Managerial perceptions of cost-system obsolescence and factors that might affect it: A case study in the Turkish hotel industry

Abstract

Purpose

This study aims to report the descriptive statistics of cost-system obsolescence (CSO) in the Turkish hotel industry and contingent factors that affect the CSO.

Design/methodology/approach

To validate the reflective measurement model, first, an exploratory factor analysis in statistical package for social sciences was conducted. Then, a confirmatory factor analysis using maximum likelihood in analysis of moment structures was performed to establish the reliability and validity of the construct measurements.

Findings

The results demonstrate that CSO symptoms did not occur frequently in sample Turkish hotels. Turkish hotels were found to operate in intense competition and a significant relationship between competition intensity (CI) and CSO takes place. The hospitability industry has been perceived as rather uncertain. However, perceived environmental uncertainty (PEU) had no significant effect on CSO, and there was no mediation effect on the relationship between CI and CSO. Turkish hotels were found to perform market-orientated activities at a mediocre level. However, no significant relationship was found between market orientation (MO) and CSO. Additionally, Turkish hotels with decentralized decision-making structures and “prospector-type” strategies were found to have less CSO. On average, Turkish hotels have centralized decision-making structures and pursue “analyzer-type” strategies.

Practical implications

This study contributes to previous literature related to accounting information in the hotel industry. It also aims to give additional insight into Turkish hotels’ competitive environment, MO activities, decision-making structures and strategies and their association with CSO.

Originality/value

The study examined CSO in the Turkish hotel industry and factors that affect CSO. The study results provide additional insight into Turkish hotels’ competitive environment, MO activities, hotel structure and strategy. A new model to test CSO was created and validated using structural equation modeling (SEM).

Citation

Cengiz, E., Cengiz, F., Cavusoglu, M. and Cobanoglu, C. (2019), "Managerial perceptions of cost-system obsolescence and factors that might affect it: A case study in the Turkish hotel industry", International Journal of Contemporary Hospitality Management, Vol. 31 No. 7, pp. 2884-2913. https://doi.org/10.1108/IJCHM-01-2018-0099