ADAPTATION OF STRATEGIC COLLABORATION BETWEEN ...

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Journal of Hospitality & Tourism Research, Vol. 37, No. 4, November 2013, 516-536DOI: 10.1177/1096348012442543© 2012 International Council on Hotel, Restaurant and Institutional Education

PARTNER CHOICE: ADAPTATION OF STRATEGIC COLLABORATION BETWEEN

TRAVEL AGENCIES

Edward C. S. KuNational Kaohsiung University of Hospitality and Tourism

Chun-MingYangMing Chuan University

Ming-Yi HuangHsing Wu Institute of Technology

Travel agencies seeking to improve their product development performance increasingly engage in collaborative product development with their suppliers. From the perspective of collaboration, the independent travel agent has a future, provided it makes appropri-ate investment in technology and creates competitive differentiation. The research goals of this study were to investigate how market-focused strategic adaptation among the members of travel agent collaborations affects perceived market performance. Data were obtained via a mailed questionnaire survey of a sample of travel agencies. The model and the hypotheses were tested using a structural equation modeling approach. The findings of this study provide interesting insights for travel agencies interested in partner choice. Customer competence has emerged as an important asset in travel agent collaboration, which can be used to increase the productivities of knowledge works through the management of product and service innovation; different strategies are dis-cussed in terms of different segments of customers within the collaboration.

KEYWORDS: corporate strategy; innovation; travel

Travel agencies seeking to improve their product development performance increasingly engage in collaborative product development with their partners (Medina-Muñoz & García-Falcón, 2000; Tsaur, Yung, & Lin, 2006). Nonetheless, during the innovation process, internal integration and partner involvement may develop a positive relationship with project performance but not with market performance (De Luca & Atuahene-Gima, 2007). How collaboration affects the market performance effort in product innovation remains an important issue.

Innovation plays a critical role in the increasingly competitive business environ-ment in which firms operate (Martínez-Sánchez, Vela-Jiménez, Pérez-Pérez, & de-Luis-Carnicer, 2009). Firms often race to market with new product offerings,

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Ku et al. / PARTNER CHOICE 517

displaying the latest technologies and capabilities and almost immediately encoun-ter direct competition. Additionally, product innovation has been linked to the creation of customer value (Lee, 2010), which is a customer’s perceived preference for a product’s attributes, performance, and consequences of use. For firms to offer superior value to their customers, they need to anticipate environmental changes while developing new products.

Understanding the customer needs that drive significant product innovation is particularly challenging for new product development (De Luca & Atuahene-Gima, 2007; Harris, Coles, & Dickson, 2000; Martínez-Sánchez et al., 2009). Travel agencies are shifting their focus from increasing internal efficiency to leveraging external resources (Dilts & Prough, 1989; Huang, 2008b; Wang, 2006), especially customer competence, in order to gain new competitive advantages. The integration of customer competence is viewed not only as a means to renew the overall competence of the organization (Ku & Fan, 2009); from the perspective of the resource on which it is based, as networks facilitate the core competition, this integration also makes it possible for a firm to acquire knowledge from customers as well as directly from a partner.

Customer competence can be regarded as a key resource that enables a firm to strengthen its customer relationships in order to produce a sustained com-petitive advantage (Ku & Fan, 2009; Wang, 2006). From the customer compe-tence view, travel agents innovate and sell multiple travel packages with their partners, as their key attraction is that they provide details of all the services available and thus offer consumers the ability to research and purchase an entire trip online using a single site in the electronic market. However, few researches explain perceived market performance as a result of collaboration or customer competence. This study aims to elucidate how customer competence and prod-uct innovation affect perceived market performance via collaboration.

Innovation is illustrated through the example of a travel agency manager who redesigns a booking process to reduce costs and increase customer satisfac-tion (Margherita, Klein, & Elia, 2007). That is, innovation-facilitating resources have a greater impact on the operation of travel agencies when a company is faced with intense competition (Wang, 2006). Moreover, knowledge sharing among members of travel agencies and airlines affects the customer relation-ship management profitability of travel agencies (Ku & Fan, 2009). Additionally, in the process of internal growth, companies develop new products or penetrate into new markets, whereas external growth is possible only with a collaborative partner, with organizations stimulating innovation and bringing about a com-petitive advantage.

From the perspective of collaboration, the independent travel agent has a future, provided it makes appropriate investment in technology, works closely with niche tour operators, and creates competitive differentiation by focusing on specialist markets (Andreu, Aldás, Bigné, & Mattila, 2010; Buhalis & Licata, 2002; Ku, Wu, & Lin, 2011). Travel agents also need to redefine their relation-ship with their partners and be proactive rather than reactive to industry changes (Ahn & Park, 2004; Romero & Tejada, 2011). On the other hand, the collaborative



518 JOURNAL OF HOSPITALITY & TOURISM RESEARCH

partnership approach requires trust and commitment for long-term cooperation, with a willingness to share risks (Andreu et al., 2010; Chiu, Yueh, Leung, & Hung, 2009), considering that this relationship is based on cooperation, mutual benefit and trust, and relational exchanges.

The benefits of collaborating are exciting; partners in collaboration should pay more attention to operational implementation issues, such as collaboration eves, to achieve successful cooperative relationships. Notwithstanding the many years that travel agents may have worked together, some observers main-tain that travel agencies have not yet established an entirely satisfactory col-laboration. Huang (2008b) points out that travel agencies struggle constantly to innovate and create new business strategies to meet ever-changing customer needs and the diversity of demands from the increasingly prudent traveler. As far as their role is concerned, travel agencies should devise suitable packages for customers and provide their employees with sufficient knowledge of travel products.

The research goals of this study were to investigate how market-focused strategic adaptation among the members of travel agent collaborations affects perceived market performance. Data were obtained via a mailed questionnaire survey of a sample of travel agencies in Taiwan. The model and the hypotheses were tested using a structural equation modeling approach. The section “Theoretical Background and Literature Review” describes the theoretical background of this study and provides a review of previous research in the field. The next section presents the research model, followed by the research method-ology, and the research findings. The final section describes our conclusions.

THEORETICAL BACKGROUND AND LITERATURE REVIEW

Resource-Based Theory

Resource-based theory was historically developed to establish the conditions under which firms can gain and sustain a competitive advantage (Wernerfelt, 1995). From that perspective, core competency is the collective learning in each organization, especially that related to how to coordinate diverse production skills and integrate multiple technology streams (Allred, Fawcett, Wallin, & Magnan, 2011). The resource-based view also states that a related linkage between all parents in a network is more likely to create an environment in which all parties can share critical yet complementary competencies to generate higher financial or operational synergies than would be possible through an unrelated diversification strategy (Richey, Tokman, & Dalela, 2010). A firm’s capability for internal coordination is a strategic resource that can be leveraged to gain a competitive advantage through an effort that involves suppliers.

A core competency provides potential access to a wide variety of markets and contributes significantly to the benefits derived from the end products as perceived by customers. From a business-to-business relationship, chain col-laboration plays a role in accessing external capabilities (Richey et al., 2010); collaboration can influence the gain from collaboration-specific capabilities,




leading to the competitive advantage of a supply chain. From the resource-based view, whether buyers and suppliers pursue a formal or informal conver-sational style with each other is likely to be partially determined by whether they have compatible personalities and common values—buyers sharing com-mon values with suppliers can produce a strategic collaboration between travel agencies.

Many strategies are used today, such as cross-functional team decision mak-ing, supply base rationalization, and long-term contracts and relationships (Ahn & Park, 2004; Allred et al., 2011; De Luca & Atuahene-Gima, 2007). An invest-ment in a specific relationship becomes a hinder strategy for an organization to maintain the business relationship (Ahn & Park, 2004), and a marketing alliance capability, which reflects a firm’s ability to manage a network of previous mar-keting alliances (Allred et al., 2011; Richey et al., 2010), has a positive impact on value creation. From the resources-based perspective, the partner’s consid-eration of a preferred collaboration is based not only on price or cost but also on factors that contribute more to the collaborator’s competence in production, distribution, and postpurchase service (Allred et al., 2011). It is also beneficial for suppliers to be able to access the business skills and expertise of their buyer partners. Although many studies appear to support this assertion, there is no consensus regarding how strongly strategic resources relate to performance.

Strategic Collaborations Between Travel Agencies

There are five types of collaboration between travel agencies. The first is between the wholesalers themselves, whereby the collaborative partners are likely to increase customer loyalty when their operations are well coordinated and they maintain loyalty programs (Buhalis & Licata, 2002; Dilts & Prough, 1989; Romero & Tejada, 2011). The characteristics of such collaborations are controlled by the market or travel policies (Huang, 2008a), and such collabora-tions can also provide benefits to customers. The second type of collaboration is between wholesalers and tour operator direct sales, which are based on mar-ket and service strategies (Huang, 2008b; Wang & Cheung, 2004). Wholesale agencies, which supply tour packages to retail agents and sell travel products to consumers, need a differentiated e-commerce marketing strategy to support the retailers. The degree of cooperation and the realization of expected goals should be considered as performance indicators of these strategic collaborations. The third type of collaboration is between the tour operator direct sales themselves. From the competition perspective, pricing condition exchanges are required for both the service provider and the consumer (Hrebiniak & Joyce, 1985; Walker, Allen, & Glines, 1997). The fourth type of collaboration is between tour opera-tor direct sales and retailers. The fifth type is between retailers themselves.

Collaboration is believed to assist a firm in three ways: by maximizing the return on the investment, by helping the firm achieve a competitive advantage, and by providing the direction and flexibility to react to new opportunities. Day (2006) suggests that business strategies should be integrated with func-tional strategies to achieve a sustainable competitive advantage; for example,




wholesalers can realize e-commerce strategic goals by acquiring the e-loyalty of retailer travel agencies (Huang, 2008a; Sophia & Cheung, 2004). Strategic collaboration is achieved when employees at various levels of an organization agree on what is most important for the organization to succeed (Déniz-Déniz & Saá-Pérez, 2003; Wang, 2006). Collaboration between strategic and opera-tional aspects is more visible in successful firms.

Innovation and Strategic Adaptation in Travel Agencies

Travel agents struggled constantly to innovate and conceive new business strategies to meet the ever-changing travel needs and diversity of demands from the increasingly discerning traveler (Wong & Kwan, 2001). Travel agencies that adopt this innovative way to sell or deliver services and manage customer rela-tionships must make technological and strategic changes (Wang & Cheung, 2004). From the strategic perceptive, airlines offer improved customer service by linking its reservation system to those of other airlines, hotel, tour operators, and travel industry locations; the airlines expected to obtain a number of bene-fits from this strategy (Duliba, Kauffman, & Lucas, 2001), including increased efficiency, possible bias in favor of the computerized reservation systems owner on the part of the travel agent, and fees from other airlines for making reserva-tions for them.

Moreover, innovative players among those providing Internet-based travel services have entered the travel industry; electronic markets where e-commerce takes place can reduce the buyers’ cost and reduce perceived complexity of products and asset specificity. Simultaneously, early adopters of technology were sensitive to the strategic actions of their competitors, their strategic part-ners, and the leading firms in the industry. Furthermore, travel agencies have become the largest online seller in recent years (Huang, 2004; Oakes et al., 1999), travel agencies were concerned about competitive advantage and perfor-mance that had driven them to establish online businesses.

The Internet helps travel agencies deliver information, enhance customer relationships, build the customer base, and improve after-sales service (Ku & Fan, 2010). Previous researchers have argued that an individual will prefer Internet shopping to conventional channels only when he or she perceives that all or some of the attributes are higher for the Internet (Keeney, 1992, 1994; Torkzadeh & Dhillon, 2002). Paradoxically, in addition to there being more competition, many online travel sites sell multiple products and travel package from multiple partners (Ku & Fan, 2009), as their key attraction is that they provide details of all the services available and thus offer consumers the ability to research and purchase an entire trip online using a single site.

RESEARCH MODEL

In strategic collaborations, organizations need to take into consideration many elements when selecting the appropriate strategy. As depicted in Figure 1, this research model takes the collaborating participants’ view, with strategic




adaptation based on the product innovation of an organization and its strategic adaptation.

Product Innovation

Product innovation provides the most obvious means of generating revenues. Radical innovations and incremental innovations are the two extremes on the con-tinuum of the novelty degree of a product (Lokshin, Van Gils, & Bauer, 2009). Market knowledge and cross-functional collaboration are two fundamental resources for successful product innovation, and product innovation and relation-ship performance play a greater role in enhancing economic performance.

It is important for firms to adopt a network approach to their innovation strategy by developing a competence in the process of network building (Harris, Coles, & Dickson, 2000). Innovation depends on the strategic integration of technological knowledge (Lee, 2010; Martínez-Sánchez et al., 2009) requiring organizations to acquire new capabilities rapidly or to ensure the presence of knowledge that may go beyond existing internal capabilities—and market ori-entation generative learning and their respective impact on exploitative innova-tion strategy and explorative innovation strategy.

In the e-commerce era, the relationship change between airlines and travel agents makes it important for both parties to provide integrated solutions to customer needs (Cheng & Cho, 2010; De Luca & Atuahene-Gima, 2007; Ku & Fan, 2009). In Taiwan, travel agencies consider innovation to be indicators of performance measurement that also have cause-and-effect relationships among themselves through two different strategies (Huang, 2008b); a travel agent can create an appropriate knowledge-sharing strategy and increase customer rela-tionship management profitability by information technology. Travel agents can survive if they focus on specific specialized services (Duliba et al., 2001; Walker et al., 1997), such as travel consultation, and if they focus on specific segments of the market, such as older travelers.

Figure 1Research Model

H1a

H2b

H3

H2a

H1bProductinnovation

(PI)

Customercompetence

(CC)

Market-focusedstrategies(MFS)

Perceived marketperformance

(PMP)




Market-Focused Strategic Adaptation

Strategic adaptation refers to an organization optimizing its strategic behav-ior when encountering environmental disruptions (Ray, 2003; Tsai & Child, 1997). This concept has been used to explain the phenomenon whereby market leaders fail to retain their competitive advantage over time; firms that adapt to their environment succeed, whereas those that do not adapt fail (Strandholm, Subramanian, & Kumar, 2004).

The strategic choice perspective provides that through the choices that they make, key decision makers have considerable influence over an organization’s future direction (Hrebiniak & Joyce, 1985; Ray, 2003). A number of strategies favored by large travel agencies, such as differentiating offers aggressively, establishing closer relationships with preferred suppliers, and deemphasizing unattractive services or markets, are not seen by small agencies as being effec-tive (Dilts & Prough, 1989). Conversely, small agencies attribute greater effec-tiveness than large agencies do to engaging in joint political action with trade associations in order to create a more favorable business climate. From the collaboration perspective, strategic adaptation can be conceptualized using two types of coherence or collaboration: internal and external.

Obviously, strategic adaptation is shaped by the need to align organizational resources with environmental opportunities and threats (Allred et al., 2011; Déniz-Déniz & Saá-Pérez, 2003). A travel agency is a customer-focused organ-ization that customers should perceive as genuinely caring about them (Ku & Fan, 2009). In the study, the adaptation strategies illustrate the importance of market-focused strategies (Kumar, Subramanian, & Strandholm, 2002) and are influenced by the intent behind strategy collaborations between travel agencies. That is, if firms believe that market-focused strategies are important, they may consider quality, delivery, and design strategies as essential to such market-focused strategy. This leads to our first hypothesis:

Hypothesis 1a: Product innovation is positively associated with market-focused strategy adaptation between collaborating partners.

Perceived Market Performance

Market performance is defined as relative performance on consumer-related outcomes and is conceptualized as having multiple dimensions that include relative market share, sales growth, and customer retention (Williams & Naumann, 2011). Perceived market performance is conceptualized as a firm’s performance over the past 2 years in terms of marketing, profitability, and growth in sales was higher than others (Delaney & Huselid, 1996). A firm’s strategic orientation affects service innovation capability and the resulting impact on market performance. In the travel service industry, cooperative rela-tionships among organizations are increasingly referred to as a crucial factor for organizational performance and survival.

Within the collaborative relationship, travel agencies increasingly form per-manent alliances with other organizations, such as airlines (Buhalis & Licata, 2002), car rental agencies, suppliers, other hotels (Schulz, 1994), and travel agencies. at PENNSYLVANIA STATE UNIV on September 13, 2016jht.sagepub.comDownloaded from



The market performance of an innovation is an increasing function of that inno-vation’s installed base and the availability of complementary travel products, and new travel products will influence market performance, which leads to our second hypothesis:

Hypothesis 1b: Product innovation is positively associated with perceived market performance.

Customer Competence

Customer competence is constituted by market-related resources such as knowledge of customer needs, preferences, and purchasing procedures; distri-bution and sales access to customers; customer goodwill or franchise reflected in the reputation of the company and its brands; and communication channels for exchange of information between the company and customers during devel-opment and commercialization of the product (Danneels, 2002).

In a network environment, a firm gains a position of competitive advantage when it has one or more comparative resource advantages that allow it to create superior value (Danneels, 2007; Davis & Golicic, 2010), relative to the com-petitors’ offers; from a resource-based view, the competence of the partner is one vehicle that an organization uses to fill resource gaps and improve its com-petitive position. Partners in a collaborative relationship have both common and individual corporate goals. Travel agents will continue to play a significant role in all regions for decades, but they need to move away from being ticket book-ers to providing value-added services to customers, which should lead travel agencies to consider the competent customer as a social construction related to managerial representations. This leads to our third hypothesis:

Hypothesis 2a: Customer competence is positively associated with market-focused strategy adaptation between collaborating partners.

A firm can potentially reduce the risks involved in commercializing an inno-vation, thus increasing the probability that the new product will be accepted by other firms, which in turn can lead to a new standard (Davis & Golicic, 2010; Dobryzkowski, Tran, & Tarafdar, 2010; Luo, Mallick, & Schroeder, 2010). Product innovation must link customer competence (Gibbert, Leibold, & Voelpel, 2001), such as knowledge of customer needs, with technological com-petence (Banker, Chang, & Kao, 2010; Kodama, 2005), such as engineering and process know-how. Companies can enhance short-term performance by provid-ing value to the customer in prepurchase situations. However, to build customer loyalty and thus long-term performance, companies need to enhance the product ownership experience of customers.

The growth of new service development competence is related to improved new service development performance. In the collaborative networking of travel agencies, travelers, both business and leisure customers, have relied heavily on travel agents for travel information and tour packages (Fan & Ku, 2010). For




example, attitude, as well as ease of control, is considered as an important factor for group travelers. In these markets, most tickets are provided by travel agents in conjunction with other travel services such as hotels and tours. Therefore, group travelers pay little attention to the purchasing channel of their tickets. Customer competence such as knowledge of customer needs creates a spiral process of interaction between explicit knowledge and tacit knowledge so as to enhance the competitive advantage and market performance of travel agents. This leads us to our fourth hypothesis:

Hypothesis 2b: Customer competence is positively associated with perceived market performance.

Strategic type is another important determinant of innovative culture (Kandemir, Yaprak, & Cavusgil, 2006), and alliance orientation significantly affects alli-ance network performance, which in turn enhances market performance (Harrington, 2005; Grawe, Chen, & Daugherty, 2009; Zhou, Brown, & Dev, 2009). For example, firms adapt different components of their marketing strate-gies in foreign markets compared with their domestic market, and such adapta-tion decisions influence the firms’ competitive position and performance in foreign markets. The other case, a price standardization strategy, has a positive impact on the export performance of the firm.

Market-oriented firms perceive competitive intensity as more sophisticated and dynamic than less market-oriented firms do (Harrington & Kendall, 2006; Kumar et al., 2002; Sin, Tse, Chan, Heung, & Yim, 2006; Zhou et al., 2009). Market-focused strategic flexibility, strategic competitive advantage, and subjec-tive and objective performance outcomes as applied to service providers and market-focused and price-based strategies have contrasting effects on perfor-mance. The degree of cooperation and the realization of expected goals should be considered as market performance indicators of these strategic collaborations.

Previous research states that different online travel agencies specialize by systematically offering different trade-offs between ticket price and ticket qual-ity (Cheng & Cho, 2010; Clemons, Hann, & Hitt, 2002). Collaboration between travel agents is based on market and service strategies (Huang, 2008a), such as that between wholesaler and tour operator direct sales. It is worth noting that small agencies do not see as effective a number of strategies favored by large travel agencies, such as differentiating offers aggressively, establishing closer relationships with preferred suppliers, and deemphasizing unattractive services or markets (Dilts & Prough, 1989). Moreover, a change in strategies becomes a combination of setting macro boundaries that influence the overall direction of change and evolution and a micro-level strategic differentiation among indi-vidual travel agents. Thus, this leads to our fifth hypothesis:

Hypothesis 3: Market-focused strategy adaptation between collaborating partners is positively associated with perceived market performance.




RESEARCH METHODOLOGY

The research goal of this study was to investigate how strategic adaptation among members of a travel agents’ collaboration affects perceived market per-formance. In this study, the unit of analysis was the travel agent. Based on an analysis by the Tourism Bureau of Transportation and Communication (2009) there are three types of travel agency in Taiwan: wholesalers (4.13% of travel agencies), tour operator direct sales (88.9%), and retailers (6.88%). Moreover, more than 60% of travel agencies have less than 20 employees. Thus, we mailed the research questionnaire to the managers of travel agencies in those cases where they could be identified; in cases where “manager” did not appear as a professional title, we confirmed in advance the key person who was responsible for the strategic activities of the travel agency.

Based on the intention of the participants, we invited and confirmed in advance the key person who was responsible for the strategic collaboration activities of the travel agency. The research questionnaires were mailed directly to the travel agencies, which were asked to pass them on to the appropriate persons with knowledge of their collaborating travel agencies who would then distribute them (one questionnaire per company).

The survey items were verified and refined for translation accuracy by two professors in travel management. The Chinese version of the draft was then pretested with 20 participants (including sales and marketing personnel and CEOs) for face and content validity, resulting in modifications of the wording of some survey items.

Of 2,677 travel agents identified from the Tourism Bureau of Transportation and Communication, we randomly selected 150 travel agents whom we sent questionnaires to; at first we asked travel agents to provide a name list of col-laborating agents, in order to identify them and avoid duplicating travel agents. Meanwhile, we confirmed the key persons with knowledge of their collaborat-ing agents in advance. Afterwards, each travel agent was requested to pass on six questionnaires to their collaborating agents; thus, we mailed out a total of 900 questionnaires to travel agents in Taiwan, which yielded a usable response of 564 fully completed questionnaires in the end. Table 1 describes the demo-graphic information of samples.

Table 1 shows that about 25% of the respondents are wholesalers and more than 70% of them are tour operator director sales. The sample percent-ages of travel agent types match that of the population in Taiwan. Because the subjects were all travel agencies, we checked if there was nonresponse bias in terms of firm size. We first compared the responding and nonre-sponding firms in terms of total revenue and number of employees. No significant differences among these five groups were found based on independent samples t tests (p > .05). The comparisons of the three type measures between the four groups of travel agencies again showed no sig-nificant differences.




Table 1Sample Description (N = 564)

Number of Travel Agents Percentage of Firms

Classification of travel agent Wholesaler 145 25.7 Tour operator director sales 401 71.1 Retail travel agent 18 3.2Total revenue per year (million NT$) <2 87 15.5 2-15 209 35.8 15-60 127 21.3 60-100 61 9.5 >100 90 14.9Number of employees <30 175 30.9 31-70 129 22.7 71-120 68 11.9 >120 192 33.9

ANALYSIS AND RESULTS

Tests of the Measuring Scales

Measurement items were adapted from the literature, and the constructs of the study were measured with a multi-item scale, as indicated in Table 2. Internal consistency reliability is the accuracy or precision of a measuring instrument, which is the extent of unidimensionality; that is, the detailed items (questions) measure the same thing. The internal consistency reliability was assessed by calculating Cronbach’s alpha values. Table 3 summarizes the relia-bility results. The internal consistency (Cronbach’s alpha) of the construct is greater than .9, which is more than the acceptable threshold.

Content validity means measuring what is supposed to be measured. In other words, if we aim at a good measure of a collaborative relationship, we should be convinced that the measurement instrument includes the essential features of success. Construct validity is established by relating a measuring instrument to a general theoretical framework to investigate whether the instrument is tied to the concepts and theoretical assumption being used. This can be analyzed, first, by correlating with the detailed items and scale. However, a more powerful method for analyzing the construct validity is factor analysis.

Because each latent construct was measured by multiple items, tests of con-struct validity were performed. To obtain evidence of the construct validity of an instrument, a researcher must make use of both convergent validity and discriminant validity. Discriminant validity was checked using factor analysis. Because multiple-item constructs measure each variable, factor analysis with varimax was used to check unidimensionality among the items. The confirmatory factor analysis shown in Table 4 was used with LISREL 8.50 software to exam-ine the convergent validity of each construct (Kim & Malhotra, 2005). The




Table 2Scale Development

Factor Item Reference

Product innovation (PI)

PI1 Our company provided successful product innovations in the past 2 years

Lokshin et al. (2009)

PI2 The above mentioned product innovations are new to the market.

PI3 The above mentioned product innovations are new features to already existing products

Customer competence (CC)

CC1 Cooperation with customers regarding product innovation occurs on a regular basis

Lokshin et al. (2009)

CC2 Our firm always relies on market research when developing a new product or product feature

CC3 Customers are highly important as a source of ideas for new products

CC4 We meet our customers on a regular basis to find out what products they will need in the future

Strategic Adaptation (market focused; MFS)

MFS1 We think innovative services are important Karen et al. (2004)MFS2 We make efforts for flexible operations

MFS3 We think innovative marketing of services is important

MFS4 We make efforts to become more market focused

Perceived market performance (PMP)

PMP1 Compared with other organizations that do the same kind of work, our firm’s performance over the last 2 years in terms of marketing is higher than others

Delaney and Huselid (1999)

PMP2 Compared with other organizations that do the same kind of work, our firm’s performance over the last 2 years in terms of profitability is higher than others

PMP3 Compared with other organizations that do the same kind of work, our firm’s performance over the last 2 years in terms of Lokshin, Van Gils, and Bauer (2009) is higher than others

PMP4 Compared with other organizations that do the same kind of work, our firm’s performance over the last 2 years in terms of growth in market share is higher than others

range for factor loadings was .62 to .82, and the model fit for confirmatory fac-tor analysis was reasonable, with a χ2 of 328.87 (degrees of freedom = 199).

Measurement Model

This study assessed construct reliability by calculating composite reliability, which assesses whether the specified indicators are sufficient in their represen-tation of their respective latent factors, as suggested by Segars (1997). These estimates of composite reliability of latent factors range from .78 to .87, which




Table 3Reliability

Item Mean SD Cronbach’s α After Deletion

PI1 4.06 0.802 .914PI2 3.90 0.829 .912PI3 3.65 0.873 .911CC1 3.51 0.973 .914CC2 3.46 0.955 .915CC3 3.93 0.824 .916CC4 3.86 0.880 .911MFS1 4.09 0.758 .915MFS2 3.78 0.855 .914MFS3 3.74 0.833 .909MFS4 3.96 0.805 .914PMP1 3.82 0.808 .914PMP2 3.88 0.853 .911PMP3 3.73 0.815 .914PMP4 3.68 0.900 .911

Note: PI = product innovation; CC = customer competence; MF = market focused; PMP = perceived market performance.

are all well above the threshold of .70, as suggested by Jöreskog and Sörbom (1989). Thus, acceptable construct reliability is implied (as shown in Table 5). However, composite reliability cannot reflect the amount of variance that is captured by the construct in relation to the amount of variance because of meas-urement error (Fornell & Larcker, 1981). Thus, the average variance extracted (AVE) estimate was used to acquire this information.

An AVE estimate of 0.50 or higher indicates acceptable validity for a con-struct’s measure (Fornell & Larcker, 1981). As shown in Table 5, all AVE esti-mates are well above the cutoff value, thus suggesting that all measurement scales have convergent validity. To assess discriminant validity among the constructs, this study calculated the square root of AVE for each construct and compared the resulting value with interconstruct correlations for each pair of constructs. Results also show that the square root of all AVE estimates for each construct is greater than the interconstruct correlations; thus, discriminant valid-ity is supported.

Test of the Structural Model

We used the LISREL 8.50 software for this analysis. Structural equation modeling was performed to test the hypothesized model presented in Figure 1 (see Figure 2). The overall goodness-of-fit was assessed in terms of the follow-ing eight common model fit measures: goodness-of-fit index, .90; adjusted goodness-of-fit index, .91; root mean square residual, .05; root mean square error of approximation, .057; normed fit index, .92; comparative fit index, .94, parsimonious normed fit index, .76; parsimonious goodness-of-fit index, .67; and the χ2 degrees of freedom ratio (1.65). Thus, overall, the data indicate a at PENNSYLVANIA STATE UNIV on September 13, 2016jht.sagepub.comDownloaded from



Table 4Confirmatory Factor Analysis

Construct Variables PI CC MFS PMP

Our company provided successful product innovations in the past 2 years

.78

The above-mentioned product innovations are new to the market .82The above-mentioned product innovations are new features to

already existing products.82

Cooperation with customers regarding product innovation occurs on a regular basis

.62

Our firm always relies on market research when developing a new product or product feature

.68

Customers are highly important as a source of ideas for new products

.60

We meet our customers on a regular basis to find out what products they will need in the future

.77

We think innovative services are important .64We make efforts for flexible operations .64We think innovative marketing of services is important .81We make efforts to become more market focused .68Compared with other organizations that do the same kind of work,

our firm’s performance over the past 2 years in terms of marketing is higher than others

.67

Compared with other organizations that do the same kind of work, our firm’s performance over the past 2 years in terms of profitability is higher than others

.82

Compared with other organizations that do the same kind of work, our firm’s performance over the past 2 years in terms of growth in sales is higher than others

.76

Compared with other organizations that do the same kind of work, our firm’s performance over the past 2 years in terms of growth in market share is higher than others

.81

Note: PI = product innovation; CC = customer competence; MF = market focused; PMP = perceived market performance. All the factor loadings are significant at the .05 level.

Table 5Measurement Model Estimation

Item PI CC EFS MFS AVE

PI .87 .75CC .623 .80 .64EFS .524 .428 .86 .75MFS .749 .684 .702 .78 .62PMP .696 .623 .563 .766 .59

Note: PI = product innovation; CC = customer competence; MF = market focused; PMP = perceived market performance. Square root of AVE for each construct was shown in the diagonal of the correlation matrix.




favorable fit for our hypothesized model. The direct model shows an accept-able fit except for chi-square and comparative fit index, but the full model seems to be superior to the direct model in explaining strategic adaptation among the members of travel agent collaborations. As presented in Table 6, the results of this hypothesized full model indicate a favorable fit of the model.

The significance and the relative strength of individual links specified by the research model were also evaluated. The results provide meaningful support for the research hypotheses. Among these hypotheses, four are fully supported.

Our analysis does not support a positive association of product innovation with market-focused strategy adaptation between collaborating partners. An innovation-oriented travel agent will analyze and store its customer requests and use these data to develop new travel products and services, but the results of innovation do not influence market-focused strategy adaptation between collaborating partners and fail to be significant at the .05 level. The strategies between collaborating partners that value product innovation as the primary work goal are different.

Figure 2Hypothesis and Testing

1.4

0.11

4.52*

7.4*

2.34*Productinnovation

(PI)

Customercompetence

(CC)

Market-focusedstrategies(MFS)

Perceived marketperformance

(PMP)

Table 6Hypothesis and Results

Hypotheses t Value Results

Hypothesis 1a Product innovation → Market focus strategies 1.4 Not supportedHypothesis 1b Product innovation → Perceived market

performance2.34* Supported

Hypothesis 2a Customer competence → Market focus strategies 7.48* SupportedHypothesis 2b Customer competence → Perceived market

performance0.11 Not supported

Hypothesis 3 Market focus strategies → Perceived market performance

4.52* Supported

*p < .05.




Hypothesis 1b, which states a positive association of product innovation with perceived market performance, was supported. A firm’s strategic orientation affects service innovation capability and the resulting impact on market perfor-mance. Travel agents should provide new travel products to improve their mar-ket performance.

The positive association of customer competence with market-focused strat-egy adaptation between collaborating partners was supported in our analysis. The importance of customer competence for collaborative work has already been established in past studies (Davis & Golicic, 2010; Kandemir et al., 2006). Travel agents face an increasingly competitive market, so customer competence is a concern in collaboration. Travel agents will continue to play a significant role in all regions.

The analysis does not support a positive association of customer competence with perceived market performance. The analysis indicates that the perceived market performance of travel agents is not affected by their customers’ compe-tence. There may be differences to consider, such as global or local traveler needs or the individual’s travel strategy. Thus, there was no significant interac-tion between customer competence and perceived market performance.

A positive association of market-focused strategy adaptation between col-laborating partners with perceived market performance was supported in the study. As Kandemir et al. (2006) point out, market-oriented firms perceive competitive intensity as more sophisticated and dynamic than less market-oriented firms do. That is, as travel agencies create a strategy adaptation situa-tion in which members of the collaboration are motivated to be customer focused, they increase market performance.

CONCLUSIONS AND IMPLICATIONS

The intersection of organizational collaboration and product innovation as an increasingly important source of a firm’s competitive advantage offers many rich opportunities for research. Customer competence has emerged as an impor-tant asset in travel agent collaboration, which can be used to increase the pro-ductivities of knowledge works through the management of product and service innovation. Moreover, acquiring the knowledge of customers so as to under-stand existing and prospective customers’ needs and wants enables a company to gain a competitive advantage in the market.

This study has focused on travel agencies and their collaborating partners. It used a multidimensional measure of factors that influence strategic collabora-tion, such measure being both intuitively appealing and reliable. The analysis of the measurement model indicates that the proposed metrics have an acceptable degree of validity and reliability. The use of the structural equation model to test the theoretical model of collaboration relationship could lead to a greater under-standing of the nature and determinants of choice and decisions related to coop-eration between firms.




Overall, the results of the study provide reliable instruments for operational-izing the key effect constructs in the analysis of market performance. They also offer some important implications for market performance in collaborations.

First, collaboration is a benefit-sharing network, but firms get such benefits according to their need. It is interesting that product innovation does not influ-ence strategic adaptation, but it does influence market performance. The result implies that not all members of a collaboration will innovate their travel prod-ucts; some of them will just select some new products or share the benefits from collaboration. For example, brand collaboration represents a strategic marketing opportunity to help an unknown brand leverage a favorable first impression from consumers in terms of brand trust and attitude toward the brand’s company. Strategic adaptation is important to the survival of a travel agent, as organiza-tions develop relatively enduring patterns of strategic behavior that coalign.

Second, customer competence is a knowledge resource in a collaborative relationship. The results of the study show that travel agencies that make adap-tations more competently will also align their strategies more effectively. As travel agencies become more customer focused, they tend to trade off resource efficiencies for increased responsiveness to their customers’ demands. For example, customers purchasing directly from operators valued experience with the tour companies and personal recommendations. Agency clients valued booking through agents along with information from guidebooks and tourist bureaus. From the interaction, customer competence has often been regarded as fundamental in helping travel agencies achieve their performance goals.

Third, an attachment relationship is a strategy for travel agency collabora-tion. Accordingly, collaborating strategies have been a major focus for improv-ing market performance. Travel agencies generally face fierce competition, and to be able to compete they must make continuous efforts to maintain product and service quality; they also need to be innovative to be the leading performers. That is, tour operator direct sales and retailers are open to cooperation and col-laboration using strong networks as well as considering market-focused forms of collaborating with wholesalers in order to attempt to overcome fragmentation disadvantages and competitive pressures. The results will show that if travel agencies wish to attract new collaborations or retain current ones, it is necessary for them to understand whether they are focused on the market or on efficiency, so that they can provide for the associated demands. The collaborating travel agencies with good communication will understand if they are more market based in making strategic adaptations.

Fourth, different strategies are discussed in terms of different segments of customers within the collaboration. Travel agencies seek long-term relation-ships with collaborating partners; customer competence as a knowledge-sharing resource between collaborators is crucial to customer service resources. In the collaborative relationship, travel agencies target different levels of customers; with customer competence, customers are ideally treated as opportunities to serve and as the reason for the firm’s existence. Through the collaborating part-ners’ communications, travel agencies can develop services to align with the needs of the customers. at PENNSYLVANIA STATE UNIV on September 13, 2016jht.sagepub.comDownloaded from



Collaboration is a major trend between the distribution and the strategy of travel agencies. Travel agencies can negotiate with clients for volume contracts, recommend travel products to individual travelers, and consult with corporate travel planners. It is important that travel agencies adopt a collaborative net-work to their strategy for innovation by developing a competence in the process of network building.

Limitations

The first limitation of this study was that we did not compare the different operation scopes of travel agents—wholesalers and retailers have different opti-mal strategies, and their motivations for knowledge sharing differ. Second, we did not analyze the motivation factor of innovation in collaborations among travel agents. Both these limitations should be addressed by future studies.

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Submitted July 21, 2011Accepted January 11, 2012Refereed Anonymously

Edward C. S. Ku is an assistant professor at Department of Travel Management, National Kaohsiung University of Hospitality and Tourism, Taiwan (R.O.C.). Chun-Ming Yang is assistant professor at Department of Tourism, Tourism School, Ming Chuan University, Taiwan (R.O.C.). His research interests include consumer psychology, marketing manage-ment, and service management. Ming-Yi Huang is assistant professor at Department of Travel Management, Hsing Wu Institute of Technology, Taiwan (R.O.C.). He is also a consult-ant of many tourism businesses and a doctoral student of Chung Hua University, Taiwan.



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