This research is one of the few that examines the way different categories of intellectual capital impact customer service firm profitability in Taiwan using annual financial reports. As mentioned before, there exists a range of methods to measure intellectual capital. However, for the reason that intellectual capital is an intangible asset, none of the measuring methods, nor the one used in the current study, have been properly validated for research purposes. According to Cascio (2000, p.11) the field of intellectual capital is “still new to proclaim any set of measures as definitive”.
Consequently, it is difficult to state with certainty that the hotel’s intellectual capital and investment in it is successfully captured. However, the results and procedure rises the level of confidence that steps have been made in the right direction.
Another important limitation of a current study is a small sample size. Due to high financial information protection, hospitality players were unwilling to share their annual reports, so researcher had to focus only on listed companies that publish financial information on yearly basis.
Thirdly, the study was conducted within narrow market segment (upscale and luxury hotels) of one service sector context, hence is limited in generalizability.
Besides, we have examined the impact on firm profitability over a 3-year period; it is possible that some intellectual capital expenditures need longer time to produce return on investment.
Despite these limitations, we believe there must be one more- clarification of a strategic orientation. It might not be sufficient enough to define firm strategic orientation as a simultaneous function of pricing strategy and operating expense ratio.
According to Porter, low-cost strategy could also be one kind of differentiation. From the managerial point of view, strategy identification must include mission and vision analysis, operating efficiency, branding and positioning, customer value proposition, choice of suppliers and distributors, etc. Besides, a successful hotel with a positioning of a differentiator over time would achieve economies of scale and low cost structure, however it doesn’t mean that hotel would become a low-cost leader and would decrease the prices, it only means that the hotel has achieved more efficient and leaner service production and its delivery. On the other hand, hotels that position themselves as low-cost leaders still can charge higher prices, because Taiwan is a country with high occupancy rate, meaning that market demand is high, so suppliers (accommodation providers) may charge a higher price and get higher margins even for standardized product and service. So, we can’t apply ex ante requirement that cost and differentiation are clear discriminators.
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Appendix
Appendix 1
Original hotels’ sample
Taipei Taiwan Hong Kong
First Hotel Empire Hotel Kowloon
Janfusun Prince Hotel Regal Hongkong Hotel
Holiday Garden Hotel Regal Airport Hotel
The Westin Taipei Hotel Marco Polo Hong Kong Hotel
Hotel Royal Chihpen Cosmopolitan Hotel Hong Kong
The Landis Taipei Hotel Conrad Hong Kong
Miramar Garden Hotel City Garden Hotel
Regent Taipei The Royal Pacific Hotel and Towers
Ambassador Hotel Taipei Cosmo Hotel Hong Kong
Taoyuan Hotel The Peninsula Hong Kong
Chateau Beach Resort Empire Hotel Hong Kong
Grand Hyatt Taipei Empire Hotel Causeway Bay
Shangri-La's Far Eastern Plaza Hotel Taipei
Metropark Hotel Causeway Bay Hong Kong
Howard Plaza Hotel Taipei Metropark Hotel Wanchai Hong Kong Sheraton Grande Taipei Hotel Taipei Metropark Hotel Kowloon Hong Kong
Grand Hotel Taipei Metropark Hotel Mongkok Hong Kong
Palais de Chine Hotel Sherwood Taipei W Hotel
Caesar Park Hotel Taipei