of the EO–performance relationship requires the 1687
consideration of a plethora of factors that may influence how entrepreneurial posture can
affect firm performance (Miller, 1981). In this regard, Lumpkin and Dess (1996, p. 152) assert
that:
[…] environmental factors, such as dynamism and munificence, or structural factors, such as the
decentralization of decision-making, may influence the performance of firms with an
entrepreneurial orientation.
Several studies have analyzed how internal and external variables moderate the EO–
performance relationship in different industry contexts (Rauch et al., 2009). Among the
external variables, environmental features stand out as the most investigated. Some of
these studies have focused on the environmental dynamism that is related to
unpredictable changes in certain business industries (Khandwalla, 1977; Lumpkin and
Dess, 2001) and the hostility that is related to contexts with high competition and few
unexploited business opportunities (Covin and Slevin, 1989; Zahra and Covin, 1995).
Covin and Slevin (1989) found a positive EO–performance relationship for small firms in
hostile environments. The authors claim that a hostile environment that is characterized by
high competition and few business opportunities seems to encourage entrepreneurial
attitudes and consequently firm performance. Other empirical studies have investigated the
moderating effect of environmental factors on the EO–performance relationship and have
found the same results (Zahra, 1993; Zahra and Covin, 1995), while others have noted
contradictory outcomes (Becherer and Maurer, 1997; Pelham, 1999; Viklund and Shepherd,
2008; Gupta and Gupta, 2015).
With regard to the tourism sector, some interesting results were found by examining
individual restaurants. EO was found to be positively related to firm performance both in
benign and hostile environments (Jogaratnam, 2002), thus finding that the positive effect of
EO on performance is independent of environmental factors. In another study,
environmental munificence, i.e. an external context with few limitations for firm growth, was
not found to have a moderating effect on the EO–performance relationship (Jogaratnam et al.,
1999).
Inspired by the above research, this paper investigates the attractiveness of a firm’s
location as a possible moderator of the EO–performance relationship. Focusing on
destination attractiveness seems to be highly relevant, as it represents a substantial
environmental factor in the tourism industry.

2.3 Destination attractiveness as an environmental moderator variable

Destination attractiveness refers to the capacity of a location to attract touristic flows. It is
determined by various elements such as natural and historic attractions, facilities and
services, infrastructure, hospitality and cost (Kozak and Rimmington, 1998). The
attractiveness of a destination thus depends on many factors and is related to its
competitiveness in terms of developing and managing its touristic offerings (Cracolici and
Nijkamp, 2009).
IJCHM During the past two decades, the competitiveness of destinations has interested an
29,6 increasing number of researchers (Gomezelj and Mihalic, 2008; Cracolici and Nijkamp, 2009)
and relevant models of destination competitiveness have been developed (Crouch and
Ritchie, 1999; Ritchie and Crouch, 2003; Dwyer and Kim, 2003). These have recognized
several factors that can be divided into two major categories: natural elements, such as
cultural heritage, natural resources and geographical and climatic features; and artificial
1688 elements, such as infrastructure, tourism suppliers and all aspects that more generally
support tourist needs in a specific location. Although the natural elements make a
destination appealing, the artificial ones are fundamental in achieving a competitive
advantage, as they facilitate a destination’s accessibility and thus the number of tourist
arrivals and overnight stays.
Environmental factors, both natural and artificial, play a fundamental role in attracting
tourists. The greater a destination’s ability to attract tourists, the greater the amount of
products and services will be demanded and consumed by tourists. In turn, the
attractiveness of a destination has been shown to affect the performance of tourism firms
(Lerner and Haber, 2001; Molina-Azorin et al., 2010).

3. Case study: the accommodation sector in Sardinia

To answer the research questions of this paper, a sample of accommodation firms located in
Sardinia was drawn in 2012. Sardinia is an Italian region and it is one of the most well-known
touristic destinations in the Mediterranean Sea (Hospers, 2003).
In 2011, the tourism sector accounted for 10.9 per cent of Sardinia’s gross domestic
product and this is a rather high percentage compared to the national average of 7.4 per cent
(Becheri and Maggiore, 2013). Although the island has become renowned for luxury tourism
at its Northeast Coast, its holiday offerings are numerous and situated throughout the island.
Seaside tourism is Sardinia’s main attraction and 70 per cent of arrivals are concentrated in
the months from May to September. This produces strong pressures on tourism resources in
some coastal destinations for a short annual period resulting in negative consequences, such
as seasonal employment with an associated structural inability to absorb seasonal workers
in the winter months and a general territorial congestion (CRENOS Centro Ricerche Nord
Sud, 2010). To remedy its seasonality problems, institutions and tourism actors have
promoted other forms of tourism that exploit the inland of the region and that can be enjoyed
throughout the entire year. These other types of attractions involve active tourism, such as
climbing, cycling, trekking, cannoning, kayaking, diving as well as activities that are linked
to fine dining and wine tasting. Most of these activities can be practiced in the internal part
of the island and they especially attract guests from abroad.
In the Sardinian accommodation sector, there are two main types of business: hotels and
other structures, such as camping, summer houses, agritourism and bed and breakfasts.
They differ in their supply of facilities, amenities, level of comfort and quality of service.
Table I provides information about the types of accommodation that were officially
registered in Sardinia during the period from 2009 to 2012.

4. Methodology
4.1 Data collection
A questionnaire that was addressed to accommodation managers and owners was designed.
A pilot study for pre-testing the questionnaire was conducted by asking four academics and
ten hotel owners to fill out the questionnaire. This pilot study was performed to refine the
research tool and to ensure that the content was appropriate, clear and relevant. After this
phase, some items were changed.
 The population for this study included all of the accommodations that were included in Destination
the Guide of Accommodations from the Department of Tourism of the Region of Sardinia. attractiveness
The guide includes the most known and organized accommodations in Sardinia. The version
that was updated in July 2012 on the official tourism website of the region (www.
sardegnaturismo.it) was used. The guide included 976 facilities and for each accommodation,
it provides a range of information, such as star rating, contact details, minimum and
maximum overnight prices, website address and e-mail address. The distribution of 1689
accommodation types in the guide is shown in Table II. As shown in Table II, the guide
mainly consists of hotels and camping accommodations and includes most of the hotels,
camping accommodations and resorts that were officially registered in Sardinia in 2012; cf.
Table I.
Each facility was contacted by e-mail asking for the questionnaire to be filled out by a
decision-maker in the company. As a result, the respondents were either owners or managers
of the accommodations. With the exclusion of accommodations without e-mail address
information and accommodations for which the e-mail address turned out to be wrong, the
number of accommodations was reduced to 867.
Data were collected by means of a web-based e-mail survey, i.e. an e-mail was sent to the
qualifying accommodations with a link to a web-based questionnaire. Although the use of
e-mail surveys and online questionnaires presents many well-documented advantages
(David and Sutton, 2011), such as low development costs, reduced response time and the
opportunity to reach a broader population, some limitations have been observed. In this

Type 2009 2010 2011 2012

Hotels 898 916 927 913

Camping and resorts 96 91 91 90
Summer housing and flats 300 324 372 426
Agritourism 590 617 614 639
Other accommodation types* 1752 1966 2025 2036 Table I.
Total 3636 3914 4029 4104 Registered
accommodation types
Notes: * This category includes accommodations such as bed and breakfasts, hostels and shelters on Sardinia (2009-
Source: Sardinia Statistics Department (www.sardegnastatistiche.it) 2012)

Guide of Accommodations Sample

(as of July 2012) (collected July to October 2012)
Type Frequency (%) Frequency (%)

Hotel 834 85.5 173 77.2

Guest house 7 0.7 2 0.9
Scattered hotel 8 0.8 6 2.7
Residential hotel 22 2.3 7 3.1
Camping 76 7.8 23 10.3
Summer housing and flats 9 0.9 7 3.1 Table II.
Residence 7 0.7 3 1.3 Accommodation types
Resort 13 1.3 3 1.3 included in the Guide
Total 976 100 224 100 of accommodations
and in the study
Source: Own calculation based on data from Guide of Accommodations (www.sardegnaturismo.it) sample
IJCHM survey, such limitations include the selection of only accommodations with e-mail address
29,6 information and a relatively low response rate.
After the first e-mail was sent out at the end of July 2012, some further reminders were
sent out avoiding the high season. The data collection concluded around mid-October, with
224 completed questionnaires and a response rate of 25.8 per cent. The number can be
considered to be satisfactory compared with the response rates that have been achieved in
1690 similar surveys carried out in the hospitality sector in general (Keegan and Lucas, 2005) and
among small tourism and hospitality firms in particular (Thomas et al., 1998).
Table II also shows the distribution of the accommodation types in the sample. As can be
seen in Table II, the accommodation types in the sample provide a good representation of the
accommodation types in the Guide of Accommodations. For example, hotels and camping
accommodations account for a share of 77.2 and 10.3 per cent in the sample, whereas these
two types account for a share of 85.5 and 7.8 per cent in the guide.

4.2 Measuring performance

The accommodation sector mainly consists of small and medium-sized firms (Getz and
Peterson, 2005). It is difficult to obtain objective performance data because of the reluctance
to externally communicate these data and because there are no publicly available financial
reports of such firms (Covin and Slevin, 1989; Murphy et al., 1996). This led to the use of
subjective performance measures in this study. In business research, performance has often
been measured using self-assessment by owners and/or managers (Dess and Robinson, 1984;
Runyan et al., 2008; Rauch et al., 2009). The use of self-assessments has proved to be a reliable
procedure for the assessment of firm performance (Dess and Robinson, 1984; Wall et al., 2004)
and for the analysis of the relationship between EO and firm performance (Rauch et al., 2009).
For this study, self-reported firm performance was measured by using two questions that
are similar to those that have been used in previous studies (Jogaratnam and Tse, 2006;
Hallak et al., 2012). Respondents were asked to express their level of satisfaction with the
sales and the profit of their firms for the past three years (2009-2011). The items were
assessed on a seven-point scale that ranged from highly dissatisfied (1) to highly satisfied (7).
The choice of only two indicators of financial business performance – sales and profit – was
in accordance with the suggestions of the hotel owners in the pre-test to use standard and
well-known indicators. The sales indicator had a mean of 3.50 and a standard deviation of
1.61. The profit indicator had a mean of 3.38 and a standard deviation of 1.61. The exact
wording of the two questions were as follows:
(1) “How satisfied are you with the sales of your firm during the past three years
(2009-2011)?”; and
(2) “How satisfied are you with the profit of your firm during the past three years
(2009-2011)?”.

4.3 Measuring entrepreneurial orientation

To measure EO, a 15-item instrument was used (see the exact wording of the 15-item
instrument in Appendix). Each item was measured on a seven-point scale. The instrument
was derived from previous studies and is composed of three items for each of the five EO
dimensions. The original nine-item instrument, which was proposed by Covin and Slevin
(1989), was used for innovativeness, risk-taking and proactiveness. This nine-item
instrument has been used in many empirical studies on EO (Rauch et al., 2009; George and
Marino, 2011). The other two dimensions – competitiveness and autonomy – were derived
mainly from George et al. (2001) and Lumpkin and Dess (1996).
Items, reliability coefficients (Cronbach’s alpha) Alpha if the item is deleted
Destination
attractiveness
Innovativeness (number of items ⫽ 3), ␣ ⫽ 0.68
1 - Emphasis on the marketing of products and services or R&D 0.729
2 - Number of new lines of products or services marketed 0.535
3 - The impact of changes in product and services 0.483
Proactiveness (number of items ⫽ 3), ␣ ⫽ 0.58 1691
4 - Reactive or proactive compared to competitors 0.396
5 - Reactive or proactive at introducing new products 0.253
6 - Competitor attitude 0.693
Risk taking (number of items ⫽ 3), ␣ ⫽ 0.79
7 - Favorability of low risk or high risk projects 0.708
8 - Environment exploitation 0.736
9 - Reaction to decision-making situations involving uncertainty 0.702
Competitiveness (number of items ⫽ 3), ␣ ⫽ 0.64
10 - Attitude to monitor the actions of the competitors 0.427
11 - Responsiveness to competitor strategies 0.349
12 - Conventional or unconventional methods of competing 0.784
Autonomy (number of items ⫽ 3), ␣ ⫽ 0.89
13 - Discourages or encourages the employees to act independently 0.848
14 - Discourages or encourages the employees to make key strategic decisions 0.840
15 - Discourages or encourages the employees to implement key programs 0.843 Table III.
Reliability analysis
Note: All items had scores from 1 to 7 (Cronbach’s alpha)

Table III shows the Cronbach’s alpha coefficients for each of the five EO dimensions. The
Cronbach’s alpha values were 0.68 for innovativeness, 0.58 for proactiveness, 0.79 for
risk-taking, 0.64 for competitiveness and 0.89 for autonomy. Judged by the 0.70 threshold
level that was recommended by Nunnally (1978), item numbers 6 and 12 appear to be
problematic. Therefore, these two items were removed. Consequently, the Cronbach’s alpha
coefficients for proactiveness and competitiveness were raised to 0.69 and 0.78, respectively.
In the analysis, the paper uses the EO index, where responses to all 13 items are pooled
into one item. The EO index had a mean of 3.61, a standard deviation of 0.93 and a Cronbach’s
alpha coefficient of 0.82.

4.4 Measuring destination/location attractiveness

For each accommodation, the aim was to measure the attractiveness to tourists of the area in
which the accommodation is located in Sardinia. Owing to the difficulty of finding an
objective measure for the attractiveness of a local tourism destination, we decided to use the
respondents’ perceptions. Destination attractiveness was measured with one specific item. In
this item, the respondents were asked to evaluate the attractiveness of the location in which
they operate on a scale from 1 to 7, where 1 represents the statement “My local area is not very
attractive to tourists” and 7 represents the statement “My local area is very attractive to
tourists”. The destination attractiveness indicator had a mean of 4.25 and a standard
deviation of 2.02.
The advantage of using the respondents’ perceptions is that the respondents are allowed
to define the geographical extent of their tourism destination. Using objective measures
entails the use of data that cover the areas that are defined administratively, e.g. municipal
IJCHM areas, which do not necessarily accurately reflect the various tourism destinations of
29,6 Sardinia. For example, Sardinian villages are mainly located inland, while popular coastal
tourism sites, which are heavily populated during summer months, often are little hamlets
that are under the administration of municipalities that are governed in cities that are
situated inland and far away. The disadvantage of using the respondents’ perceptions is that
the owners and/or managers do not necessarily have perfect insights into how attractive
1692 tourists find their local tourist destinations. How attractive tourists find a given tourist
destination can be measured by the actual number of overnight stays at a given destination.
Therefore, a robustness check was performed after the main analyses in which the subjective
measure of destination attractiveness was replaced by an objective measure that was based
on the number of overnight stays.

4.5 Statistical analyses and control variables

Regression analyses were carried out with firm performance as the dependent variable and
EO and destination attractiveness as the predicting variables. Ordered logit regressions were
used because the dependent variables (sales and profit) were measured on ordinal scales
(Wooldridge, 2002, Chapter 15). To test for moderation effects, an interaction term between
EO and destination attractiveness was included, while we controlled for the fixed effect of
these two variables. This is the standard method of testing for moderation effects (Baron and
Kenny, 1986; Karatepe and Shahriari, 2014). The interaction term was calculated as EO
multiplied by destination attractiveness (EO * destination attractiveness). Before
multiplication, all of the predicting variables were centered. If the coefficient of the
interaction term becomes statistically insignificant, destination attractiveness has no
moderating effect. Regressions for both sales and profit were performed and for both of these
dependent variables, regressions with the interaction term (full model) and without the
interaction term (reduced model) were performed. Performing regressions for both the full
and the reduced model made it possible to perform a likelihood ratio test of nested models.
The null-hypothesis in this test was that the reduced model was nested in the full model. If
the null-hypothesis cannot be rejected, i.e. if p ⬎ 0.05, it means that the reduced model is fully
nested in the full model and hence that the explanatory power of the reduced model is not
significantly improved by adding the interaction term in the full model. In other words, if the
null-hypothesis in the likelihood ratio test cannot be rejected, it also means that destination
attractiveness does not moderate the relationship between EO and firm performance.
In the regression analyses, a number of control variables were included. Owing to the
different types of accommodation that were included in the sample, accommodation size was
quantified using the number of employees. Having camping accommodations in the sample,
for example, rules out measuring accommodation size by rooms or beds. The facilities that
were offered by an accommodation were included by using dummy variables for restaurant,
swimming pool and rent out sports equipment (whether the hotel offers to rent out bikes or
other sports equipment). It was a conscious choice not to include variables that characterize
the respondents’ profiles. Including the respondents’ profiles does not make theoretical sense
as the respondents have different functions (owner, co-owner, managerial director and
management team member) and, therefore, must be expected to have different levels of
decision power in the firms.
In the final part of the results section, two robustness checks were carried out. The first
robustness check was performed by replacing the subjective measure of destination
attractiveness by an objective measure that was based on the number of overnight stays in
the Sardinian municipalities. The exact measure contains the number of overnight stays
divided by the number of inhabitants in the municipalities in 2011. Because data for the
number of overnight stays were not available for some municipalities, the number of Destination
observations that were used in this robustness check was reduced from 224 to 217. In the attractiveness
second robustness check, the respondent profile was included in the original regressions
with the following variables characterizing the respondents: age, a dummy for female, years
of experience in the tourism business, a dummy for having a master degree or higher, a
dummy for having an educational background in tourism and/or hospitality and dummies
for the respondent types (owner, co-owner, managerial director and management team
member). Table IV shows descriptive statistics for the variables that were used in the main 1693
regression and the robustness checks.

5. Results
5.1 Main regression results
Table V presents the results of the main regression analysis. There are four different
models. Model 1 uses sales as the dependent variable and the interaction term is
excluded. Model 2 replicates this analysis but includes the interaction term to test for
moderation effects. Models 3 and 4 replicate the previous models but use profit as
dependent variables. The results show that the interaction terms in Models 2 and 4 are
not statistically significant (p-value ⬎ 0.05). Likewise, the results of the two likelihood
ratio (LR) tests of nested models show that the explanatory power of the reduced models
for both sales and profits could not be improved by including the interaction term
between EO and destination attractiveness. In conclusion, the results show no evidence
of destination attractiveness having a moderating effect on the EO-firm performance
relationship.
With regard to Models 1 and 3, the coefficients for EO are highly statistically
significant in both models (p-values ⬍ 0.001) and the results suggest a slightly stronger
positive impact of EO on profit than on sales. Further, the results show that destination
attractiveness is statistically significant in Models 1 and 3 (p-values ⬍ 0.01), revealing a

Variable N Mean SD Min Max

EO index 224 3.61 0.93 1.08 6.15

Destination attractiveness (self-reported) 224 4.25 2.02 1 7
Overnight stays per inhabitant 217 38.08 45.23 0.08 173.73
Accommodation size 224 19.03 24.97 0 200
Restaurant 224 0.80 0.40 0 1
Swimming pool 224 0.49 0.50 0 1
Rent out sports equipment 224 0.62 0.49 0 1
Sales 224 3.50 1.61 1 7
Profit 224 3.38 1.61 1 7
Respondent profile
Age 224 43.65 10.74 24 70
Female 224 0.43 0.50 0 1
Experience in the tourism business (years) 224 12.04 10.56 0 41
Master degree or higher 224 0.10 0.30 0 1
Tourism/hospitality educational background 224 0.41 0.49 0 1
Unique owner 224 0.11 0.32 0 1
Co-owner 224 0.30 0.46 0 1
Managerial director 224 0.14 0.35 0 1 Table IV.
Management team member 224 0.45 0.50 0 1 Descriptive statistics
IJCHM Ordered logit models for sales Ordered logit models for profit
29,6 Model 1 Model 2 Model 3 Model 4
Independent variables Coefficient z Coefficient z Coefficient z Coefficient z

Predicting variables
EO Index 0.618*** 4.38 0.616*** 4.36 0.766*** 5.24 0.765*** 5.23
1694 Destination attractiveness (DA) 0.223*** 3.49 0.221*** 3.45 0.198** 3.08 0.198** 3.07
EO Index ⫻ DA ⫺0.024 ⫺0.39 ⫺0.001 ⫺0.02
Control variables
Accommodation size 0.014* 2.27 0.015* 2.28 0.017* 2.54 0.017* 2.54
Restaurant ⫺0.469 ⫺1.50 ⫺0.472 ⫺1.51 ⫺0.354 ⫺1.10 ⫺0.354 ⫺1.10
Swimming pool 0.142 0.53 0.132 0.49 0.195 0.72 0.194 0.71
Rent out sports equipment ⫺0.261 ⫺0.94 ⫺0.258 ⫺0.93 ⫺0.312 ⫺1.11 ⫺0.311 ⫺1.11
Model
LR test of nested models (␹2) 0.15 0.00
Table V. LR test of nested models (p) 0.70 0.98
Relating sales and LR test of POA (␹2) 34.46 40.22 33.25 38.37
profit to LR test of POA (p) 0.26 0.25 0.31 0.32
entrepreneurial Observations 224 224 224 224
orientation, self- Pseudo R2 (Nagelkerke) 0.21 0.21 0.24 0.24
reported destination
attractiveness and Notes: POA ⫽ Proportional Odds Assumption (null-hypothesis is that there is no violation of this
other variables assumption); * p ⬍ 0.05; ** p ⬍ 0.01; *** p ⬍ 0.001 (two-tailed)

slightly stronger positive effect on sales than on profit. The results also show that EO
has a stronger effect on firm performance than destination attractiveness. Two ␹2-tests
showed that this difference is statistically significant for both Models 1 and 3. Thus, the
null-hypothesis of zero difference between the coefficients for EO and destination
attractiveness could be rejected in both cases (p ⫽ 0.014 in Model 1 and p ⫽ 0.001 in
Model 3). With regard to the control variables, accommodation size is positively related
to sales and profit at the 5 per cent significance level. The accommodation facilities that
were included as control variables (restaurant, swimming pool and rent out sports
equipment) are not associated with firm performance.
Note that the proportional odds assumption behind the ordered logit regression has not
been violated in any of the four models in Table V. As Table V shows, the LR test of
proportionality of odds across the response categories could not be rejected (all four p-values
way above 0.05).

5.2 Robustness checks

This section reports the findings of two robustness checks.
First, Table VI shows the results of replacing the subjective measure of destination
attractiveness with the objective measure of destination attractiveness. As mentioned,
the objective measure is made up of the number of overnight stays divided by the
number of inhabitants in the Sardinian municipalities in 2011. As seen in Table VI, using
this objective measure of destination attractiveness does not change the results in any
significant way. Importantly, the interaction terms in Models 2 and 4 are still
statistically insignificant and the two LR tests of nested models can still not be rejected.
Hence, using the objective measure of destination attractiveness also leads to the
conclusion that destination attractiveness does not moderate the relationship between
EO and firm performance.
 Ordered logit models for sales Ordered logit models for profit
Destination
Model 1 Model 2 Model 3 Model 4 attractiveness
Independent variables Coefficient z Coefficient z Coefficient z Coefficient z

Predicting variables
EO Index 0.685*** 4.78 0.680*** 4.75 0.834*** 5.67 0.826*** 5.61
Overnight stays per inhabitant 0.009** 2.96 0.008** 2.89 0.007* 2.41 0.007* 2.30
EO Index ⫻ Overnight stays per 0.002 0.70 0.004 1.06 1695
inhabitant
Control variables
Accommodation size 0.013* 1.97 0.012 1.94 0.015* 2.18 0.014* 2.14
Restaurant ⫺0.134 ⫺0.41 ⫺0.152 ⫺0.47 ⫺0.044 ⫺0.14 ⫺0.073 ⫺0.22
Swimming pool 0.125 0.46 0.152 0.55 0.185 0.67 0.229 0.82
Rent out sports equipment ⫺0.188 ⫺0.67 ⫺0.210 ⫺0.75 ⫺0.275 ⫺0.97 ⫺0.309 ⫺1.09
Model
LR test of nested models (␹2) 0.48 1.12
LR test of nested models (p) 0.49 0.29 Table VI.
LR test of POA (␹2) 37.21 36.67 36.50 36.05 Relating sales and
LR test of POA (p) 0.17 0.39 0.19 0.42 profit to
Observations 217 217 217 217 entrepreneurial
Pseudo R2 (Nagelkerke) 0.19 0.20 0.23 0.24 orientation, objective
destination
Notes: POA ⫽ Proportional Odds Assumption (null-hypothesis is that there is no violation of this attractiveness
assumption); objective destination attractiveness is measured at the municipality level by the number of (overnight stays per
overnight stays divided by the number of inhabitants in 2011; * p ⬍ 0.05; ** p ⬍ 0.01; *** p ⬍ 0.001 inhabitant) and other
(two-tailed) variables

Second, the regressions that are shown in Table V were run again while adding the
following control variables to reflect the respondent profile: age, a dummy for female,
years of experience in the tourism business, a dummy for having a master degree or
higher, a dummy for having an educational background in tourism and/or hospitality
and dummies for the respondent types (owner, co-owner, managerial director and
management team member). The results of this robustness check (not reported in a table
because of space constraints) do not change the results that have been found so far. Thus,
the interaction terms between EO and destination attractiveness are still statistically
insignificant (Model 2: Coefficient ⫽ 0.001, z ⫽ 0.02, p ⫽ 0.99; Model 4: Coefficient ⫽
0.023, z ⫽ 0.35, p ⫽ 0.73) and the two LR tests of nested models can still not be rejected
(p ⫽ 0.98 for sales; p ⫽ 0.73 for profit). Only one respondent profile variable is
statistically significant. Thus, being a female respondent was found to be negatively
related to both sales and profit (significant at the 5 per cent level for sales and at the 1
per cent level for profit).
In sum, the two robustness checks do not change the results that were found in the main
analysis in Table V. The results, therefore, appear to be quite robust. Moreover, variance
inflation factor (VIF) tests were performed using linear regression for all regressions, i.e. for
the main regressions and the regressions in the robustness checks. The VIFs for individual
independent variables ranged from 1.03 to 3.13. The common rule of thumb is that
multicollinearity is present if the VIF of a single variable exceeds 10 (Gujarati, 2003, p. 362).
Thus, the VIF tests did not demonstrate any problems of multicollinearity in any of the
regressions.
IJCHM 6. Conclusions and discussion
29,6 6.1 Conclusions
The purpose of this paper was to contribute to the understanding of successful business
performance among accommodation firms by focusing on EO while considering destination
attractiveness as an external environmental factor. The paper had two specific research
questions. The first research question was as follows: Does destination attractiveness
1696 moderate the relationship between EO and firm performance? The second research question
was as follows: What matters most for accommodation firm performance, EO or destination
attractiveness? To answer these two questions, a survey was conducted in 2012 among a
sample of 224 accommodation firms in the Sardinian accommodation sector. The sample was
drawn from the official Guide of Accommodations that included the most known and
organized accommodations in Sardinia, which are mainly hotels and camping
accommodations.
With regard to the first research question, the results showed that destination
attractiveness does not moderate the relationship between EO and accommodation firm
performance. Destination attractiveness and EO are both positive and statistically
significant determinants of firm performance and they seem to act independently. In other
words, there is no a differential impact of EO on sales and profit depending on attractiveness
to tourists of the location in which the firm operates.
With regard to the second research question, the results suggest that EO matters more for
accommodation firm performance than destination attractiveness. This indicates that
entrepreneurial strategy plays a fundamental role in the success of an accommodation firm
and especially for hotels, in light of the composition of the sample that was investigated.

6.2 Theoretical implications

It is noteworthy that destination attractiveness has not been considered before as an
environmental factor that might moderate the EO–performance relationship in the tourism
sector. The literature has mainly focused its attention on the determinants of the attractive
capacity of a destination and on the direct positive effect of attractiveness on the ability to
attract touristic flow with consequent improvement on tourism firm performance
(Molina-Azorin et al., 2010; Lerner and Haber, 2001).
The finding of no moderation effect is in line with previous studies that look at
environmental factors other than destination attractiveness (Becherer and Maurer, 1997;
Pelham, 1999; Jogaratnam et al., 1999; Jogaratnam 2002). However, it must be said that there
are also studies that conflict with this evidence (Covin and Slevin, 1989; Zahra, 1993; Zahra
and Covin, 1995). Therefore, the findings seem to support the first strand of the literature.
However, it can be noted that previous empirical works are mainly based on industries that
are different from tourism with the important exception of the works of Jogaratnam et al.,
(1999) and Jogaratnam (2002), which, however, are limited to restaurant performance.
An attractive destination could be considered to be a benign environment in terms of
business opportunities and prospective sales. On the other hand, an unattractive destination
could be described as a hostile environment and could incite entrepreneurs to pursue
strategies and activities that will address tourists’ needs and tastes and will attract visitors.
These conjectures have not been supported by the findings of this paper, which showed no
moderation effect of destination attractiveness on the EO–performance relationship.
Indeed, the results clearly show that EO has a significant positive impact on firm
performance in the case of the Sardinian accommodation sector. This evidence confirms the
previous research in other sectors (Rauch et al., 2009), within the tourism sector among
restaurants (Jogaratnam et al., 1999; Jogaratnam, 2002; Sul and Khan, 2006) and among
hotels (Jogaratnam and Tse, 2006; Tajeddini, 2010). EO seems to have a larger effect on profit Destination
than on sales. Although the difference was probably not statistically significant, this finding attractiveness
suggests that entrepreneurial ability is not limited to the ability to sell products and/or
services but, more generally, to the ability to create value. This can be rationalized
considering that the activities that are included in the EO model do not only concern
strategies that pertain to market share growth. As argued by Lazear (2005), entrepreneurs
are jacks of all trades and their abilities are not limited to one dimension, but rather, they
span a set of ambits. EO dimensions, such as innovativeness and autonomy and some 1697
aspects of risk-taking, are linked to organization activities and functions that are aimed at
finding new ways to implement processes and in general to carry out new ideas.
With regard to the positive effect of destination attractiveness on firm performance, this
effect seems to be higher on sales than on profit. This difference makes sense given that a
destination’s power to attract tourists influences the services and goods that are consumed
by customers and thus sales. Instead, profits are generated by the difference between sales
and costs. Profits thus depend not only on revenues but also on a firm’s ability to be efficient
in utilizing factors as well as supporting related costs.

6.3 Practical implications

The overall recommendation of this paper is that accommodation firms should focus on
implementing entrepreneurial activities and not only, as frequently happens, concentrate on
selecting attractive destinations in which to conduct their businesses. Moreover, the findings
suggest that also accommodation firms that are located in areas that are less attractive in
terms of natural and artificial resources may produce better performance if they are managed
with an EO.
The findings of this study are important from a policy-oriented perspective, given that the
accommodation sector is a key revenue-generating sector, especially in Sardinia. A large
share of the accommodations in the sample reported relatively low levels of EO, e.g.
approximately 25 per cent of accommodations had an EO index of less than 3. Given the
importance of EO for firm performance, the findings, therefore, suggest the need to improve
entrepreneurial activities in the Sardinian accommodation sector. Entrepreneurial abilities
can be learned (Sarasvathy and Venkataraman, 2011), so one recommendation of this study
is to develop training programs to improve EO. Public institutions could provide such
programs to accommodation firms as a strategy to encourage and foster EO among
accommodation managers.

6.4 Limitations and future research

As with every study, this research presents some limitations that must be considered. First,
it was conducted in the Sardinian accommodation sector from July to October and therefore,
the results are limited to this context. However, findings may be generalized to other islands
in similar periodic and geographic contexts. Second, the sample size is not very large, with all
of the attendant statistical problems that this implies. However, it may be noted that several
previous empirical works have reached conclusions that are based on even more limited
samples. Third, the sample mainly included hotels and camping accommodations and for
these two accommodation types, the sample provided a good representation of the
accommodation sector in Sardinia. The sample did not include a number of other
accommodation types that operate in Sardinia. Among the non-included accommodation
types were mainly smaller accommodation structures such as bed and breakfasts and
agritourism accommodations. Consequently, there is a need for future research to determine
whether the findings of this paper can be replicated with regard to other accommodation
types. Fourth, the data could potentially be hampered by self-selection problems. For
IJCHM example, entrepreneurial firms may be more interested in responding to a questionnaire
29,6 survey that addresses entrepreneurship than firms with few or no entrepreneurial activities.
Moreover, given that the data were collected by means of a web-based e-mail survey, the
responding firms may have been more familiar with the internet. In turn, a greater familiarity
with the internet may be linked to higher levels of EO. Both of these two potential sources of
self-selection could have led to an overrepresentation of entrepreneurial firms in the sample.
1698 However, at least in the data, there is nothing to suggest that the sample suffers from such
overrepresentation. Hence, the data showed considerable variation in the level of
entrepreneurial activities among the sampled firms with the EO variable (the EO index)
approximately following a normal distribution with a mean of 3.61 and ranging from 1.08 to
6.15 on the seven-point measurement scale. Fifth, self-reported survey data were used to
measure firm performance because it was not possible to collect publicly available
performance data. Therefore, future research could replicate this study using objective firm
performance data, if it is available, e.g. incorporating firms whose financial documents are
publicly available. There are several factors to support the inclusion of self-reported data in
the current study because the approach of collecting publicly available data would also have
limitations that relate to, for instance, a reluctance of declaring correct data on earnings and
tax evasive behaviors. Finally, all of the limitations that are tied to cross-section analysis
(possible omitted variable problems, reverse causality) apply here.

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Corresponding author
Nicoletta Fadda can be contacted at: nfadda@uniss.it
IJCHM Appendix
29,6
In general, my firm favors . . .

1. A strong emphasis on the marketing of tried and true 1234567 A strong emphasis on R&D technological
1702 products or services leadership and innovations

How many new lines of products or services has your firm marketed in the past 3 years?
2. No new lines of products or services 1234567 Very many new lines of products or
services
3. Changes in product or service lines have been mostly of 1234567 Changes in product or service lines have
a minor nature usually been quite dramatic

In dealing with its competitors, my firm . . .

4. Typically responds to actions which competitors initiate 1234567 Typically initiates actions to which
competitors then respond to
5. Is very seldom the first business to introduce new 1234567 Is very often the first business to introduce
products/services, administrative techniques, operating new products/services, administrative
technologies etc techniques, operating technologies etc
6. Typically seeks to avoid competitive clashes, preferring 1234567 Typically adopts a very competitive, “undo-
a “live-and-let-live” posture the-competitors” posture

In general, my firm has . . .

7. A strong proclivity for low-risk projects (with normal 1234567 A strong proclivity for high-risk projects
and certain rates of return) (with chances of very high return)

In general, my firm believes that . . .

8. Owing to the nature of the environment, it is best to 1234567 Owing to the nature of the environment,
explore gradually via timid, incremental behavior bold, wide-ranging acts are necessary to
achieve the firm’s objectives

When confronted with decision making situations involving uncertainty, my firm . . .

9. Typically adopts a cautious, “wait and see” posture in 1234567 Typically adopts a bold, aggressive posture
order to minimize the probability of making costly in order to maximize the probability of
decisions exploiting potential opportunities

In dealing with competitors, my firm . . .

10. Does not monitor the actions of the competitors at all 1234567 Intensively monitors the actions of the
competitors very closely
11. Is not highly responsive to competitors’ strategies 1234567 Typically adopts a head-to-head
confrontational strategy
12. Typically uses conventional methods of competing 1234567 Is willing to adopt unconventional methods
of competing

When confronted with decision making under uncertainly, my firm . . .

13. Discourages the employees from acting independently 1234567 Typically encourages the employees to act
without previously consulting the owners independently without previously
consulting the owners
14. Discourages the employees from making key strategic 1234567 Typically encourages the employees to
decisions without previously consulting the owners make key strategic decisions without
previously consulting the owners
15. Discourages the employees from implementing key 1234567 Typically encourages the employees to
programs without previously consulting the owners implement key programs without
previously consulting the owners
Table AI.
The 15 questionnaire Notes: There are 5 EO dimensions: innovativeness (items 1-3), proactiveness (items 4-6), risk taking (items 7-9),
items measuring competitiveness (items 10-12) and autonomy (items 13-15)
entrepreneurial Sources: Items 1-9: see Covin and Slevin (1989); item 10: generated from statements in Lumpkin and Dess (1996); items 11-15:
orientation see George et al. (2001)