Tourism Management 32 (2011) 963e976

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Tourism Management
journal homepage: www.elsevier.com/locate/tourman

Progress in Tourism Management

Understanding small rms in tourism: A perspective on research

trends and challenges
Rhodri Thomas a, *, Gareth Shaw b, Stephen J. Page c
a

Leeds Metropolitan University, UK

University of Exeter, UK
c
London Metropolitan University, UK
b

a r t i c l e i n f o

a b s t r a c t

Article history:
Received 13 August 2010
Accepted 4 February 2011

Although small rms in tourism have featured on the agendas of policy-makers for several decades,
academic interest over the same period has uctuated. Certainly the urry of activity that occurred
during the early 1990s became a steady ow of somewhat fragmented output rather than the ambitious
and coherent programme of research that was anticipated at the time. The paper traces progress in this
eld by reviewing inter-, multi- and disciplinary studies that contribute to current understanding of
small rms in tourism and how this understanding articulates with wider debates within tourism
studies. In so doing, it challenges some conventional wisdom and provides an agenda for future research.
2011 Elsevier Ltd. All rights reserved.

Keywords:
Small tourism rms
SMEs
Tourism policy
Tourism development

1. Introduction

2. Evolution of the eld

One of the most conspicuous developments in tourism policy

internationally over the past two decades has been the growth of
interest in small businesses. They have been seen by policy-makers
as the economic lifeblood of the sector and, simultaneously but
paradoxically, as the laggards that prevent innovation and growth.
These and other ambiguities stimulated academic enquiry that
sought to reveal how small businesses worked and how they
articulated with the economies of destinations. Research has,
however, extended beyond the boundaries of economic geography.
Although most intellectual effort has been, and remains, located
predominantly within the business and management literature,
some of the more signicant contributions to understanding small
rms in tourism have drawn on sociology, social anthropology and,
to an extent, politics and policy studies. This paper provides
a comprehensive review of the contours of the debates that have
taken place over the past decades, challenges some of the
conventional wisdoms sometimes cited in the tourism literature
and signals a new research agenda. It is structured thematically to
incorporate many of the major concerns that currently vex tourism
scholars including sustainability and the social and cultural relations embedded in tourism.

Academic research on small rms in tourism has developed

much more slowly than many had anticipated fteen or twenty
years ago. At the time, there was a wave of activity that encompassed international conferences (Buhalis, 2002; Morrison, 2003a),
the creation of formal research networks (such as ATLAS tourism
SME special interest group) and discussion lists for sharing information and debating the latest hot topics. A body of literature followed. Some publications sought to consolidate what was already
known (Thomas, 1998) whereas most (for example Dahles & Bras,
1999; Jones & Haven-Tang, 2005; Thomas, 2004) collated the
ndings of research projects and, often, mapped out directions for
future work. Though usually well received (e.g. Eaglen, 2006;
Pinfold, 2001; Teare, 2006; Thomas, 2007a), the promising
research vein revealed by these events and publications has not
been fully exploited. Unlike the mainstream small business eld,
where research ourished, in tourism, interest has been variable;
recent additions to the literature (such as Ateljevic & Page, 2009;
Thomas & Augustyn, 2007) are welcome but tend to represent
fairly isolated examples of collective endeavour. The predicted
explosion of output in the tourism journals has not fully materialised either (Getz & Carlsen, 2005; Li, 2008).
The limited engagement by tourism academics in research
relating to small rms is surprising because reference to such
enterprises is common in the tourism literature. Claims have been
made that they somehow typify the sector and can be vital to job
creation (Wanhill, 1999), to destination competitiveness (Jones &

* Corresponding author.
E-mail addresses: r.thomas@leedsmet.ac.uk (R. Thomas), G.Shaw@exeter.ac.uk
(G. Shaw), S.Page@londonmet.ac.uk (S.J. Page).
0261-5177/$ e see front matter 2011 Elsevier Ltd. All rights reserved.
doi:10.1016/j.tourman.2011.02.003

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R. Thomas et al. / Tourism Management 32 (2011) 963e976

Haven-Tang, 2005; Novelli, Schmitz, & Spencer, 2005; OECD, 2008),

to economic development (Andriotis, 2002; Echtner, 1995; Wanhill,
1996), including destination development (Johns & Mattsson,
2005; Tinsley & Lynch, 2001), to sustainable tourism (Fuller,
Buultjens, & Cummings, 2005; Horobin & Long, 1996), to
sustaining particular lifestyles (Ateljevic & Doorne, 2000; Shaw &
Williams, 2004) and can create signicant social benets
(Kokkranikal & Morrison, 2002). Moreover, small rms in tourism
have, over the years, also been the object of local, regional and
national policy interventions in many parts of the world (Nilsson,
Petersen, & Wanhill, 2005; Rogerson, 2005, 2007; Thomas, 1994,
1995). Yet, they remain under-theorised and under-researched.
Under-theorised in that there have been too few (or inadequate)
attempts at explaining how important features of these organisations might be understood (for example, their genesis, growth or
their articulation with the wider socio-economic environment that
they inhabit) rather than describing their characteristics or
behaviours (critical though this is when researchers are turning
their attention to a topic for the rst time). The shortfall in research
is important as it often results in presumptions being made about
small rms in particular settings which are misplaced.
The limited vitality of academic debate about small rms and
their role in tourism has also resulted in some overly general
conventional wisdoms being perpetuated. Several of these will
become evident during the discussion that follows. By way of
illustration, the sector is routinely described as being characterised
by small and medium sized enterprises (SMEs). Such a description
is, of course, broadly accurate but is hardly illuminating. This is
because it fails to recognise the disproportionate importance of
large rms in terms of the number of people employed in the sector
(Thomas, 2000), ignores debates about whether employment
creation is likely to emerge from smaller or larger businesses (for
a summary of the debate, see Bridge, ONeill, & Crombie, 2008) and,
more importantly, by not deconstructing tourism, it does not
analyse similarities and differences between sub-sectors or
between tourism and other sectors of the economy. As Smith
(2006: 56), in a thoughtful comparative analysis points out, the
ndings of this research refute the notion that tourism is different
in this regard from other sectors of the economy. on an industryby-industry basis, tourism is less dominated by SMEs than agriculture, forestry, shing, and hunting; construction; real estate, and
rental and leasing services; and professional, scientic, and technical services. He uses Gini indicies to show variation between subsectors (see also Reichel & Haber, 2005). An interesting comparison
not made by Reichel and Haber (2005) is with retailing, which e in
the UK at least e has seen a sharp fall in the number of small shops
over recent decades. Seeking to understand structural changes
within the sector is also vital. Are there likely to be more small rms
or fewer? Do such questions yield the same answer in different
contexts? What little research has been undertaken in this area so
far has offered limited insight (Morrison & Conway, 2007; Morrison
& Thomas, 1999; Slattery, 2009) and, more disappointingly, has not
provoked others to take up the research challenge.
Table 1 illustrates the broad development of research in this area
over recent decades. The most inuential studies of the late 1980s
prompted academics to think differently about small businesses in
tourism; they questioned the wisdom of understanding these
businesses only as units of production. This work continued in the
1990s where research on lifestyle rms progressed and beyond
2000 where related research began to focus more explicitly on
social relations.
Perhaps one of the fundamental weaknesses of the existing
literature is the absence of any major paradigm shift or the way in
which researchers see small rms in tourism. With some exceptions discussed later in the paper, there has been a tendency to

Table 1
Orientation and progress in researching small tourism rms.
1980s
New ways of seeing e early conceptual developments that provided alternative
ways of understanding small rms.
Examples:
Shaw et al. (1987)
Williams et al. (1989)
1990s
Mapping the terrain e baseline data on motivations and behaviours that
demonstrated the importance of non-nancial motivations and informal
ways of managing rms.
Examples:
Morrison (1998a)
Page et al. (1999)
Recognising heterogeneity e rened earlier conceptual insights and applied
them to issues of concern in tourism studies, notably sustainable tourism.
Examples:
Dewhurst and Horobin (1998)
Ateljevic and Doorne (2000)
2000
Beyond the economy e studies that consider small rms in terms other than
as economic units.
Examples:
Di Dominico (2008)
Sweeney and Lynch (2009)
Source: authors

consistently conceive businesses narrowly and almost exclusively

in isolation of their wider social contexts. Much of the research has
also missed important changes to the policy landscape. For
example, the connection between small rms in tourism and the
rise of the cultural and creative industries in which tourism, leisure
and hospitality is often now situated in policy terms. The result is
a focus on enterprises per se rather than wider debates, such as the
rise of an experience economy (Pine & Gilmore 1999), in tourism
studies. This line of argument is advanced by Ashworth and Page
(2011) in this journal in relation to urban tourism but it can
equally be applied to small business research. Arguably, a consequence of these limited insights is a minimal academic involvement
in new debates dominating international bodies such as the
Organisation for Economic Co-operation and Development (OECD)
in relation to the tourism competitiveness-sustainability agenda,
on issues of productivity in the small and medium sized enterprise
(SME) sector and the recent emergence of debates associated with
partnership working to address issues of collaboration and destination development in relation to small businesses (OECD, 2008).
It is important in a review such as this to recognise the potential
value of those studies that are not obviously categorised as small
business research. For example, studies on adventure tourism in
various parts of the world have focused predominantly on the SME
sector that dominate the business structure of this nascent and
expanding activity (see, for example, Bentley, Cater, & Page, 2010;
Bentley & Page, 2008; Page, Bentley, & Walker, 2005a,b). Whilst
these studies have been concerned with operational issues as part
of a different research agenda, their results have a considerable
salience with, in this case, issues reported on lifestyle and motivations for working as owner-operators in scenic locations,
pursuing professional interests as a basis for earning a living.
Moreover, they show that tourism is only one part of a wider
market for their businesses which serves to highlight the limitations of overly simple market classications sometimes found in
the literature. It is arguably more pertinent to draw on wider
developments in social science to offer alternative theorising (see
Page & Connell, 2010).
In an attempt to rejuvenate academic interest, this paper
reviews progress in some key areas relating to small rms in

R. Thomas et al. / Tourism Management 32 (2011) 963e976

tourism and proposes a new research agenda. The approach is

broadly based, drawing on inuential contributions that have been
made beyond tourism journals. In so doing, it seeks to assess
progress thematically, paying particular attention to those issues
that are especially germane to tourism or tourism research. The
discussion builds on the emergent research agenda identied
recently by Shaw and Williams (2010) which argued that whilst
increased interest has been given to understanding small rms in
tourism, there were also many missed opportunities (see also,
Morrison, Carlsen, & Weber, 2010). In the current review a wider
perspective is given that encompasses studies in both developed as
well as developing economies. It starts, however, with a detailed
discussion of denitions and their signicance.
3. Denitions and types (and why they might matter)
One of the early debates in the literature was about establishing
agreed denitions of small enterprises and small and medium
sized enterprises (SMEs) in tourism. Some of the contributions
were abstract and sought to interrogate the conceptual value of
identifying these rms as separate analytical categories (Morrison,
1998a,b; Thomas, 2000). Most were empirical (and often survey
based) and tried to specify the distinguishing characteristics of
tourism SMEs and their owners (Page, Forer, & Lawton, 1999;
Thomas et al., 1998; Thomas, Friel, Jameson, & Parsons, 1997).
Although there had been some highly inuential publications
previously (notably Shaw, Williams, & Greenwood, 1987 and
Williams, Shaw, & Greenwood, 1989), the novelty of small rms
research in tourism during the late 1990s is captured by Page et al.s
(1999) suggestion that it was almost terra incognita. There has been
progress since then but it has been sporadic and uneven.
Perhaps stimulated by a major public investment in small
business research (Storey, 1996), several British academics examined the qualitative differences between small, medium and large
scale tourism enterprises (Morrison, 1998a; Thomas, 1998) and
made the case for recognising their distinctiveness. Many of the
distinctions between large and small rms that had been identied
for all sectors were then applied to tourism by Page et al. (1999) and
Thomas (2000): the uncertainty faced by small enterprises and
how they responded to it; their contrasting approaches to innovation; the need for a managerial structure if enterprises grew
(though most do not); and the availability of capital. Some
distinctive e but not unique e factors that impact on tourism
enterprises were also considered as part of a case for the separate
study of small rms in this sector. Others had already noticed that
size (however operationalised) does inuence the internal and
external relations of an economic unit, but other factors such as
economic sector . are likely to be just as crucial in determining
whatever it is that is being investigated (Burrows & Curran, 1989:
530). There have been occasional attempts at creating grounded
denitions of small rms in tourism and hospitality (Peacock, 1993)
but, in practice, most academic researchers defer to ofcial denitions, where distinctions are usually made according to the
number of people employed. Unfortunately, there is no international agreement on size bands (denitions vary signicantly
between, for example, Africa, Australia, Europe and the United
States) so comparative work remains problematic. Perhaps the
failure to identify a rigorous conceptual distinction between small
rms in tourism and similar businesses elsewhere accounts for the
limited take up of acronyms such as SMTEs (small and medium
sized tourism enterprises) (Buhalis, 1993), SMHO (small and
medium hospitality organisations) (Buhalis & Main, 1998) and SHEs
(small hospitality enterprises) (Alonso & ONeill, 2009).
Although the terms are sometimes used interchangeably, it is
important to draw a distinction between progress on small

965

businesses research, the focus of this review, and progress on

entrepreneurship and family business research in tourism. As
others have pointed out, there may be conceptual overlap but the
differences between the literatures are signicant (Getz, Carlsen, &
Morrison, 2004; Getz & Carlsen, 2005). Some of the work that has
been undertaken to understand those rms that are deemed to be
entrepreneurial (a process) and those that may be owned and
managed by a family (a structure) will cast light on some small
enterprises. However, as much research on entrepreneurship and
on family businesses includes larger enterprises, not all of the
literature is relevant.
Entrepreneurship and the entrepreneurial process is usually
dened with terms such as vision, creativity, innovation,
exploitation of opportunity, and nancial motivation and growth
(Chell, 2009; Morrison, 2006; Morrison, Rimmington, & Williams,
1998; Russell & Faulkner, 2004; Swedberg, 2000). Such characteristics apply to some small tourism rms but several commentators
suggest that these entrepreneurial rms are the minority in tourism
(Getz & Paterson, 2005; Morrison, 2006; Page et al., 1999; Thomas
et al., 1997, 1998), at least in developed economies. There are hints
in the literature of there being a higher incidence of entrepreneurial
rms among those operating in certain sub-sectors e travel, certain
types of accommodation providers and restaurants e and fewer
elsewhere, notably bed and breakfasts and micro family oriented
rms (Getz & Paterson, 2005). As these authors acknowledge, such
generalisations are of limited value; small businesses are heterogeneous, and their behaviour is inuenced by a complex array of
structural factors as well as personal agency (see also, Lynch, 1998).
Lis (2008) review of research on entrepreneurship in a selection
of tourism journals shows that at least some of the work relates to
small enterprises. Over a twenty year period, he identied more
than forty papers. However, it is difcult to nd themes that unify
this disparate set of publications that coalesce broadly around the
notions of entrepreneurship and entrepreneurial process. Though
disappointing in that respect, there are important individual
contributions; these are discussed in relation to the themes below.
Research that sought to document the motivations and characteristics of small rms in tourism during the early- to mid-2000s
produced essential baseline data. As a result of their efforts, for
example, most researchers accept that although some owners seek
to grow their business, most do not. This baseline work also
revealed the limitations of using the term small rm in tourism to
categorise all businesses of a certain size. The heterogeneity of this
constituency led commentators to propose typologies of SMEs.
Shaw (2003), for example, proposed a bifurcated approach, drawing
a distinction between business-oriented and lifestyle-oriented
small business owner-managers. The latter were sub-divided to
incorporate non-entrepreneurs (perhaps those that have moved to
an area as a form of semi-retirement) and ethically driven owners
(as revealed by the research of, for example, Ateljevic & Doorne,
2000). It seems that lifestyle motivations predominate in tourism
(Getz & Carlsen, 2005; Lashley & Rowson, 2009; Mottiar, 2007).
The notion of a lifestyle business has gained currency and is,
undoubtedly, a useful way of drawing distinctions between small
businesses in tourism. However, it also suffers from some of the
characteristics Markusen (2003) describes as fuzzy. It is generally
taken to mean a business that is operated in a manner that incorporates non-nancial factors. Thus, such lifestyle rms have been
seen to represent forms of consumption as much as production
(Williams et al., 1989). Dewhurst and Horobin (1998) advanced this
thinking by arguing that small business owners sought utility
maximisation based on a (usually single) trade-off between
income/growth and quality of life goals. Success for these ownermanagers was grounded in their own circumstances (see also
Carlsen, Morrison, & Weber, 2008, for a review). Ateljevic and

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R. Thomas et al. / Tourism Management 32 (2011) 963e976

Doorne (2000) drew attention to the role values might play in

conditioning the business practices for some owners. They found
operators working in niche markets who were driven by a concern
for the environment and a sense of community. Following them,
Shaw and Williams (2004) suggested that lifestyle entrepreneurship might be entirely compatible with professionally organised
business practice but within a particular (lifestyle or) cultural
framework. They provide empirical evidence of highly commercial
businesses operating in the surng sector precisely because they
want to live in that community. More recently, Thomas and Thomas
(2006) also discovered business owners who were motivated
commercially but dened themselves in other ways. In one
instance, the need to promote spirituality seemed to be as powerful
as a very evident commercial orientation in running the business.
These enterprises might be classied as ideological lifestyle businesses. Their ideologies may encompass deeply-held, localised,
social or community concerns (Keen, 2004) or the artistic (Filllis,
2009), spiritual, or political (such as gay or lesbian politics). Di
Domenico (2005) used symbolic interactionism as a framework
for interpreting the needs, goals and values of guest house owners
in Scotland. Her research also highlights the importance of
considering how values routinely inuence decision-making.
Lynchs (2000, 2005) work on what he terms the commercial
homes sector (CHS) is instructive for its unravelling of how social
practices e be they familial or between hosts and guests in private
spaces (the home) e inuence business behaviour. As he argues,
social networks may, for example, create obligations e perhaps
family employment e which may restrict the take up of business
opportunities. In other instances, they may act as a critical resource.
Lynch illustrates very clearly how many of those operating such
businesses can blur the boundaries between offering a commercial
service and offering hospitality (which implies a social exchange
rather than a commercial transaction). Others operating in the CHS
were found to be much more entrepreneurial. Lynch raises
important areas for research. Indeed, his later work with Sweeney
and Lynch (2009) provides a valuable extension to the initial
argument by offering a typology of commercial home owners that
is inuenced by those who have undertaken related work on
private home owners. The result is one that conrms the value of
applying psychological and sociological lenses to this kind of
commercial activity. The moot point, however, is whether the
businesses examined are any more than variants of lifestyle
entrepreneurs or whether they merely add another aspect to this
broad and fuzzy term.
There are numerous consequences of not conceptualising small
tourism rms appropriately. On the basis of the foregoing discussion, it is clear, for example, that public policy designed to
encourage participation in collective marketing or quality
networks are not likely to be well received by lifestyle rms unless
they incorporate their values (Hall & Rusher, 2005). Similarly, the
notoriously low levels of participation in training schemes and
other programmes designed to enhance competitiveness are
probably explained e at least in part e by a failure to enter the
world(s) of the small tourism business (Morrison, 2003b). It is also
evident that although small business owners are complex individuals, it is possible to categorise them for various purposes.
However, such categories are likely to vary according to their stated
purpose (for example, to understand environmental behaviour or
growth orientation) and suffer from the same limitations as
attempting to categorise any individuals with a limited set of
criteria. Since such categories are, ultimately, descriptive devices,
an important challenge now is to understand more about the
dynamics of those organisations within such categories. However,
a more sophisticated theorising of lifestyle business ownership is
required. At present, almost exclusive attention is given to agency

(usually business motivation) with little consideration of signicant

mediating factors such as gender, ethnicity and wider socioeconomic considerations.
4. Small business management and development
There have been several inuential surveys of small business
management practices undertaken over the past decade or so (e.g.
Page et al., 1999). These conrm the high incidence of informal and
generally unsophisticated approaches to the management of many
small tourism enterprises. This is predictable for a sector that is
characterised often (though not always) by low barriers to entry,
low value-added and motivations that are frequently not primarily
(or exclusively) nancial. As Ateljevic (2007) cautions, however,
there is a degree of variation; his research suggests, for example,
that those investing more in the business are more likely to
formalise arrangements. Indeed, he argues that it is useful to
differentiate between two types of owner-manager e those that
consider any changes to informal arrangements would not improve
business performance and those that, in the face of a challenging
business environment, seek to become more businesslike. The
latter would incorporate greater consideration for strategy and
formality. Such categories are helpful but there is no agreement in
the literature yet about the most valuable way of categorising.
Several others have been advanced in different contexts (for
example, Dewhurst & Thomas, 2003; Morrison et al., 1998;
Williams & Tse, 1995).
Much of the research commented upon in this review relates to
non-growth tourism rms in visitor-receiving (inbound or
domestic tourism) settings because that reects the emphasis of
existing endeavour. Downward and Davies (2007) work on travel
agents and tour operators provides an important diversion by
concentrating on growth-oriented rms in the travel sector (travel
agents and tour operators). Their results highlight price inexibility
among smaller businesses, as well as their larger counterparts, with
an emphasis on non-price competition. This is redolent of oligopolistic rather than competitive markets. Such behaviours have not
previously been identied among smaller rms and call into
question some of the more prominent narratives about competition
in the sector.
The question of business success in tourism is problematised by
Montoro-Sanchez, Mas-Verdu, and Soriano (2008). Focusing on the
contrasting approaches of the economics and management literatures, they concentrate their attention on minimum cost and
productivity measures in SME hotels. Their research produced a set
of apparent relationships (for example, between training and costs/
productivity) but falls short of offering an integrated explanation of
performance (or growth). Indeed, it is somewhat curious that
almost no attention has been given to applying theories of small
business growth to tourism businesses (see Boer, Thomas, &
Webster, 1997; Bridge et al., 2008; Shaw & Williams 2010; Storey,
1996 for critical reviews). A rare exception is Altinay and Altinay
(2006) who provide a systematic and fascinating account of
factors inuencing the growth of small and very small minority
ethnic restaurants and cafes in London. Using multiple regression
analysis, they highlight the importance to growth of uency in
English, formal recruitment methods and employment of co-ethnic
workers. They demonstrate how an interplay of these factors
conate to provide low costs and competitive advantage. Future
research that examines growth for other types of tourism businesses should be given more prominence.
The importance of strategies and strategic alliances e both often
seen as necessary internal dimensions of growth e have been
examined by several contributors. These reveal the role of
commitment and compatibility in securing the longevity of

R. Thomas et al. / Tourism Management 32 (2011) 963e976

alliances (Pansiri, 2008), the inter-relationships between strategy

and functional aspects of management (Soriano, 2005), possible
connections between strategies and entrepreneurship (Williams &
Tse, 1995) and the potential for collaboration between small
enterprises (Morrison, 1998b). A selection of papers reporting
research on the operational aspects of small business management
has also been produced sporadically (for example, Alonso & ONeill,
2009; By & Dale, 2008; Ozgener & Iraz, 2006; Sharma & Upneja,
2005). Valuable though these are, there is at present a failure to
consolidate such knowledge because the topics and contexts are so
different.
One of the areas of management that has witnessed more of
a sustained research effort is the use of information technology,
particularly for marketing. Initially, studies tended to map out
usage and provide guidance on how to create a resonance between
the information needs of the business and information and
communication technologies (ICT) usage (for example Mutch,
1995). Later studies (for example, Anckar & Walden, 2001;
Buhalis & Main, 1998; Wood, 2001) focused more on building
explanations for the take up of IT and its consequences. Thus,
a range of inuences that push and pull small enterprises to
utilise ICT has been identied. Some of these may have policy
consequences (ignorance, for example, might be remedied by
training interventions) while others are seen as contributory
factors to competitiveness (or otherwise). The search for insights to
inform business practice has followed. Martin (2004), drawing on
case studies from small hospitality rms, argues that effective use
of ICT can develop from social usage of the internet in small business contexts. More recent research has revealed continued underutilisation of technology (Murphy & Kielgast, 2008) though Huang
(2008) provides a robust model for the adoption of e-commerce
strategies among very small operators.
Drawing on fteen case studies of virtual teams of e-entrepreneurs undertaken as part of a pan-European study, Matley and
Westhead (2007) highlight a number of important issues. They
provide very clear illustration, for example, of how such virtual
teams (or small international collaborative networks) can operate
successfully in niche markets and the competitive advantage
gained from the strategies they adopt. Some of the advantages for
members include the quality and quantity of market information
available, the reduced costs of responding to market opportunities,
and access to an internal pool of technical and human resources.
Moreover, their work provides a fascinating insight into how such
teams operate, noting the role of active and passive actors.
Research by Page, Yeoman, and Greenwood (2007) observed
a commercial squeezing out of smaller rms by new high yielding
budget hotel chains (e.g. Holiday Inn Express, Premier Inn and
Travelodge). Properties being converted back to domestic use or
sold for multiple occupancy was one short-term consequence of
the commercial strategies of rapidly expanding hotel chains that
swept the tourism environment in late 1990s and new millennium.
Commercial responses from smaller enterprises, such as creating
niche products, including boutique or more specialist higher value
products, illustrates the natural change in urban environments
with an all-year round tourism market. This development was also
accounted for by the rise in the residential property market
compared with the value of hotel properties. In more constrained
seasonal operating environments, the competitive appeal is
reduced and so smaller rms have a greater potential to survive,
especially where the business model is based on diversication or
cross-subsidisation with summer prots.
Innovation along with the related aspects of knowledge acquisition and absorption are increasingly signicant aspects of study in
tourism. Such topics are of particular importance to research on
small businesses given their numbers and role in local tourism

967

economies. Surprisingly, however, innovation and knowledge

management issues remain areas of relative neglect in the study
of small rms (Hernandez-Maestro, Munoz-Gallego, & SantosRequejo, 2009).
Three main research strands can be identied, namely the
impact of e-tourism as an innovation in small businesses, the nature
of innovation in small rms and thirdly the ability of such businesses to obtain and absorb knowledge of innovation (see Ateljevic
and Page, 2009). The rst has already been discussed but it is worth
pointing out here that e-tourism is increasingly being seen as an
important innovation for small businesses in developing economies
by various agencies (Buhalis & Costa, 2006), although other studies
have examined impacts in western economies (Martin, 2004). In
terms of the nature of innovation in small businesses, studies are
rather limited and have tended to expose the problems of innovation. Decelles (2004) survey of the situation in France discusses
innovation in a general sense but identies that in tourism many
product innovations are fairly visible and can be relatively quickly
imitated. However, many small businesses have inadequate
incentive mechanisms (Decelle 2004: 13) due to the increasing
complexity of some innovations and especially risk aversion
amongst owners. Other more detailed research by Blake, Sinclair,
and Soria (2006) draws attention to the barriers to change in
small accommodation establishments whilst further drawing
attention to sectional differences. In terms of the latter, Jacob,
Tintore, Acquilo, Bravo, and Mulet (2003), working in the Balearic
Islands, argue that organisational changes and process delivery are
the most frequent types of innovation in the accommodation sector.
The importance of rm size is also highlighted by By and Dale (2008)
who point out that this impact on entrepreneurial culture and
innovation via the process of change management. Decelle (2004:
12) recognises something similar which he attributes to a form of
limited rationality from small business owners.
The work of Blake et al. (2006) though not specically concerned with SMEs also raises the issue of what types of innovations
are considered important in both accommodation and attraction
sectors. Unfortunately, what this work misses along with other
tourism research is the so-called hidden innovations commonly
found within the tourism industry (NESTA 2008; Shaw & Williams
2010), many of which are either small-scale or based around the
novel use of combinations of existing technologies. Many are also
related to a creative and knowledge based workforce which is often
seen as more limited in small businesses. The nature of innovation
in small tourism enterprises has received very little attention in
respect of types of innovation and there has been little recognition
of whether these enterprises are involved in discontinuous incremental innovation. In one of the few studies to address this,
Thornburn (2005) claims in a small study of 5 tourism SMEs that
radical innovation only occurred when the business was established. In other words, business creation was the radical innovation
beyond which only incremental innovations took place. Unfortunately, we have few other studies to support these views.
Most attention has been focussed on the third theme, the
capability of small businesses to absorb both tacit and explicit
knowledge of innovations. Such learning processes are especially
signicant for small rms (Deakins & Freel 1998). Much of the
attention has been given to the hotel industry and Hallin and
Marnburg (2008) provide a review of empirical work. In doing so,
they stress the signicance of organisational learning via knowledge sharing and knowledge capture. More specically Kyriakidou
and Gores (2005) research of SMEs suggest that benchmarking
organisational cultures can help knowledge transfer, by helping
identify the key knowledge gaps.
Some of the difculties are in part overcome through aspects of
collaboration, which has been viewed through the importance of

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networks and clusters (Braun, 2005; Grngsj & Gummersson 2006;

Morrison, Lynch, & Johns, 2004). However as Braun (2005: 2) argue,
tourism networks are complex structures and that more studies are
needed to explore their complexity and functions. Braun (2005) study
of tourism clusters in Australia goes some way to exploring the way
knowledge transfer is operated via such clusters. They also found that
in many cases tourism SMEs felt disconnected from the domain,
displayed a low level of interrm trust, and little interest in clustering
(Braun 2005: 10). In a slightly different context, that of SME collaboration within the value (supply) chain, Thornburns (2005) study
demonstrates how both tacit and explicit knowledge are provided by
specialised organisations that support tourism SMEs. In terms of
future research, two themes are particularly important; the rst
concerns the type of knowledge being transferred, particularly how
more sticky tacit knowledge is moved around SME networks.
Secondly, there is the importance of leadership in these SME cluster
and networks which is starting to be addressed (Morrison, 2003b).
5. Policies to support business development
Hall (2009) recently provided a valuable account of how some
aspects of tourism public policy might impact on entrepreneurship
within the sector, developing a framework to show the manner in
which different categories of policy might inuence business
development. Though his task was somewhat frustrated by the lack
of research, his contribution highlighted the need for researchers to
acknowledge the broader scope of policy initiatives that affect
tourism entrepreneurship (Hall, 2009: 262) and not simply focus
on tourism policy.
There are examples of such work in the literature. Almost
twenty years ago, for example, Thomas and Thomas (1992) examined the impact of planning legislation on small hot food takeaways. They discovered spatial variation in the way planning
regulations were interpreted, a divergence between government
directives and planning practice and poor understanding of the
planning system among small (often minority ethnic) rms, which
worked to their detriment. Some other contributions have examined the implications of mainstream small business policy on
tourism businesses. Thomas (1994, 1995) assessed two of the main
tenets of European and UK SME policy during the 1980s (which
remain broadly similar today): deregulation and the provision of
business support. This research suggests severe limitations of the
former as a stimulant for business development and is unconvinced
that the latter is sufciently well informed by appropriate
conceptions of small business behaviour in the sector. Indeed, the
impact of mainstream SME policy on tourism businesses remains
a valuable area for further enquiry (Shaw & Williams, 2010).
Most of the literature on public policy and small businesses tend
to focus on various policy initiatives that are designed specically
for tourism or tourism businesses. OSullivan et al. (2003), for
example, drawing on an evaluation of a European Union (EU)
structural funding initiative, highlight the value of creating
a network of small tourism businesses. Fleischer and Felsenstein
(2004) reveal the output and employment effects of particular
support measures for small tourism businesses. Following their
research, Woods and Deegan (2003) are sanguine about the value
of a particular French quality brand and how small rms can benet
from participation.
One of the central tenets of public policy responses to address
issues of competitiveness among small rms in many developed
countries has been the re-emphasis on minimum quality standards
and a perception that the twin pillars of competitiveness e quality
and productivity (Kellar 2005) e need to be tackled alongside the
improving capabilities of ICTs to raise both dimensions. ICTs have
also provided a new forum, via the introduction of Web 2.0

technologies and social networking, to make quality issues more

public and transparent. New media such as TripAdvisor have placed
service experiences and their rating rmly in the public domain
(Page, 2011). For small rms, this can be both an enabling technology e by showcasing customer satisfaction e and conversely, it
can be a negative and highly unpredictable experience for the less
quality led business. Technology and ratings schemes such as this
may eventually displace the current grading schemes operated by
public sector tourism organisations.
Research on local tourism policy formation has suggested that
policy interventions are more effective when they involve partnerships of stakeholders (Bramwell & Lane, 2000; March & Wilkinson,
2009). To date, the emphasis has tended to be on community
participation, with little reference made to where small businesses
connect with such communities (Thomas, 2007b). Haven-Tang and
Jones (2005: 355) is one of the few contributions to pay attention
to small rms in this context. They argue that if co-operation and
collaboration between the public and private sectors are to be
successfully pursued . partnerships must derive mutual benets for
all participants . there must be transparency, trust and a clear
agenda for action. Few might disagree with the sentiments but such
perspectives are in danger of neglecting local power relations and do
not explain why participation rates vary from place to place.
Thomas and Thomas (2006) have argued that the notion of local
dependence is a useful way of understanding why small rms do or
do not participate in formal partnership arrangements in particular
locations or at particular times. Ward (1995: 5e6) explains that: The
locally dependent rm will have an embedded interest in the area;
an interest which will be mediated through representation in urban
politics. Thus, a perception that their prosperity is aligned with the
future of an area may be a powerful motive for taking an interest in
that areas future and in seeking to inuence it. A lack of functional
ties will limit participation. As Davies (2001: 166) noted from
a number of case studies, companies with local roots are more likely
to become involved in partnerships where the local director feels
a sense of civic responsibility (see also Curran, Rutherfoord, & Smith,
2000; Miller & Besser, 2003). Some studies of small rms in tourism
have also found them embedded in their locality (Dahles, 2000; Hall,
2004; Keen, 2004; Lynch, 2000), though their manifestations may be
different and their ability to inuence policy is not assured.
In an earlier contribution, Thomas and Thomas (2005) developed some of Healey, de Magalhaes, Madanipour, and Pendlebury
(2003) framework to argue that three different kinds of resources
need to be drawn upon if small rms are to inuence policy change
locally: knowledge resources (including the ability to recognise,
operate within, and perhaps alter and subvert, key frames of
reference and hegemonic discourses); relational resources
(including establishing relationships of the right kind with the right
interests/actors at the right time) and a mobilisation capacity (or an
ability to act collectively).
Although some of these themes emerge in the valuable literature
on small business networks in tourism (see for example Gibson &
Lynch, 2007; Lynch & Morrison 2007; Mitchell & Schreiber, 2007)
little of this work relates to policy development. The varied evidence
provided by Thomas and Thomas (2006) suggests that small businesses often fail to appreciate the subtle manner in which power is
exercised in local tourism policy formation and partnership
working. The existence of policy discourses is not necessarily recognised and, though small rms are sometimes able to mobilise
resources, they often fail to effect change. Thus, even when small
rms participate formally in partnerships, they are unlikely to do so
to their advantage unless they grasp the nuances of the local tourism
project e or are enabled to do so e and have strong policy networks.
The failure to engage small businesses has been explored from
a different perspective by Morrison (2003b). She provides an

R. Thomas et al. / Tourism Management 32 (2011) 963e976

important discussion of the reasons for the potential failure to

engage small businesses in state training programmes. She argues
that, too often, those involved in delivering business support do not
assume to enter the world of the small business (to establish what
matters to them or what their needs might be) but instead focus too
much on the supply of interventions such as consultancy, training
programmes or other forms of business support. Such observations
had been hinted at in earlier contributions (e.g. Lynch, 1994). These
perspectives have been considered by ofcials [see, for example,
European Commission (2006) or OECD (2007) (which contains
a summary of these debates written by one of the authors of this
article)] even if they have not been implemented because of the
higher cost associated with such delivery. Several challenges
remain with such interpretations, however. Perhaps the most
signicant among these is that market failures are still usually
assumed to exist rather than demonstrated (Thomas, 1998).
6. Small rms and destination development
Research on small rms from the outset examined their
contributions to the local economies of tourism destinations (Shaw
& Williams 1987; Stallinbrass 1980). However, more recently
Morrison, Carlsen, and Weber (2008: 12) have drawn attention to
the contradictory evidence in the literature, arguing for the need to
go beyond a simplistic dichotomy of negative and positive
discourse. Such discourses tend to centre around the managerial
and entrepreneurial skills of the owners of small businesses,
particularly those associated with lifestyle entrepreneurs. Thus,
small businesses have been identied in successive studies as being
a key problem of UK coastal resorts (Shaw & Coles 2007). In this
context, as Hall and Rusher (2004) point out, the lifestyle goals of
such tourism business owners are often not in tune with the needs
of many local economies.
In contrast to such negative perspectives, several studies have
highlighted the positive contributions made to many rural economies. For example, Ateljevic and Doorne (2000) along with
Komppula (2004) have stressed the importance of institutional
specicity, with others arguing that such businesses act as agents of
economic transformation (McGehee & Kim 2004). Keens (2004)
study in New Zealand focussed attention on these small businesses in providing unique and enjoyable experiences and thereby
acting as key agents of economic development. Keen (2004) goes
further claiming that these social or community entrepreneurs of
the types formerly identied by Ateljevic and Doornes (2000)
research, are the main facilitators of development.
As Morrison et al. (2008) demonstrate, the negative discourses
on small rms in some destinations are more than countered by the
positive evidence provided in a range of other studies (Hollick &
Braun 2005). The question of why tourism studies present such
contested evidence on the role of small businesses in local economies remains. Morrison et al. (2008) see the answer in relation to
the need to understand the social constructs of these tourism
enterprises. In doing so, they give support to the work of Russell
and Faulkner (2004) which viewed lifestyle entrepreneurs as
a social phenomenon that should be treated as such. Ateljevic and
Doorne (2000, 2003) provide a more rounded perspective, arguing
that such entrepreneurs are culturally complex and cannot be
understood through the established business model of the small
rm. We would add to this a further dimension relating to the types
of lifestyle entrepreneurs and their relationship to particular
destinations.
In the context of destination development and the role of small
business, a further body of research highlights their economic
signicance through the importance of collaboration and networks.
This has generated increased interest in the role of such networks

969

(Grngsj & Gummersson, 2005; Hollick & Braun 2005; Morrison

et al., 2004; Novelli et al., 2005), providing both empirical and
conceptual perspectives. Of particular signicance is Thornburns
(2005) case study of small tourism rms in Australia which has
demonstrated the importance of external collaboration within such
networks for the transfer of different levels of tacit knowledge. This
knowledge ow produces a range of linkages with other businesses
within the value chain. Unfortunately, very little is known about the
economic value of these small business networks within different
local economies. Thornburns (2005) study in part builds on the
work of Tinsley and Lynch (2001) which highlighted the three main
types of network links, namely; exchange networks, communication networks and social networks. All are important to the small
tourism business and in most cases tend to overlap.
In addition to the complexity of such networks, Tinsley and
Lynch (2001) stress that tourism destinations are also complex.
This complexity in part is due to the fact that in many destinations
small businesses are often owned by in-migrants. Such migration
produces an added factor in the development of local networks. All
of which suggests that there is considerable scope to explore small
business networks of all types across a range of tourism
destinations.
7. Sustainability
Notwithstanding the prominence of debates about sustainability within tourism policy research circles (Dredge & Whitford,
2010; Getz, 2009), few academics have paid particular attention
to the role of small rms. Those that have, however, have usually
tried to explain why some rms are, or might become, environmentally engaged while others are not, and to then consider the
policy implications of such an understanding. Several inter-disciplinary studies have provided valuable insights. Ateljevic and
Doorne (2000), for example, show the role values play in decision-making. With mixed success, Dewhurst and Thomas (2003)
draw on Ajzen and Fishbeins (1980) theory of reasoned action to
help understand how values and a range micro and macro factors
inuence practice. The four-part categorisation of small rms that
emerged from their research emphasises the need to differentiate
between small businesses in tourism. Tzschentke et al.s (2008)
more recent work also show the critical role played by values and
the importance of understanding the social context of decisionmaking.
Each of these contributions advances knowledge but they tend
to theorise issues at the level of the individual owner-manager.
Although this is valuable, academics in tourism have not yet
examined potential connections between, say, notions of Schumpeterian creative destruction and emerging (environmental)
business practices (Hall, Daneke, & Lenox, 2010). A greater
consideration of some of the debates taking place in allied elds of
study, such as entrepreneurship or environmental economics,
might be fruitful in this respect. Further, the literature on sustainable tourism and small rms provides limited guidance for policymakers. This policy distance will be disappointing for those
advocating change, particularly in the absence of leadership from
elsewhere (Clarke, 2004). Examples where policy issues are
a central feature of studies in this area, such as Fuller et al. (2005),
are refreshing but are not located centrally in the literature about
small businesses and small business development in tourism.
Small rms in tourism have largely failed to embrace the
growing environmental agendas of the public sector in relation to
reducing the carbon footprint of tourist activities to mitigate the
emissions of CO2 and its contribution to climate change. Studies by
Essex, Vernon, Pinder, and Curry (2003) illustrate the implementation gap that exists between public sector intentions to drive

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forward the sustainability agenda and the practices of small

tourism businesses. This is evident by the failure of many national
and global environmental accreditation schemes to grow their
membership among the SMEs. This limited growth is sometimes in
spite of specic incentives (e.g. the Green Tourism Business Scheme
in Scotland). This illustrates a wider public policy challenge associated with the ability (or inability) to inuence business behaviour
in this respect. Identifying policy instruments that will encourage
or coerce businesses to embrace the sustainability agenda is a key
area for future research and development.
There are different levels of policy intervention that can be used
to develop public sector objectives in the business environment
(see Page & Connell, 2010). Not surprisingly, organisations representing businesses tend to argue that the compliance costs of
regulations, even when they are introduced for socially or environmentally benecial reasons, fall disproportionately on smaller
rms and tend to stie enterprise. Supporting evidence of their
detrimental impact, however, is sparse with existing work tending
to be commissioned for the purposes of lobbying (see Thomas,
1994, 1995 for a review of the debates).
There are dimensions to the sustainability debate in relation to
small rms that extend beyond their environmental impact which
are poorly developed in the current literature. Here, recent
advances in research have combined new paradigms emerging
from development studies (e.g. Scheyvens, 2003, 2011). Pro-poor
tourism perspectives, for example, have small businesses at the
heart of the practical application of sustainability principles. The
1980s saw a political shift away from large infrastructure projects
and international hotel projects as the basis for modernising the
economies of developing countries based on tourism, towards
more targeted development assistance in the form of capacity
building and SME development (see Hall & Page, 1996 for a review
of the situation in the Pacic Islands based on Australian and New
Zealand aid). This was premised on enabling indigenous people to
develop and control their own destiny through greater community
participation in tourism development. A popular model for
promoting such small business development can be traced to the
parallel interest in planning and tourism on community-based
tourism development (Murphy, 1986). More recently, such thinking
has informed the work of transnational agencies such as the United
Nations Environment Programme (UNEP).
Mitchell and Ashley (2008) provide a valuable assessment of
research on micro and small enterprises (MSEs) and their contribution to poverty reduction. Their analysis of the informal and
formal sector of developing countries focused on the tourist value
chain and its dominance by MSEs as the vehicle for transferring the
benets of international tourist spending to locals. They point to
numerous inuential studies outside the domain of mainstream
tourism research (UNWTO, 2011) as well as the wider development
studies literature to illustrate how policy intervention to assist the
MSE sector has been neglected. Yet, they are only able to utilise
a limited number of studies to show how formalising links between
MSEs and the supply chain generate tangible benets in pursuit of
pro-poor tourism objectives. Indeed, with some notable exceptions,
there is a dearth of evidence on how exactly these benets are
transferred at the MSE level. Studies in some developing countries
(see Ashley, 2006; Mitchell & Le Chi, 2007) attach an importance to
entrepreneurial culture in this transference process, especially at
a community level (e.g. see Harrison & Schipanis, 2007 review of
Laos). There is a clear need for more detailed analysis of how the
poor benet from the activities of MSEs, which Mitchell and Ashley
(2008) conceptualise in relation to three pathways: the direct
effects of tourism, secondary effects and the dynamic effects of
tourisms impact on the economy, such as the expansion of the
macro economy. Hall and Gssling (2006) offer an alternative

perspective when they argue that the carbon requirements of using

long-haul tourist spending from the developed nations to developing countries is at odds with climate change debates that require
carbon reduction strategies. For them, such forms of tourism are
inherently unsustainable from an environmental perspective.
Herein lies the inevitable dilemma of anticipating the contribution
of small rms to development but based on forms of travel that are
sometimes in conict with the niche and high yield forms of SME
development such as ecotourism (see Page & Dowling, 2002 for
a review).
The nal area of research that has attracted relatively limited
attention in the literature is the cultural dimensions of sustainability, particularly the role of ethnicity and its role in tourism
development. Smith (2003) has highlighted the importance of
culture as a catalyst for tourism development, but few studies have
focused on SMEs and moved the research agenda on beyond
generic debates over projects for harnessing the cultural dimensions to create a viable tourism-based strategy that unies the local
culture which is subsequently used for business development. As
Ashworth and Page (2011) argue, in urban areas this has given rise
to local expressions of culture to differentiate geographical areas as
part of the process of glocalisation. For example, Tokarskas (2010)
survey of the perceptions of small businesses of culture-led
regeneration in Brick Lane, East London, is one example of a study
that examines the micro issues underlying the creation of an ethnic
landscape based on small businesses. It is interesting because it
records the 11.4 million of state investment in urban regeneration
and the creation of a tourist bubble based on 51 new restaurants
and cafes that form the largest cluster of Asian restaurants in the
UK. The collaboration of the SMEs, combined with state re-imaging,
has assisted in showing how SMEs can be the hub of tourism
redevelopment strategies.
8. The informal economy
Almost all of the literature on small rms in tourism ignores
informal economic relations. This is not surprising as there are
signicant conceptual and methodological challenges to be overcome before any meaningful explanation of their dynamics can to
be developed. Yet, there is extensive anecdotal and some empirical
evidence to suggest that informal economic activity is endemic
among small rms in tourism (Williams, 2005; Williams & Thomas,
1996). For most commentators, the informal economy is made up of
activities that while the goods and services that form the output
are perfectly legal, the production and/or distribution of these
goods and services involve some illegality (Thomas, 1992: 4). This
excludes criminal activity and productive activity that is not ofcially recorded (such as that undertaken by households).
Estimates of the size of the informal economy vary enormously.
According to Williams (2005), in the UK they range from between 1
to 34 per cent of GDP. This evidently undermines the condence
with which estimates can be treated. Less energy has been
expended trying to understand the phenomenon, especially in
tourism. Indeed, it is likely that the highly technical focusing on size
has somewhat diverted attention away from research into those
factors which inuence relative levels of informality spatially and
temporally.
Levels of informal activity are usually explained in terms of the
conditions and motivations of individuals. Thus, factors such as
changes to the rate of taxation and state benets are seen as
important explanatory variables. Although useful, one important
limitation of this kind of analysis is that it can lead to a downplaying
of structural considerations (Williams, 2005). Sassen-Koobs (1989)
inuential analysis of informalisation in New York provides illustration of the limitations of an exclusively motivational explanation

R. Thomas et al. / Tourism Management 32 (2011) 963e976

of informalisation. She argued that post-war economic growth

resulted in greater standardisation of consumption and a decline
of informal economic activity. The more recent polarisation of
incomes, however, has created conditions likely to encourage
informal economic activity because the growth of very high income
jobs requires a supply of low income workers to satisfy the increase
in non-standard consumption patterns. Small businesses, including
those in tourism, which have a higher propensity to informal
activity, emerge to satisfy these niche markets. Further, these
conditions create a demand from the low income workforce for low
cost products and services that are often provided by small rms.
Stepick (1991) made similar observations following a study of
the hotel sector in Miami. In that case, the informal sector of the
local economy grew to provide for the needs of Haitian immigrants.
The complexity of local circumstances is shown to have inuenced
the manner in which the informal sector developed. Different
factors were found to be at play in a northern British city where
small businesses were articulated with city centre hotels often as
a result of cost minimising strategies (Thomas & Thomas, 1994;
Williams & Thomas, 1996).
Though not dened in the same way, Hall and Rusher (2005:
146) point to the importance of considering the informal
economy at the level of the destination: . many B&Bs are an
informal tourism sector that may actually cause damage to the
destination by not being available to provide services when tourists
demand them. As has been argued above in the case of lifestyle
businesses, a failure to appreciate the lived experience of such
businesses is not likely to yield policy interventions that resonate
with the intended participants.
Williams (2005) provides a useful summary of the determinants
of different levels of informal economic activity. In doing so he
highlights the potential role of markets (for goods and services, for
labour, and for information), the state (including levels of taxation
and degrees of social inclusion) and the characteristics and
circumstances of individuals and households (including their
employment status, income levels, and skills). From his perspective,
it is the characteristics of particular economies, and other social
changes, that create pressures and opportunities for informal
economic activity, some of which are taken up. Since these
opportunities are often associated with small rms in tourism,
research in this area is long overdue.

9. Researching SMEs in developing economies

Research on tourism SMEs in developing economies has been
relatively neglected until fairly recently, despite some signicant
early studies (Rodenberg, 1980; Wahnschafft 1982). Thus,
Nemasetoni and Rogerson (2005: 198) argue that the literature on
small tourism rms in the .. developing world is relatively
underdeveloped. Such lack of interest is, however, changing very
rapidly due to the interest shown by global agencies such as the
World Bank (2006) on the opportunities offered by tourism for
economic growth. As Rogerson (2008: 399) demonstrates the
tempo of research on small rms in the developing world is
beginning to gain momentum. Furthermore, publications by the
UNCTAD (2002), and by the growth of interest in the ideas of propoor tourism (Ashley & Roe 2002; Bah & Goodwin 2003) have
added to a growing research agenda. Much of this is focussing
around the need for development strategies and policy instruments
to help stimulate the growth of small businesses (Cook et al., 2007;
Dahles 2000). The importance of small businesses in the developing countries of Africa have been further strengthened by the
World Bank (2006) estimates that such enterprises account for
around 90% of tourism rms.

971

A series of case studies is associated with this renewed interest

in tourisms role as a tool for economic growth, particularly
amongst the more disadvantaged members of society. These have
on the whole attempted to address specic issues. In this context,
attention in South Africa has been on the challenges of small
business formation in the black townships, with the so-called
growth of township tourism (Dieke, 2003; Nemasetoni &
Rogerson, 2005). As they explain the growth of township tours
particularly in places such as Soweto and Gauteng have provided
a potential for local black entrepreneurs to establish small-scale
tour operations. Their use of in-depth interviews provides some
empirical evidence of the origins and challenges faced by those in
the township of Gauteng. Many were classied as opportunistic
entrepreneurs driven by the motivations for prot and wealth
generation. They also found factors that shared common features
with small businesses in developed economies e namely, the desire
for self-employment and the use of informal start-up capital. The
problems of funding such enterprises have been highlighted by
Human Sciences Research Council (2006) denoting those businesses having difculty in accessing nance as the second
economy tourism (Rogerson, 2008: 400).
Other studies across South East Asia, Latin America and the
Caribbean recognised both the importance and diversity of small
tourism businesses in developing areas (Dahles & Bras, 1999;
Dahles & Kuene, 2002; Roessingh et al., 2006). Whilst Rogerson
(2008) has focused on urban environments many other
researchers have tended to give more attention to rural businesses,
as is shown by the case studies in Page and Getz (1997). However,
what is remarkable about the research in developing economies is
the diversity of businesses being studied. There is not the overemphasis on tourism accommodation establishments that one
nds in the developed world, although this does vary across
countries.
As the international agencies give increased emphasis to
tourism and especially small-scale enterprises through the agenda
of pro-poor tourism, it becomes imperative that tourism academics
identify a meaningful research agenda that can both help policymakers and contribute to wider debates on the role of tourism
SMEs. This agenda is in an embryonic stage but existing debates
would suggest that it needs to consider a number of key themes.
These include the linkages between the policies of pro-poor
tourism and the work of those studies researching small-scale
entrepreneurs. In this sense motivation, business skills and access
to nance become critical. In part Nemasetoni and Rogerson (2005)
have outlined some key elements of this research agenda in which
they call for the need to improve the understanding of entrepreneurship and small enterprise development, which in developing
economies needs to embrace the power relationships within the
international tourism system as initially identied by Britton (1982,
1987). Emphasis needs also to be given to examining business
survival rates and not just rm formation. There is little point policy
initiatives helping business start-ups if failure rates are high
(UNCTAD, 2002).
In contrast to the studies associated with pro-poor tourism and
small business development is the recent upsurge of work on
tourism SMEs in the emergent economy of China. If there is
a common thread it is that of policy, but in this instance national as
opposed to international policy making. Thus, in China early studies
sought to explore the changing policy structure following the
economic reforms of Deng Xiao-pings open door policy of 1978
(Jackson, 2005; Zhang et al., 1999), which saw the growth of
tourism enterprises. Research on small tourism businesses has
been variable but progress has focussed on the impact of economic
growth and national policy on the opportunities within the hotel
industry (Qu, Ennew, & Sinclair, 2005). More generally Chen (2006)

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Table 2
An indicative research agenda on small rms in tourism.
Areas for initiation
(generally absent from tourism research)

Emerging areas
(limited research in tourism)

Established areas (in need of further

theoretical development)

Small business growth and failure

Business strategies
Finance and nancial management
Supply chains
Innovation and knowledge management
Explanations of structural changes
International comparative studies
Small festival and events businesses

Informal economic relations

Pro-poor tourism
Ethnic enterprises
Gender
Social and cultural perspectives
Local economic development
ICTs
Policy formation and participation
in local partnerships

Sustainability
Characteristics and motivations (including lifestyles)
Training and learning
Developing economies
Impacts (or evaluations) of public policy
Contributions to local economies
Small business networks and clusters
Marketing

has identied three main periods of SME growth in China, namely;

early phase (1978e1992) of rapid SME growth; second phase
(1992e2002) the reform of state-owned SMEs alongside growth of
public sector and a third phase (2002e) government policies and
support for expanding SMEs (Hussain, Millman, & Matlay, 2006).
Various surveys for SMEs across all economic sectors have shown
that despite the efforts of government most entrepreneurs start
their business using private savings (Hussain et al., 2006).
Within the specic context of tourism, Zhao and Getz (2008)
provide a prole of the characteristics and goals of small rural
family owned business operators in the Guangxi region. They note
the importance of non-nancial motivations and highlight the
importance of family in the running of small rms. Zhang and
Morrisons (2007) paper provides an insight into the complexities
of the evolving system in China. Thus, they identify three main
ownership categories; state-owned, collective owned and privateindividually owned. In terms of the latter, businesses having more
than 8 employees are designated private enterprises with smaller
businesses termed individual enterprises. Clearly, this is a further
complication of denitions as we discussed at the outset. Of greater
importance is the impact of the attitudes and perceptions of small
business owners towards the local state. As Zhang and Morrison
(2007: 278) explain, owners know that being too successful
could draw the attention of local government ofcials who they
might impose high levies and fees. Such examples from China
highlight the need to develop a wider set of criteria with which to
explore the behaviour of these small business owners, presenting
as they do contrasts to our ideas of lifestyle entrepreneurs.
10. Conclusion
Small businesses form an important part of the tourism system
internationally yet remain relatively under-researched. Indeed, in
spite of the extensive list of publications reviewed for this paper,
there has been something of a collective side-stepping of small
business research in tourism. The trickle of interest that began to
grow some twenty years ago did not turn into the torrent that many
had expected. For a variety of reasons e some to do with access,
some to do with perceptions about what the locus of interest in
tourism research should be e small rms have failed to capture the
collective imaginations of tourism scholars to the extent that other
avenues of investigation have. This means that our understanding
of such organisations within tourism is partial. Some things are
clear e motivations vary, these motivations are susceptible to
appropriate categorisation, certain business practices are more
likely to yield reward than others and that networks play important
and multifarious roles in the lives of owner-managers. It also
suggests that the impact of research on small rms in tourism has
been marginal to mainstream studies of small businesses.
Critically, however, the limits of existing research on small rms
have consequences to some degree for almost all of the major

research problems in tourism studies. How can sustainable tourism

be understood and addressed without appreciating the role of
small enterprises? How can public policy initiatives to enhance
quality, to create jobs, to regenerate destinations do so without
understanding the dynamics of smaller enterprises that are
endemic in tourism? How can the social and cultural role of tourism
be understood without examining one of the key locations of
exchange in many parts of the (tourism) world? How can tourism
be understood without incorporating the informal economic relations that constitute so many of the transactions between tourists
and small businesses in developed as well as developing economies? At the moment, the danger is that assumptions are made
about small businesses that appear not to be borne out by the
evidence. An interesting illustration is the manner in which many
local authorities do not differentiate between SMEs and other
businesses when looking at their absorptive capacity during an
event to benet from its hosting. When the desired benets are not
reported by the SME sector, policy-makers are often unable to
explain why they have failed to operate in the same manner as
much larger businesses that are networked, promote their products
globally and view events as a key strategy to extend the season or to
provide a short-term boost to their business. Therefore, it is not just
the academic neglect and limited understanding of the SME which
has academic interest: the actual tourism sector and its ability to
benet from visitors is also a major issue for academics working
with policy-makers. Therefore, the purpose of this paper to challenge many of the assumptions about SMEs and their characterisation and existence in the broad eld of tourism has numerous
contributions to make to a better understanding of this phenomenon as well as highlighting the research tasks ahead. For example,
to assume SMEs are characterised by homogeneity, formality, make
signicant contributions to local economies or to destination
development are all open to question, perhaps on a case-by-case
basis. Such questioning is only likely to achieve a deeper understanding of the relationships that exist between SMEs, tourism,
destinations and the customers they serve (both tourist and nontourist).
This paper has also drawn attention to many of the potential
avenues of research that remain open to critical enquiry. Little is
understood, for example, about why some small businesses in the
sector that seek growth, achieve their aspirations while others do
not. There are partial insights from studies that have been undertaken broadly in management research, including innovation and
knowledge transfer, but much remains to be done. Researching the
strategies, strategic alliances and the effective utilisation of ICT, for
example, will enable a clearer understanding of how businesses
might be supported by the public sector. Similarly, greater understanding of how skills and knowledge on a range of matters might
be developed would be equally welcome. Research on these
enterprises must recognise spatial and sectoral variation; small
tour operators in Australia and restaurants in India may belong to

R. Thomas et al. / Tourism Management 32 (2011) 963e976

tourism but factors explaining their role, development and

behaviour will be marked by difference more than similarity.
The indicative research agenda presented in Table 2 reects
much of the analysis contained in this review. Following an
approach used by Blackwell and Kovalainen (2009), it distinguishes
between three areas for future research. The rst e the areas for
development e contain important topics that have been largely
omitted from scrutiny by tourism academics. The application of
theories of business growth or the development of explanations for
structural changes within the sector would be examples within this
category. In effect, these are novel areas of research for tourism
academics. The second e labelled emerging areas e provides
suggestions for research that builds on the limited foundations
provided by existing work. In these cases, there has been some
activity but there remains considerable scope for theoretical
advancement and further empirical studies. The nal category e
the established areas e includes topics where either the issue is
well established within tourism studies, even if research on certain
aspects lags behind (such as small rms and sustainability) or
because there has been a sustained effort which has borne fruit but
requires development, notably theoretically (such as lifestyle
businesses). There is no suggestion that the table is comprehensive.
It is provided to provoke debate and, thereafter, to stimulate further
research. Such a debate may encompass what has been excluded
from the table as much as what is listed. Casting more light on these
and the other areas discussed in this paper will serve academics
well and offers the prospect of more effectively informing policy
and practice.
In responding to this agenda, researchers must be alert not only
to the implicit values underpinning the work on small rms in
tourism (for example, that being entrepreneurial is somehow
inevitably good) but also that the agenda itself, i.e. what is seen as
important or worth researching may be shaped by the concerns of
those with power (Thomas, 2011). This is illustrated most clearly in
the context of public policy, where there is a danger on occasions of
theory being led by policy (Lovering, 1999). In other words, what is
researched, how it is researched and what counts as evidence may
encompass an assumed or normalised set of reference points.
Emphasising the need to nd ways of identifying and supporting
growth rms (ironically, neglected by tourism scholars) may be an
example, for it presupposes the importance and desirability of
growth among small tourism rms without questioning whose
interest might be served by such a policy. Retaining a critical
perspective is vital if researchers are to understand the range of
social, economic, cultural and political issues that present themselves for scrutiny by small rms in tourism.
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