Driving factors to competitive sustainability of SMEs in the tourism sector: An introspective analysis

Abstract

The services sector continues to play a major role in the transformation of economies. For instance, the tourism sub-sector, which is a key segment of the service sector has become one of the major contributors to economic transformation in developing economies. Given this prospect, stern competition has been created among tourism firms across the globe. However, the tourism sectors in most developing countries continue to grapple with competitive pressure challenging their competitive sustainability. Drawing on the theory of change, the purpose of this paper is to investigate factors that drive the competitive sustainability of small and medium enterprises in the tourism sector in Ghana. Data was collected from 310 SMEs in the tourism sector through the administration of a structured questionnaire and analyzed using Partial Least Square Structural Equation Modelling. The results show that price sensitivity, site maintenance, and entrepreneurial competency have a positive and significant effect on the competitive sustainability of small and medium enterprises in the tourism sector. By implications, the paper provides managers of tourism facilities with an encompassing mechanism aimed at improving tourism sites, enhancing the entrepreneurial competencies of staff, and adopting pricing strategies to enhance the competitive sustainability of the tourism sector from a developing country’s perspective. The study advances theories on tourism competitive sustainability.

Keywords:

• competitive
• sustainability
• tourism
• SMEs
• driving factors

Public Interest Statement

Small and Medium Enterprises (SMEs) are pivotal in the economic performance of both developed and developing countries. It is seen as the engine of every economy due to its enormous contributions to economic growth and development. It is worth noting that competitiveness is edging small and medium enterprises to implement better policies that will drive them into sustainability. In light of this, SMEs in the tourism sector of Ghana continue to facilitate measures that will drive them into competitive sustainability and influence tourists to embark on regular visits. Given this, the study seeks to explore the determinant factors that have helped small and medium enterprises in the tourism sector to be competitive and sustainable, especially in an emerging economy like Ghana. This investigation will be critical by providing beneficial guidelines to the tourists and SMEs in the tourism industry as well as providing more insight into the literature.

1. Introduction

Small and Medium Enterprises (SMEs) are pivotal in the economic performance of developing countries. It is seen as the engine of every economy due to its enormous contributions to economic development in both developed and developing countries (Ali Abbasi et al., 2022; Ali Qalati et al., 2020). In the recent dynamic global business environment and industrialization, SMEs play a crucial role in the economy through new product development and enhancing entrepreneurial capabilities (Raoof et al., 2021). One of the vibrant and most promising sectors is the tourism sector. Netto (2009) defined tourism as the migration of people from one location to another for leisure, business, or other short-term goals. Goeldner and Ritchie (2005) on the other hand defined tourism as “the processes, activities, and outcomes arising from the relationships and the interactions among tourists, tourism suppliers, host governments, host communities, and surrounding environments that are involved in the attracting and hosting of visitors”. Like any tourism sector around the world, tourism in Ghana has been seen as the major socioeconomic activity and driver of economic growth. The sector helps in wealth creation, and poverty reduction and revitalizes other sectors (Mensah-Ansah et al., 2011). According to Okeniyi et al. (2020), Ghana has a cultural, natural, and historical background that makes the tourism sector expansive and diverse. The country is among the most tourist destinations in Africa, boasting many interesting sites including Kakum National Park, Kumasi Zoological Gardens, Wli Waterfalls, Labadi Beach, Lake Bosomtwe, Military Museum, Kwame Nkrumah Memorial Park and Mausoleum, Elmina Castle, Mountain Afadjato, among others (Ministry of Tourism (MoT) Report, 2013). The tourism sector is Ghana’s fourth-highest foreign exchange earner, contributing 7.1% to the gross domestic product (GDP) in 2017 (PricewaterhouseCoopers, 2017). The industry contributed over US $ 3.0 billion to the GDP of Ghana in 2013 (Adu-Ampong, 2019).

Geoffrey Deladem et al. (2021) reported that the tourism sector is expected to generate 8.5 billion dollars and creating of over a 1.4million jobs by the year 2027. Moreover, about 4,320,000 tourist inflow are also expected within the same year (Ministry of Tourism (MoT) Report, 2013). While the tourism sector remains significant to Ghana’s economy, its competitiveness and sustainability are more critical (Adu-Ampong, 2017). United Nations Environment Programme (UNEP) (2005) stated that “sustainable tourism is tourism that takes full account of its current and future economic, social and environmental impacts, addressing the needs of visitors, the industry, the environment, and host communities”. To stimulate tourism competitiveness, Dai et al. (2017) submit that industry adjustment and promotion strategies for tourism competitiveness. Angelkova et al. (2012) also proposed a synergy between the actors including tourism companies, destinations, and the authorities for tourism competitive sustainability. Achieving tourism sustainability ensures industry competitiveness and the safety of tourists (Del Baldo & Demartini, 2016; Jia et al., 2022). Tourism competitiveness shows industrial, environmental, and community sustainability practices, supported by effective policies and infrastructural development (Gomez-Vega et al., 2022; Uyar et al., 2022). Tourism’s competitive sustainability benefits visitors, the industry, the community, and the environment. In addition, tourism competitive sustainability is relevant to tourists’ destination decisions (Leung & Baloglu, 2013).

In Africa, for instance, sustainable tourism initiatives and measures have been put in place for promotion, and rural industry adjustment in line with the Global Sustainable Tourism Council Agenda. For instance, Hachileka (2003) stated that Wildlife Conservation and National Parks Act and the Wildlife Conservation Policy have helped in achieving tourism sustainability in Botswana. Moreover, the Ghana Tourism Authority report shows the policies to be employed to achieve tourism competitive sustainability in Ghana (Government of Ghana, 2010). Consequently, these policies and actions enable the tourism sector to be innovative, provide unique services, and offer practical solutions to preserve the environment (Perez Guilarte & Barreiro Quintans, 2019). Although these tourism strategic policies are essential for tourism competitiveness, Ariya et al. (2021) observed a loose synergy between the tourists and the major stakeholders’ strategic plan in the context of Africa. Njoroge (2021) indicates that the tourism trade continues to struggle for survival in the market due to inadequate local community engagement and environmental and social-cultural degradation. The scenario in the tourism sector in Ghana is not different. The tourism sector has not been able to achieve competitive sustainability due to a lack of community participation and effective tourism policies (Kimbu et al., 2018; Tamakloe & Agbenyega, 2017).

It is undeniable that the tourism sector is of great importance to both the private sector and the government of Ghana (Amoako et al., 2022). In this context, it has been proposed that effective policies and marketing strategies are vital for achieving tourism competitive sustainability in Ghana. Akyeramfo-Sam and Nti (2017) argued that tourism service providers need modern technologies for rural tourism competitiveness and development. Additionally, scholars have evidenced that tourism destination has a positive effect on tourism competitiveness (Ayiine-Etigo, 2022), and contends that tourism destinations with effective marketing strategies can attract tourists for competitiveness (Acquah et al., 2022; Preko et al., 2022). It has been argued that achieving tourism competitive sustainability can be influenced by factors including tourists satisfaction, tourism destination image, digital media, and regulatory environment (Gamor & Mensah, 2022; Kotoua & Asiedu-Appiah, 2022; de Paula Aguiar-Barbosa & Chim-Miki, 2022). Vasanicova et al. (2021) for instance, revealed that regulatory conditions and tourism market dominance are a business environment that significantly tourism competitiveness. Besides, Agyeman and Asebah (2022) study focused on tourist satisfaction in Ghana and proposed that tourist contentment is one of the driving factors for tourism competitive sustainability. However, a review of the existing literature revealed that no studies have been carried out in the area of driving factors toward the competitive sustainability of the tourism sector within the Ghanaian context. Given the apparent gaps in the literature, this study contents that, a new trajectory has to emerge in the literature to bridge the knowledge gap on competitive driving factors toward the sustainability of the tourism sector (Amoah et al., 2021; Chisadza et al., 2022). Thus, this presents a gap in the literature that needs to be filled. This study investigates the determinant factors (tourists’ contentment, price sensitivity, technological adoption, constant site maintenance, entrepreneurial competency, and regulatory environment) that account for the tourism competitive sustainability in an emerging economy, particularly Ghana, using the quantitative method to fill this methodological and context gap. The study contributes to the existing knowledge of the SME tourism sector in emerging economies by assessing the determinant factors that account for competitive sustainability. The study would also provide beneficial guidelines to the tourists and SMEs in the tourism industry as well as provide more insight into the literature. Finally, this research also provides a background to the researchers and scholars for their research studies. The remaining sections of the paper are arranged as follows: the literature review followed by the methodology, results and discussions, study implications, conclusion, and finally limitations for future studies.

2. Literature review

2.1. Theoretical foundation and hypotheses development

The theory of change (TOC) is used to explain why and how a specific type of change is expected to take place in an organization (Weiss, 1995). The theory specifically seeks to map out the “missing middle” between what a program or change initiative seeks to offer to an organization’s reform programs and how the activities contribute to desired outcomes. For this purpose, it tracks every aspect of indicators in an initiative to measure them to get the desired impact (De Silva et al., 2014). Grounded on the TOC, Reinholz and Andrews (2020) aver that, in science, technology, engineering, and mathematics higher education, change agents can draw on prior knowledge and contribute how to better achieve meaningful changes in these fields. Thus, a causal analysis grounded in evidence detailing how a selected intervention is projected to bring about the desired shift in development is attained (Blustein et al., 2019). While SMEs seek to detail their desired impact and the measures it, the TOC hypothetically guides them to get there, from the beginning to the end. Thornton et al. (2017) conclude that, in agricultural research, incentives from funding agencies significantly impact the outcome of their research which goes to improve the perception of agricultural research. Again, activities such as monitoring and evaluation in collaboration with effective behavioral changes, help bring the desired impact.

The outcome of the application of the TOC is then used to determine what actions or interventions are needed to bring about the outcomes that have been determined to be necessary for the ultimate success of the project (Tadros, 2019). This method helps clarify the relationship between day-to-day actions and long-term success. Better planning results when actions are based on an in-depth comprehension of the processes that bring about change. It also improves evaluation by making it feasible to track development toward the realization of more far-reaching objectives beyond the simple tagging of program results. Following the above, and in line with the TOC tenets, the theory practically models how interventions affect changes in an organization’s context, this study operationalizes the theory to reflect how tourism firms adopt strategies aimed at making them competitively sustainable.

As such, the TOC reflects the current state of knowledge regarding the mechanisms by which SMEs drive towards adopting emerging technologies which results in learning experiences to facilitate the transformation, and how to progress toward objectives may be evaluated. Here, the study details how the TOC is put to use and emphasizes what drives SMEs along a competitive sustainability path. Moreover, the TOC has tremendous potential to create impacts that balance the need to generate new knowledge in the Tourism industry, however, there is currently a lack of strong evidence to support this claim. Following this, De Silva et al. (2014) argued that the TOC is neither a sociological nor psychological theory. For this, reason this study uses the TOC to explore factors that drive SMEs in the tourism industry to be competitively sustainable.

2.2. Competitive sustainability

Studies have highlighted that competitive sustainability is key to tourism development (Rastvortseva & Palchaeva, 2020; Sul et al., 2020). United Nations Environment Programme (UNEP) (2005) described “competitive sustainability as tourism that takes full account of its current and future economic, social and environmental impacts, addressing the needs of visitors, the industry, the environment, and host communities. Achieving competitive sustainability from the tourism viewpoint encourages tourism service providers to be proactive in today’s competitive environment (Christofi et al., 2022; Hassan, 2000). Michael et al. (2019) argued that tourism service providers can achieve sustainable competitive advantage through local community engagement, customer-oriented services, and innovativeness. In line with this, Nurmalinda and Asmaniati (2022) recently witnessed that local culture, environmental preservation, culture, and promotion improve tourism competitiveness. Santos et al. (2022) asserted that the tourism sector with effective policies and destination management is likely to achieve competitive sustainability. Furthermore, a study conducted by Bazargani and Kilic (2021) argued that infrastructural development, enabling environment, and community participation play a critical role in tourism performance. Moreover, prior studies have identified the positive effect of competitiveness on tourism’s competitive sustainability. Sánchez and Jaramillo‐Hurtado (2010) for instance, examined how ecotourism can be enhanced for competitive sustainability and reported that ecotourism management has a significant effect on tourism competitiveness. Gössling (2018) also witnessed that information technology usage has a significant and long-term effect on tourism competitive sustainability. Similarly, Varelas et al. (2021) further revealed that tourism service providers” higher usage of new technologies would improve business growth, hence achieving competitiveness. Grimstad and Burgess (2014) study argued from the tourism destination perspective and evidenced a positive relationship between tourism destinations and competitive sustainability. Besides, Kunst and Ivandić (2021) study on the viability of travel and tourism competitiveness witnessed that tourism competitiveness has a significant effect on tourist destination decisions in the Mediterranean region context. Therefore, tourism service providers should focus on policies in improving environmental actions and customer-oriented services for competitiveness (Castellani & Sala, 2010; Jones et al., 2017; Okeiyi et al., 2005; Roman et al., 2020; Tasnim et al., 2022).

2.3. Tourists contentment

Several studies have explored the determining factors of tourism competitiveness in the context of SMEs (Amoako et al., 2022; Musavengane et al., 2020; Purwanto et al., 2022). Cunha et al. (2020) identified that tourist contentment is one of the essential elements in tourism competitive sustainability. Lee and Xue (2022) defined contentment as a feeling of pleasure or disappointment that comes from the comparison between impression of the performance (results) of goods and services. In the context of tourism, tourist contentment encourages tourists to express their interests in destinations. According to Del Baldo and Demartini (2016), tourist contentment leads to revenue generation and revisit intentions. Preko et al. (2018) studied push and pull factors on tourists’ satisfaction. The study further assessed the motives, satisfaction, and behavioral intention of tourists and revealed a strong and positive effect of push and pull factors on tourist contentment and behavioral intention. Their study demonstrated that satisfied customers tend to repeat purchases, which positively influences tourists’ competitive sustainability. Consequently, Amissah (2013) sampled data from the hotel and restaurant managers and reported a significant effect of tourists’ satisfaction on the competitive sustainability context of Ghana. Akan and Dimensions of Service Quality (1995) argued that cleanliness, timeliness, and employee behavior are vital determinants of tourist satisfaction. It was found that tourist destination ambiance and quality service positively affect tourist satisfaction. Similarly, Anabila et al. (2022) recently evidenced that quality service and tourist delight are the foundation for long-term tourism development. Osakwe et al. (2016) confirmed that positive correlation between tourist satisfaction and tourism competitiveness. Furthermore, a study conducted by Owusu-Frimpong et al. (2013) concluded that tourism service providers with effective strategic policies on local communities, towns, and cities attract tourists and achieve competitiveness. This study contends that SMEs in the tourism sector should prioritize community participation and networking with major stakeholders to achieve competitive sustainability (Fransen et al., 2022; Sung, 2022). Based on the above literature, this study proposes that:

H1: Tourists’ contentment would positively affect the competitive sustainability of SMEs in the Tourism sector.

2.4. Price sensitivity

Avlontis and Indounas (2007) defined price sensitivity as a measure by which customers judge the value of an offering and it strongly impacts brand selections among competing alternatives. Göral (2016) explained that price is considered a determinant factor of market competitiveness. From the tourism perspective, Amoah et al. (2021) revealed that price is one of the strong antecedents that motivate tourists. Tourists’ price plays a crucial role in tourists’ destination decision-making process because it covers accommodation, travel costs, and toll fees/service fees. In view of this, Forsyth and Dwyer (2009) reported that it is essential to understand and define the prices of goods and services purchased by tourists. Literature has indicated that pricing has a significant effect on tourism competitive sustainability. In a study conducted by Richards (2014), it was revealed that tourism pricing strategies include ticketing, accommodation pricing policy, affordable lifestyles, parking lots, and variability of services. Elgarhy’s (2022) study on tourism pricing strategy witnessed a strong and significant effect of pricing policy on tourism competitiveness on the travel agents located in Egypt. Their study further advanced that tourism pricing strategies positively affect tourist destination choice. In addition, Mensah-Ansah et al. (2011) argued that tourism pricing policy positively influences tourists’ destination choices, hence achieving tourism competitive sustainability. Similar work by He et al. (2019) evidenced a positive link between pricing policy and tourism competitive sustainability. Furthermore, Wahyuningdyah et al. (2019) explored pricing strategies in improving tourism competitiveness. Their study demonstrated that essential tourism services, quality of services, information availability, physical components, and pricing policy positively contribute to achieving tourism competitive sustainability. The findings of Bandi and Friedli (2014) also observed a positive effect of an effective price mechanism on tourism competitive sustainability. The authors further submit that pricing policy among tourism service providers in the SME sector should correlate with tourism services offered. These studies argued that pricing policies contribute to improving tourism competitive sustainability (Ahmadi & Ghasemi, 2022; Magdalena & Sondakh, 2022). The later studies proposed a price mechanism to help tourism destinations be competitive in their pricing strategies. Pricing schemes were found to be significant factors in influencing the competitiveness of the businesses. Hence, the study hypothesizes that:

H2: Price sensitivity would trigger positively the SMEs’ competitive sustainability in the tourism sector.

2.5. Technological adoption

With increasing competitiveness and globalization, SMEs are facing rigorous competition from multinational enterprises (Dabija et al., 2022; Goel et al., 2022; Taylor & Douglas, 2013). Technology adoption is the process of accepting, integrating, and using new technology. This is done by using technology to create new mappings between inputs and outputs and new allocations of inputs that take advantage of the new mappings. In recent times, businesses including SMEs tourism sector have adopted innovations to improve performance and compete with multinational enterprises (Kumar Bhardwaj et al., 2021). Patma et al. (2021) pointed out that the adoption of technology plays a crucial role in business growth. According to Nuryyev et al. (2020), technological adoption and usage enhance customer service and business continuity. Several preliminary studies have confirmed the association between modern technology usage and tourism competitive sustainability (Hinson & Boateng, 2007; Intan Salwani et al., 2009; Ren et al., 2015). For instance, Mollah et al. (2022) highlighted the adoption and usage of modern technologies in tourism development in the context of Asia. Their study outlined artificial intelligence, virtual and artificial reality that have positively contributed to the development of tourism in Asia, particularly in scenic spots, transportation, sporting events, catering, and accommodation. García et al. (2019) study argued that smart technologies have a significant impact on tourist destination choice. A study by Uwamariya et al. (2022) also revealed a significant effect of mobile payment on tourism competitive sustainability. A recent study by Amoako et al. (2022) reported that new technologies have helped tourism actors to connect with stakeholders through conferences, seminars, and presentations. Abou-Shouk et al. (2013) further argued that technological evolution has facilitated the invention of websites and other social media applications for tourism business growth. The study report that tourism service providers with accessible website provide adequate and updated information regarding ticket booking, hotels, accommodation, and car rentals to tourists, which significantly influence their destination decision. In addition, L. H. Kim and Njite (2009) revealed a positive effect of website usage on tourism destination choice in the hotel context.

Many studies have demonstrated the relevance of social media technologies in tourism competitiveness (Leung & Baloglu, 2013). Social Media refers to “a group of Internet-based applications that build on the ideological and technological foundations of Web 2.0, and that allow the creation and exchange of user-generated content” (Kaplan & Haenlein, 2010). Some of the social media platforms include Facebook, Twitter, WhatsApp, Instagram, and WeChat (Mohanty et al., 2022). Social media allow tourists and tourism service providers to communicate and share vital information. Tourist service providers used social media platforms to share information with potential visitors, which helps them with travel plans and destination decisions (Osei & Abenyin, 2016). Kotoua and Asiedu-Appiah (2022) reveal that social media has become an essential tool for tourists’ destination choices. Khan et al. (2022) revealed that Facebook helped in the dissemination of information to tourists, which has a positive effect on tourism intention to visit among UK Muslim women. An empirical study by J. Kim and Tussyadiah (2013) evidenced a positive correlation between social media usage and tourism competitive sustainability. Wang et al. (2022) further evidenced a significant effect of social media application on tourism competitive sustainability. Lucarelli and Heldt Cassel (2020) that social media has helped tourism service providers to achieve tourism competitive sustainability through enhanced customer service, customer relationship management, and interaction with stakeholders. From the aforementioned, this study proposes that:

H3: Technological adoption would positively affect SMEs’ competitive sustainability in the tourism sector.

2.6. Constant sites maintenance

Site maintenance plays a central role in improving tourism competitiveness in today’s marketplace. Lind and Muyingo (2009) defined maintenance as “restoring to or retaining to a state in which an item can perform an initially specified function”. Prior studies have assessed site maintenance and its impact on tourism competitive sustainability (Newsome et al., 2012). Constant site maintenance aims to intrinsically energize tourists’ visitation (Amoah et al., 2021). Constant Maintenance is a unique feature of small and medium enterprises in the tourism sector and has stimulated tourists and foreign nationals to visit. Urboniene et al. (2018) identified constant site maintenance as significant in tourist visitation. Rogerson and Baum (2020) argued that site maintenance has driven and boosted the sector thereby attracting tourists and competing with others in the industry at the national level. This is because, globally, tourists are attracted to destinations with beautiful site scenes and this has necessitated the regular maintenance of such places. Therefore, the developmental agencies in the tourism sector at the local, regional and national levels have instilled the habit of site management by implementing policies and provision of major infrastructures to boost the sector hence, making tourism competitive to continuously contribute to economic development (Li et al., 2022; Rueda Márquez de la Plata et al., 2022). Barkauskas et al. (2015) state that constant site maintenance has a positive relationship with tourism revenue. Thus, a well-maintained tourist site attracts tourists and foreigners which in turn leads to tourist satisfaction. The study further added that income generation plays a vital role in tourism sustainability. In addition, Kumi et al. (2018) for instance, investigated building resilience in the eco-tourism sector using data from Ghana. Their study witnessed that site maintenance contributes positively to tourism competitive sustainability. Furthermore, Brouder (2020) demonstrated that constant site maintenance significantly affects tourism competitive sustainability. Other findings support the hypothesis that constant site maintenance positively contributes to destination choice and tourism competitive sustainability (Choi & Turk, 2011; Dolnicar et al., 2022; Goodall, 1995; Platania et al., 2022; Rylance & Spenceley, 2017; Spencer & Sargeant, 2022). Therefore, the study hypothesizes that:

H4: Constant site maintenance would positively affect SMEs’ competitive sustainability in the tourism sector.

2.7. Entrepreneurial competency

Prior studies conducted in the tourism setting have evidenced a crucial role of entrepreneurial competency in tourism competitiveness (Phelan & Sharpley, 2012; Sajilan et al., 2016). According to Botha (2020), entrepreneurial competencies are “the combined and integrated components of knowledge, skills, and attitudes of an entrepreneur”. Entrepreneurial competencies are usually related to business formation, survival, and venture growth. It was explained that competency is the attribute of an entrepreneur’s activities that contribute to venture outcomes (Adeyonu et al., 2022). Entrepreneurial competencies enable SMEs to make strategic business decisions and gain a competitive advantage. Filimonau et al. (2022) highlighted the significance of entrepreneurs’ attributes in the viability and growth of a business. The study emphasized that entrepreneurial competence enhances knowledge and shapes behavior in the context of tourism. As outlined by Halim et al. (2022), opportunity, personal and learning competencies, innovation, analytical, relationship, strategic, commitment, and strategic as significant areas of entrepreneurial competencies. Considering this, Sajilan et al. (2016) submit that continuous training is crucial whiles developing required entrepreneurial competencies in the field of tourism. Research has found evidence of entrepreneurial competencies in tourism competitive sustainability. A recent study conducted by Halim et al. (2022) on entrepreneurial competencies and their relationship with tourism destinations concluded that entrepreneurial competency and technology factors significantly affect tourism destinations and tourism competitiveness in Malaysia. Similarly, Islamovna (2022) evidenced a positive correlation between entrepreneurial competencies and tourism competitiveness. In addition, Samad and Alharthi (2022) witnessed that entrepreneurial competencies influence women’s participation in tourism, which leads to tourism competitiveness. Furthermore, Biswas (2022) recently found a significant relationship between entrepreneurial competence and tourism business growth. Moreover, the findings from Chen et al. (2022) have demonstrated that entrepreneurial competencies can contribute to tourism competitiveness. Based on the above, the study hypothesizes that:

H5: Entrepreneurial competency would positively affect SMEs’ competitive sustainability in the tourism sector.

2.8. Regulatory environment

According to Cao (2015), regulatory and policy framework is essential for tourism development, because it facilitates tourist attraction and helps in achieving competitiveness. Governments have a pivotal role in establishing ecotourism regulations (Scott, 2022; Xin & Senin, 2022). It has been argued that the regulatory environment aims to enhance local community engagement and eco-tourism development (Basera et al., 2022; Karmoker & Ahmed, 2022; Sudini & Wiryani, 2022). Based on this, the regulatory environment is regarded as sustainable tourism emphasizing environmental and legal issues (Freeland & Martin, 2022). According to Huseynli (2022), National Tourism Strategy in Australia was established to “create a sustainable tourist business that contributes to economic, environmental, and social well-being” (Commonwealth of Australia, 1992). In addition, Wu et al. (2022) stated that the “14^th Five-Year Plan” under the Green Concept aims to ensure tourism development and the regulation of the water environment in the context of Xinjiang Autonomous Region, China.

Previous studies have evidenced that a regulatory environment positively contributes to tourism competitive sustainability (Aktürk, 2022; Bezvesilnaya et al., 2020). Dredge et al. (2016) argued that regulatory approaches in the hospitality industry improve tourist growth and sustainability. From the business environment perspective, Rigelský et al. (2021) witnessed a positive influence of the business regulatory environment on tourism competitiveness. A study conducted by Aryeetey and Ahene (2005) demonstrated that a flexible regulatory environment enhances tourism competitiveness through tourists’ attraction and foreigners for business and other purposes. Prior evidence suggests that a regulatory environment can significantly increase tourists’ destination choice (Ying et al., 2022; Zulvianti et al., 2022; Mensah & Blankson, 2013; Tasnim et al., 2022; Toivonen, 2022). Based on the above literature and arguments, the study hypothesizes that:

H6: Regulatory environment would positively affect SMEs’ competitive sustainability in the tourism sector.

In Figure 1 below a conceptual framework for the study is presented synthesizing the theoretical constructs as demonstrated in each of the hypotheses discussed.

Figure 1. Conceptual framework.

3. Methodology

The researchers used a quantitative approach to achieve their goal, creating a questionnaire that was distributed to a large number of small and medium-sized businesses in Ghana’s tourism sector. Based on the conceptual framework, a questionnaire was designed to put the research model and proposed hypotheses to the test. The questionnaire was divided into two parts sections: A and B. Section A contains the personal demographics of the respondents’ whiles section B contains the questions on the variables to be measured. In all, six questions were designed concerning section A, and twenty-nine questions to that concerning section B. A five-point Likert scale questionnaire was designed where 1 stands for strongly agree and 5 strongly disagreed. A Likert scale is a psychometric tool used to quantify personality, character, and attitude traits by converting qualitative features into numerical measurements. On a Likert scale, a number value is assigned to each statement and the respondent chooses one to represent the degree of agreement and disagreement. Before the questionnaire was finalized, the reliability of the scales was ensured through a pre-test with 50 participants. Questions that were not reliable, thus, falling below the allowable reliability scale of J. F. Hair et al. (2019), were dropped. The administration of the survey was continued after the revision of the questionnaire.

The data was collected from Small and Medium Enterprises in Ghana’s tourism sector in the main tourism regions of the country using an online approach to gather the data required for the analysis, which was then answered by the managerial staff of the selected SMEs using a convenience sampling technique (Amoah & Jibril, 2021; Hussain et al., 2020). The convenient sampling approach was adopted due to the availability of participants who were prepared to offer the required information or data and to cut down on time spent in the process (Haseeb et al., 2019). The study focused on the managerial staff in the industry in answering the questionnaire due to the information in their possession, in-depth knowledge, and the fact that, the participants represent the main decision-makers in the sector. Before embarking on the data collection processes, formal permission was sought from the various tourism firms that were selected for the study through letters, emails, and other notifications. After the approval of the permission of the request, the Google link of the questionnaire was sent to the targeted respondents for them to answer (Javed et al., 2022; Jibril et al., 2020). The study utilizes the online survey instrument approach for the data collection due to its convenience and reliability for data collection as asserted by some scholars (Amoah et al., 2021; Androutsopoulos, 2017; Javed et al., 2020; Miller et al., 2017; Rivaz et al., 2019). A total questionnaire of 380 was distributed to the selected SMEs in the tourism sector. Out of this, 310 questionnaires representing 81.58 percent were correctly filled for the data analysis and processing after taking off the incomplete, anomalies questionnaires. According to (J. Hair et al., 2017; Tabachnick et al., 2007), a sample size of 300 and above qualifies for a quantitative study. The data was collected between May-August, 2022. The questionnaire took each respondent an average of eight minutes to complete. Again, the respondents/participants were at their liberty to quit/exit the online portal of the questionnaire after answering. To ensure a high level of ethical standard and confidentiality, respondents/participants were specifically advised not to state/write their names on the questionnaire before/after answering. In all, the 310 corrected responses received were processed and analyzed through PLS-SEM (ADANCO 2.0) software version. Table 1 below therefore shows the details of the demographics of the respondents/participants of the study.

Table 1. Demographic characteristics

Details		Frequency	Percentage (%)
Gender	Male	203	65.40
	Female	107	34.60
Age	23.28	49	15.50
	29–34	99	32.00
	35–39	115	37.20
	40–45	36	11.70
	Above 46	11	3.60
Educational Level	Senior High School	65	21.00
	Certificate/Diploma/HND	73	23.60
	Bachelor Degree	107	34.60
	Masters/PGD	58	18.40
	Others	7	2.40
Company Size	Micro (1–20 employees)	99	32.00
	Small (21–50 employees)	91	29.40
	Medium (51–100 employees)	68	22.00
	Large (100 above)	52	16.50
Work Experience	1–5 years	149	47.90
	6–10 years	93	30.10
	10–15 years	47	15.20
	15 and above	21	6.80
Location of business	Greater Accra	87	27.80
	Central Region	69	22.30
	Volta region	53	17.20
	Western Region	47	15.20
	Ashanti region	47	15.20
	Others	7	2.30
Sample Size (n)		310	100

Source: Author’s field survey- May-August 2022

3.1. Data analysis and techniques

According to the researchers’ interpretation, PLS-SEM was used for the data analysis. Haseeb et al. (2019) and Javed et al. (2020) claim that it is permissible to use such software, specifically PLS-SEM ADNACO 2.0 version, for evaluating the study model and putting forth hypotheses. As opposed to the Covariance-based equation, the PLS-SEM was chosen for a variety of reasons. PLS-SEM 2.0 was used for the testing of the study hypotheses since the PLS-SEM evaluates connections between the latent variables and the relationship of the constructs simultaneously (J. F. Hair et al., 2019; J. Hair et al., 2017).

3.2. Measurement of the constructs

The five-point Likert scale, which has been utilized by researchers like (Pimentel & Pimentel, 2019) was used to modify the construct measurements from previously published works of literature. 1 = strongly disagree, 2 = disagree, 3 = neutral, 4 = agree, and 5 = strongly agree. The ordinal scale was chosen since it gauges how strongly the respondent feels about the constructs being measured. Table 2 and 3 below indicate how the various constructs were measured. The appropriate measurement scale for this study is an ordinal scale because it measures the volume of responses, opinions, or thoughts provided by the respondents.

Table 2. Construct reliability and validity

Constructs	Dijkstra-Henseler’s rho (ρA)	Jöreskog’s rho (ρc)	Cronbach’s alpha(α)	The average variance extracted (AVE)
Tourists Contentment	0.8347	0.8967	0.8254	0.7440
Price Sensitivity	0.8673	0.8811	0.8212	0.6524
Technological Adoption	0.9402	0.8975	0.8359	0.7458
Constant Sites Maintenance	0.8625	0.8825	0.8222	0.6561
Entrepreneurial Competency	0.9132	0.9208	0.8830	0.7470
Regulatory Environment	0.9370	0.9351	0.9103	0.7463
Competitive Sustainability	0.8855	0.8906	0.8351	0.6765

Source: Authors’ processing from ADANCO 2.0 version

Table 3. Construct items, loading, and variance inflation factor (VIF)

Construct	Indicator	Loading	VIF
Tourists Contentment	TC1: In my view, tourists’ satisfaction plays a major role in the sustainability of the tourism sector	0.8508	2.5992
	TC2: Tourists are satisfied with the activities of customer relationship management e.g. and tourist’s guard.	0.7792	1.4992
	TC33: The beauty and quality of the environment informed tourists’ decisions for other visitations.	0.9147	2.9188
	TC4: In my view, tourists are strongly motivated by the satisfaction gained by visiting places	0.8878	2.5507
Prince Sensitivity	PS1: Prices charged are moderate in the tourism sector	0.6790	1.4042
	PS2: Price plays a major decision in the tourist’s decision-making process	0.7444	1.5496
	PS3: In my view, prices are always constant without regular changes	0.9014	2.7831
	PS4: In my view, indigenes and foreigners are usually satisfied with payments made in the tourism sector.	0.8843	2.5449
Constant Site Maintenance (CSM)	CSM1: In my view, consistent maintenance has contributed to the sustainability of the tourism sector	0.6372	1.3977
	CSM2: Preservation of the tourists’ environments plays a key role in the maintenance of the site	0.8065	1.8011
	CSM3: Policies developed on sites maintenance have also moved the sector forward	0.9092	2.8731
	CSM4: Management constantly maintains the tourists’ sites.	0.8610	2.4529
Technological Adoption	TA1: Technology is an essential tool in promoting tourism.	0.8083	1.8549
	TA2: Adoption of technology helps in sharing authentic information on their websites/social network platforms.	0.7715	1.7947
	TA3: Technology platforms are useful tools for reaching out to those who are far and near.	0.9019	2.8134
	TA4: Technology adoption contributes to the profitability of the tourism sector	0.9104	2.0950
Entrepreneurial Competency	EC1: Ability to take responsibility for solving a problem	0.6740	1.5452
	EC2: Cooperation with others, networking, and utilizing contacts	0.9046	3.2288
	EC3: Persuasive communication and negotiation skills	0.9377	3.0420
	EC4: Recognize market gap, exploit market opportunity	0.9145	3.0378
Regulatory Environment	RE1: Government policies favors the tourism industry	0.6135	1.3717
	RE2: In my view, the tourism sector enjoys better policies from the ministry of tourism	0.9169	3.2998
	RE3: The tourism sector is regularly supported by the government to make them competitive	0.9316	3.9675
Competitive Sustainability	CS1: Evaluation of the tourist’s environment accounts for its sustainability	0.6809	1.3024
	CS2: In my view, policies on security have also impacted positively on SMEs in the tourism sector	0.8722	2.3742
	CS3: In my view, accessibility of tourist places is usually friendly informing tourists of regular visitation	0.9128	3.2284
	CS4: Government policies on tourism usually boost the morale of tourists accounting for the competitive sustainability of the sector	0.8801	2.5577

Source: Author’s processing from ADANCO 2.0 version

4. Results and discussions

4.1. Assessment of model appropriateness

The researchers used Dijkstra-rho Henseler’s and Cronbach’s alpha coefficients to test construct reliability and validity as informed by the PLS-SEM literature (J. F. Hair et al., 2019). More significantly, the methodological literature has advised using this criterion (see Jakada et al., 2020; Shiau et al., 2019). Table 3 shows that all threshold values were greater than 0.5, demonstrating the strong coefficients of construct dependability established by (J. F. Hair et al., 2019). Version 2.0 of the PLS-SEM ADANCO software was used to evaluate the psychometric qualities of the constructs and the supporting items (Dijkstra & Henseler, 2015). Jöreskog’s rho (pc) and Dijkstra-rho Henseler’s (A) both had values that were more than the necessary thresholds of 0.7 and 0.8 respectively. Thus, Dijkstra-rho Henseler’s (A) provided the result, which had a minimum reliability coefficient of 0.8347 and a maximum of 0.9402, while the average variance extracted (AVE) presented convergent validity with a minimum threshold of 0.5. (see Table 2).

The indicator loadings of the latent constructs, on the other hand, were thoroughly assessed and loaded to their respective constructs. According to J. F. Hair et al. (2019), all factor loadings were greater than 0.6. The factor loadings yield (0.6135 and 0.9377) as the minimum and maximum loads, respectively. Table 3 below shows the details of the factor loadings, along with the various research constructs and corresponding loadings (coefficients). The existence of multicollinearity was also used to detect evidence of common method variance (CMV) for the variance inflation factor measurement scale (VIF).

In addition, the discriminant validity of the constructs among the latent variables was evaluated using Fornell-Larcker J. F. Hair et al. (2019), as shown in (Table 4) below. According to experts (J. F. Hair et al., 2019; Henseler et al., 2015), the AVE values of the measured constructs are shown in the diagonal (in bold) of Table 4, which must be more or equal to 0.5. To show discriminant validity, all of the AVE constructs should have higher coefficients at both column and row positions than other constructs. The outcome demonstrates that the constructs meet both fundamental and strict presumptions, establishing discriminant validity.

Table 4. Discriminant validity using Fornell-Larcker

Construct	Satisfaction	Sensitivity	Tech-Adoption	Maintenance	Competency	Environment	Sustainability
Satisfaction	0.7440
Sensitivity	0.3983	0.6524
Tech-Adoption	0.0393	0.0634	0.7458
Maintenance	0.3246	0.5609	0.0460	0.6561
Competency	0.1927	0.2972	0.1717	0.2735	0.7470
Environment	0.2334	0.3013	0.1943	0.2772	0.3990	0.7463
Sustainability	0.2641	0.4895	0.1016	0.4437	0.4809	0.3128	0.6765

Note: the diagonal (in bold) is the average variance extracted (AVE) Sources: Author’s processing from ADANCO 2.0 version.

4.2. Structural modeling- path analysis (Hypothesis testing—PLS-SEM)

The researchers also realized that path analysis is required following the evaluation or assessment of model fit. It is crucial to establish this analysis since it eventually shows how the study constructs highlighted in the analysis relate to one another. The findings revealed that Competitive Sustainability (CS) has a positive and significant effect on the constructs: Price Sensitivity (PS), Sites Maintenance (SM), and Entrepreneurial Competency (EC) as their p-values were less than 0.05 and not significant for Tourists Satisfaction (TS), Technology Adoption (TA) and Regulatory Environment (RE) as their p-values were greater than 0.05 respectively. The regression coefficients, Beta, and the significant values, T-values > 1.96 (or P-values 0.05), are displayed in Table 5 below. The coefficient of determination (R2) of the regression model was evaluated concerning the prediction ability (coefficient of determination) of the research model. As a result, the table below and Figure 2 accurately display the R2 of the predictor variable, which is 64 percent.

Figure 2. Estimated research model. Source: Authors’ processing form ADANCO 2.2.1 software.

Table 5. Hypothetical path coefficient

Relationship	Beta (β)	Standard bootstrap results					Empirical remarks
		Mean value	SD error	T-value	Effect size (Cohen’s f^2)	P-value
H1:TS -> CS	0.0193	0.0238	0.0541	0.3576	0.0006	0.3604	Rejected
H2:PS -> CS	0.3012	0.2997	0.0703	4.2861	0.0918	0.0000	Confirmed
H3:TA -> CS	0.0252	0.0281	0.0504	0.4998	0.0014	0.3087	Rejected
H4:SM -> CS	0.2121	0.2110	0.0892	2.3791	0.0517	0.0088	Confirmed
H5:EC -> CS	0.3893	0.3857	0.0644	6.0465	0.2211	0.0000	Confirmed
H6:RE -> CS	0.0159	0.0202	0.0554	0.2865	0.0003	0.3873	Rejected
Dependent variable:	Coefficient of determination (R^2)				Adjusted R^2
Competitive Sustainability	0.6489				0.6419

Sources: Author’s processing from ADANCO 2.0 version. Note: TS = Tourist Satisfaction, PS = Price Sensitivity, TA = Technology Adoption, SM = Site Maintenance, EC = Entrepreneur competency, RE = Regulatory Environment, and CS = Competitive Sustainability.

4.3. Discussion

Relative to the underlying hypotheses as presented in Table 5, the study first sought to determine how tourists’ contentment influences competitive sustainability which was not supported. Again, the second hypothesis which was to ascertain how price sensitivity influences competitive sustainability was nonetheless supported. Affirming the studies of Richards (2014), this implies price is a key indicator of the sustainability of tourism firms. Wahyuningdyah et al. (2019) maintained that lowered pricing generally helps tourist firms to cover enormous geographical distances in the shorter possible time and spur their market share and customer base. On the contrary Font et al. (2016) customers do not choose a hospitality site based on competitive pricing mechanisms but rather on the quality of services being provided. The authors, for instance, add that, customers appreciate owners for their effective communication and responsibility toward their welfare more than what is paid for the services delivered. It is upon this, that customers insist give them value for their money and not how competitive facilities’ pricing is. The argument here is that, contrary to popular belief, low prices have no positive effect on the low season/high season price ratio or the average length of stay for guests, so improvements can only be brought about by increased occupancy rates.

Another contrary hypothesis was the adoption of technology and its impact on competitive sustainability. This result was surprising given the rate at which tourism businesses are aggressively deploying technology to meet the needs of customers (Nikolskaya et al., 2019; Samala et al., 2020). In fact, given the devastating impact of Covid-19 on the tourism sector Škare et al. (2021), the deployment of smart technologies in the sector has drastically lessened the burdens. Sharma et al. (2021) for instance, mentioned that the timely introduction of online ordering systems was a haven for restaurant services. Lu et al. (2022) also added that, amid the pandemic, and the surrounding uncertainties, social networking tools offered a behemoth of capabilities for businesses to maintain their constant relationship with their customers. It is therefore surprising that this hypothesis was not supported. This thus, calls for introspection into the adoption of technology in the sector to objectively understand how technology helps makes tourism facilities competitive and sustainable. Furthermore, site maintenance had a significant influence on competitive sustainability. Site maintenance is a dimension of service quality, particularly in the tourism sector where site cleanliness is significant. Affirming this, Al-Hazmi (2021) noted that, tourist retention at a site largely depends on the health conditions of the site. Moreover, tourists are more concerned about their health based on the health status of the tourist site (Font et al., 2016). Furthermore, entrepreneurial competence also determines the competitiveness and sustainability of SME tourism firms.

Yet again, the contrarywise hypothesis which was rejected was the influence of the regulatory environment on the competitiveness and sustainability of SME tourism firms. The bottom line of these findings is that a regulated tourism industry does not impact the competitiveness of tourism services which is troubling. The tourism sector is another heavily regulated industry due to the direct impact its services have on the health and social well-being of individuals (Nieuwland and Van Melik (2020). Randle and Hoye (2016) aver that tourism authorities are to ensure that, all facilities meet the established regulations governing the sector. Often facilities that do not meet this requirement are blacklisted and sanctioned. The consequence is that their rating and popularity are affected and consequent patronage is affected. In this regard, it makes it contradictory. Nonetheless, given the circumstances and the geographical setting in which the study was conducted, such instances may be apparent. Thus, requires further introspection of this revelation.

5. Implications

5.1. Theoretical implications

The services sector has come under severe competition in recent times due to its significant role in supporting the primary and secondary economic sectors. With the growing need to transform the intangibility of services into a hypothetical product, most SMEs are racing to meet the demands of their teaming consumers in a bid to stay relevant and become competitive. The tourism sector contributes a mammoth of value to most economies in the world. Given this, there has been an upward trend in the number of SMEs springing up in this sector with varying outcomes in terms of their sustainability amid the competitive nature of the sector. Given this, studies have indicated the need to extrapolate why the tourism sector needs a retrospective analysis to determine why it is becoming competitive (Chin et al., 2017; Kerdpitak et al., 2022; Du Plessis et al., 2015). Regrettably, existing studies have not successfully explored the challenges of SMEs in the tourism sector that are making them competitive leading to their sustainability. It is for this reason this study comes with an additional understanding of the factors driving the competitive advantage of SMEs. The study argues that competition among SMEs in the tourism sector is critical to their survival. In other words, SMEs need to have a competitive urge to become sustainable. As acknowledged, this trajectory has not been given attention to tourism firms in emerging economies. Thus, this study set the pace to bring to the fore key critical success factors that lead to the competitive sustainability of SMEs in the tourism sector.

Furthermore, this study explored the determining factors that have helped SMEs in the tourism sector to be competitive and sustainable in an emerging economy. The study contributes to the emerging studies on the sustainability of SMEs (Alonso & Ogle, 2010; Núñez-Ríos et al., 2020; Nuryyev et al., 2020). Extensive literature resulted in the drawing of factors that contribute to the survival of SMEs in the tourism sector. The factors include tourist contentment, price sensitivity, technology adoption, constant maintenance, entrepreneurial competency, and regulatory environment. The relationship between all these factors to competitive sustainability was determined. Note that, these factors have been identified as critical to the competitive sustainability of SMEs (Battistella et al., 2018; Egala et al., 2021; Rodríguez et al., 2020). Nonetheless, understanding the relationships that exist among them and competitive sustainability has been nascent. Thus, this study has theoretically added to the understanding of competitive sustainability and its cumulative affordance of the literature on SME sustainability.

5.2. Managerial implications

This study comes with several implications for managers of SME tourism businesses. The study provides a practical approach to managers of SMEs in the tourism sector to enhance their competitiveness and become sustainable. Albeit, the stiff competition in the sector demands an effective strategy to be on the edge. Even though the study did not find support for firms’ competitive sustainability with tourist satisfaction, technology adoption, and regulatory environment, it does not suggest that these factors do not drive the competitiveness and sustainability of SMEs. Studies have shown that these factors can help SMEs become more competitive. Thus, attention must be given to these factors to enable SMEs to provide cutting-edge services to customers. Furthermore, while the study reinforces why pricing mechanisms, entrepreneurial competencies, and maintenance are key drivers, owners of tourist facilities should pay urgent attention to these factors to help improve quality services.

6. Limitations

In the bid to explore the driving factors toward the competitiveness and sustainability of SMEs in the tourism sector in Ghana, this study pursued this objective through the theory of change. Again, the study employed the quantitative technique as the main methodology. The study also derived opinions from the managerial staff of SMEs as the main source for the data collection. The above may be limitations to this study. Nonetheless, future studies could employ the use of other empirical and theoretical frameworks to add more knowledge to the literature. Again, even though the quantitative approach for such an empirical study is appropriate, a mix of qualitative can be employed by future studies. In doing so, other units of observation besides the managerial level can be employed in future studies. Beyond the limitations, however, the findings of the study remain significant with several positive implications for theory and practice.

7. Conclusion

The purpose of this study was to investigate the characteristics that drive SMEs in the tourist industry in Ghana to be competitive and sustainable. Six hypotheses were examined using data obtained from a sample of 310 SMEs; of these, three were found to be supported by the data. According to the findings of the study, factors such as pricing mechanisms, site maintenance, and entrepreneurial competencies have a positive and significant impact on the competitive sustainability of small and medium-sized tourism businesses in Ghana. On the contrary, tourists’ contentment, technological adoption, and regulatory environment did not affect the competitive sustainability of SMEs in Ghana. Based on the findings, it is implied that to encourage the long-term competitive viability of businesses, the appropriate policies ought to concentrate on lowering prices to make them more competitive, enhancing tourist destinations, and cultivating the entrepreneurial skills of small and medium-sized business owners in the tourism industry. The findings contribute to the existing body of research on the topic of the competitive sustainability of SMEs in developing nations and make available solutions to alleviate the problems that may be faced by them in an attempt to provide exceptional service.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work is supported by Tomas Bata University in Zlin through; IGA/FaME/2021/005. Significant factors in the sustainability of economic growth with a focus on the SME segment.

Notes on contributors

Sulemana Bankuoru Egala

Sulemana Bankuoru Egala is a Doctoral researcher in data mining and information management at the School of Management and Economics, University of Electronic Science and Technology of China (UESTC), Chengdu, China. He is currently an Assistant Lecturer with the Department of Informatics, Faculty of ICT at the Simon Diedong Dombo University of Business and Integrated Development Studies (SDD-UBIDS), Wa, Upper West, Region, Ghana. His current research interests include health informatics, data mining, service quality, and social business analysis.