A conceptual model of performance for small motels: development and empirical testing

The value of small firms to the economy is recognised globally (Storey, 2003). In Australia small firms encompass 97 percent of all private sector businesses. Of particular interest to this research is the tourism industry, which is currently experiencing substantial turbulence. The tourism industry, like many other service sectors, is comprised mainly of small firms. Despite difficult conditions these small tourism enterprises remain key providers of services in Australia and continue to make an important contribution to both export activity and employment. There are many sectors that make up this industry, including accommodation, transport, attractions, cafes, bars and restaurants. Because of their interconnectedness there is a high degree of interdependence for these businesses. For example, the small motel sector is an important accommodation provider for travellers and a needed service by other tourism enterprises in the transport and attractions sectors. However, government agencies feel that these organisations may not be performing as well as they could be. Government concern about standards and the professionalism of tourism and related sectors has been the impetus for a number of support programs and accreditation schemes. Emerging from this concern is a need to better understand the influence that the owner-managers of these firms have on improved business performance outcomes; but study of business performance has been difficult as the performance construct incorporates many diverse and complex dimensions. Of relevance to this study is the considerable work by researchers of performance management in large manufacturing firms, where, in recent years the focus has turned to more holistic approaches to measuring performance. However, little has been done to utilise this knowledge for small tourism enterprises, and in particular small motels, as key service providers. Given that the management activities of business managers and the impact they have on business performance have been widely studied in large business there is a need for further research in the area in small motels. Therefore, the main question, which this research has attempted to answer in relation to small motels, is: How effective are the existing strategic management business performance measurement models for improved business performance in the small motel sector? This research employs a mixed method approach in an effort to draw on the existing performance measurement models to develop and test a performance measurement system (PMS) for firms and small motels specifically. A literature review of performance measurement and small business management research is utilised to develop a conceptual PMS for small motels. This review underpins the research, comprising a series of interviews with industry experts, which are used to refine the model for small motels. The refined model is empirically tested with small motel owner-managers using a case study approach. The six research issues explored in this research aim to solve the main research problem. In summary, the case research generally confirms the conceptual model as refined by the experts’ findings with some modifications. Overall, the research highlights that there are three components that need to be addressed in the PMS for small motels. The two key dimensions are the drivers and the results. To indicate how the two inter-relate in achieving the desired business results, a third component - a cycle of performance management for improvement, which includes processes of measuring and monitoring dimensions, is also included. Essentially, the cycle of performance management and measurement starts with the drivers, which determine the results. The drivers include the stakeholders’ and ownermanager’s wants and needs, which guide the strategy formulation and implementation and the firm’s capabilities and processes. The drivers are managed by the ownermanager to determine the business results. The results are measured by the outputs and the outcomes. The motel’s outputs are a result of the motel’s activities and are assessed by a balance of both financial and non-financial measures. The outcomes are the final product of the motel’s outputs and in the small motels are measured by both stakeholder and owner-manager satisfaction. Measures provide information about both the output and outcome results and are obtained during the measurement and monitoring process. Finally, the review system is concerned with the relationship between the drivers and the results to ensure continuous improvement and the delivery of the stakeholders’ desired wants and needs. In the small motels, a continuous improvement process is undertaken via a simple and informal system of control, review and deployment whereby the employees, customers and networks play a crucial role. The findings of this research contribute both to small business management and measurement theory, as well as providing a basis to guide small business policy makers and managers. As the methodology adopted in this research utilises a mixed method approach, part of which depends on case study research, recommendations rather than generalisations are presented. In order to generalise these findings to the wider small motel or small business sector there is a need for further research using a positivist survey approach. There is also an opportunity to conduct research to test this model with other industry sectors, where the unit of study would be selected from a different population of small firms. In conclusion, the final PMS for the small motels answers the research problem and highlights that existing performance measurement systems developed for large firms can be modified for the purpose of aiding improved performance in small motels. The PMS developed in this research is an holistic and integrated model that has not yet been widely studied with regard to small firms. The PMS for small motels, built and tested in this research, contributes to the field of performance management and provides a basis for further theory building.