Interlocking directorships against community closure:a trade‐off for development in tourist destinations

Beritelli, Pietro and Strobl, Andreas and Peters, Mike (2013) Interlocking directorships against community closure:a trade‐off for development in tourist destinations. Tourism Review, 68 (1). pp. 21-34. ISSN 1660-5373

Abstract

Purpose In remote rural areas such as the Alps, communities present a set of specific laws, norms and rules. According to social capital theory, these idiosyncrasies are founded on the closure of the actors in the community. On the contrary, as tourist destinations develop, enterprises and organizations gradually acquire non‐local directors in the boards, slowly affecting the identity of the local community. The aim of the paper is to analyze whether interlocking directorships with board members, residing outside of the destination, really increases openness in the boards of the organizations. Design/methodology/approach For a set of salient organizations in six tourism destinations in Austria and in Switzerland, the authors analyzed the networks of interlocks between local and non‐local (outside of the region, outside of the country) board directors. Findings Chi‐square tests for group differences in tie densities show that, with the exception of the control destination Zürich, intragroup linkages (i.e. locals and non‐locals among their peers) are stronger than intergroup linkages. Research limitations/implications Further research must address the operationalization of social capital with a set of variables that could be checked against increasing interlocks with non‐local directors, and the validation of the results of the six case studies with additional tourist destinations and regions and in the context of other industries, where inherently the identity and the underlying social capital may be less developed. Practical implications The benefits of interlocking directorships with non‐local board members (i.e. acquisition of knowledge, increase of reputation for the destination) may fail to appear, when these actors do not effectively join with local board directors. In contrast, rather close networks of local board directors may increase the probability of collective action, effective sanctioning, and, generally speaking, the development of social capital. Social implications A tourist destination or generally a community must ponder the benefits of either one of the aspects. That is, a closed community guarantees the preservation of reciprocal trust and the development of locally grown and accepted governance. In contrast, by increasing the organizational connections with external directors in the boards, the enterprises may gain additional knowledge, new financial resources, etc. but they may undermine historically grown rules and norms as well as routines that are founded on reciprocal trust and a common identity. Originality/value The functionalities of destination communities are of growing interest for tourism researchers. However, tourism research has never focused on networks of interlocking directorships. By analyzing interlocking directorships in the context of tourist destination communities, this research opens a new stream of discussion for both community research, and the usefulness of research on interlocking directorships.