The Role of Information and Communication Technologies and Dynamic Capabilities on Tourism SMEs Competitiveness During Real Time Crisis

Abstract

The tourism industry is one of the most vulnerable sectors during times of crisis. Studies on this vulnerability captured how a situation like the COVID pandemic affected tourism-related business operations, especially small-and-medium sized enterprises (tourism SMEs) because of their relatively small size and limited capabilities. Such economic turbulence severely hinders the performance of tourism SMEs and reduces their contribution to the country’s economy. This loss of revenue can be substantial, and studies on how SMEs can cope with a fast-changing business environment by accelerating technological developments, acquiring new knowledge and developing dynamic capabilities have become vital issues for management. Drawing on strategic management theories and focusing on how firms maintain competitiveness, there is an ongoing debate about the effectiveness of dynamic capabilities on firm competitiveness because most research has not been conducted in real time during a crisis such as the pandemic. We have attempted to compensate for that lack of data in this study on tourism SMEs, with special emphasis on how application of information and communication technology (ICT) influences development of dynamic capabilities, and vice versa. Through prudent use of dynamic capabilities and scarce resources, a firm can leverage its technological development to maintain competitiveness even during a crisis. The dissertation investigated the effectiveness of information and communication technology capabilities and dynamic capabilities (DCs) during real time environmental turbulence on tourism SMEs. The role of DCs as mediators between ICT application and tourism SMEs’ competitiveness and the moderating influence of environmental turbulence on utilization of DCs were determined. A research framework was developed with reliance on an existing body of literature, to create a model of tourism SMEs struggling to survive during the COVID-19 pandemic. The quantitative research techniques were evaluated and the optimal study method was selected to bridge the data gap in the literature. A survey was distributed to 487 tourism SMEs in the United Arab Emirates (UAE) during the peak of the pandemic when the borders were closed between the seven emirates, and tourism SMEs were under severest stress. The research framework was tested using partial least squares structural equational modeling (PLS-SEM), and the results of this study were surprising. ICT capabilities helped tourism SMEs to achieve competitiveness and enhanced the development of the firms’ dynamic capabilities. While DCs can enhance firm competitiveness during challenging times, their improper implementation and the lack of suitable resource allocation and deployment could actually reduce the performance of tourism SMEs. The discovery that environmental turbulence did not have a moderating role in competitiveness was surprising. Given the empirical results obtained during the peak of the COVID-19 pandemic, this study renders a significant contribution to the body of knowledge and provides a theoretical foundation for practical use.

Keywords Dynamic Capabilities, Environmental Turbulence, Firm Competitiveness, Firm Survival, COVID-19 Pandemic, Crisis, Smes, Tourism, Information And Communication Technologies (ICT)