Risk perception in small and medium-sized family businesses in the hospitality industry

Abstract of the study

Purpose:The vulnerability of the tourism industry to a variety of risks - including family-related, SME-specific, strategic, tourism-specific and external factors - characterizes the environment in which small and medium-sized family businesses (SMBs) operate. Although SMEs are important players in the dynamic tourism sector, they are not a homogeneous group but have different strategic orientations. This study examines the interplay between strategic orientation and risk perception in order to better understand how these perceptions influence decision-making processes, resilience and long-term business survival.

Design/methodology/approach: Based on a qualitative data set of 119 face-to-face interviews, the authors applied different rounds of coding to better understand the relationship between strategy and risk. First, three groups of strategic orientation were identified: proactive and sustainability-oriented SMEs, destination-affirming and resilience-oriented SMEs, and passive SMEs. The interviews were then coded with regard to various identified risks.

Results:The data shows clear differences in the risk perception of the three groups. Proactive and sustainability-oriented SMEs prioritize business risks and show an inclination towards innovation and sustainability. Destination-affirming and resilience-oriented SMEs perceive a broader range of risks, link their investments to destination development, emphasize family and health risks, and navigate competitive pressures. Passive SMEs are primarily concerned about external risks, show limited awareness of internal and strategic risks, resist change and often delegate decisions to successors.

Research limitations/implications: The authors contribute to existing knowledge by providing a comprehensive status quo of perceived risks for different strategic orientations - an area that has been little researched. Furthermore, the differences in risk perception suggest that simplistic models that ignore subjective perception may be insufficient for policy recommendations and understanding industry dynamics.

Practical implications: The different orientations illustrate the diversity within CMFUs. Recognizing these differences enables targeted interventions that can address the specific concerns of each group and thus promote business resilience and sustainable destination development. The authors suggest practical support for destination management organizations and regional policy, especially to strengthen the risk management of passive SMEs.

Social implications: As tourism destinations are complex stakeholder networks, uncovering different risk landscapes benefits overall destination development. Proactive SMFUs are particularly relevant as they can drive the destination forward through innovative business models, while passive SMFUs could hinder development (e.g. through lack of innovation or unresolved succession).

Originality/value: While previous studies often examined specific risks (such as climate change or COVID-19) in isolation, this work shows that SMFEs do not necessarily perceive these risks equally. Rather, risk perception correlates with strategic orientation, which opens a new field for research on decision-making and resilience of tourism stakeholders.

Key findings of this study

Strategic orientation determines risk perception: The perception of risks is not uniform in family businesses in the hospitality industry, but is directly related to the respective strategic orientation of the owners.

Proactive businesses focus on business risks: This group defined by the study within the SMEs prioritizes entrepreneurial risks and sees challenges such as climate change more as an opportunity for innovation and sustainable business models.

Resilience-oriented businesses look at the destination as a whole: they perceive a particularly broad spectrum of risks (including family and health) and closely link their willingness to invest with the development of the location.

Passive companies externalize risks: These companies are primarily concerned about external factors (e.g. politics, laws), neglect internal or strategic risks and tend to postpone investments and innovations.