Corporate governance practice for tourism small and medium-sized enterprises in Malaysia

Nurhazani Mohd Shariff,Azlan Zainol Abidin

doi:10.21833/ijaas.2018.01.004

Abstract

The Tourism Small and Medium-Sized Enterprises (TSMEs) make a significant portion of entrepreneurial enterprises in Malaysia, and as a matter of fact play a big role as the backbone in the Malaysian tourism industry. Good corporate governance has been proven as a mechanism to increase companies' performance and since corporate governance also plays a vital role in the small firms including entrepreneurial, this study intends to examine the corporate governance practices in TSMEs namely ownership and board structure, conflict of Interest, stakeholders, social responsibility, remuneration and transparency. A number of 229 respondents consisted OF board of directors and top management of TSMEs were asked to indicate the importance of corporate governance practices and to determine the component of best practices for the TSMEs. The findings highlight that all the six corporate governance practices significantly derived as important component for the TSMEs. At present, there has been limited study on corporate governance in TSMEs. Hence. these findings would contribute towards considering these best practices as a vital role in managing TSMEs in achieving their strategies and objectives.

Highlights

It is reported that many of the small and medium-sized enterprises (SMEs) in Malaysia are in the services sector, with more than a third of the firms involved in the tourism industry in 2010
As tourism emerged as one of the world’s major industries with significant changes in the structure and operation of the tourism industry worldwide, the global transition to tourism-focused economies, the emergence of new destinations, and increasing demands for differentiated tourism products and services have engendered the need for tourism small and medium-sized enterprises (TSMEs) to develop strategies to become competitive in the changing global economy
The study has significantly highlighted the importance of corporate governance practice in the TSMEs

Summary

Introduction

It is reported that many of the SMEs in Malaysia are in the services sector, with more than a third of the firms involved in the tourism industry in 2010. As tourism emerged as one of the world’s major industries with significant changes in the structure and operation of the tourism industry worldwide, the global transition to tourism-focused economies, the emergence of new destinations, and increasing demands for differentiated tourism products and services have engendered the need for tourism small and medium-sized enterprises (TSMEs) to develop strategies to become competitive in the changing global economy. Several studies note that TSMEs play important role in the industry as to achieve the significant changes in global tourist consumption, and the increase of differentiated and niche tourism products (Page et al, 1999; Getz and Carlsen, 2000; Ateljevic, 2009). Nurhazani Mohd Shariff, Azlan Zainol Abidin/ International Journal of Advanced and Applied Sciences, 5(1) 2018, Pages: 24-30 because apart from their key role in delivering tourism products to the tourist, they play an active role in advancing the local community. TSMEs still continue to face challenges that impede successful tourism development in destination countries, slowing gains that can emerge from TSMEs activities

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