How Entrepreneurship in the Hospitality?

How Entrepreneurship in the Hospitality and Tourism Industry can be a Cause of Ethical Concerns?

“At a more fundamental level, it can be argued that the very nature of what some might refer to as acting in an entrepreneurial way raises ethical questions”. (Morris et al. , 2002 p 31).

In many academic studies, the hospitality and tourism sector has been associated with a low degree of entrepreneurial behavior.

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Mentions can be made of the likes of the internationally endorsed Conrad Hilton and Thomas Cook, with the more recent innovators such as Richard Branson and Stelios Haji-Ioannou, all of whom have deeply transformed their respective sectors. However, the international tourism industry seems to be lacking entrepreneurial impulse in contrast to other sectors (Page et al. , 1999; Andriotis, 2002; Morrison & Teixeira, 2003). This short paper aims to explain the ethical issues associated with entrepreneurship and how it could concern the tourism and hospitality industry.

By cross-referencing the theories of ethics and entrepreneurship, the ethical and value dilemmas that underlie this issue will also be discussed and analyzed on the macro and microenvironment. This assignment will rely on case studies which will support managers in different aspects such as the identification of the stakeholders involved and its implications, and the provision of potential measures focussing on the implementation of professional judgments as part of strategic planning with the goal of redressing this issue.

Conceptual and Theoretical Foundations on Entrepreneurship Ethics

Ethics focuses on the self-awareness between what one represents right and wrong. It emphasizes the grounds and nature of morality, incorporating rules of conduct, moral judgments, and standards (Taylor, 1975). Hunt and Vitell’s model (1993) highlights three important ethical theories and explains how personal moral codes are being influenced by deontological, theological, or environmental practices.

Other major macro-environmental ethical theories include stockholder, stakeholder, and social contract theories (extended to Integrative Social Contracts Theory (ISCT) by Donaldson and Dunfee in1994). The Entrepreneurial Context of Ethics According to Morrison (2000a), Greenbank (2001), and Pittaway (2005), entrepreneurship is assimilated with a multi-dimensional attitude that coordinates economic and non-economic behaviors such as ideology, legitimacy, social mobility, and psychological factors (McKay, 2001). Vyakarnam et al. 1997) demonstrate that small business entrepreneurship ethics could be classified under three themes; the impact of the owner’s personality on business ethics, which is leading to the conflicts of personal values, and entrepreneurial activity itself. On a macro-economic level, it has been demonstrated that entrepreneurship is linked to distinctive challenges; emerging from industry settings. New enterprises are often subject to limited financial resources, recurrent over-dependence on a restricted offer, their propensity to depend on a niche consumer base, and constant environmental changes.

A moderately restricted market presence, inhering small enterprises to significant demand instability, enhanced by the lack of support from distributors and suppliers, an aggressive competitor’s penetration may also impact start-ups negatively (Boyd and Gumpert, 1983).

Stages of Entrepreneurship development

According to the extensive literature review, entrepreneurial development stages (Figure 1) have a profound impact on ethics as the company develops and grows from venture ideas to a mature organization (Dodge, 1992). While small business entrepreneurs differed significantly from their big business counterparts, Longenecker et al. (1989) could not demonstrate one as being “more” or “less” ethically strict. Therefore, it seems that the ethical evolution of companies is inherent to a number of countering forces which depends on many factors, starting from the development stage of the company. While, limited management controls, pragmatic operational demands, and lack of public visibility associated in the creation stages may adversely impact ethical consideration, the entrepreneur’s personal beliefs and pride may encourage a higher ethical focus. Figure 1: Evolution in the ethical reference point as ventures grow (Morris et al. 2002)

How the Organisational Context affects Entrepreneurship?

Other ethics challenges may arise from the organizational structure, relating to the stakeholder theory discussed previously. Especially, the initial stages of venture formation the founding entrepreneur are intrinsically linked to the new structure, while important stakeholders involved have often personal and social relationships with the founder. Family, friends, or even employees may also be investors which will raise unique and complex ethical problems (Dees and Starr, 1992).

These social ties may also engender collusion and misconduct which may lead to conflicts and increased unethical behavior. The Social and Economical Role of Entrepreneurship Arguably, the social and moral role of entrepreneurship in economic terms varies. While entrepreneurship views empirically as a key economic development factor; there is a divergence about the intrinsic relationship between entrepreneurship and economic development. In an environment that can be particularly challenging to entrepreneurs, institutions play an important role in fostering or discouraging entrepreneurship.

Mair and Marti (2011) show that in situations where voids can be observed in functioning institutions, new ventures also play a building role by creating new networks of stakeholders, which ultimately will create emerging markets (Sarasvathy and Dew, 2005). Nevertheless, the absence of solid institutions in an environment dominated by well-established entrepreneurial networks can actually hinder the emulation of new ventures by creating financial barriers to entry, and by diluting supplementary entrepreneurial activity (Aidis et al. , 2008).

The concept of Empowerment and Social Entrepreneurship

It is important to note that entrepreneurship’s role has traditionally been to empower alternative trails to achievement and/or an opt-out option to modern living (Scase, 2000). This concept introduces the concerns with pursuing lifestyle preferences where individuals align entrepreneurial activity (also called lifestyle entrepreneurship) to fit personal goals and lifestyles (Kaplan 2003, Botlon and Thompson 2003). It is, therefore, reasonable to assume that this role could relate to social entrepreneurship (Bridge et al. , 2003).

With a stronger focus on social development than the concept of entrepreneurship, Bystydzienski (1992) suggests that empowerment allows an individual to gain the ability to hold power to the extent of self-governing and shaping daily life. By doing so, the initiator becomes more involved in a process of social, economic, psychological, and political change which represents the four underpinning theories of Scheyven’s (1999) model of empowerment. In the case of women-owned small businesses, Heyser (2006) observes that the role of women empowerment could be used as potential catalysts for more profound societal changes.

Al-Dajani (2007, p. 20) defined women’s empowerment as “a continuous, on-going process entailing enhanced abilities to control choices, decisions, and actions”. This definition reiterates that women's empowerment could be seen as a central condition to positive change and progress within a wider community. In a more recent article, Al-Dajani & Carter (2010), advocate that the influence and respect of empowered women within the household, community, and society at large is increased.

In this sense, one could assume that the need for social change could be initiated at local levels by the empowerment of women through entrepreneurial activities, especially in countries where the suppression of women’s involvement is largely accepted and observed.

The Factors emerging from Entrepreneurship

From the preceding discussion emerges the notion of an individual’s assessment of social acceptability, appeal, and viability influenced by cultural attitudes and norms, socio-economic factors, and the relation between the entrepreneur and their host community (Jones, 2000).

It is then debatable that entrepreneurs could be either seen as reactive or proactive individuals in this process. Entrepreneurs are not necessarily driven by tangible assets, such as maximization of a return on investment, or the exploitation of marketing opportunities.

The role of Industry Settings in Entrepreneurship

Due to low legal and professional barriers to entry, the industry setting could be seen as the prospective ground for entrepreneurs to apply their innovative process (Morrison, 1998b; Szivas, 2001). Moreover, local research by Nyaupane et al. 2006) found that tourism growth in the Annapurna region, an area dependant on climbing and trekking tourism, has enhanced the quality of life for the local population and has helped the revival of regional traditional culture. This was echoed by another more recent study from Walker et al. (2011), which highlights that the involvement in the production of hospitality services is particularly suitable for women in developing regions due to their limited literacy and low levels of education.

Conclusion

The overall findings from the case study (McMillian et al. 2011) highlight that women’s empowerment in the hospitality and tourism industry has improved their self-sufficiency and quality of life by reducing their workloads. At a more local level, access to wider occupational opportunities and schooling alternatives has initiated the chance for children and younger siblings to make their own life decisions. However, the gain of respect that women have secured is fundamentally linked with the increase of revenue generated through their businesses. This condition shows how crucial economic empowerment is in the overall process.

Also, the political empowerment of women is still problematic, especially in a larger cultural context. Although developmental efforts were initiated by national governments, gender equality progress has yet to penetrate communities at a local level. Small family businesses facilitate the wealth creation process to rural and peripheral communities and local economies, by positively contributing to social and financial capital gain. In doing so, the sustenance of natural environments, crafts, and traditions which might otherwise disappear are often regenerated.

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