Testing and Developing the Environment Risk Construct in Hospitality Strategy Research

Abstract

The study of environment risk as a construct in strategy research has been mostly conducted in the context of events that occur in the environment of enterprises. Moreover, prior studies in hospitality strategy research have captured managers’ perceptions of their environment and its impact on firm business strategy, organizational structure, and performance. In this study, the authors develop an approach to model environment events by measuring the risk factors using indicators of a ratio scale and by testing the risk effects on the firm vis-à-vis corporate strategies, capital structure, and performance. The dimensions of the environment risk construct and their measures are developed and then tested with regard to their relationship to the performance of the firm.The results of this research suggest that proxies of environment risk account for a significant variation in the firm’s strategy and its performance.