Levels of quality and environmental management in the hotel industry: Their joint influence on firm performance

International Journal of Hospitality Management 29 (2010) 500–510

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International Journal of Hospitality Management journal homepage: www.elsevier.com/locate/ijhosman

Levels of quality and environmental management in the hotel industry: Their joint influence on firm performance Juan Jose´ Tarı´ *, Enrique Claver-Corte´s, Jorge Pereira-Moliner, Jose´ F. Molina-Azorı´n Department of Business Management, University of Alicante, PO Box 99, E-03080 Alicante, Spain

A R T I C L E I N F O

A B S T R A C T

Keywords: Quality management Environmental management Performance Hotel industry

Many studies have examined quality management and environmental management separately. This paper analysed the commitment to quality and environmental management at the same time, and their separate and joint effects on hotel performance. The empirical data were collected from a sample of 301 3-to-5-star Spanish hotels. A cluster analysis was carried out to identify the levels of commitment to quality and the environment. Then, ANOVA and regression analysis tested the quality and environmental commitment levels-performance link. Three levels of quality and environmental commitment have been identified. The findings showed that the commitment to quality and environmental practices influences hotel performance. ß 2009 Elsevier Ltd. All rights reserved.

1. Introduction Several studies have examined the levels of quality management (QM) and its relationship with performance (Flynn et al., 1995; Kaynak, 2003); and environmental management (EM) levels and performance (Angell and Klassen, 1999; Melnyk et al., 2003). A debate on the effects of QM and EM can be identified in the literature. The empirical findings are mixed and thus no homogeneous results have so far been obtained about the existence of these relationships. Nevertheless, a majority of studies shows positive results in the field of QM (Powell, 1995; Easton and Jarrell, 1998; Prajogo and Sohal, 2006) and EM (Klassen and McLaughlin, 1996; Carmona-Moreno et al., 2004). Previous empirical literature in the field of QM and EM has examined these systems separately. However, some theoretical studies have indicated some benefits of integrating the two systems (Wilkinson and Dale, 1999; Corbett and Cutler, 2000; Karapetrovic, 2002, 2003; Poksinska et al., 2003; Zutshi and Sohal, 2005), for example, an improvement in the efficiency of the organisation, a reduction of bureaucracy by eliminating duplication of policies and procedures, the alignment of goals and processes, and a reduction in the costs of internal and external audits. Moreover, these two systems share similar purposes and implementation factors. In fact, EM offers a striking parallel with QM (Klassen and McLaughlin, 1996). A longterm goal of both QM and EM is to move towards a proactive, preventative stance. Similarly, the literature on QM (Kaynak, 2003)

* Corresponding author. Tel.: +34 965903606; fax: +34 965909915. E-mail addresses: [email protected] (J.J. Tarı´), [email protected] (E. Claver-Corte´s), [email protected] (J. Pereira-Moliner), [email protected] (J.F. Molina-Azorı´n). 0278-4319/$ – see front matter ß 2009 Elsevier Ltd. All rights reserved. doi:10.1016/j.ijhm.2009.10.029

and EM (Corbett and Cutler, 2000) reveals that these systems have common implementation practices, for example, leadership, training, and permanent self-assessment and improvement. Therefore, the benefits of the integration of the two systems and the similarities in terms of purposes and implementation factors justify the importance of evaluating QM and EM together. The literature has analysed the effects of QM and EM on firm performance in both manufacturing and service industries, though to a lesser extent in the latter (Gustafsson et al., 2003). Furthermore, although there are studies that have examined QM (Camiso´n, 1996; Partlow, 1996; Kimes, 2001; Gustafsson et al., 2003; Antony et al., 2004) and EM (Kirk, 1995, 1998; Mihalicˇ, 2000; Chan and Ho, 2006; Chan and Wong, 2006) in the context of the hotel industry, the relationships between QM, EM, and performance have not been examined so deeply in the literature relating to the hotel industry in comparison to other industries. In addition, to our knowledge, empirical studies of the effects of the joint commitment to QM and EM practices on firm performance have not been conducted. Therefore, it is necessary to examine these relationships in the hotel industry to fill this gap. This paper focuses on the Spanish hotel industry. Spain ranks second in the world in the tourism industry, both in terms of the number of travellers (after France) and in terms of the revenues generated by tourism (after the United States) (WTO, 2008). The aim of this paper is twofold: to identify the levels of commitment to QM and EM in the Spanish hotel industry; and to test the relationship between those commitment levels and firm performance. The main contribution of this paper is to analyse jointly QM and EM, and their impacts on performance. Moreover, considering that fewer studies have analysed service organisations, this paper tries to fill that gap in the empirical literature through an examination of Spanish hotels.

J.J. Tarı´ et al. / International Journal of Hospitality Management 29 (2010) 500–510

The paper is organised as follows. The next section reviews the link between QM and performance, EM and performance, and the commitment to QM and EM. Next, the research design is described. Finally, results, discussion, and conclusions are presented. 2. Literature review 2.1. Relationship between QM and firm performance Quality gurus suggested that the role of quality was key in the improvement of performance (Demingm, 1982; Juran, 1988). Demingm (1982) pointed out that higher quality implies lower costs and increased productivity, which in turn gives the firm a greater market share and enhanced competitiveness. Juran (1988) identified the three basic functions of the QM process as the stages for quality improvement: planning, organisation and control. The current approach to quality considers that quality is free because cost reduction can help to obtain a greater market share (Crosby, 1979; Juran, 1988). Consequently, QM can be applied at all levels in the firm, often showing that costs can be reduced and differentiation levels increased (Belohlav, 1993). This theory suggests that QM has positive effects on firm performance. In this context, several studies have found that QM practices apply equally to both manufacturing and service firms and that they may all successfully adopt them (Prajogo, 2005). Nevertheless, studies reported in the literature have examined service organisations to a lesser extent than manufacturing firms. Moreover, within the service industry, although the importance of QM in hotels has been recognised (Saleh and Ryan, 1991; Danaher and Mattsson, 1994; Callan and Bowman, 2000; Callan and Kyndt, 2001; Min et al., 2002), there has been limited research that has addressed the structure and antecedents of the QM concept in the hospitality research field compared to service or manufacturing industries (Wilkins et al., 2007). The hotel industry is so concerned with product and service quality (Johns, 1995; Kimes, 2001) that there is even a service quality measurement named LODGQUAL (Getty and Thompson, 1994) as a specific derivate of SERVQUAL (Parasuraman et al., 1985), designed for the lodging industry. In general terms, the empirical literature on the relationship between QM and performance uses different quality variables and reports mixed results. For example, with reference to the total quality management variable, several empirical studies have found a positive link between total quality management and firm performance (Flynn et al., 1995; Powell, 1995; Samson and Terziovski, 1999; Kaynak, 2003; Prajogo and Sohal, 2006). QM pursues customer satisfaction and process improvement in order to achieve cost reductions by means of defect and waste prevention. According to some works, the success of total quality management depends critically on soft aspects such as leadership and people management (Powell, 1995; Samson and Terziovski, 1999; Terziovski et al., 2003). In the context of the hotel industry, the literature also suggests positive results. There are several research works which consider that total quality management is related to competitive advantage and hotel performance. Total quality management can influence performance within the hotel industry in two complementary ways. It can have internal impacts through processes, and external impacts through the market. Internal impacts on performance are related to the internal functioning of organisations (e.g. increase in productivity, improvement in efficiency and reduction in costs and waste). External impacts on performance have to do with the effects of quality on customer satisfaction and demand (e.g. increasing sales and market share, keeping tourism relationships, attracting new tourists, achieving higher tourist satisfaction levels and improving image) (Bowen and Schoemaker, 1998; Pizam and Ellis, 1999; Gustafsson et al., 2003; Antony et al., 2004; Wilkins et al., 2007).

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Nevertheless, other scholars have shown that some firms do not achieve this positive effect (Boje and Winsor, 1993), which may be due to the motivation for implementing total quality management (e.g. external or institutional reasons), an ineffective implementation or the lack of management support, amongst other reasons. As for the effects of the ISO 9001 certification variable on performance, some studies have shown that ISO 9001 certified firms do not outperform those which do not have such certification (Singels et al., 2001), while others have argued that certified firms outperform non-certified ones financially (Wayhan et al., 2002; Chow-Chua et al., 2003). In the context of the hotel industry, Callan (1992) found that quality certification reduces staff turnover and waste. Walker and Salameh (1996) showed that quality may result in positive changes in employee turnover, enthusiasm, cooperation, communication, operational factors, and customer satisfaction. Birdir and Pearson (1998) found that quality certificates can be a tool to promote and improve a firm’s image, both internally and externally. Finally, Nield and Kozak (1999) suggested three categories of benefits resulting from ISO 9000: operational, marketing and people benefits. Despite these benefits, the literature has also identified a number of inconveniences (Brown et al., 1998; Kanji, 1998; Singels et al., 2001; Yahya and Goh, 2001). These include the extra costs involved in obtaining quality certification, the time used, a greater operational bureaucracy, and the lack of attention to personnel development (Ingram and Daskalakis, 1999; Nield and Kozak, 1999). Nevertheless, a correct application of the system will allow advantages to outweigh disadvantages. Benefits and shortcomings may also appear in the hospitality industry when these organisations implement a QM system correctly. Accordingly, in general terms, a majority of works show positive results in the literature from QM and in the literature on hotel industry. Therefore it can be argued that effective implementation of a QM system can improve performance. 2.2. Relationship between EM and firm performance Previous studies that have analysed the relationship between the EM and firm performance have used different environmental variables. Some works have used variables related to EM (practices, initiatives, technologies, environmental management system) (Judge and Douglas, 1998; Klassen and Whybark, 1999). Other studies have used environmental performance variables, both positively (emission reductions) and negatively (emissions generated) (Hart and Ahuja, 1996; Wagner et al., 2002). Moreover, the findings about these relationships are mixed, but the majority of studies found that EM has positive effects on firm performance. These mixed results can be explained from two theoretical approaches: the traditional approach to EM and ‘the Porter Hypothesis’. On the one hand, the more traditional stance postulates that an improvement in the environmental impact caused by an enterprise leads to a reduction in its profitability. Thus, it is suggested that compliance with environmental regulations incurs significant costs, reducing the capacity to compete (Jaffe et al., 1995). Furthermore, although cost savings can easily be obtained with a number of simple prevention measures, the most ambitious prevention measures may involve costs that exceed the savings to be derived from them (Walley and Whitehead, 1994). In addition, there are some difficulties that a hotel may encounter in adopting an EM system, e.g. lack of knowledge and skills, lack of professional advice, uncertainty of outcome, certifiers/verifiers, lack of resources, and implementation and maintenance costs (Chan, 2008). On the other hand, in ‘the Porter Hypothesis’ (Porter and Van der Linde, 1995), EM can help firms to reach a win-win situation, from which both the firm and the environment will benefit. The

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distinction between cost and differentiation competitive advantages provides a useful framework to analyse the impacts of EM on firm performance. As for the costs, pollution prevention can allow a firm to save control costs, input and energy consumption, and also to reuse materials through recycling (Hart, 1997; Quazi et al., 2001). Thus, the essential purpose of eco-efficiency is to produce and deliver goods more cost-efficiently while simultaneously reducing ecological impact and resource intensity, and minimising material as well as energy intensity (Starik and Marcus, 2000). In the hotel industry, some authors point out that environmental practices can allow a hotel to save costs related to resources, water and energy consumption (Iwanowski and Rushmore, 1994; Chan and Lam, 2003, Chan, 2005). Thus, some measures related to water use are to implement water savings through changes in routine (e.g. reducing washing/rinsing cycles in the laundry), check regularly for leaks from cisterns, taps and pipes and that plugs in basins fit properly, install sensors for low-flow and other watersaving fittings in kitchens, guest bathrooms and public washrooms, and minimise water use by recycling grey water for gardening, washing floors, flushing toilets, etc. Regarding energy, some measures are to identify simple changes in routine that can be made to save energy (such as turning off lights and running equipment such as dishwashers and washing machines at full loads) and to identify and implement low-cost measures such as fitting energy-efficient light bulbs and motion detectors, improve insulation and use heat recovery techniques. Moreover, EM also fosters product differentiation. For example, a reduction of pollution levels will probably increase the demand from environmentally sensitive tourists, since the ecological characteristics of products can become a new competitive argument appreciated by these ‘green’ customers and firms can acquire a better ecological reputation (Miles and Covin, 2000; Chan and Wong, 2006) and thus force hoteliers to adapt to their new preferences, among which a greater respect for the environment stands out (Cook et al., 1992; Feiertag, 1994; Pyo et al., 2002). In this situation, the destination’s environmental conservation could become a key success factor in terms of hotel competitiveness, since it helps to keep the destination’s appeal and, therefore, to attract tourists. Thus, if hotels apply effective EM, they are likely to improve their guests’ perception of environmental quality both of the hotel and of the tourism product as a whole (Kirk, 1998; Chan and Wong, 2006). This means that the different stakeholders involved in creating a destination’s tourism product should work on a long-term planning project so that its level of competitiveness can be maintained, all of which require the adoption of a sustainable tourism policy (Jennings, 2004). Within that overall policy, hotels should adopt proactive environmental management to help ensure the sustainability of the destination and to be more competitive. 2.3. The commitment to QM and EM QM and EM are increasingly being adopted by firms, very often together (Karapetrovic and Willborn, 1998; Wilkinson and Dale, 1999). In fact, EM offers a striking parallel with QM (Klassen and McLaughlin, 1996). As is the case with QM, a long-term goal of EM consists of moving towards a proactive, preventative stance, incorporating environmental issues into product design, technology-related decisions, the entire manufacturing process, and customer service. Moreover, the QM goal of ‘‘zero defects’’ closely parallels the ‘‘no waste’’ aim of EM-based systems. QM focuses on waste insofar as it applies to process inefficiencies, whereas EM pays more attention to pollution. The integration of QM and EM has become a popular topic of research and practice (Karapetrovic, 2003; Karapetrovic and Willborn, 1998; Wilkinson and Dale, 1999; Zutshi and Sohal,

2005). These studies suggest that quality and environmental management systems and standards have become a key pillar for the improvement and survival for many organisations. A commitment to quality and environmental issues require that managers consider several aspects to successful implementation such as obtaining commitment from the top management, having adequate resources to integrate the systems, having communication and training, and having integrated audits (Zutshi and Sohal, 2005). Then, the common elements of both management systems can be implemented in a shared manner in whole or in part by organisations without unnecessary duplication (Wilkinson and Dale, 1999). Karapetrovic (2003) emphasises the integration of internal management systems, not an integrated standard. The implementation of both management systems can be carried out in three ways by hotel firms (Karapetrovic and Willborn, 1998): establishing the QM system first and subsequently the EM system; establishing the EM system first and subsequently the QM system; or establishing the EM and QM systems simultaneously. In any of the three cases, the hotel firm must reflect on the desirable level of integration between both management systems. This level of integration can be represented as a continuum with two ends: a zero or minimum level of integration with two totally independent systems, and the complete or total integration of both systems. An integrated system adds a series of benefits to those achieved by each of the systems alone. Among these benefits, the literature has highlighted the following (Beckmerhagen et al., 2003; Beechner and Koch, 1997; Poksinska et al., 2003; Zutshi and Sohal, 2005): an improvement in the efficiency and effectiveness of the organisation, avoiding duplication of effort and reducing costs; a reduction of bureaucracy by eliminating duplication of policies, procedures and registers; the alignment of goals, processes and resources and a reduction in the costs of internal and external audits; and the availability of joint training and improved communication between all organisational levels. Many hotels may adopt practices related to QM (e.g. management commitment, people management, customer focus, continuous improvement) and EM (e.g. resources-saving practices, people management, use of ecological arguments in marketing, purchase of ecological products) to achieve the benefits associated with this integration. For instance, TUI is a tourist group including hotels (Riu, Iberotel, Robinson) which is strongly committed to QM and EM. This fact has enabled it to increase satisfaction levels among external stakeholders, to be included in the Dow Jones Sustainability Index (DJSI) World and FTSE4Good, and to improve its credit ratings, which in turn gives it flexible access to financial markets. In addition, well-known hotel groups (such as InterContinental Hotels Group, Radisson, Sol-Melia´, Hoteles RH) include in their web pages the actions and benefits resulting from their quality and environmental policies, and this has made it possible for these groups to improve their gross profit. As stated above, some studies have analysed QM levels and performance and others EM levels and performance. Few scholars have dealt with the link between the two systems from an empirical point of view (Curkovic et al., 2000; Zutshi and Sohal, 2005). Zutshi and Sohal (2005) find the benefits from operating quality and environmental systems and show success factors such as top management commitment, adequate resources, and communication and training across the organisation. Curkovic et al. (2000) examine the relationship between QM and EM, and develop a series of measures for various aspects related to these two management systems. These authors validated a scale that included quality and environment issues, using independent items for each one of the systems, though they did not analyse the effects of the integrated system on performance. These studies suggest that a commitment to quality and environmental issues may have positive effects on performance in manufacturing and service

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industries. These results may be extended to hotel industry. However, to our knowledge, no study has analysed the levels of commitment to QM and EM practices and its effects on firm performance in the hotel industry. Drawing on the literature review above, it can be concluded that commitment to QM and EM may have positive effects on hotel performance. Therefore, the following hypotheses are proposed: Hypothesis 1. Hotels that are more committed to QM and EM show significant higher firm performance levels. Hypothesis 2. The commitment to QM and EM explain significantly hotel performance. 3. Research design 3.1. Sample and data collection The population is made up of 3900 3-, 4- and 5-star individual hotel establishments which appear in the Official Hotel Guide ˜ a (Tourism Spanish Secretariat). These published by Turespan hotels were chosen because they are the most likely committed to QM and EM since they might have more firm resources to afford these managerial systems, although their QM and EM could be different. This population considers all the hotels independently of whether they implement QM or EM. A structured questionnaire with closed questions was sent by post to the CEO of each establishment because that is the only person in the hotel who can answer all questions related to QM, EM, and firm performance. Ideally, information should be gathered from multiple respondents at each firm to minimise the potential for bias from a single informant. However, the nature of the questions and the small size of some hotels limit the possibility of using multiple respondents for all the hotels (Carmona-Moreno et al., 2004). A pre-test was carried out with 10 hotel managers, the president of a hoteliers’ association and three researchers specialised in hospitality management. This pre-test was very helpful because these experts expressed their opinion about the variables and the way of measuring them. They suggested some aspects related to the way of asking some items that would be more suitable for hotel managers and increase the response rate. A total of 301 hotel managers answered the questionnaire. Stamped addressed envelopes for the answers were enclosed for the purpose of improving the response rate, together with the promise to return a managerial report of the results to the participants. Furthermore, the deficiencies detected in the answers were rectified through telephone calls, by fax or by e-mail. With regard to the sampling error, for a confidence level of 95%, and the least favourable situation of p = q = 0.5, the error is 5.4%. Although the response rate of the questionnaire may seem low, it is close to the mean obtained by mail surveys in Spain (del Brı´o et al., 2002). There is not a strong tradition of collaboration with research centers in Spain. In addition, when it comes to studying management issues and performance, companies are usually reluctant to answer because they tend to be afraid to show their strengths and weaknesses. Some international studies have even had to admit that they had serious problems with response rates in Spanish firms. Very et al. (1997) examined French, British, and Spanish firms. The rates of response were: 27% among French firms, 34% in British firms, and only 6% for their Spanish counterparts. Regarding the sample, 58.1% of the respondents are 3-star hotels; 37% corresponds to 4-star establishments and only 5% are 5-star hotels. The average number of employees in the hotels analysed is 46, the maximum value for this variable being 227 employees. The average size of the hotels is 125 rooms and 241

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beds. Finally, regarding type of hotel management, 42.9% of the establishments are chain-affiliated, whereas the remaining 57.1% are independent. Non-response bias was assessed by comparing early respondents with late respondents (Armstrong and Overton, 1977). The rationale is that late respondents are more similar to nonrespondents than are early respondents. The dataset was divided into thirds according to the number of days from initial mailing until receipt of the returned questionnaire. Pearson’s chi-square tests and Student’s t between the first and last thirds indicated no statistically significant differences in the mean responses for all the variables measured. Therefore, non-response bias is presumed not to be a problem in this dataset. It was additionally found that the categories in the sample and the population were significantly related (p < 0.05; Pearson’s chi-square) and that no significant differences existed between the number of rooms and beds in the sample and in the population (p > 0.10; Student’s t). Following Podsakoff and Organ (1986), Harman’s single factor test was applied to analyse common method variance because we have only a single respondent. Seven factors were extracted with the first factor accounting for 25% of the total variance. Therefore, the observed relationships among constructs are not largely accounted for by the systematic variance associated with the measurement technique. 3.2. Variables After reviewing the conceptual and empirical literature, some scales were selected for use in measuring QM, EM and firm performance. QM commitment. Various measurement studies have developed a reliable, valid scale in the manufacturing and service industry (Saraph et al., 1989; Flynn et al., 1994; Black and Porter, 1995; Ahire et al., 1996; Grandzol and Gershon, 1998; Conca et al., 2004). Some of the common practices identified in these studies are: leadership, quality planning, people management (e.g. training), customer focus, process management, supplier management, continuous improvement and product design. Other works have identified QM practices in the hotel industry (Bretier and Bloomquist, 1998; Arasli, 2002). Based on this literature review, the present study used 10 QM practices (see Table 1) which were scored on a seven-point Likert scale ranging from 1 (no commitment) to 7 (maximum degree of commitment). EM commitment. The scale proposed by Carmona-Moreno et al. (2004) was used. The 12 practices were divided into two constructs — basic and advanced EM commitment (see Table 1) — and measured with a seven-point Likert scale ranging from 1 (no commitment) to 7 (maximum degree of commitment). Firm performance. The present study focuses on performance considered in terms of the operational and financial results (Venkatraman and Ramanujam, 1986) measured from primary data and specific to the hotel industry. The performance variables measured are objective and perceptual. This combination of variables is of paramount importance in the lodging industry because these establishments commercialise intangible experiences (Reichel and Haber, 2005). As for objective performance variables, three of them have been measured: occupancy rate per room, gross operating profit (GOP), and GOP per available room per day (GOPPAR per day). These variables are appropriate to measure the performance of an individual hotel establishment because they are always known by the Spanish managers of an individual hotel establishment and because GOP and GOPPAR include revenues and costs of the hotel (Brown and Dev, 1999). The variables GOP and GOPPAR per day were measured using 10 intervals on which hotel managers had to rate their establishment. The percentiles 0, 5, 10, 25, 50, 75, 90, 95 and 100 of the mean values for these variables in

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Table 1 Construct validity of perceptual measures. Variables/items

Factor 1

QM commitment (Saraph et al., 1989; Flynn et al., 1994; Black and Porter, 1995; Ahire et al., 1996; Bretier and Bloomquist, 1998; Grandzol and Gershon, 1998; Arasli, 2002; Conca et al., 2004) 1. The management is committed to quality 2. Customers’ present and future needs are known to the firm 3. The firm collaborates with intermediaries to improve the product offered in the establishment 4. The firm collaborates with suppliers to improve the product offered in the establishment 5. The establishment staff receive training in quality-related issues 6. Employee motivation is encouraged 7. All the staff are involved in the elaboration of the product offered 8. Improvements are identified in the service delivery process 9. Objective compliance is monitored and deviations are corrected 10. A culture focused on the continuous improvement of the product offered is at work Eigenvalue per factor % of variance explained per factor Accumulated % of variance explained Correlation matrix determinant Kaiser–Meyer–Olkin Index Bartlett’s significance test of sphericity

0.726 0.697 0.632 0.725 0.820 0.822 0.832 0.859 0.849 0.866 6.188 61.88% 61.88% 0.001 0.917 0.000

Variables/items

Factor 2

EM commitment (Carmona-Moreno et al., 2004) Basic EM commitment 1. Purchase of ecological products 2. Environmental collaboration is made easier for the customer 3. Reduction in the use of environmentally dangerous products 4. Energy-saving practices 5. Water-saving practices 6. Selective collection of solid residues Advanced EM commitment 7. The firm trains its employees in environmental issues 8. Compensation is given to employees with environmental initiatives 9. Use of ecological arguments in marketing campaigns 10. Organisation of environmental activities by the firm 11. The firm has a long-term environmental approach 12. Quantification of environmental savings and costs Eigenvalue per factor % of variance explained per factor Accumulated % of variance explained Correlation matrix determinant Kaiser–Meyer–Olkin Index Bartlett’s significance test of sphericity Variables/items Perceptual performance (Camiso´n, 1999) Competitive performance 1. Room occupancy rate 2. Market share gain 3. Average sales growth in the last five years 4. Income per room 5. Total gross profit 6. Gross profit per room 7. Wealth creation (Accounting value of the firm with respect to its market value) 8. Capacity to generate profit in times of crisis Stakeholder satisfaction 9. Customer satisfaction level 10. Employee satisfaction level Eigenvalue per factor % of variance explained per factor Accumulated % of variance explained Correlation matrix determinant Kaiser–Meyer–Olkin Index Bartlett’s significance test of sphericity

the 221 Spanish hotel firms with a single 3-to-5-star establishment obtained from the SABI (Sistema de Ana´lisis de Balances Ibe´ricos) database were calculated. We calculated these variables in this way because these were the only objective data to which we had access and also because, as we were told by the practitioners and researchers consulted during the exploratory study, it is not advisable to ask directly for these variables, which are commercially sensitive. Regarding the perceptual performance, we employed an adapted scale developed by Camiso´n (1999) and

Factor 1

0.633 0.496 0.771 0.860 0.871 0.505

0.714 0.829 0.820 0.855 0.667 0.651 1.587 13.23%

5.992 49.94% 63.17% 0.001 0.904 0.000 Factor 1

Factor 2

0.591 0.619 0.641 0.838 0.904 0.890 0.813 0.800

5.510 55.10 66.98% 0.002 0.880 0.000

0.833 0.862 1.188 11.88%

formed by 10 items valued from 1 to 7 (1 meaning ‘‘much worse than competitors’’ and 7 meaning ‘‘much better than competitors’’) (see Table 1). 3.3. Reliability and validity of perceptual measures Regarding validity, content validity, construct validity and criterion-related validity were checked. Content validity was assured by an extensive review of the literature and the expert

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Table 2 Levels of commitment to QM and EM. Variables

Group 1 QM and EM proactive n = 91

Group 2 QM committed n = 158

Group 3 reactive n = 51

Mean

Sign.

QM commitment Basic EM commitment Advanced EM commitment

6.29 6.16 5.21

5.73 5.05 2.99

4.11 3.72 1.73

5.62 5.16 3.46

0.000(1) 0.000(1) 0.000(1)

QM commitment items The management is committed to quality Customers’ present and future needs are known to the firm The firm collaborates with intermediaries to improve the product The firm collaborates with suppliers to improve the product The establishment staff receive training in quality-related issues Employee motivation is encouraged All the staff are involved in the elaboration of the product offered Improvements are identified in the service delivery process Objective compliance is monitored and deviations are corrected A culture focused on the continuous improvement of the product offered

6.74 6.09 5.97 6.34 6.22 6.18 6.21 6.27 6.42 6.46

6.32 5.75 5.52 5.70 5.37 5.49 5.78 5.84 5.74 5.80

5.08 4.67 4.12 4.59 3.35 3.63 3.84 4.27 3.80 3.71

6.23 5.67 5.42 5.71 5.28 5.38 5.58 5.70 5.61 5.65

0.000(2) 0.000(2) 0.000(2) 0.000(2) 0.000(2) 0.000(2) 0.000(2) 0.000(2) 0.000(2) 0.000(2)

Basic EM commitment items Purchase of ecological products Environmental collaboration is made easier for the customer Reduction in the use of environmentally dangerous products Energy-saving practices Water-saving practices Selective collection of solid wastes

5.62 5.95 6.30 6.40 6.37 6.33

4.24 4.28 5.32 5.70 5.54 5.22

2.84 3.12 3.73 4.39 4.31 3.90

4.42 4.59 5.35 5.69 5.59 5.34

0.000(2) 0.000(2) 0.000(2) 0.000(2) 0.000(2) 0.000(2)

Advanced EM commitment items The firm trains its employees in environmental matters Compensation is given to employees with environmental initiatives Use of ecological arguments in marketing campaigns Organisation of environmental activities by the firm The firm has a long-term environmental approach Quantification of environmental savings and costs

5.55 4.37 4.86 4.63 6.01 5.81

3.43 2.10 2.46 2.31 4.09 3.58

1.75 1.31 1.80 1.35 2.24 1.90

3.79 2.65 3.09 2.86 4.37 3.98

0.000(2) 0.000(2) 0.000(2) 0.000(2) 0.000(2) 0.000(2)

(1) F ANOVA; (2) Pearson’s chi-square.

judgment of academics and professionals in the hotel industry. Construct validity is assessed by means of a factor analysis for each measure. In this analysis, one construct proved to be unifactorial and two did not (Table 1). Two latent variables were obtained in the area of EM: basic EM commitment (a factor in which the highest scores were obtained in the items associated with shortterm costs) and advanced EM commitment (a factor which contained the items representing an effort in long-term issues). In addition, two latent variables were identified on the perceptual performance scale: competitive performance (as all the variables with significant scores in this factor could be measured through the firm’s accounting or financial ratios); and stakeholder satisfaction (which includes employee and customer satisfaction levels). These latent variables will be considered in later analyses. These new variables will be made up by aggregating the scores achieved in the items covered by them. Criterion-related validity was measured through the correlation between the different performance variables and the QM and EM variables. The correlation matrix shows that most of the predictor variables are significantly related to performance (p < 0.05). As for reliability, this was estimated using Cronbach’s alpha, which measures the internal consistency of multidimensional scales. The minimum advisable value — 0.7 (Nunnally, 1978) — is exceeded for every single factor. Reliability ranged between 0.83 and 0.93 and was thus satisfactory. 4. Results A two-stage cluster analysis was used to identify the levels of QM and EM commitment in Spanish hotels. Both hierarchical (Ward’s Method) and non-hierarchical cluster procedures were applied. Three hotel groups were found (see Table 2) and this solution was validated in four ways. The existence of significant

differences between the hotel groups in the factors and in the variables was checked first. Second, a discriminant analysis was performed; the analysis showed that 99% of the cases grouped were correctly classified in their respective groups. Third, hierarchical cluster analysis was applied employing the rest of the different algorithms from Ward’s Method. All of them suggest three groups, because the fourth is composed only of outliers. Finally, opinions of some of the hotel managers interviewed confirm that the solution obtained, as well as its interpretation, largely fit their perception of the surrounding reality. Therefore, this cluster solution is valid and robust. The following three clusters were obtained. Group 1 (QM and EM Proactive Hotels) is formed by the hotels showing the highest QM and basic and advanced EM commitment level. Group 2 (QM Committed Hotels) is the group in which most hotels are located. Its commitment to QM is above the average, but in terms of EM, this group is below the average, both in basic and in advanced EM commitment. Group 3 (QM and EM Reactive Hotels) is the smallest group and its commitment to QM and EM is always below average, and they even obtained the lowest scores for each one of the items. To complete the description of these groups, a comparison was made using some relevant variables in the hotel industry. The variables compared are: star rating (3-to-5-star hotels), size (number of rooms), hotel facilities available (sum of 38 possible ˜ a’s Official items referring to these variables drawn from Turespan Hotel Guide), chain affiliation (independent or chain-affiliated hotel) and room rate. As can be seen in Table 3, QM and EM commitment increase in parallel with those variables, except in chain affiliation. For example, QM and EM proactive hotels have a higher star rating, more rooms and facilities, are chain-affiliated to a greater extent and are the most expensive hotels. In order to test the Hypothesis 1, the performance levels achieved by each group were compared. Table 4 shows that QM and EM proactive hotels have higher firm performance in all

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506

Table 3 Comparison of star rating, size, facilities, chain affiliation and room rate between groups. Variables

QM and EM proactive

QM committed

Reactive

Sign.

Star rating (3-, 4-, and 5-star hotels) Size (no. of rooms) Facilities (sum of 38 possible items referring to these variables drawn from Turespan˜a’s Official Hotel Guide)a Chain affiliation (0: independent; 1: chain-affiliated) Room rate

3.59 150.56 18.40

3.45 118.53 16.97

3.29 100.31 16.20

0.044(1) 0.065(2) 0.019(2)

0.51 128.73s

0.37 113.25s

0.47 98.05s

0.078(1) 0.018(2)

(1) Pearson’s chi-square; (2) F ANOVA. a Parking, free indoor parking, accessible facilities and public areas, medical service, credit cards accepted, change, nursery, meeting room(s), simultaneous translation, dogs allowed, 24-h room service, hairdressing salon, bar/coffee shop, discotheque, shops, garden/terrace, swimming pool, heated swimming pool, tennis, squash, golf, minigolf, sauna, gym, bicycle hire, heating, air conditioning in rooms, individual safe, jacuzzi, rooms with lounge/suites, telephone in rooms, television in rooms, video/dvd in rooms, internet in rooms, fax, satellite dish antenna, mini-bar, and hairdryers in rooms.

Table 4 Differences in performance between groups. Variables

QM and EM proactive

QM committed

Reactive

F ANOVA

Scheffe´ (post hoc)

Occupancy rate per room GOP GOPPAR per day Competitive performance Stakeholder satisfaction

66.44% 4.59 4.58 4.96 5.68

62.84% 3.89 4.11 4.51 5.33

64.76% 3.71 3.92 4.44 4.99

1.355 4.208** 2.212 8.627*** 13.015***

– QM – QM QM QM

and EM proactive > QM committed, reactive** and EM proactive > QM committed, reactive*** and EM proactive > QM committed, reactive***; committed > reactive**

*0.05 < p  0.1. ** 0.01 < p  0.05. *** p  0.01.

variables. These differences are significant in the GOP, in competitive performance and in stakeholder satisfaction. In a post hoc analysis, GOP and competitive performance of the QM and EM proactive hotels are significantly higher than the QM committed, and QM and EM reactive hotels. The same happens with stakeholder satisfaction, and in addition this satisfaction is significantly higher in the QM committed hotels than the QM and EM reactive ones. No significant differences were obtained regarding occupancy rate per room. Neither do significant differences exist in the GOPPAR per day, the performance variable which eliminates the ‘size effect’. Therefore, Hypothesis 1 is partially supported. Next, in order to test Hypothesis 2, multiple linear regressions were applied in which performance variables were used as dependent variables and QM and EM commitment levels as the independent variables; and size was used as a control variable (Table 5). We have assessed the potential multicollinearity among the items of perceptual measures, which could produce unstable estimates in regression analysis. Thus, a collinearity test was performed. In the case of QM, the results showed minimal collinearity with the variance inflation factor (VIF) of all items ranging between 1.95 and 4.07, far below the common cut-off threshold of 5–10. However, condition indexes and the proportion of variance suggested the existence of multicollinearity in QM10 (a culture focused on continuous improvement). This could be due

to the fact that the other items lead to QM10. Therefore, QM10 was removed from QM. In the case of basic EM, the VIF of all items fell between 1.28 and 3.08, and for advanced EM are between 2.02 and 2.42. Condition indexes and the proportion of variance for these two variables did not show any multicollinearity problem. Finally, competitive performance items have a VIF between 1.47 and 3.32. However, condition indexes and the proportion of variance suggest that multicollinearity existed in GOPPAR per day. This could be because the other items lead hoteliers to perceive that their hotels achieve higher levels of this variable. Therefore, perceptual GOPPAR was removed from competitive performance. Regarding stakeholder satisfaction, VIF, condition indexes and the proportion of variance did not show multicollinearity problems. It can be seen that all the multiple regression models proposed are significant. Although QM and EM commitment have significant regression coefficients, quite disparate values are found for the determination coefficient adjusted between the different models. This shows that the different QM and EM commitment levels influence each performance variable to a different extent. Regarding performance variables, occupancy rate per room is slightly influenced by basic EM commitment (p < 0.1). Advanced EM commitment increases the GOP significantly (p < 0.05). Advanced EM commitment also influences GOPPAR per day significantly (p < 0.01), but basic EM commitment impacts this variable negatively. This may be due to fact that these basic

Table 5 Multiple regression analysis between QM, EM and performance. Occupancy rate per room QM Basic EM Advanced EM Size F R2 adjust. * ** ***

0.05 < p  0.1. 0.01 < p  0.05. p  0.01.

0.102 0.137* 0.043 0.321*** 11.196*** 0.123

GOP 0.024 0.006 0.170** 0.538*** 33.371*** 0.327

GOPPAR per day 0.043 0.182** 0.304*** 0.108* 5.301*** 0.061

Competitive performance ***

0.269 0.118 0.188** 0.026 8.730*** 0.097

Stakeholder satisfaction 0.332*** 0.116 0.049 0.100* 12.899*** 0.140

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Table 6 Multiple regression analysis between QMEM and performance. Occupancy rate per room QMEM Size F R2 adjust.

0.060 0.335*** 20.085*** 0.116

GOP

GOPPAR per day **

0.116 0.545*** 64.202*** 0.321

**

0.140 0.109* 4.833** 0.028

Competitive performance ***

0.259 0.023 10.608*** 0.063

Stakeholder satisfaction 0.349*** 0.118** 20.302*** 0.117

*

0.05 < p  0.1. 0.01 < p  0.05. *** p  0.01. **

practices require short-term costs to save energy, water and other resources. Regarding competitive performance, QM and advanced EM commitments have a positive influence (p < 0.05). Stakeholder satisfaction is only positively influenced by QM commitment (p < 0.01). When QM and EM items are integrated jointly in the same variable (QMEM) (see Table 6), similar results are obtained. The joint commitment to QM and EM (QMEM) has significant regression coefficients in all performance variables analysed. Therefore, Hypothesis 2 is partially supported. Furthermore, this regression analyses in Table 6 show quite disparate values in the determination coefficient. Regarding size as a control variable, size has a significant influence on occupancy rate per room, GOP, GOPPAR per day and stakeholder satisfaction in the regression analyses included in Tables 5 and 6.

5. Discussion and conclusions The result of the cluster analysis indicates that the hotels could be grouped into three clusters, based on QM and EM commitment. The first of these groups was composed of hotels that showed evidence of being proactive in QM and EM. The second group was made up of firms that were committed to QM. And the final group was made up of hotels that were reactive in terms of both QM and EM. Each group had different characteristics and reflected different levels of commitment to QM and EM. The results may indicate ways in which the hotels in the last two groups, QM committed and QM and EM reactive hotels, could identify actions that would improve their levels of QM and EM commitment. Moreover, the fact that the QM and EM proactive hotels had a higher star rating, more rooms and facilities, and were more likely to be affiliated to a chain, may be the outcome of the fact that hotels that have more resources are more profitable (Brown and Dev, 1999; Chu and Choi, 2000; Israeli, 2002; Pine and Phillips, 2005), and because they have more financial resources they have a stronger commitment to QM and EM. As stated above, the literature reported that different levels of QM and EM may lead to improved performance. Accordingly, hotels with different levels of QM and EM commitment may perform at different levels. The findings derived from ANOVA show significant differences in several performance variables: GOP, competitive performance and stakeholder satisfaction. The difference in GOP may be due to the fact that an increase in QM and EM commitment is related to the size of the hotel. Regarding competitive performance and stakeholder satisfaction, the differences may be due to the fact that, because of their higher degree of commitment to QM and EM, hoteliers can have the impression that their competitiveness and stakeholder satisfaction levels exceed those of their known competitors. However, there are no significant differences in occupancy rate per room, which suggests that tourists do not choose a hotel because of its commitment to QM and EM. Nor are there significant differences in the GOPPAR per day, the variable which eliminates the ‘size effect’. As stated

above, this fact shows that size is an important variable in the hotel industry in relation to QM and EM. Looking at the above results, it can be seen that the implementation of effective QM and EM practices may improve firm performance in the hotel industry, although some aspects of performance may be improved more than others. Results derived from regression analyses show that the different QM and EM commitment levels influence the performance variables to different extents. The same happens when joint commitment to QM and EM (QMEM) is analysed. Therefore, separate and joint QM and EM commitment levels exert a heterogeneous influence in terms of intensity and direction. This fact may explain the absence of homogeneous relationships between QM and firm performance and between EM and firm performance obtained in previous studies, because they have used different performance variables. In addition, based on the results, QM and EM commitment may have positive effects on GOP, GOPPAR, competitive performance and stakeholder satisfaction. Our results show that levels of commitment to QM and EM may have positive effects on firm performance. The results support, for some performance variables, the existing literature that found links between QM and firm performance (Powell, 1995; Bowen and Schoemaker, 1998; Pizam and Ellis, 1999; Samson and Terziovski, 1999; Kaynak, 2003; Sila and Ebrahimpour, 2005; Wilkins et al., 2007), and between EM and firm performance (Kirk, 1995; Klassen and McLaughlin, 1996; Judge and Douglas, 1998; King and Lenox, 2002; Carmona-Moreno et al., 2004; Gonza´lez-Benito and Gonza´lez-Benito, 2005). The main contribution of this study is to show three levels of QM and EM commitment which may lead to different levels of firm performance in Spanish hotels. In the vast majority of studies, QM (Powell, 1995; Kaynak, 2003; Sila and Ebrahimpour, 2005) and EM (Klassen and McLaughlin, 1996; Carmona-Moreno et al., 2004; Link and Naveh, 2006) have been analysed separately. This paper examines the joint effects of QM and EM practices on firm performance. Thus, it contributes to the meagre empirical literature about commitment to QM and EM. These results have managerial implications, which should encourage hotels to re-evaluate their level of commitment to QM and EM, and to see this as a way to improve firm performance. First, the different levels of commitment define the characteristics of the groups and consequently hoteliers may identify the most influential specific quality and environmental aspects in each group, which can help them to identify the areas in which they should invest and the aspects where improvement needs to be made if they wish to move from one group to another. Second, commitment to QM and EM may have positive effects on some firm performance variables. This may be due to the fact that these practices may reduce costs and improve the hotel image, which could impact on operational and financial performance. Third, the most profitable group of hotels is the QM and EM proactive hotels, because this kind of hotel achieves the maximum on each performance variable analysed. Therefore, hotels in Spain should aspire to this high level of commitment to QM and EM. In addition, commitment to joint programmes of QM and EM may have a

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significant influence on the hotel performance, and consequently it may be worth investing in these two management systems. The following paragraphs identify some specific actions that exploit the value of investing in QM and EM and their relationship with performance. In relation to QM, an effective QM system may improve the hotel’s image and have an impact on customer satisfaction and service quality (Claver et al., 2006). One example of this can be seen in the performance of NH Hotels (2009). NH Hotels have created and implemented an internal quality culture through an Integral Management Plan governing Service Quality, called Quality Focus. This project allows NH to improve the services provided to customers, by involving and training all employees in the quality culture and compiling, disseminating and setting-up service procedures at NH Hotels in order to design action plans to improve customer satisfaction. QM practices help hotel managers to reduce their costs and, therefore, to be more profitable. Quality efforts in hotels make it possible to develop business activities efficiently and effectively. Quality of service is improved by having better customer information, an enhanced quality measurement system, and better employee training. For example, employees should be trained with the aim of enhancing professionalism, which leads to an improved service quality, as employees make fewer mistakes and consequently do their job better (Claver et al., 2006; Bogota´ Plaza Hotel, 2009; NH Hotels, 2009). In relation to EM, Kirk’s survey found the major benefit of EM was the improvement in public image and better relationships with the local community (Kirk, 1995). Two examples of this can be seen in the performance of the Shangri-la Hotels & Resorts in China and the Taj Hotels & Resorts in India which appear in the 2009 Green Brands Global Survey (WPP, 2009). WPP (2009) found similar global agreement when consumers are asked about how important it is that companies be green. At least 77% of consumers in all countries say it is somewhat or very important. In India and China the numbers are significantly higher: 87% and 98%, respectively, say that corporate reputation is an important consideration when making a purchase decision. Consumers in this survey also agreed that the most important step a company can take to demonstrate its ‘‘green-ness’’ is to reduce the amount of toxic or other dangerous substances in its products and business processes. However, Chan (2009) pointed out that many hoteliers with written environmental policies saw the major benefit in terms of financial management performance. Chan (2009) identified several environmental actions in three hotels (Kowloon Shangri-la, Nikko Hongkong, and Grand Stanford). These environmental actions included electricity-saving measures (solar control window film, air-conditioning system sensors, key tag controlled switches, and energy-saving light bulbs), measures for gas and fuel oil reduction (clean kitchen equipment and properly adjusted and maintained boilers), water-saving measures and consumption assessment (installation of flow regulators, clean kitchen equipment and discipline in turning on water taps only when needed). All these measures help these hotels to reduce their costs and, therefore, to be more profitable. In Spain, NH and Sol-Melia´ Hotels implement similar environmental policies. As a result, NH achieved a reduction of s2.3 million in their energy consumption and s0.5 million in water consumption in 2008. In addition, Sol-Melia´ saved s0.8 million in water consumption. A number of limitations of the present study need to be taken into account, as they indicate some possible avenues that future research might explore. The present study was based on crosssectional data and used a single respondent, the hotel manager, who would be unlikely to admit openly to not being interested in QM and EM. Therefore, future research could focus on a longitudinal design, which would provide a way to examine these

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