CONFERENCE ON GLOBAL TOURISM GROWTH: A CHALLENGE FOR SMEs

It is widely accepted that technological change underpins a global economy and that geographic location and concentration is of foremost importance for tourism development and competitive advantage. This paper discusses the role of tourism networks, clustering and destination value chains for micro and small and medium size tourism enterprises (SMEs) in freely assembled destinations. In discussing destination benefits and barriers surrounding SME clustering, SME positioning and performance are highlighted. It is proposed in this paper that SME clustering and value are not always naturally established. Successful destination clusters may be created by upgrading SME performance, analysing local value chains and matching both tangible and intangible sources of value, such as systems, leadership, relationships and brands with demand-side value segmentation. INTRODUCTION The growing influence of ICT, networks and relationships as critical factors in shaping the distribution of economic advantage is relevant to tourism, as it directly impacts on interactions between local and global forces (Giddens, 1990). The realities of global competition require an understanding on the local level of global markets and the complexities of interactions with multiple stakeholders along global supply chains (Youngdahl & Loomba, 2000). Today’s tourism manager is expected to possess the ability to mobilise information and capture knowledge that contributes to the augmentation of product or value along global value chains. Well resourced large and vertically integrated industry players in the tourism sector have been steadily upgrading and globalising their network systems, building on longestablished relationships for competitive advantage. The dynamics are quite different for small and medium size enterprises (SMEs) in freely assembled destinations, where the benefits of network strategies are less well understood. Tourism networks are complex structures, yet there are relatively few studies on tourism networks (Morrison, Lynch, & Johns, 2004), resulting in a limited understanding of tourism networking processes at the destination level. BACKGROUND Theoretical discussions on generic networks can be found as far back as 1960 (Philips, 1960), although it would take several more decades until Davidow and Malone (1992) called networked organisations ‘virtual corporations’, referring to the loosening of well-defined hierarchical company structures into a more flexible and shared approach towards the delivery of products and services to match customer desires. Connectivity and the Internet have added new externalities to the concept of networked firms. Today’s networks coordinate much of their business through the virtual marketplace. In principle, such networks are made up of a set of interconnected nodes with fluid decentralised structures and boundaries. A network is able to integrate new nodes based on the node’s ability to communicate with or add value to the network (Castells, 2000). Within the texture of interdependence, modifications in a