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Management Style andEnvironmental Scanningin the Search for BusinessOpportunities and ChallengesGiri Jogaratnam aa Hotel and Restaurant Management , EasternMichigan University , Ypsilanti, MI, USAPublished online: 12 Oct 2008.

To cite this article: Giri Jogaratnam (2005) Management Style and EnvironmentalScanning in the Search for Business Opportunities and Challenges, InternationalJournal of Hospitality & Tourism Administration, 6:1, 53-71, DOI: 10.1300/J149v06n01_04

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Management Styleand Environmental Scanning

in the Searchfor Business Opportunities

and ChallengesGiri Jogaratnam

ABSTRACT. Managers that scan the environment in their boundaryspanning roles need to be attentive to the opportunities and challengesthat may arise due to changes occurring within the environment. As anindustry environment changes, an entrepreneurial management orienta-tion helps firms adapt to changing market conditions. The purpose ofthis study is to examine the link between management style and environ-mental scanning. Based on responses from 201 top-level hotel executives,the findings suggest that entrepreneurial managers are more frequentscanners of the environment. [Article copies available for a fee from TheHaworth Document Delivery Service: 1-800-HAWORTH. E-mail address:<docdelivery@haworthpress.com> Website: <http://www.HaworthPress.com>© 2005 by The Haworth Press, Inc. All rights reserved.]

KEYWORDS. Management style, entrepreneurship, environmental scan-ning

Giri Jogaratnam, PhD, is Associate Professor, Hotel and Restaurant Management,Eastern Michigan University, Ypsilanti, MI.

Address correspondence to: Giri Jogaratnam, Associate Professor, Hotel and Res-taurant Management, Eastern Michigan University, 206 Roosevelt Hall, Ypsilanti, MI48197 (E-mail: giri.jogaratnam@emich.edu).

This project was supported by a research grant funded by the Hong Kong Polytech-nic University and was completed when the author was affiliated with the School ofHotel and Tourism Management at that institution.

International Journal of Hospitality & Tourism Administration, Vol. 6(1) 2005http://www.haworthpress.com/web/IJHTA

© 2005 by The Haworth Press, Inc. All rights reserved.Digital Object Identifier: 10.1300/J149v06n01_04 53

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INTRODUCTION

Increasingly, changes in technology, products, and competitor’s con-cepts are occurring at a more and more rapid pace. Given that change inthe corporate world is fast and getting faster, it is becoming ever moreimportant for the hospitality manager to understand and accuratelygauge the environment in order to develop reasoned, yet distinctivemethods of adapting to, and exploiting environmental opportunities. Anorganization must adapt to its environment if it is to remain viable(Lumpkin & Dess, 1996; Powell, 1992). Although a period of rapidchange makes obsolete a good many of the old issues and concerns, italso creates opportunities for innovation and experimentation (Drucker,1999). Success in turbulent environments requires that the firm is inalignment with the forces driving change. This requires that managersscan and monitor the opportunities and threats emanating from the envi-ronment.

Effective scanning gives a company industry foresight and the po-tential to get to the future before the competition thereby obtaining aleadership position in the marketplace (Hamel & Prahalad, 1994). En-vironmental scanning, which is a fundamental input component of thestrategic planning process, is primarily concerned with the acquisitionand use of information about external events and trends (Auster &Choo, 1993). Information is the raw material of managerial work andbusiness strategy is formulated based upon available information. Alarge part of the managers’ information comes from or concerns theenvironment external to the organization. Managers should under-stand that, without information, business activities might easily evolveinto nothing more than mere guesswork. Moreover, business strategywill become fruitless speculation if there is no information uponwhich to base management decision-making (Peacock, 1995).

The purpose of this study is to examine the link between managementstyle and environmental scanning. The two rather broad questions thatguide this study are as follows: Are there connections between howmanagers behave and whether or not they are likely to take notice ofwhat is going on in the outside world? Are managers characterized byparticular operating styles more or less likely to look outwards and seri-ously take note of what they see and interpret? Specifically, the aim is toassess whether entrepreneurially oriented managers are more or lesslikely to scan their environments for information that may offer aglimpse into the future, as well as for potential new opportunities orchallenges that might impact the firm’s market position. Management

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style and leader characteristics are expected to change with an organiza-tion’s transition through the life cycle (Tse & Elwood, 1990). As an in-dustry environment changes, an entrepreneurial management orientationhelps firms adapt to changing market conditions. In a period of rapidchange and innovation, businesses will find it difficult to survive if theirmanagers do not acquire entrepreneurial competence.

This paper is expected to benefit hospitality practitioners in severalways. First, it makes an attempt to raise awareness of an entrepreneurialapproach towards environmental scanning. This is achieved by sharinginformation on primary data collected from the hotel industry in HongKong, a cosmopolitan city with many world-class hotels. Next, this pa-per provides a more realistic analysis of the potential link between anentrepreneurial management style and environmental scanning in thehotel industry. Hoteliers can then be encouraged to adopt an entrepre-neurial stance towards addressing environmental scanning activities,one that is focused on leading change. Lastly, the paper advocates theimportance of environmental scanning in the hotel industry and stressesthe need for hotel managers to frequently scan their environments in or-der to take full advantage of potential opportunities and minimize anyforeseeable challenges. The paper should, therefore, be of value to hotelmanagers and students of hotel management.

Entrepreneurial Management Style

The strategy literature widely acknowledges the importance of entre-preneurship to the strategic management of business enterprises. Man-agers in large and long established organizations can use entrepreneurialbehavior and actions to create wealth, as can owners of newer recentlyestablished operations. Entrepreneurship applies to both new venturesand existing businesses and is set apart by the strategic decision, actionsand operating management philosophies that managers adopt. Entrepre-neurial managers create wealth by concentrating on innovative, proactiveand risk-taking behaviors (Ireland, Hitt, Camp & Sexton, 2001; Wil-liams & Tse, 1995). In this regard, entrepreneurship is considered tobe a context-dependent social process through which individuals andteams create wealth by bringing together unique packages of resourcesto exploit marketplace opportunities (Ireland, Hitt, Camp, & Sexton,2001). It is also viewed as having both attitudinal and behavioral com-ponents that combine to promote the search for competitive advantagesthrough product, process, and market innovations. In sum, the entrepre-neurial attitudes and behaviors that managers exhibit provide a foun-

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dation for long-term competitive success for firms of all typescompeting in multiple environments across several different marketeconomies.

Miller (1983) offers one of the earliest characterizations of the entre-preneurial orientation construct and describes it in terms of managerialbehavior that focuses on engaging in product market innovation, under-taking somewhat risky ventures, and being the first to come up withproactive innovations, in order to beat competitors to the punch. Re-searchers adopting this perspective operationally define managementstyle in terms of the degree to which managers are inclined to competeaggressively, to take business related-risks, and to support change andinnovation in the pursuit of a competitive advantage (Miller & Friesen,1983; Miles, Covin, & Heeley, 2000; Covin & Slevin, 1989). Miller(1983) has argued that innovation, proactiveness, and risk-taking werethree components that comprise a basic uni-dimensional managementorientation. Following this stream of research, management style isviewed as being represented on a continuum ranging from conservativeto entrepreneurial (Covin & Slevin, 1988). A conservative style is asso-ciated with a management orientation that is risk-averse, non-innova-tive, and reactive, whereas an entrepreneurial style is associated with amanagement orientation that is risk-taking, innovative, and proactive.Based on the literature reviewed, the dimensions used to describe man-agement style are as follows:

• Innovative: consistently making resource commitments that pro-mote new ideas, products, services, or technological develop-ments.

• Proactive: constantly seeking new opportunities, trying out newideas to pre-empt the competition and acting in anticipation ofemerging trends.

• Risk-taking: frequently making bold (versus cautious) resourcecommitments in support of projects with a reasonable chance offailure.

Environmental Scanning

The purpose of environmental scanning is to identify and track cur-rent and potential trends that afford business opportunities and posechallenges to the continued success of an organization (Auster & Choo,1993). The trick, according to strategic management gurus Hamel andPrahalad (1994), is to foresee the future. The process of scanning is the

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primary means by which managers acquire information about externalenvironmental events that may have an impact on the organization(Hambrick, 1981; Jain, 1984). Top-level management and executivesare expected to scan the business environment in search of informationabout events, issues and happenings that may be indicators of relevanttrends (e.g., Auster & Choo, 1993). Enhanced knowledge of pertinenttrends is expected to facilitate decision-making and influence the choiceof future courses of action. Therefore, environmental scanning is con-sidered to be a source of input to the strategic planning process (Daft,Sormunen & Parks, 1988; Ebrahimi, 2000). Executives’ interpretations ofenvironmental forces are considered to influence their strategic actionsand determine how they manage their companies. For that reason, envi-ronmental scanning as well as information acquisition and interpretationplay a vital role in organizational effectiveness (Kumar, Subramanian &Strandholm, 2001; West & Olsen, 1989).

Whether the scanning systems in place are formal and organized orinformal and unscientific, environmental scanning has traditionally beenviewed as the domain of top management (Auster & Choo, 1993) whomight spend as much as one-fourth of their time monitoring the environ-ment (Hambrick, 1981). Since very few organizations have dedicatedindividuals or units conducting environmental scanning many manag-ers resort to informal scanning in their role as strategic decision makers(Keegan, 1974; Jain, 1984). This seems to be the case with managers inthe hospitality industry as well (West & Olsen, 1989; Costa & Teare,1996; Olsen, West & Tse, 1998). Moreover, research has failed to showthe benefits associated with the adoption of formal scanning systems(e.g., Lenz & Engledow, 1986). Given that managers have limited timeand means for scanning (e.g., Ebrahimi, 2000) and that formal environ-mental scanning units are not commonly used, decision makers at alllevels are encouraged to contribute by continuously identifying andevaluating trends within the environment (e.g., Okumus, 2004; Coulter,2002).

Entrepreneurial Management Style and Scanning–Is There a Link?

It has been said that entrepreneurship is an attitude towards manage-ment that seeks to accentuate innovation, flexibility, and responsive-ness driven by the perception of opportunity, while providing moresophisticated and efficient management (Guth & Ginsberg, 1990;Naman & Slevin, 1993). An entrepreneurial attitude supports and facili-tates the process of identifying market prospects and helps create a set

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of resources through which they can be exploited. Managers that scanthe environment in their boundary spanning roles need to be attentive tothe opportunities and challenges that may arise due to the changes oc-curring within the environment.

Leading industrialists and academics have suggested that changeshould be welcomed and accepted and that adapting to a changing envi-ronment is now a compulsion rather than a choice (Slater, 1999).Change is therefore seen as a necessary strategy that cannot be avoided.Consequently, it can be argued that frequent scanning of the businessenvironment facilitates entrepreneurial efforts to identify opportunitiesand challenges as managers seek to adapt to environmental changes. Inthis study, we argue that managers distinguished by particular manage-ment styles have dissimilar predispositions and abilities to act on envi-ronmental information. On the basis of this discussion, we examine ofthe following research question:

Is environmental scanning influenced by management style? In theirsearch for opportunities and challenges, do entrepreneurially ori-ented managers scan the environment more frequently than conserva-tively oriented managers?

METHOD

Data has been collected by means of responses to a structured ques-tionnaire. The top-management team at each of the member hotels listedin the directory published annually by the Hong Kong Hotels Associa-tion was identified and represents the overall population surveyed. Acover letter explaining the purpose of the research along with a copy ofthe questionnaire was mailed to each of the executives thus identified.Follow-up mailers and phone calls were made to those who had not re-sponded within two weeks of the initial mailing. Reliable scales existfor both the variables considered in this study, and these scales, orslightly modified and adapted versions of them, are employed in this re-search.

Although self-report data is commonly adopted in management re-search, there is the risk of common-method bias, or the possibility of al-ternative explanations. While such variance may inflate or deflate themagnitude of relationships, it is more of a concern in research where therespondents may have very strong sentiments towards a particular issue(e.g., job satisfaction, attitudes). Environmental scanning is considered

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to be a much less obtrusive phenomenon and therefore less likely to bedistorted by self-report data (Ebrahimi, 2000). Further, there was no ev-idence of a compressed response range, a familiar concern associatedwith the social desirability aspect of common-method bias (Podsakoff &Organ, 1986). Moreover, previous research relating to strategic issueshas shown a high correlation between self-report data and objectivemeasures (Shortell & Zajac, 1990). Given these arguments and the factthat this study produced significant results, it is unlikely that com-mon-method bias affects the data used in this study.

The analysis of data in this study proceeded along three stages. First,the items representing entrepreneurial orientation were factor analyzedto identify the underlying dimensions associated with the construct. Thefactors representing the three a priori dimensions of entrepreneurialmanagement style were extracted using exploratory factor analysis withVarimax rotation and Kaiser Normalization. Second, a cluster analysiswas used to identify the number of homogeneous groups formed by theitems representing entrepreneurial management style. It has been sug-gested that cluster analysis is a combination of art and science (Jurowski &Reich, 2000). Therefore, the choice of number of clusters was based onthe need for parsimony versus generality (Romesburg, 1984) and re-flects knowledge of the subject matter, previous experience, and thepurpose of the study. Third, MANOVA followed by uni-variate tests ofsignificance were adopted to profile the clusters in terms of environ-mental scanning frequency. The intent was to examine whether statisti-cally significant differences existed between the two entrepreneurialclusters or groups of respondents with respect to their frequency ofscanning.

Measures

One of the most often used measures of scanning relate to the fre-quency of scanning (Beal, 2000; Ebrahimi, 2000). Scanning was assessedin terms of the frequency with which managers gather information on ele-ments relating to the task or operating environment of firms (i.e., competi-tors, customers, and suppliers of resources). Seventeen items representingelements of the task environment were adopted from previous studies(Yasai-Ardekani & Nystrom, 1996; Beal, 2000) and a seven-point scaleranging from “1 = seldom” to “7 = frequently” was used to assess the fre-quency of scanning. Reliability was assessed using the conventional mea-sure of coefficient alpha. Five items represented the competitor arena(alpha = 0.83), four items assessed customer related issues (alpha = 0.91)

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and eight items assessed suppliers of resources (alpha = 0.86). These re-sults approximate those reported by Beal (2000) who obtained alphas of0.82, 0.82, and 0.74 for scanning frequency indices relating to the com-petitor, customer and supplier groups, respectively. The overall scanningfrequency scale had a mean of 4.92, and a standard deviation of 0.809.

Management style is defined in terms of managerial propensity to-wards innovation, proactive decision-making, and risk taking and wasexamined using a ten-item instrument. Adapting specific items fromexisting instruments developed by previous researchers (e.g., Miller& Friesen, 1982; Covin & Slevin, 1989; Jogaratnam, 2002) enhancedthe content validity of the instrument. Managerial assessments ofcompetitive behavior were obtained by means of a structured ques-tionnaire using a seven-point scale ranging from “strongly disagree”to “strongly agree.” In responding to these items, owners/managerswere asked to characterize their firm’s competitive behavior over themost recent three years. The entrepreneurial style index comprised ofthe ten items had a mean of 4.63, a standard deviation of 0.702, a re-sponse range of 2.40 to 6.80, and a Cronbach alpha coefficient of0.7288 (see Table 1). These results approximate those reported byNaman and Slevin (1993).

RESULTS

The instrument was pre-tested and refined with respect to clarity andformatting. Surveys were mailed to 457 top-level hotel executives and201 responses were obtained for an overall response rate of 44.0%. Onaverage, the respondents had 4.75 years of experience in their currentjobs and had accumulated over 16 years working experience in the hotelindustry (Table 2). Wave analysis was conducted to determine whetherthe non-respondents were from the same population, or if they were sta-tistically different from the responding hoteliers. Follow up telephonecalls were made to several non-respondents and based on informationprovided by ten of these non-respondents, no statistically significantdifferences were found between respondents and non-respondents onthe hotel characteristics and personal profile of managers (p < 0.05). Acomparison of early-respondents (those responding before the fol-low-up survey was mailed) and late-respondents (those responding af-ter the follow-up survey was mailed) showed that these groups did notdiffer on any of the key operational variables studied (p < 0.05). The as-sumption here was that late-respondents might not have responded were

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it not for the follow-up mailing. These tests, along with the range of thedata obtained, suggest that the data are not subject to response bias. Wealso tested for the effects of extraneous variables (i.e., star classifica-tion, type of hotel, average rate, and size–specifically, number of em-ployees and number of rooms) and found that these variables did nothave any discernible influence on frequency of scanning at the p < 0.05level of significance.

As suggested before, the items representing the entrepreneurial ori-entation construct were submitted to an exploratory factor analysis toexamine support for the a priori dimensions and assess factorial or con-struct validity (see Table 1). Three factors representing the a priori di-mensions of innovation, proactiveness, and risk-taking emerged fromthe factor analysis. The Kaiser-Meyer-Olkin (KMO) measure of sam-pling adequacy indicated that the 10-item sample was adequate for fac-tor analysis (KMO measure = 0.82). Following Kim and Mueller’s(1978) suggestions, at least three items loaded significantly (i.e., at alevel equal to or greater than 0.30) on each factor. Each individual factorhad an eigenvalue greater than one and explained at least 14% of the

Giri Jogaratnam 61

TABLE 1. Descriptive and Factor Analysis Results–Entrepreneurial Behavior

Mean(n = 199)

StandardDeviation

FactorLoading Eigenvalue

% ofvariance

Innovative 2.602 26.02

1. Usually the first to find and introduce new products/technologies

3.97 1.519 .844

2. Usually the first to introduce new innovations in ourmarket area

3.90 1.478 .843

3. Committed to acquiring and developing new technologiesahead of the competition

4.27 1.406 .840

4. Frequently work on improving products and servicesthrough innovation

4.88 1.269 .549

Proactive 2.548 25.48

5. Proactive in pursuing market opportunities 5.39 1.216 .844

6. Act in anticipation of future problems, needs or changes 5.41 1.130 .824

7. Track industry trends in anticipation of futuredevelopments

5.08 1.139 .774

Risk-taking 1.467 14.66

8. Make major decisions in a cautious and incrementalmanner*

4.96 1.062 .766

9. Prefer to maintain the status-quo rather than makechanges that may be risky*

4.21 1.398 .728

10. Follow the competition in introducing new things or ideas* 4.19 1.307 .513

Total Variance explained 66.17

Note: Ratings are based on a Likert-type Scale ranging from 1 = strongly disagree to 7 = strongly agree.*Reverse coded for data analysis.

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variance. Together the factors explained 66% of the total variance in theentrepreneurial orientation items. Cronbach’s coefficient alpha for eachof the three factors ranged from 0.71 to 0.78, above the generally ac-ceptable criterion of 0.6 (e.g., Bearden, Netemeyer & Teel, 1989). As

62 International Journal of Hospitality & Tourism Administration

TABLE 2. Demographic Profile

(n) %

Title

General Manager 50 24.9%

Finance Director/Controller 28 13.9

Human Resources Manager/Director 24 11.9

Sales and Marketing Manager/Director 37 18.4

Rooms Division Manager 45 22.4

Functional Manager (HK, F&B, etc.) 7 5.5

Years in Present Position

< 1 Year 31 15.4%

> 1 Year; < 4 Years 80 39.8

> 4 years; < 7 Years 25 12.4

> 7 Years 57 28.4

Number of Years in Hotel Industry

< 10 Years 50 24.9%

> 10 Years; < 15 Years 45 22.4

> 15 Years; < 20 Years 49 24.4

> 20 Years; < 25 Years 27 13.4

> 25 Years 23 11.5

Number of Rooms in Hotel

< 200 19 9.5%

201-400 44 21.9

401-600 77 38.3

> 601 52 25.8

Average Daily Rate

< HK$ 800 47 23.4%

HK$ 801-HK$ 1,000 37 18.4

HK$ 1001-HK$ 1,200 32 15.9

> HK$ 1,200 39 19.4

Type of Hotel

Tariff A (5 star) 75 37.3

Tariff B (4 star) 108 53.7

*May not add up to 100% due to missing data on some items.

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shown in Table 1, the estimated loadings have the expected positivesign and the standardized factor loadings are large enough (> 0.5) toprovide confidence that they are actually measuring common latentconstructs.

A cluster analysis was used to identify groups of respondentsbased on similar responses to the entrepreneurial orientation items.The between-group, agglomerative, average linkage hierarchical clus-tering approach and the squared Euclidian distance measure wereadopted for this analysis. In order to identify the best cluster solu-tion, both the dendogram and the icicle plot were visually examinedand further confirmed by calculating the differences in width ofranges between each cluster solution. This cluster solution was fur-ther validated through the use of a T-test in which cluster member-ship was designated as the independent variable and each one of the10 entrepreneurial orientation attributes used to derive the clusterswas the dependent variable. In each case, the clusters’ mean scoreswere significantly different (p < 0.01). This approach to validatingthe cluster solution is consistent with Churchill’s (1987) recommen-dation and suggests that the clusters are distinctive and stable. Suchan approach has also been adopted in similar research (e.g., Manu &Sriram, 1996; McDougall, Covin, Robinson, & Herron, 1994). Thetwo-cluster solution adopted for analysis was also consistent withthe a priori entrepreneurial-to-conservative characterization of man-agement style adopted in this research (Covin & Slevin, 1989). Re-peating the clustering procedure across different random samplesfrom the same population tested the internal validity of this result. Incombination, these efforts suggest that the clusters that emerge hereare naturally occurring strategic archetypes evident in the data andare not due to chance. The entrepreneurial group constituted about53% of the sample and is characterized by higher rates of innovation,proactiveness and risk-taking. The conservative group comprisedabout 47% of the sample and may be described as more likely to berisk-averse, non-innovative, and reactive.

The research purpose was examined by assessing whether there weredifferences in the frequency with which various environmental attrib-utes were scanned by entrepreneurial and conservative managers (seeTable 3). The results of the MANOVA procedure indicated that scan-ning frequency differed depending on management style (F (17,176) =3.93, p < 0.001). In general, managers with entrepreneurial manage-ments styles tended to scan their task environments more frequentlythan did their conservative counterparts. A follow-up uni-variate proce-

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dure revealed significant differences in the frequency of scanning envi-ronmental attributes relating to the competitor, customer, and suppliersectors of the operating environment. For each of the 17 items exam-ined, the frequency of scanning score for entrepreneurially oriented ex-ecutives was higher than that for conservatively oriented managers.Specifically, 15 of the 17 items assessed were found to distinguish be-tween entrepreneurial and conservative management styles. The twoitems where significant differences were not found related to interestrate changes and the availability of external financing.

Competitive Moves: Five items were used to assess scanning relatingto the competition and in each case the group of entrepreneurial manag-ers reported more frequent scanning of these items (p < 0.05). Execu-tives with entrepreneurial management styles had higher average scanning

64 International Journal of Hospitality & Tourism Administration

TABLE 3. How Scanning Frequencies Vary by Entrepreneurial versus Conser-vative Styles

How frequently do you scan the environment for informationon the following areas?

Con

serv

ativ

e(n

=93

)

Ent

repr

eneu

rial

(n=

106)

FV

alue

Sig

nific

ance

1. Competitors’ prices 6.20 6.50 4.08 0.045*

2. Competitors’ introduction of new products and services 5.48 6.23 22.36 0.000***

3. Competitors’ advertising/promotion programs 5.40 5.87 8.73 0.004**

4. Competitors’ entry into new markets 5.27 5.70 5.34 0.022*

5. Innovations and new technologies 4.42 5.13 16.84 0.000***

6. Buying habits of customers 5.04 5.95 40.68 0.000***

7. Customers’ product preferences 5.00 6.06 52.27 0.000***

8. Customer demand for existing products 5.12 6.05 37.04 0.000***

9. Customer desire for new products/services 4.93 5.91 43.07 0.000***

10. Interest rate changes 3.31 3.60 1.09 0.297

11. Availability of external financing 3.34 3.53 0.39 0.533

12. Laws and regulations governing labor 3.77 4.42 7.73 0.006**

13. Availability of labor 3.68 4.11 3.07 0.081@

14. Employee wages and working conditions 4.22 4.74 7.48 0.007**

15. Financial and accounting practices 3.91 4.36 3.99 0.047*

16. Supplier price changes 4.83 5.33 6.47 0.012*

17. Supplier introduction of new products 4.52 5.14 9.61 0.002**

Note: Ratings are based on a seven-point scale ranging from 1 = “seldom” to 7 = “frequently.” Cluster analysis was usedto categorize respondents into entrepreneurial and conservative management styles.@ p < 0.10 * p < 0.05 ** p < 0.01 *** p < 0.001

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scores when items relating to competitor behavior were considered. En-trepreneurial managers more frequently scanned the competitive do-main for price changes, introduction of new products and services,competitors’ advertising and promotion programs, competitors’ entryinto new markets, and competitor introduction of innovations and newtechnologies when compared to conservative managers. Entrepreneur-ial managers were thus more likely to stay on top of competitor’s movesand hence less likely to be caught off guard. For instance, competitor in-troduction of menu items to take advantage of recent dietary trends maybe better and more effectively countered when competitor moves areregularly tracked.

Customer Needs: Four items were used to assess scanning frequencyin the customer domain and in each case executives with conservativemanagement styles had lower average scanning scores with respect tothe customer related items (p < 0.001). Here again, the differences weresignificant and entrepreneurially oriented managers scanned areas relat-ing to customer buying habits, customer product preferences, customerdemand for existing products, as well as customer desire for new prod-ucts and services more frequently when compared to managers withconservative management styles. This would suggest that entrepreneur-ial managers are more likely to track customer related trends in an effortto better understand where customer needs are unfulfilled, where theirproblems are not being solved, and where the gaps are that need to befilled.

Supplier Information: Eight items were used to assess the frequencyof scanning relating to supplies of labor, financing, and raw materials inorder to assess differences between managers characterized by the twomanagement styles. Entrepreneurial managers had significantly higheraverage scanning scores for the items relating to five of the eight items.Specifically, these pertain to laws and regulations governing labor, avail-ability of labor, employee wages and working conditions, supplier pricechanges, and supplier introduction of new products. Marginal differ-ences in scanning relating to the availability of information on financialand accounting practices were also found. Entrepreneurial managers aremore likely to proactively seek out information that may impact labor,supplier, and resource issues relating to operations. For instance, theymay more frequently scan for information on supplier introduction ofnew product variations or technologies that may enhance the efficiencyof operations.

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DISCUSSION

The results of this study suggest that entrepreneurially oriented hotelmanagers in Hong Kong scan the environment more frequently than con-servatively oriented managers. Frequent scanning increases environmen-tal awareness of trends that may afford potential new opportunities. In anenvironment of heightened competition and uncertainty competitive meth-ods have an increasingly short life. A rapidly changing competitive envi-ronment therefore requires continual efforts to generate new sources ofcompetitive advantage while simultaneously attempting to counteract thecompetitor’s sources of advantage. Unfortunately, innovative new ideashave little protection in service industries and are easily copied by com-petitors thus negating any initial competitive advantage gained by the in-novator. Such conditions create competitive forces that promote anenvironmental dynamism and uncertainty unique to this industry. Thistype of environment is similar to that found under conditions of hyper-competition, where sustained competitive advantage is difficult to achieve,much less maintain. The achievement of any advantage thus involves acontinual process of creation, erosion, negation, and re-creation.

Unfortunately for managers in boundary spanning roles, rapid changesin the environment produce volumes and volumes of new informationevery day. Recent estimates suggest that available information doublesevery three years. As such, managers are practically swamped with in-formation and have to determine what is pertinent to operating and stra-tegic needs and what is not. This is no easy task. Moreover, although itmight be relatively simple to identify environmental changes, it is muchmore difficult to predict the effect of these trends upon the firm and itsoutcomes. This is primarily because managers are neither able to assignprobabilities to the likelihood of various events actually occurring, norare they able to attribute cause and effect relationships to events takingplace in the environment and the impact they may have on firm perfor-mance. To succeed and outlast the competition, hospitality managersmust not only have the ability to estimate changes in the environment,but also an appreciation of the impact the external environment mayhave on the firm. Given the overwhelming nature of information avail-able, managers should adopt a systematic approach to scanning, studyexternal sectors carefully, and identify what information is needed tomake intelligent decisions. With some practice and over time, managerswill come to recognize what external information is truly important tostrategic decision making.

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In those areas where a greater degree of unpredictability is perceived,there is a greater need to scan the environment and to act in anticipationof the forces that influence change. Managers who are able to identifyenvironmental trends, understand how elements of the external environ-ment affect the firm, and envisage the effect of these environmentalchanges upon the firm will have an edge in developing sources of com-petitive advantage. In times of great change, often compounded by un-certain environments and the challenges of competing in complexglobal markets, competitive advantage is obtained by leading change.Leaders who are able to envision the future and create product and ser-vice combinations that will take advantage of upcoming opportunitieswill be able to participate in driving industry change. The business envi-ronment is constantly changing and change is a part of the reality ofbusiness. In an environment of turbulent and seemingly unpredictablechange, being adaptive is not good enough. Products and services aswell as the tools and methods of providing them are constantly evolv-ing. Thus managers cannot avoid change, but rather, they must embracechange and act in anticipation of a constantly changing business envi-ronment. Managers adopting an entrepreneurial management style arebest positioned to lead change based on their frequent scanning for po-tential environmental prospects as well as challenges or discontinuities.

CONCLUSIONS

Organizations are creatures of their environment–they are open sys-tems in that they influence and are impacted by the environment. There-fore, organizational decision makers must consider the constraints andopportunities posed by their environments in making managerial deci-sions–they cannot make decisions in a vacuum or without consideringthe environment. Whether the scanning systems in place are formal andorganized or informal and unscientific, some amount of time should bedevoted to tracking changes and trends in the environment.

For many managers, talking to customers and sales representatives aswell as reading trade journals and general news magazines may yieldsufficient evidence to the trends taking place in certain sectors of the en-vironment. On the other hand, a thorough, comprehensive assessmentof the environment would require a more systematic and purposefulsearch. How much time and effort is devoted by individual managers toenvironmental scanning would be dependent on the degree of changeand uncertainty in a given environment–the more dynamic the environ-

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ment, the more time and effort required. Despite the several demands ona manager’s time, decision makers should be encouraged to engage inenvironmental scanning in their efforts to appraise current strategiesand conceive future strategies.

As with any study, there are limitations to this research. Given theselimitations the results obtained here should be interpreted with cautionand the findings may not be generalized beyond the range representedby the sample. For instance, the data obtained relate to a sample of HongKong hotels. Future research incorporating a more geographically di-verse sample would help further establish the external validity of thefindings obtained here. Moreover, the cross-sectional nature of thisstudy does not permit one to suggest causal directions between environ-mental scanning and management style. Having said this, and whilestrongly encouraging research to minimize such limitations, there areimportant conclusions to be drawn from this research. The study revealsthat entrepreneurially oriented managers scan their environments morefrequently than conservative managers, at least within the context of theHong Kong hotel industry. Although one must be cautious in implyingcausality, hoteliers may find it advantageous to adopt an entrepreneurialstance, one that emphasizes a management style that is proactive, inno-vative and open to taking measured risks where appropriate. Based onthe results obtained in this study, it might be suggested that Hong Konghoteliers who take the initiative and embark on change to create themarkets of the future will be better positioned to control the destiny oftheir firms. At the same time, those that fail to frequently scan their en-vironments and push forward assume the risk of stagnation and lose theability to dominate their territories; those who fail to forge forward willbe marginalized.

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RECEIVED: 04/02/04REVISIONS RECEIVED: 10/01/04

ACCEPTED: 10/15/04

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