*By Paola Gómez, Representative of the Dominican Republic Tourism Office in Brazil
The Dominican Republic, a half-an-island country, has managed to spring up to the forefront of global tourism. With the arrival of more than 10 million visitors in 2023, one of the smallest countries in America has emerged as a giant of the post pandemic era of tourism.
Surely, it was a feat to equal its population number in guests; However, is this result by itself enough to consider the strategy of the Dominican tourism industry a successful one?
There are traditional indicators to identify when a small player is becoming a greater one. When the operation reflects into bigger numbers in the bank accounts, managers assert that the economic activity is growing. According to Penrose (1959), “growth is the differential outcome between (at least) two points in time”. Differential refers to incremental, should we note.
Understanding growth as a positive variation is not a difficult task; what authors have not been able to establish is a concrete definition for the outcome part of Penrose’s concept. This seems to be a big concern for researchers, as McKelvie and Wikllund’s (2010) paper on growth research acknowledges:
“A major hurdle that need to be overcome is to determinate the appropriate growth indicator to apply (Weinzimmer et al., 1998). This essentially involves determining the appropriate dependent variable to employ to effectively capture growth. Many different measures of growth have been used, including sales levels, profitability, number of employees, and market share (Gilbert et al.,2006; Shepherd & Wiklund, 2009; Storey, 2004). The choice of growth measure represents a different type of growth that may or may not reflect growth in terms of other metrics” (p. 268).
Given so many possible indicators, it becomes hard for organizations to choose the proper one to measure its growth. McKelvie and Wiklund (2010) cite Hoy, McDougall, and Dsouza who, in their 1992 paper, Strategies and Environments of High Growth Firms, claim that “sales growth is the most effective growth variable as it translates easily across countries and industry contexts” (p.268). On the other hand, others like Shepherd and Wiklund (2009) assert, “employment growth seems to be the metric that shows best concurrent validity” (p.105).
Evidently, different points of view have not been discussed enough to come out with a consensus, even thou, experts agree on the urgency of the problem: “we argue that the how aspect of growth is a necessary and fundamental question that needs to be better understood before we can turn our attention to how much a firm grows.” (McKelvie and Wiklund, 2010, p. 261).
Despite the new tendency of the business logic, the selection of growth indicators is still based on the traditional model. “The dominant logic focused on tangible resources, embedded value, and transactions. Over the past several decades, new perspectives have emerged that have a revised logic focused on intangible resources, the co-creation of value, and relationships” (Lusch and Vargo, 2004, p.1).
This is how customer retention rate does not figure in the list of the common business growth indicators, as some of the results it affects do. Differing, The DR has managed to focus on customer retention as a key growth indicator: “The rewards of loyalty are long-term and cumulative. The longer a customer remains loyal, the more profit a business can reap from a single customer (…). Increased customer loyalty leads to higher profitability, higher employee retention, and a more stable financial base” (Griffin, 2002, p. 9).
The evolution of the Dominican Republic tourism is undeniably successful one not only by the giant number of arrivals than happens to keep increasing year after year, but, more importantly, by the 92% of these visitors stating they plan to come back to the destination. Not only they do come back several Emes: they bring new friends, they are joined by new family members and even motivate coworkers to come for business trips.
Reference List
Gilbert, B.A., McDougall, P.P., & Audretsch, D.B. (2006). New venture growth: A review and
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Griffin, Jill (2002). Customer loyalty: How to earn it, how to keep it. San Francisco, CA: Jossey-Bass
Lusch, S, & Vargo , R. (2004, January). Evolving to a new dominant logic for markeEng. Journal of
MarkeEng, 68, 1-17.
McKelvie, A. & Wiklund, J. (2010). Advancing firm growth research: A focus on growth mode
instead of growth rate. Entrepreneurship Theory and PracEce, 34 (2), 261-288.
Penrose, E. (1959). The theory of the growth of the firm. New York: Oxford University Press
Shepherd, D. & Wiklund, J. (2009). Are we comparing apples with apples or apples with oranges?
Appropriateness of knowledge accumulaEon across growth studies. Entrepreneurship
Theory and PracEce, 33, 105-123.
Stoney, D.J. (1994). Understanding the small business sector. London: Routledge.
Weinzimmer, L.G., Nystrom, P.C., & Freeman, S.J. (1998). Measuring organizaEonal growth: Issues,
consequences, and guidelines. Journal of Management, 24, 235-262.
The opinions expressed in this text are the author’s opinion and do not necessarily reflect the position of WTM Latin America.