5.2.1 Recommendations for practitioners
The results and findings of this study provide empirically justified evidence for managers and investors to pay special attention to the impact of strategic orientation on investment directions and the importance of intellectual capital in lodging industry.
Based on the results and preceding discussion, a number of implications can be drawn for practitioners.
First of all, lodging industry players should ensure that their investments in each intellectual capital category are consistent with their strategic orientation, because according to the results (consistent with previous researches), depending on a firm’s
strategic orientation, increasing or lowering expenditures on diverse types of intellectual capital will differently impact firm profitability.
Secondly, for decision makers in firms that pursue differentiation strategy, higher investment in all three intellectual capitals brings benefits for firm performance.
However, investments in systems capital and human capital are equally essential and cause the highest return on investment. Differentiators must understand that for service firms, spending more on professional and service employees (including higher remuneration and ongoing, consistent training) lead to higher firm performance.
For the low-cost leaders, we would recommend to invest more in the operational knowledge that can be obtained from external providers and simultaneously decrease their spending on employees and minimize expenditure on customer capital. It is recommended to set greater focus on process improvement and automation systems, because this way hotels pursuing low-cost leadership strategy achieve faster processing time and higher productivity index per employee. Spending more to affiliate with a high-quality management company may be a wise strategy for low-cost leaders.
In order to increase competitiveness, the efforts of managers should focus on developing human capital. Additional investment in education and training (for both professionals and service employees), greater motivation and attraction of promising and talented employees through better payment and working conditions would lead to better service, lower turnover, growth of professional competence and competitive advantage.
In order to achieve sustainable competitive advantage, organization should integrate employees’ individual knowledge into structural system that transforms tacit information into explicit one (the customer would be more satisfied if employee would recognize him without referring to a database -an example of value creation through conversion of codified knowledge into tacit knowledge). Firms should also ensure that knowledge is shared through the creation of appropriate organizational climate and culture.
Besides, it is highly recommended to managers to provide an additional financial statement to disclose the current value of firm’s intangible assets. It would decrease the information asymmetry for investors between market and book values of the company, helping to reflect a real value and attract more external investors.
With the growing trend of globalization, demand for hospitality and lodging industries in Asia and around the world is likely to increase. The more service firms learn about effective investments, the bigger value they would be able to deliver to each stakeholder.
5.2.2 Recommendations for further studies
The findings of the study provide some knowledge about the impact of strategic orientation on intellectual capital investments in hospitality industry firms, but the effort to understand the complex role of strategic orientation and intellectual capital investment on firm profitability is far from being complete.
For further studies, it is recommended to obtain additional data on human capital investment: expenditure on professional employees and expenditure on service employees should be measured separately, because different groups of employees provide unique components to human capital and bring differential value to their organizations (Walsh K., C.A. Enz and L. Canina 2008). Future scholars should investigate if the relative impact of each type of human capital on performance will depend on firm’s strategic orientation.
Future studies should explore more deeply the intellectual investments in other market segments (economy, midscale, etc.) of lodging industry, as well as in other types of customer service firms and even diverse industries. Enlarging the study context would enable researchers to examine and compare different organizations distinctive sets of investments in intangible assets.
Future study should explore the impact of strategic orientation of hotels given different cultural environment on intellectual capital investments in hospitality industry firms. Such expansion into a broader geographical coverage would determine whether there are effects of cultural background that impacts importance of a
particular intellectual capital category, hence requests bigger investment in it.
It is also recommended to expand this research into a longer time frame in order to determine if there is long-term relationship between current investments and future returns.
Future studies should continue testing the hypothesis with market value as a
dependent variable (instead of EBIDTA). The research is based on intangible assets, however, conventional accounting rules do not measure intangibles, so EBIDTA might be a misleading indicator of firm value and profitability. Intellectual capital impacts market value, so we suggest it might be a more suitable and more precise to calculate the impact of intangible assets on firm performance using Tobin’s Q, because “Q” represents the ratio of the market value of a firm’s existing shares to the replacement cost of the firm’s physical assets. So Tobin’s Q must be more useful and correct in predicting investment decisions.