Studies focused on explaining business internationalisation have contributed significantly to the tourism sector, especially for the formulation of better marketing strategies and positioning of companies in an increasingly competitive environment [1
]. Despite the extensive knowledge generated, there is still no consensus on the businesses´ conditions and capabilities that guarantees their international success, and on a sound methodology for evaluating and measuring business internationalisation [2
Tourism enterprises in general, and more specifically nautical tourism firms, operate in a high competitive environment, searching for tourists to be attracted by its features. In this scenario, the undertaking of internationalisation strategies may raise firms´ opportunities to work towards sustainable development, by focusing on those attributes that are more capable of nourish their image within the global market and are relevant to face competitors out of their natural environment [4
As far as nautical tourism is concerned, there is scarce literature that aims to support internationalisation strategies and it is not possible to provide useful recommendations to nautical enterprises that guarantee the efficiency in the use of resources dedicated to international growth. More specifically, to date, it is still not possible to explain to what extent the possession of marketing and internationalisation plans benefit internationalisation processes of nautical tourism firms. Also, there is limited knowledge on the likely influence of factors of socio-psychological nature (i.e., motivations and attitudes), that have been widely investigated as determinants of business expansion in other tourism segments [5
Thus, the present study aims to analyse factors determining international growth in SMEs dedicated to nautical tourism activities. Results are useful for nautical tourism planning, especially for islands and coastal destinations seeking to make nautical tourism a key driver for competitiveness, resilience and positioning improvement. That is, this study provides empirical evidence on international performance of nautical tourism SMEs that can be useful for the better prediction of success in future investments and for the design of proper incentive mechanisms for internationalisation in nautical destinations. Therefore, international success among nautical tourism firms will contribute to enhance the image of the nautical enterprise itself and to promote the successful management strategies of their destinations of origin.
The research focuses on the Macaronesia Region (a collection of five archipelagos in the North Atlantic Ocean off the coast of the continents of Europe and Africa), where a sample of 60 companies located in six different islands with high nautical specialisation is used. Therefore, regional differences were also identified regarding the analysis of current conditions and capacities for the internationalisation. In this sense, the research subject of this article is concerned with the contribution that earlier nautical tourism SMEs’ individual experiences in competing islands destinations has on the identification of synergies and areas where destinations may be able to work together (i.e., coopetition), thus contributing to formulate recommendations to increase regional competitiveness and sustainability [11
3. Materials and Methods
In this paper, a universal model of causes of international growth of SMEs is proposed, thus validating a more holistic approach in explaining internationalisation within the nautical sector. This is, the present research focuses on analysing the interrelation between the international growth of nautical tourism firms and several factors, ranging from the business features (i.e., attributes that are under the control of tourism managers), to other variables of socio-psychological nature; such as motivations and attitudes of SME´s managers in respect to the internationalisation subject and perceptions about distinctive features of their organisations.
3.1. The Proposed Model
The starting point was the consideration that there are basic attributes and conditions of nautical enterprises that favour their international growth and success. In this sense, the model includes variables such as, (i) the possession of marketing plans; (ii) customer satisfaction surveys; (iii) staff training plans; (iv) experience in the participation/organisation of international events; (v) having received capital injections or public subsidies, among others (see Figure 1
). All these variables are measured in the same way (take value 1 if the company has the condition, and 0 if not) and can be grouped into a construct named COND-basic conditions for internationalisation (see Table 1
Secondly, it is estimated that the international growth of the company depends on its ability to differentiate from the competition, which we have called differentiation factors (DIF). Along these lines, it is expected that those companies defining themselves as being innovative, with competitive prices, a high sense of belonging and nautical culture show greater international performance. Thirdly, considering that motivation is an important antecedent of successful international growth in tourism [6
], it is expected that nautical tourism firms with foreign investments are the ones giving more importance to motivational aspects (MOT) as shown in Table 1
. In this model, the endogenous variable refers to the international growth of the firm (variable INT in the model) and involves only two alternative choices, taking value 1 if the enterprise has foreign investments and 0 if not. In this case, a Binomial Logit model guarantees robustness as it is based on the theory of random utility. All the information used in the study has been self-reported by the owner or manager through in-depth interviews.
Other variables related to the socio-economic profile of the companies were also included in the model, such as the number of employees (EMP), the possession of patents (PATENT) and an internationalisation plan (P_INT), which were measured as shown in Table 1
. International success can vary among nautical tourism firms according to their place of origin, specialisation degree and accumulated experience [18
]. Thus, another hypothesis that is studied in the present paper is to what extent the island where the firm is located has an influence on its international growth (variable DEST in the model).
3.2. Research Instrument
Face-to-face interviews were conducted with managers and/or owners of the companies in the sample, using a questionnaire as a guide and support for the database creation. The questionnaire was structured into four groups of questions, which contained open, closed and multiple-choice formats (See Table 2
). The first section consisted on the socioeconomic characteristics of the firm. In the second group of questions seven attributes of the company were verified, where the manager had to answer “Yes”, if the company complies with the condition, and “No” if not (Table 2
In the third section of questions, the interviewee had to assess six aspects that, in his/her opinion, differentiated the company from the competitors. The valuation was carried out on a Likert scale of 5 points, where 1 = I do not agree (the manager considers that the company does not have this particular characteristic that differentiates it from the competition) and 5 = I completely agree (the manager fully agrees with this statement). Regarding motivations, the manager had to assess ten aspects on a 5-point Likert scale, where 1 = Not important (if the motivation stated was not relevant for him/her when considering international growth) and 5 = Very important (if the motivation is considered completely transcendent).
The questionnaires were validated through focus groups with experts from the University of Las Palmas de Gran Canaria and four businessmen who acted on behalf of the sector. That is, questions were assessed for their efficacy and appropriateness for the objectives of the research by intensive work with focus groups discussions with experts.
In Europe, the nautical tourism industry is mainly composed by small and medium enterprises (SMEs) that have a very favourable international projection and recognised entrepreneurial skills in exports, inside and outside the European Union, especially towards United States, Asia, and/or Russia [68
]. In this scenario, islands destinations rely heavily on the foreign exchange of maritime activities to expand and develop their economies, and their seaports play a crucial role within the European maritime economy acting as transportation hubs. Moreover, EU islands and archipelagos are the most important regions in Europe in terms of international tourism arrivals and the pursuit of nautical activities [69
More specifically, the archipelagos of the Macaronesia Region, grouped strategically thanks to their biogeographic and socioeconomic similarities, have promoted maritime tourism development as a source of wealth and sustainability for their coasts during the last decades. It is recognised that the nautical industry plays a fundamental role in promoting innovation and economic growth in the region [16
]. Therefore, it can be suggested that nautical tourism organisations of islands of the Macaronesia Region are a good representation of the nautical industry.
The target population of the study was defined as the group of enterprises that conform the offer of nautical products, services and experiences in the Macaronesia region. Cruising activities, and companies that sell accessories and nautical equipment, maintenance and repair of boats or other infrastructures were not included. Three of the five archipelagos of the Macaronesia were chosen; the Canary Islands, Madeira and Cape Verde, because of their relevance in the offer of activities related to nautical tourism [70
The Canary Islands are considered a tri-continental platform for economic relations between Europe, Africa and America, motivated mainly by their geostrategic situation [43
]. Many tourist companies in the archipelago have internationalised, especially in the areas of accommodation, hospitality and catering, consulting, transport or construction. Within the nautical tourism industry, canarian companies are identified by their maturity, extensive knowledge of the sector and wide experience in participating in international events [43
]. Madeira stands out for its experience in organising high-profile sporting events such as international sailing races [72
]. Finally, although the business sector dedicated to nautical tourism in the Cape Verdean islands is small, it is a favourite destination for sailing and the practice of sport fishing thanks to its strategic geographical position between the European and American continents [25
The population size is unknown, due to the lack of official statistics of the industry at a regional and island level. Thus, the study required the creation of a regional directory of enterprises. This was done through: (i) the comprehensive review of the main promotional guides of the three destinations and the existing directories published by the regional chambers of commerce, and (ii) the Snowball Method [73
]. The greatest difficulties for the creation of the directory were found in the Cape Verdean archipelago. The final directory covered a total of 142 companies in the three destinations, while the final sample size was 60 companies and was composed by those companies that were willing to participate in the interview phase. Table 3
shows the sample distribution per island, and the period of the interviews.
The fieldwork was carried out in the main offices of the companies. Entrepreneurs were briefly informed of the structure and purpose of the interview and the way in which they had to rate the different aspects. Although the fieldwork was carried out in different moments of the year there were no significant differences in the profiles of the respondents and non-response rates between early May and late December 2017.
3.4. Data Analysis
The database was built with the coded responses from the interviews. After coding the information, the database was processed with the SPSS program (version 24.0). Table 4
presents a description of the various methods utilized in the empirical analysis of the data. A t
-test was employed to assess the differences between early May and late December respondents. Former ones represented more than 70% of the total sample. The results showed non-significant differences at the 0.05 level [74
Frequency analysis and Chi-square test were used for the descriptive analysis of the results, and to identify the regional differences between the companies in terms of their profile and basic conditions for internationalisation. On the other hand, the ANOVA analysis of variance was used to analyse the differences between the companies from different islands regarding the perception of the differentiation and motivational factors. In all cases, the factor was the island where the company is based, which divided the sample into six subgroups, 1 = Gran Canaria; 2 = Lanzarote; 3 = Fuerteventura; 4 = Tenerife; 5 = Madeira and 6 = Cape Verde.
Before estimating the model an Exploratory Factor Analysis (EFA) were undertaken in order to reduce the number of variables and define the constructs in the model. Before running the logistic model, we also examined multicollinearity between predictors, confirming the pertinence of the variables included in the model. The R2 parameter was used to evaluate the explanatory power of the variance of the dependent variable-INT.
4.1. Sample Characteristics
shows the distribution of the companies in the sample by region and type of main activity. In this classification, those enterprises with a heterogeneous portfolio, integrating multiple activities in the maritime environment (i.e., snorkelling, kayak, parasailing, etc.), have been grouped into the ¨various activities¨ category. Gran Canaria and Lanzarote (Canary Islands), and Madeira are the islands that have the largest number of SMEs interviewed. On average, these companies deal with around 12,500 customers each year and were set up an average of less than 15 years ago. 48.3% of companies offer various activities, being the most frequent category.
shows the seasonal analysis of demand, which points to the existence of significant differences between firms of different islands during the spring season. While most companies stated they receive few or null customers in April and May, 75% of companies in Cape Verde confirmed that these months are the ones of high demand. This suggests an opportunity for the European firms to take benefit from other nautical destinations such as Cape Verde during these months of the year.
Regarding the main clients’ countries, there are also differences between companies based in different islands. While any company in Cape Verde identified the English market among its main users, more than 68% of the firms in the Canary Islands and Madeira identified the British market as one of the most important ones for them. Most SMEs also identified Germany as one of the main markets, again with the exception of Cape Verde. Finally, no companies in Tenerife or Madeira claimed to receive users from the US, whereas it was considered a main market for 75% of those in Cape Verde (see Table 7
4.2. Regional Analysis of Conditions, Motivations and Differentiation Factors
Significant differences were found between companies from different islands, regarding the possession of marketing plan, customer satisfaction survey and staff training plans (Table 8
). In Madeira, 100% of the companies interviewed claimed to have their own marketing plan, whereas in Gran Canaria only 37% of the companies used it (Chi-2 = 13.1; p
< 0.01). Similarly, almost 89% of entrepreneurs in Gran Canaria indicated they did not use customer satisfaction surveys, while in the rest of the islands more than 68% of the companies used these questionnaires (Chi-2 = 24.8; p
< 0.01). This is an important aspect to explain island-based nautical SMEs’ progress towards internationalisation, insofar as it depends on these attributes.
Finally, Table 9
presents the results of the ANOVA analysis of ten motivational aspects and six differentiating features that managers evaluated for their companies. Here we present the sample average for each subgroup of companies according to the base island, and the value and significance of the F Fisher statistic. As far as the motivations were concerned, all the entrepreneurs indicated on average that having sufficient financial capacity to hire employees and sufficient liquidity to assume an investment were not significant reasons, in their opinion, to consider international expansion. This is a highly relevant conclusion for tourism managers as it identifies the elements that are not a priority for the design of incentive mechanisms for the industry. On the contrary, all entrepreneurs do consider that diversifying the portfolio of services, and leveraging capabilities of human resources (HR) are compelling reasons to expand abroad.
Regional differences lie in the existence of accessible markets (F = 3.88; p < 0.01), increased profitability (F = 3.01; p < 0.05) and prestige (F = 2.56; p < 0.05). That is, the average number of companies in Gran Canaria and Cape Verde differ from the rest since they do not consider the existence of accessible markets to be sufficient motivation to expand abroad. Companies from Cape Verde differ from the rest because they do not believe that internationalisation will increase their profitability and brand prestige within the sector.
Regarding differentiation, regional differences fall into three aspects; competitive prices, human resources and business models. The companies in Tenerife stand out as the only ones in the sample that, on average, do not consider their prices to be the most competitive in the Canary Islands. Businessmen in Gran Canaria, on the other hand, do not believe that staff training programs are their distinguishing feature in the sector, unlike companies from the other islands (F = 5.53; p < 0.01). Thirdly, companies from the Canary Islands, unlike those from Portugal and Cape Verde, perceive that their business model has a high export potential to other geographical contexts (F = 3.42; p < 0.01). All companies on average agree that their employees have a high sense of belonging and nautical culture. These findings allow to elaborate islands’ profiles thanks to the distinctive capacities of their nautical industries, thus contributing to identify opportunities for developing islands’ competitive advantages within the nautical sector.
4.3. Results of the Model
With the purpose of reducing the variables in the model, an Exploratory Factorial Analysis (EFA) was carried out with the 23 variables that assessed the conditions, motivations and perception of differentiation of the companies. The factor analysis resulted in four dimensions or constructs with a total explained variance of 68.47%, as shown in Table 10
. The coefficients of the factorial loads were always above 0.50, indicating a high correlation between the variables within the dimensions. The reliability of the scales was measured through Cronbach’s Alpha coefficient and obtained values greater than 0.75, which is considered a good consistency of the analysis. Bartlett’s sphericity test with Chi2 value = 42196.83 and p
< 0.00, and the Kaiser-Meyer-Olkin statistic at 0.838 indicate that the variables used were adequate for factorisation.
Two constructs were obtained on the motivational aspects (MOT 1 and 2), a construct that groups the perception of the entrepreneur on the aspects that differentiate his company from the competition (DIF) and another on the basic conditions for internationalisation (COND). With regards motivations, the first construct (MOT 1) measures the importance that the entrepreneur attaches to the search for prestige and competitiveness of the company as a motivational factor to expand internationally, while the second (MOT 2) is based on the financial and market capabilities and the need the company has to take advantage of these.
summarises the general results of the model, including the regression weights that were significant to explain the variance of the dependent variable (INT-international growth). The R2
value for the endogenous variable is also presented, which shows a high reliability of the measure, indicating 68% of the variance of INT.
The results determined that the island where the enterprise is located (DEST) does not influence its international performance (INT), in line with previous research that states that location and geographical distances (in this case caused by insularity) are not a constraining factor for international growth [40
]. In addition, the advantage of possessing a patent (PATENT) does not show any significance in explaining SME’s international growth (β = 6.099, p
> 0.05), although this is a significant aspect in other tourism segments [57
]. Thus, it can be stated that nautical tourism firms differ from the rest of tourism enterprises with respect to the role of innovation in explaining international growth. This is probably due to the fact that nautical tourism firms suffer more constraints when it comes to innovation due to the restricted environmental regulations that exist in the places where they operate (i.e., whale watching activities, marine protected areas, etc.) [48
There is also a direct relationship between the baseline conditions (COND) and the international growth of the firms (INT), thus confirming that the probability of international success increases if the nautical tourism firm presents marketing plans, customer satisfaction surveys, training staff programs, and also with the participation/coordination of international events and funded projects. Similarly, the more capital investment the company has received, the more likely it is to invest in foreign markets (β = 0.360, p < 0.01), which falls in line with the existing literature on the tourism sector.
In general, the study confirms the findings of [6
], proving that the search for prestige and competitiveness (MOT 1) and distinctive attributes (DIF) are of great importance in explaining international growth in nautical tourism firms. These findings are in line with previous research, stating that internationalisation depends on the existence of a significant advantage of the company over its competitors [39
]. Therefore, those companies owning international investments at the moment of the interview show greater conviction that their prices are the most competitive and their business model has great export potential (β = 0.261, p
< 0.05) and, furthermore, give greater importance to understanding internationalisation as a vehicle to increasing company prestige and competitiveness within the sector (β = 0.410, p
A novelty arising from the research was that the number of employees (EMP) is a constraining factor of international growth being firms with fewer staff members the ones more likely to have foreign investments, although literature states that for a tourism firm it is the opposite [7
]. In this sense, it can be assumed that large companies that are well established in their island, with large profit margins and a consolidated brand image do not feel the need to expand to international markets in order to diversify or make their businesses more profitable.
Finally, having an internationalisation plan was found to be another determining factor in the model with direct and positive relation with INT (international growth). In fact, the strength of the relationship between P_INT and INT variables (β value = 0.587) is higher than for the rest of the explanatory variables with p < 0.01. As a result, it can be stated that this is the most important factor determining international growth in nautical tourism firms. Summarising, the design of an appropriate internationalisation plan, together with the promotion of competitiveness and distinctiveness, are elements that need to be incorporated in the positioning strategies of nautical enterprises seeking international development. But this is not a subject, which only concerns the industry, as it also requires the implementation of effective mechanisms of promotion of internationalisation from tourism authorities and other public and private agents, posing a challenge for nautical tourism governance in general.
5. Discussion and Concluding Remarks
Since nautical destinations depend critically on the set of products and services on offer, the better the international positioning of nautical tourism firms, the greater opportunities for destinations to increase their competitiveness and resilience capacities. Thus, among the potential strategies for raising the sustainability of nautical destinations, there is scope to ensure the adequate management of the nautical industry that leads to international growth and success of enterprises in the long term.
In order to study the potential for internationalisation success among nautical tourism firms, this article has empirically investigated factors determining international growth of SMEs dedicated to nautical activities in the context of island destinations, thus contributing to define a profile of the nautical tourism firms with greater international performance.
The model developed in this paper (i) provides a better and wider understanding of the determinants of international growth in the context of nautical firms of islands destinations; (ii) identifies the attributes of nautical SMEs that are crucial in predicting international success; (iii) shows the important role that managers’ motivations and sense of distinctiveness have to explain international growth of their firms and, finally; (iv) provides sound knowledge on similarities and differences in the context of competing island destinations of the same region with common interest in positioning improvement within the global nautical tourism market.
From a theoretical point of view this research validates a universal model that explain the causes of international growth of tourism-based SMEs dedicated to nautical activities, including factors at different dimensions, in line with previous research [44
], on the one hand, and incorporating under-investigated variables at the level of firms’ attributes and others of socio-psychological nature, on the other hand. In this sense, the inclusion of motivational aspects (MOT) and the perceptions of managers regarding the potentialities of their enterprises (DIF) allowed to obtain a higher reliability of the measure to explain the variance of the dependent variable (INT-international growth) in the model.
Furthermore, this paper provides empirical evidence that serve as a reference for all island-based nautical companies with international projection, as it identifies the areas that require special attention in order to ensure sustainable international development, being the island where the company is based, not relevant. This finding also provides sound knowledge on island-island relationships, as new regional policies can benefit several islands at the same time in so far as they use this information.
From a managerial and policy perspectives, this finding is of great usefulness for tourism managers to design more appropriate incentive strategies for the industry, and adapt their promotional plans with a new segmentation approach based on the conditions, motivations and differentiating features of the enterprises in each island. At the same time, it opens a new perspective for the development of island-based nautical destinations networking structures and coopetition. This is, competing enterprises that belong to the same archipelago can be framed within a unique network, and co-create new nautical products and services with export potential during the low seasons (i.e., Spanish enterprises during April–May in Cape Verde).
For the case of the Macaronesia region, a joint nautical tourism offer broadens the spectrum of opportunities to access new tourism markets, while at the same time it represents an important boost for the desired positioning of the Macaronesian nautical destinations, which together with the geographical proximity, the equality of conditions from the point of view of their insularity and vulnerability, and the accumulated experience of some entrepreneurs, will allow to make good practices available to everyone. Thus, coopetition can be justified in the context of nautical tourism to promote internationalisation, value co-creation, and consequently greater competitiveness for the destinations and regions involved.
For the archipelagos of the Macaronesia Region, this study has multiple utilities, since the growth of nautical tourism is considered a priority action at the public level, but companies have difficulties in diversifying their portfolio of products and services abroad [42
]. In general, tourism policy in these islands should focus not only on giving encouragement or stimulus to grow and search of prestige of the nautical industry, but also on guaranteeing that enterprises meet the basic criteria for internationalisation, thus, ensuring a more efficient use of the resources to this end.
Additionally, proper incentive mechanisms for internationalisation should be accompanied by tools that guide the nautical entrepreneurs to the enhancement of their essential strengths, as well as to be capable of self-evaluate their comparative and competitive advantages, and to identify the correct tools for analysing the best options to invest their capital. It is so important that policy makers embrace useful recommendations of the foreign markets that are more suited to the expansion, and guide enterprises to select the best pathways, given the fact that geographical distance is only a psychological barrier.
Although technological innovation, and especially the use of information and communication technologies (ICTs), are playing an important role in the promotion of destinations and in communication flows; for the nautical sector, and according to the results of this study, innovation does not seem to play a significant role in explaining international growth. This finding cannot be fully generalised for all types of nautical tourism firms, but it does open up a new perspective in which island-based nautical tourism SME’s are less dependent on current global technological advances for international success.
Finally, companies have the great challenge of becoming architects of their own history, of gaining influence in the public policy for promotion and support to their industry for the internationalisation process. To do this, they must be aware of the attributes and capabilities that guarantee international success, have detailed plans and knowledge about the foreign markets and new urban areas of nautical development, from the point of view of supply and demand, thus, recognising their competitive advantages within the same. Indeed, the best possible strategies for internationalisation in nautical destinations are the ones that promote interest and motivation among nautical firms to grow towards the future and broaden their market in the best socio-economic and environmental conditions for their sustainability.
This study faces various limitations that substantially reduce the potential generalisation of its results and the scope of its conclusions. Firstly, it is based on six island destinations for nautical tourism, and therefore there is need to consider evidence on other alternative nautical destinations in coastal and urban areas. Secondly, the small analysis sample requires further evidence with much larger samples in order to consolidate proof of the robustness of the relationships found in the investigation, which justify future research directions. Thus, future studies should consider investigating the sector in island destinations of other regions, and compare it with empirical evidence from mainland studies. This assessment might be useful for suggesting more universal recommendations that would meet the specific requirements of the various types of maritime tourism industries. Finally, there might also be a need to evaluate the environmental awareness of entrepreneurs and how this influences their decisions to expand their businesses, given the high environmental significance of the nautical industry.