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Environmental Scanning and Information Source Utilization: Exploring the Behavior of Hong Kong Hotel and Tourism Executives Giri Jogaratnam and Rob Law Journal of Hospitality & Tourism Research 2006 30: 170 DOI: 10.1177/1096348005284488 The online version of this article can be found at: http://jht.sagepub.com/content/30/2/170

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JOURNAL OFLaw 10.1177/1096348005284488 Jogaratnam, HOSPIT / ENVIRONMENT ALITY & TOURISM AL SCANNING RESEARCH BEHAVIOR

ENVIRONMENTAL SCANNING AND INFORMATION SOURCE UTILIZATION: EXPLORING THE BEHAVIOR OF HONG KONG HOTEL AND TOURISM EXECUTIVES Giri Jogaratnam Eastern Michigan University Rob Law The Hong Kong Polytechnic University Different levels within the management hierarchy will have varying needs for information and will rely on diverse sources and utilize different types of information. This study examined current information acquisition practices adopted by hotel and tourism industry managers in Hong Kong. Data were collected by way of a survey questionnaire. Findings are reported pertaining to scanning attention ascribed to the task and remote environments, perceived importance of information source, frequency of information source usage, and the use of computer systems in environmental scanning. KEYWORDS:

environment; scanning; information; strategy making

Managers in search of long-term success must consider industry trends and potential discontinuities, whether technological, demographic, regulatory, or social, to enhance their chances of staying ahead of the changes that are constantly occurring in the business environment (Costa & Teare, 2000; Ginter & Duncan, 1990; Hamel & Prahalad, 1994). Those executives that scan the environment in their boundary-spanning roles need to be attentive to the opportunities and challenges that may arise due to the changes occurring in these areas (Aguilar, 1967; Choo & Auster, 1993; Hax & Majluf, 1994). In those areas where a greater degree of unpredictability, fluidity, and complexity is perceived, there is a greater need to scan the environment and to act in anticipation of the forces that influence change (Daft & Weick, 1984; Ebrahimi, 2000; Yasai-Ardekani & Nystrom, 1996). Authors’Note: The project was supported by a research grant (G-T568) funded by The Hong Kong Polytechnic University and was completed while the lead author was affiliated with the School of Hotel and Tourism Management at that institution. Journal of Hospitality & Tourism Research, Vol. 30, No. 2, May 2006, 170-190 DOI: 10.1177/1096348005284488 © 2006 International Council on Hotel, Restaurant and Institutional Education

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Jogaratnam, Law / ENVIRONMENTAL SCANNING BEHAVIOR

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Tourism entities—whether hotels, tour operators, or travel agencies—function as open systems in that they interact with, respond to, and are affected by their external environment (Coulter, 2002). This concept is based on an evolutionary biological model that assumes that the organization and environment are open to each other (Chaffee, 1985). According to open systems theory, a large part of managers’information comes from or concerns the environment that is external to the organization (Auster & Choo, 1994; Fahey & Narayanan, 1986; Smeltzer, Fann, & Nikolaisen, 1988). In this regard, the process of coming to know or searching the business environment is referred to as “environmental scanning” (ES), which is an approach to gathering relevant information and turning it into knowledge that can be used in managing a business (Fahey & King, 1977; Lenz & Engledow, 1986; Okumus, 2004). On this basis, ES is considered to be a fundamental component of the strategic planning process and is concerned with the acquisition and use of information about external events and trends (Auster & Choo, 1994; Costa & Teare, 2000). Okumus (2004), based on a comprehensive review of ES-related studies in hospitality strategic management, notes that the majority of research pertaining to ES has been conceptually based, prescriptive in orientation, and conducted primarily in relation to the North American domain. At the same time, there is a paucity of empirical evidence on how hospitality and tourism entities carry out their ES activities, especially within the Asian context. Moreover, research evidence suggests that Western theories focusing on organizations and their environments are likely to suffer from a weak fit (Boyacigiller & Adler, 1991; Kiggundu, Jorgensen, & Hafsi, 1983) in terms of generalizability to a non-Western context. Along these lines, Harrington (2001), based on an analysis of perceived and archival measures of environmental complexity and dynamism, contends that the various hospitality industries operate in significantly different environments, raising the proposition that resulting managerial and organizational practices also differ. As such, it would clearly be useful to assess whether the concepts and frameworks adopted from the normative strategic planning school can be applied and generalized to the Asian hotel and tourism context (Kim & Lim, 1988; May, Stewart, & Sweo, 2000). Moreover, whereas Ngamkroeckjoti and Johri (2000) note that the literature on ES in the Asian context is rather scanty, Ebrahimi (2000) calls for research to examine the role of ES in different national settings. Taking these cues, this study aims to contribute to the literature by extending the line of research in ES, especially as it applies to the contingencies faced by hotel and tourism executives. Hong Kong provides a unique setting for this stream of research, as it is populated by a variety of local and foreign hotel and tourism entities, as well as decision makers from different nationalities, operating in one environmental setting. Hong Kong is one of the leading travel destinations in Asia, with many world-class hotels. The rapid growth of the tourism industry in Hong Kong in the 1990s and early 2000s stimulated the rapid development of the local hotel industry (Law & Jogaratnam, 2005). In the period 1992 to 2001, Hong Kong had been able to attain an average hotel occupancy rate of greater than 80%, whereas the corresponding figure for worldwide hotels was less than 70% (Hong Kong Tourism Board, 2002). The Asia-Pacific region is also the fastest growing


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JOURNAL OF HOSPITALITY & TOURISM RESEARCH

travel and tourism region in the world and is projected to account for more than 25% of all inbound tourism by the year 2020 (World Tourism Organization, 2003). The primary objective of this study is to examine current ES practices used by Hong Kong hotel and tourism industry executives. A secondary, but not less important, objective is to examine the applicability of Western-based scanning theory in the Asian context. In this process, the article reviews and synthesizes the previous generic and hospitality literature pertaining to the focus of ES as well as sources of information used and preferences. The following questions are, therefore, addressed in this study: (a) Which environmental sectors receive greater scanning attention? (b) Are external or internal sources of information considered more important? To what extent are these sources personal or impersonal? (c) Are external or internal sources of information used more frequently? To what extent are these sources personal or impersonal? (d) To what extent is information technology used to support scanning efforts? RELATED LITERATURE—ES

The purpose of ES is to identify and track current and potential trends that afford business opportunities and pose challenges to the continued success of an organization (Auster & Choo, 1994; Costa & Teare, 2000). The process of scanning is the primary means by which managers acquire information about external environmental events that may have an impact on the organization (Hambrick, 1981; Jain, 1984; Olsen, Murthy, & Teare, 1994). Scanning is also seen as a means of improving an organization’s ability to deal with a rapidly changing environment (Jain, 1984). Researchers adopting the normative strategic planning approach suggest that environmental scanning is a source of input to the strategic planning process and is viewed as the first step in the process that attempts to link strategy and the external environment (Costa & Teare, 2000; Daft, Sormunen, & Parks, 1988; Ebrahimi, 2000). Unfortunately, this is not an easy task, because many environmental events are ambiguous, open to interpretation, and thus prone to differing perceptions (Daft & Weick, 1984; May et al., 2000). It is this perceived environment, and not the objective or physical environment, that managers act upon (Boyd, Dess, & Rasheed, 1993; Daft & Weick, 1984). As such, executives’ interpretations of environmental forces influence their strategic actions and determine how they manage their companies. Therefore, ES, together with information acquisition and interpretation, are expected to play a vital role in organizational effectiveness (Olsen et al., 1994; West & Olsen, 1989). Whether the scanning systems in place are formal and organized or informal and unscientific, ES has traditionally been viewed as the domain of top-level managers (Auster & Choo, 1994), who might spend considerable time and effort monitoring the environment (Hambrick, 1981; Mintzberg, 1973). Although managers have limited time and means for scanning (Ebrahimi, 2000), and despite that formal or advanced ES models are not commonly used (Jain, 1984), top-level decision makers assume the responsibility for ES, or identifying and evaluating trends within the environment (Coulter, 2002; Okumus, 2004). Because few organiza-



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tions seem to have dedicated individuals or units conducting ES, many managers resort to informal scanning in their role as strategic decision makers (Jain, 1984; Keegan, 1974). A review of ES-related research in hospitality management suggests that this appears to be the case with managers in the hospitality industry as well (Costa & Teare, 1996; Olsen, West, & Tse, 1998; West & Olsen, 1989). Olsen et al. (1998) note that hospitality managers are not very committed to formal and continuous ES. Moreover, Costa and Teare (1996) suggest that ES “is not in widespread use in hospitality organizations” (p. 15). According to West and Olsen (1989), most hospitality executives adopt a rather informal approach to ES. Moreover, research has failed to show the benefits associated with the adoption of formal scanning systems (Lenz & Engledow, 1986). Along these lines, Okumus (2004) argues that there is not any empirical evidence within the hospitality management literature that shows “a strong correlation between formal ES activities and economic performance” (p. 126). Focus of Scanning

Organizations scan or search the business environment in order to better comprehend the external forces that may have an impact on their future (Subramanian, Fernandes, & Harper, 1993). The acquisition of knowledge pertaining to external forces facilitates management’s ability to plan and respond effectively to contingencies that may affect the future position of an organization (Fahey & Narayanan, 1986; Jain, 1984). In this process, an evaluation of the external business environment should reveal forces and events that could have an impact on the organization (Choo & Auster, 1993; Slattery & Olsen, 1984). This is followed by an internal assessment of the firm and the designation of organizational strengths and weaknesses within the context of previously identified patterns and trends in the external environment (Fahey, King, & Narayanan, 1981; Hax & Majluf, 1994). Information obtained from both the internal and external environments drives the strategic planning process (Choo, 1999). Therefore, performance will, to an extent, be based on how effectively information can be converted to a usable format. For environmental scanning to contribute to the strategic planning process, decision makers must have access to information resources and the ability to exploit available information. It therefore follows that enhanced knowledge of pertinent trends should facilitate managerial decision making and influence their choice of future courses of action. However, it should be recognized that merely establishing or conducting ES without integrating the information gathered into the strategy-making process will make the information useless (Fahey & King, 1977). Managers today are exposed to vast amounts of environmental information and have access to far more information than they can possibly perceive. Consequently, executives faced with limited capacity for information processing and bounded rationality must adopt a selective approach to scanning (Hambrick, 1982). Managers are thus expected to scan according to their perception of the necessity for information (Pfeffer & Salancik, 1978). In this regard, Fahey and Narayanan (1986) identify two approaches to scanning: the outside-in approach and the inside-out approach. The former is considered to be a macroperspective,


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or one that adopts a broad view of the environment. Under this approach, the view of the environment is unconstrained and all elements are considered. The focus is on the longer term trends and the identification of alternative scenarios. In contrast, the inside-out approach is considered to be a microperspective and one that adopts a narrow view of the environment. Under this approach, the view of the environment is constrained by organizational needs and internal influences, and the focus is on fewer environmental elements and a shorter time horizon. According to Costa and Teare (1996), for ES to be relevant and useful it should be based on an inside-out perspective and therefore selective and appropriate to the needs at hand. Moreover, “any attempt to monitor both the general and task environment is beyond the resources and ability of all firms” (p. 158). Previous studies suggest that ES assesses information relating to every sector of the external environment (Choo, 1999; Costa, Teare, Vaughan, & Edwards, 1997; Hambrick, 1982; West & Olsen, 1989). Increasingly, organization theorists have adopted the general and task environmental levels to describe facets of the environment (Bourgeois, 1980; Ebrahimi, 2000; Hambrick, 1982; Jain, 1984; May et al., 2000). The task environment is considered to be industry specific and consists of all those organizations with which a given organization must interact to grow and survive (Costa et al., 1997; West & Olsen, 1989). These typically include customers, suppliers, and competitors (Asheghian & Ebrahimi, 1990; Daft et al., 1988). The contingencies associated with the task environment are those that are closest to the operator, and therefore information pertaining to opportunities and threats is more easily accessed and the timing of developments more easily understood (Fahey & Narayanan, 1986; Olsen et al., 1998; West & Olsen, 1989). The general environment, on the other hand, consists of broad forces that influence societal institutions as a whole (Fahey & Narayanan, 1986; Hambrick, 1982). These include economic conditions, technological developments, political and regulatory environments, and sociocultural and demographic trends (Asheghian & Ebrahimi, 1990; Grant, 1998; Hambrick, 1982; Thompson, 1967). The opportunities and threats emanating from these areas tend to be more abstract, and the timing of developments is more difficult to estimate (Fahey & Narayanan, 1986). The task environmental sectors have been associated with greater degrees of strategic environmental uncertainty when compared to the general environmental sectors (Auster & Choo, 1994; Daft et al., 1988; Ebrahimi, 2000; Sawyerr, 1993). This is because the task environment changes quickly and is considered more complex and important than the general environment (Ebrahimi, 2000). Moreover, the task environment is likely to have a direct impact on the firm and is thus considered more important to domain navigation or business-level strategy, and especially goal setting and goal attainment (Bourgeois, 1980; Thompson, 1967). The general environment, on the other hand, is more likely to have an indirect influence on organizational performance (Daft et al., 1988) and is often linked to domain definition or corporate-level strategies (Bourgeois, 1980). However, Elenkov (1997), based on a Bulgarian sample, found that the task and general environments did not differ significantly in terms of perceived strategic uncertainty.



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Researchers have examined the level of importance ascribed to different sectors of the environment based on the resources spent on collecting strategic information from each sector (Sawyerr, Ebrahimi, & Thibodeaux, 2000). In general, research evidence on the scanning attention ascribed to the task versus general environment has been mixed. Studies of decision makers in the United States and Canada have generally found that the task environment receives greater scanning attention (Aguilar, 1967; Auster & Choo, 1994; Daft et al., 1988; Johnson & Kuehn, 1987; Keegan, 1974; Kefalas & Schoderbeck, 1973; Smeltzer et al., 1988). However, some studies of U.S.-based multinationals (Kobrin, Basek, Blank, & Palombara, 1980; O’Connell & Zimmerman, 1979; Preble, Rau, & Reichel, 1988) and decision makers in developing countries have found that the remote environment receives greater scanning attention (Elenkov, 1997; Sawyerr, 1993). Given the inconclusive nature of previous findings concerning the focus of scanning, this study addresses whether the task or general environmental sectors receive greater scanning attention from executives in the Hong Kong hotel and tourism industry. Sources of Information Used and Preferences

Different levels within the management hierarchy will have varying needs for information, will rely on diverse sources, and will utilize different types of information. The same information available in the environment is likely to have different strategic and practical implications depending on managerial level and functional area (Ireland, Hitt, Bettis, & de Porras, 1987). Strategic issues may also have different implications for different properties depending on factors such as primary market segment served and size of business (Simons & Namasivayam, 1999). In early research, both Aguilar (1967) and Kefalas and Schoderbeck (1973) concluded that neither functional area nor hierarchical level significantly influenced the amounts in which executives scanned different environmental domains. Organizational size was also found not to affect the amount of scanning conducted by managers (Aguilar, 1967). Different methods of scanning have been proposed, for instance, the individualistic versus collective approach articulated by Mintzberg, Ahlstrand, and Lampel (1998). The individualistic approach, often referred to as the “top-down” model, allows decision makers to quickly scan the environment and adopt appropriate strategic actions (Nutt, 1989). As opposed to this more traditional conceptualization, the collective approach adopts the perspective that all hierarchical levels are involved in the ES process. This allows for the decentralization of scanning activities and the participation of lower level managers (Papadakis, Lioukas, & Chambers, 1998). Proponents of this view agree that greater diversity and heterogeneity in backgrounds of those scanning the environment will provide more information as well as a better understanding of the environment (Forbes & Milliken, 1999; Simons, Pelled, & Smith, 1999). Hospitality researchers have argued that managers and employees at all levels should be involved in ES activities (Okumus, 2004). An uncertain environment requires that an organization continually evaluates organization-environment alignment. Decision makers of firms facing greater


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environmental uncertainty are expected to take on greater responsibility for ES (Daft & Weick, 1984; Yasai-Ardekani & Nystrom, 1996). Moreover, a collective approach that permits firms to use more information is expected to be more effective in a complex and uncertain environment, whereas an individual approach may be better suited to a less complex and predictable environment (Ashmos, Duchon, McDaniel, & Huonker, 2002). Furthermore, as top managers find it difficult to comprehend rapidly changing environments, they tend to become more involved in scanning those environments (Choo, 1999). The strategic information sources that managers rely on or the modes of scanning have generally been classified into two broad categories, external and internal, and then further subdivided into two additional categories, personal and impersonal (Aguilar, 1967; Choo, Detlor, & Turnbull, 2000). External sources are those concentrated outside an organization’s hierarchical structure, whereas internal sources are available within an organization. Moreover, personal sources communicate information personally, whereas impersonal sources communicate information to broad audiences or through formalized, group-oriented activities (Aguilar, 1967; Daft & Weick, 1984). Although managers may rely on a variety of sources, previous research (Choo, 2002; Daft et al., 1988; Duncan, 1990; Elenkov, 1997; Ginter & Ghoshal, 1988; Preble et al., 1988,) suggests that managers have a preference for personal sources that communicate information directly rather than impersonal sources. This preference was stronger when managers were seeking information from marketrelated environmental sectors that were highly fluid and ambiguous (Choo, 2002). Personal interactions, especially with those outside the organization, afford an opportunity to minimize managers’ selective biases (Van de Ven, 1986). However, and contrary to these findings, Sawyerr (1993) and Aiyepeku (1982) both studied samples of Nigerian organizations and reported that there was a greater reliance on impersonal sources as the level of uncertainty increased in the remote environment. These results are in support of Stahl (1979), who has argued that information from personal sources may be suspect because there is a general lack of trust in organizations in developing countries. The results of studies relating to the preference for external versus internal sources also seem mixed. Some researchers have found a greater reliance on external over internal sources (Aguilar, 1967; Keegan, 1974), especially as the level of uncertainty in the environment increased (Elenkov, 1997; Rhyne, 1985; Sawyerr, 1993). Others, however, have found a greater utilization of internal sources of information (Aiyepeku, 1982; Ghoshal, 1988; Kobrin et al., 1980; O’Connell & Zimmerman, 1979; Preble et al., 1988; Sawyerr et al., 2000). Culnan’s (1983) study, which revealed a positive relationship between perceived source accessibility and frequency of source usage, may be used to partially explain these mixed results. In the absence of reliable external information, for instance in developing countries, internal capabilities are developed, thereby increasing the perceived source accessibility of internal sources, which over time leads to a greater reliance on internal sources (Sawyerr et al., 2000). Given the disparate conclusions arising from previous research concerning the modes of scanning, this study explores the questions of whether external or internal sources of



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information are considered more important, which ones are used more frequently, and to what extent these sources are personal or impersonal. METHOD Data Collection

Data were collected by means of a survey questionnaire completed by managers of hotel and tourism businesses located in Hong Kong. It is managers’ perceptions of environmental scanning that is the focus of this study. The study is crosssectional by design, and no attempt is made to imply causality. The sample frame consisted of all the general managers listed by two respective associations—the Hong Kong Hotels Association and the Hong Kong Association of Travel Agents. The names and addresses of hotel general managers were obtained from a directory published annually by the Hong Kong Hotels Association. Contact details and names of general managers of travel agencies and tour operators were obtained from the official Web site maintained by the Hong Kong Association of Travel Agents (www.hata.org.hk). A cover letter explaining the purpose of the research along with a copy of the questionnaire was mailed to the population thus identified. Follow-up mailers and phone calls were made to those who had not responded within 2 weeks of the initial mailing. Although the limitations of questionnaire-based research are well documented (cf. Yu & Cooper, 1983), the benefits arising from cost savings, convenience, anonymity, and reduced interviewer bias seem to outweigh the limitations. The limitations of using self-report data must also be recognized. Though self-report data are commonly adopted in management research, there is the risk of commonmethod bias or the possibility of alternative explanations. As such, the results of this study should be viewed as presenting managers’ perceptions of their ES. The geographically circumscribed nature of the sample may also limit the extent to which any conclusions may be generalized. Instrument

Following previous research evidence attesting to the validity of the frequency approach to scanning measurement (Farh, Hoffman, & Hegarty, 1984), this study was directed at measuring scanning frequency. In an effort to enhance construct validity, the sectors or domains within the task and general environments are adopted from previous studies (Daft et al., 1988; May et al., 2000). The frequency with which these sectors were scanned was assessed on a 7-point scale ranging from seldom (1) to frequently (7). Following previous research, sources of information were measured in terms of their being external or internal and personal or impersonal sources (Auster & Choo, 1994; Daft et al., 1988; Elenkov, 1997). The importance attributed to each source was assessed on a 7-point scale ranging from not very important (1) to very important (7). The frequency of use of sources was measured on a 7-point scale ranging from seldom used (1) to frequently used (7). Reliability was assessed using the conventional measure of coefficient alpha. Nine items represented the sectors scanned (α = .78) whereas 13 items were used


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to assess both importance (α = .84) and frequency (α = .83) of scanning. Cronbach’s coefficient alpha in each case was above the generally acceptable criterion of .6 (Bearden, Netemeyer, & Teel, 1989). Statistical Analysis

Frequency distributions were tabulated to assess emergent trends within three general areas: scanning attention received by various environmental sectors, perceived importance of information source, and frequency of information source usage. Paired-samples t tests were adopted to examine significant differences in managerial preferences. This test compares the means of two variables for a single group. RESULTS AND DISCUSSION

A total of 486 questionnaires were distributed to top-level executives and 181 responses were received, representing a 37% response rate. As demographic characteristics may influence perceptions of the environment and strategic actions, details pertaining to respondents’age, gender, formal education, management position, career background, industry tenure, and position tenure were obtained. Demographic characteristics of the study sample are provided in Table 1. Which Environmental Sectors Receive Greater Scanning Attention? In attempting to answer this question, the scanning attention attributed to various sectors of the environment was assessed. To obtain these ratings, the respondents were asked to indicate how often they assessed information pertaining to the environmental sectors within the task and general environments. Three of the top four most frequently scanned sectors were components of the task environment. The economic sector within the general environment also received frequent scanning attention. Within the task environment, the customer sector emerged as the most important, followed by the competitor sector (see Table 2). Seventy-eight percent of the respondents rated the customer sector as receiving frequent scanning attention, and 69% of the respondents perceived the competitor sector as receiving frequent scanning attention. Within the general environment, the economic sector received frequent scanning attention, followed by the legal/regulatory, technological, and social sectors. Specifically, 67% saw the economic sector as requiring frequent scanning attention. Forty-three percent, 36%, and 41% of the respondents viewed the legal/regulatory, technological, and social environments, respectively, as requiring frequent scanning attention. Thirty-eight percent and 31% of the respondents viewed the demographic and political sectors, respectively, as requiring frequent scanning. To test the significance of these findings, the scanning frequency scores for the task and general environments were calculated by averaging the frequency of scanning scores for the three sectors of the task environment (M = 5.11, SD = 1.14) and the six sectors of the general environment (M = 4.23, SD = 1.02). These composite scanning scores for the task and general environments were analyzed using a paired-samples t test. The scanning frequency associated with the task



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Table 1 Respondent Profile

n Title CEO/director/general manager Assistant general manager Departmental manager Years in present position 11 years Years in industry 21 years Educational background Secondary Vocational Undergraduate Postgraduate Age 46 years Gender Male Female Career background Hotel Restaurant Travel/tourism

68 45 61 75 81 24 48 48 31 26 26 53 14 57 50 79 52 47 111 66 42 55 68

Note: Entries may not add up to 181 due to missing values.

environment was significantly higher than the scanning frequency associated with the general environment (t = 9.55; p < .001). These results are consistent with previous research findings obtained based on U.S. and Canadian samples suggesting that the market sector composed of both the customer and competitor forces received the greatest amount of attention (Aguilar, 1967; Auster & Choo, 1994; Daft et al., 1988; Johnson & Kuehn, 1987; Kefalas & Schoderbeck, 1973; Smeltzer et al., 1988). Consistent with past research on U.S.-based multinationals and firms operating in developing countries, the economic sector also received frequent attention (O’Connell & Zimmerman, 1979; Preble et al., 1988; Sawyerr, 1993). Although Preble et al. (1988), among others (Elenkov, 1997; Sawyerr, 1993), reported that the political sector was also considered to be important, the hotel and tourism executives sampled in this study rated the political domain considerably lower than the other factors assessed in this study.


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Table 2 Scanning Attention Ascribed to External Environmental Factors Seldom Environmental Sector Task environment Customers Competitors Suppliers General environment Economic Regulatory Technological Social Demographic Political

Frequently

1

2

3

4

5

6

7

n

M

SD

0 5 6

2 8 5

13 13 27

25 30 67

40 35 23

41 41 24

59 49 28

180 181 180

5.57 1.32 5.22 1.60 4.56 1.52

4 14 9 8 13 17

6 12 10 11 14 20

11 20 24 32 24 44

38 57 69 54 59 41

50 34 35 45 37 33

50 26 19 19 19 17

20 17 9 10 12 5

179 180 175 179 178 177

4.98 4.28 4.22 4.20 4.11 3.70

1.36 1.62 1.56 1.41 1.53 1.52

Are External or Internal Sources of Information Considered More Important, and To What Extent Are They Personal or Impersonal Sources? The perceived importance associated with the various sources of information was assessed on an ascending Likert-type scale of 1 to 7 (1 = not very important and 7 = very important). A high numerical score suggests a high importance rating. Table 3 provides a listing of the perceived importance attributed to various sources of information used by the executives sampled in this study. These managers rated customers (M = 6.14, SD = 1.09) as the most important source of information. Managers and supervisors (M = 5.26, SD = 1.14) and business associates (M = 5.25, SD = 1.19) were the next most highly rated sources. Internal reports and studies, suppliers, newspapers, TV, radio, and peers and colleagues were also considered to be important sources of information. Although the World Wide Web, trade shows and conventions, and subordinates were ranked as being moderately important sources, external reports and studies, trade publications, and consultants were considered to be the least important of all sources assessed. Further examination of the degree of importance attached to various sources reveals that approximately 93% of the respondents rated customers as being a very important source. Seventy-eight percent indicated that managers and supervisors were very important, and 75% viewed business associates as an important source. Considerably fewer respondents perceived trade publications (51%) and consultants (38%) as being important sources compared to the other sources assessed. To test the significance of these results, the average scores for the internal and external sources were calculated by averaging the importance ratings for the four internal sources and the nine external sources. In a similar fashion, the study also obtained average scores for external-personal and internal-personal sources as well as scores for external-impersonal and internal-impersonal sources. The average scores thus obtained were analyzed using a paired-samples t test to test differences with respect to the human versus physical nature of sources used. The



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Table 3 Importance Attributed to Information Source Not Very Important Environmental Source

1

External sources CustomersP 1 Business associatesP 0 SuppliersP 2 Newspapers, TV, radioI 4 World Wide WebI 6 Trade shows, conventionsP 3 External reports, studiesI 6 Trade publicationsI 5 ConsultantsP 14 Internal sources Managers/ supervisorsP 1 Internal reports/ studiesI 4 Peers/colleaguesP 3 SubordinatesP 5

Very Important

2

3

4

5

6

7

n

M

SD

2 3 6

2 11 12

7 30 49

28 57 49

54 50 31

87 28 30

181 179 179

6.14 1.09 5.25 1.19 4.96 1.37

4 8

20 17

39 47

45 41

46 38

21 22

179 179

4.89 1.40 4.74 1.49

10

23

43

44

32

24

179

4.72 1.47

6 11 19

21 19 29

47 53 49

59 40 40

30 41 21

10 10 7

179 179 179

4.55 1.33 4.54 1.40 3.97 1.53

2

9

27

63

54

24

180

5.26 1.14

4 2 5

12 15 22

30 49 42

46 65 57

54 31 31

28 15 18

178 180 180

5.16 1.38 4.80 1.20 4.70 1.38

Note: Superscript P = personal sources; superscript I = impersonal sources.

importance score associated with external-personal sources was significantly higher than the importance score associated with external-impersonal sources (t = 4.81; p < .001). Likewise, the importance score for internal-personal sources was significantly higher than the importance score for internal-impersonal sources (t = 3.84; p < .001). Overall, personal sources were considered significantly more important than impersonal sources (t = 3.57; p < .001). These results are in general agreement with previous studies on the importance of personal sources over impersonal sources (Aguilar, 1967; Daft et al., 1988; Elenkov, 1997; Ghoshal, 1988; Kobrin et al., 1980; Preble et al., 1988). In an uncertain environment, top-level managers are more likely to use verbal over written sources of information (Kurke & Aldrich, 1983). Similarly, managers in dynamic environments also tend to prefer personal sources to help interpret unclear issues (Daft & Weick, 1984). Moreover, in cultures dominated by group or social orientations, managers tend to rely more on personal sources (Schneider, 1989). At the same time, these findings are somewhat different from those reported by previous researchers focusing on samples composed of Fortune 500 companies. For instance, Jain (1984) found that newspapers were the most important source, whereas Subramanian et al. (1993) reported that specialized sources, including trade journals and trade publications, were ranked as the number one source by most firms. However, these specialized sources also included customers, the source ranked most important by the executives sampled in this study. The


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World Wide Web that emerged in this study as being fifth in importance among external sources was not reported by any of these previous studies. This may be partially explained by the rapid growth in technology, together with enhanced access to technology among managers within the hotel and tourism industry and elsewhere. As with this study, Subramanian et al. also reported that consultants were found to be the least important source of information. There were no significant differences in the means of the importance scores associated with internal and external sources (t = 1.29; p > .05). The finding that executives attributed almost equal importance to external and internal sources is somewhat perplexing. Based on the results of this study, it would appear that the importance attributed to sources of information is independent of their being categorized as internal or external. Are External or Internal Sources of Information Used More Frequently, and to What Extent Are They Personal or Impersonal Sources? Frequency of information source usage was also assessed on an ascending Likert-type scale of 1 to 7 (1 = seldom used and 7 = frequently used). A high numerical score indicates a frequently used source (see Table 4). The most frequently used external sources of information include customers (M = 5.68, SD = 1.35), business associates (M = 4.93, SD = 1.27), and newspapers, TV, radio (M = 4.80, SD = 1.37), whereas the most frequently used internal sources include managers and supervisors (M = 5.16, SD = 1.24), internal reports and studies (M = 5.04, SD = 1.32), and peers and colleagues (M = 4.88, SD = 1.20). To test the significance of these results, the frequency scores for the utilization of information from internal and external sources were computed by averaging the frequency scores for the four internal sources and the nine external sources. These average internal (M = 4.87, SD = 1.05) and external (M = 4.63, SD = 0.87) information source utilization scores were analyzed using a paired-samples t test. The frequency with which internal sources were utilized was significantly higher than the frequency with which external sources were utilized (t = 2.97; p < .01). These results support previous findings (Aiyepeku, 1982; Sawyerr et al., 2000). Preble et al. (1988) suggest that there is a greater reliance on internal sources primarily because firms may have greatly increased their internal capabilities of collecting environmental information. West and Olsen (1989) also noted that most executives rely heavily on internal sources such as other members of management or other executives for their information. There were no statistically significant differences in the means of the frequency of use of impersonal and personal sources of information. This is somewhat different from the results reported by previous researchers (Aguilar, 1967; Keegan, 1974; Preble et al., 1988), who found a greater reliance on personal or human sources in comparison to documentary or physical phenomena sources. Similarly, Johnson and Kuehn (1987) reported that small-business respondents use more verbal media than printed sources. Auster and Choo (1994) and Choo et al. (2000), however, reported preferences for external nonpeople sources (e.g., radio, TV, newspapers, and World Wide Web) over both internal-people sources



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Table 4 Frequency of Use of Media Seldom Environmental Source

1

External sources CustomersP 1 Business associatesP 3 Newspapers, TV, radioI 2 World Wide WebI 8 SuppliersP 6 Trade shows, conventionsP 9 Trade publicationsI 8 External reports, studiesI 11 ConsultantsP 25 Internal sources Managers, supervisorsP 2 Internal reports, studiesI 3 Peers, colleaguesP 2 SubordinatesP 6

Frequently

2

3

4

5

6

7

n

M

SD

5 1

6 19

21 41

37 52

46 46

64 18

180 180

5.68 1.35 4.93 1.27

8 8 9

20 14 19

41 47 51

54 47 37

35 30 39

21 25 18

181 179 179

4.80 1.37 4.72 1.53 4.64 1.48

9 8

24 23

43 59

46 40

33 30

15 11

179 179

4.49 1.52 4.39 1.42

7 19

17 27

58 42

45 46

33 15

7 4

178 178

4.38 1.42 3.71 1.60

2

11

40

41

63

21

180

5.16 1.24

3 4 7

14 11 20

38 47 58

50 62 46

47 37 28

24 15 15

179 178 180

5.04 1.32 4.88 1.20 4.53 1.39

Note: Superscript P = personal sources; superscript I = impersonal sources.

(e.g., colleagues, managers) and external-people sources (e.g., customers, competitors). To What Extent Is Information Technology Used to Support Scanning Efforts? The study also asked the hotel executives to characterize their use of computer systems and information technology to facilitate ES and subsequent decisionmaking efforts. All 181 executives (100%) sampled indicated that they utilized computer systems to aid the process of scanning the business environment. In fact, among external sources, the World Wide Web emerged as the fifth most important and the fourth most frequently used source. It is clear that access to information technology has dramatically changed the process of information acquisition and that there have been significant changes in the use of computers. Evidence of this progress is to be found when the results of this study are compared to the findings of Keegan’s (1974) initial study reporting that computers were not being used in the ES process and the subsequent study of Preble et al. (1988) reporting that 51% of multinational executives did not use computers in the scanning process. This study found that fully 100% of the executives sampled used computers to assist with decision making at the strategic, tactical, and operational levels. This dramatic change in the use of computer technology helps partially explain the emergence of the World Wide Web as a significant source of information for executives.


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Both industry leaders and academics have suggested that the power of information technology should be effectively harnessed to support strategic planning activities and facilitate the process of environmental scanning (Griffin & Olsen, 1996). If properly used, information technology can provide a level of sophisticated support and enhance the process of scanning both the internal and external environments. Electronic databases, database support systems, and data analysis can all play a role in supporting strategic planning activities (Law, 1998). Griffin and Olsen (1996) suggest that such systems do not need to be complex, expensive, or even complete to be useful. A successfully implemented strategic planning database support system has the potential to produce a powerful competitive advantage to the business entity. CONCLUSIONS

The purpose of this study was to examine current ES practices of hotel and tourism executives in the Asian context and to assess the applicability of scanning theory to this context. When compared to previous research, the findings suggest that there are important differences as well as some similarities in scanning practices. The results of this study show that scanning attention was higher for the task environmental sectors than the general environmental sectors. For purposes of strategic decision making, the customer, competitor, and economic sectors are those considered most important and therefore received the most scanning attention. When executives were asked to rate how seldom or how frequently they scanned different environmental sectors, three of the top four sectors were in the task environment and the last four rated sectors were in the general environment. This may be because of the higher degree of uncertainty associated with the task environment (Ebrahimi, 2000) as well as the importance and relevance of the task environment for purposes of goal setting and alignment (Bourgeois, 1980; Thompson, 1967). The results of this study also suggest that customers, along with managers and supervisors and outside business associates, are considered to be the most important sources of information. This supports the finding that personal sources are preferred over impersonal sources. This affinity for personal sources may be partially explained by a cultural preference of this group of executives to build personal alliances and networks and thereby increase their personal capabilities to collect environmental information. Because personal connections and informal influence are crucial to the achievement of organizational objectives in the Chinese culture, it is logical for managers functioning within this context to rely on personal sources of information. Hong Kong managers may also rely on personal sources simply because they do not have the same range of nonpersonal sources as those available elsewhere. The results also point out that internal sources are utilized more frequently than external sources. As Preble et al. (1988) note, this greater dependence on internal information sources may be associated with an enhanced internal ability to collect environmental information. Here again, in support of Culnan (1983), this group of executives may have developed internal capabilities, thereby increas-



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ing perceived source accessibility of internal sources, thus contributing to a greater reliance on internal sources. The three general conclusions of this study can be summarized as follows. The Hong Kong–based hotel and tourism executives scan the task environment with greater frequency, ascribe greater importance to personal sources of information, and utilize internal sources of information more frequently. The first two findings confirm the previous general conclusions based on U.S. and Canadian samples but contradict findings based on U.S. multinationals and decision makers in developing countries. However, and in opposition to this result, the third finding confirms previous findings based on U.S.-based multinationals and decision makers in developing countries but is contrary to the general findings based on U.S. and Canadian samples. MANAGERIAL IMPLICATIONS

To beat competitors to the punch, tourism businesses—whether hotels, tour operators, or travel agencies—and more specifically managers of these businesses must be able to foresee opportunities not seen by others or be able to exploit opportunities based on capabilities that other competitors do not have. This requires deep insight into factors affecting customer demand, including trends in economic, political, technological, and demographic elements. Top managers who are able to anticipate and embark on change in their efforts to achieve harmony with their environments can best help guide their organizations to long-term success. This implies that decision makers will need to possess skills to scan the environment and identify changes and trends that could occur in that environment (note: specifics on how to conduct environmental scanning are elaborated on elsewhere and are thus not elaborated on here). In this scanning process, they must look for emerging patterns of change that offer opportunities to capture new business and satisfy the customers of the future. At the same time, they must be aware of threats that could derail the future success of the firm. Once threats and opportunities have been determined, they must then invest in products and services that will drive industry change and provide sustained competitive advantages. How does a manager anticipate and participate in the opportunities of the future? As a first step, managers of hotel and tourism businesses must be able to clearly articulate the fundamental trends or forces already at work that have the potential to profoundly influence the future of the industry. They must then identify the opportunities they are best positioned to exploit given their particular portfolio of capabilities. This exercise may rely as much on imagination as on prediction and require thinking beyond the narrow and traditional views of the business. According to strategic planning theorists, creating the markets of tomorrow requires industry foresight informed by a keen understanding of environmental trends, as well as a degree of curiosity and imagination that is as deep as it is boundless. Effective ES facilitates this process and involves information gathering from both the general and task environments through sources that may be external or internal and personal or impersonal in nature.


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Submitted June 15, 2004 First Revision Submitted October 9, 2004 Second Revision Submitted April 9, 2005 Final Revision Submitted July 6, 2005 Accepted July 7, 2005 Refereed Anonymously


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Giri Jogaratnam, Ph.D. (e-mail: [email protected]), is a professor in hotel and restaurant management at Eastern Michigan University. Rob Law, Ph.D. (e-mail: [email protected]), is an associate professor in the School of Hotel and Tourism Management at The Hong Kong Polytechnic University.
