The Journal of Accounting and Management, Vol 5, No 2 (2015)

Business Resources and Capabilities as Drivers Of Environmental Strategy: A Case Study of The Nigerian Tourism Development Corporation (NTDC)

Oghojafor B.E.A.¹, Ogunkoya O.A.²

Abstract: This paper is a case study that investigates the activities of the Nigerian Tourism Development Corporation (NTDC) in relation to the environmental marketing strategies of hotels in the Nigerian hospitality industry. Specifically, it studies the relationship between resources and capabilities as drivers of the environmental marketing strategy of hotels. Building on the resources-base view, this study explains the drivers and outcomes of environmentally friendly marketing strategies in the Nigeria hotel services. It is a survey research design in which data that were collected from 152 hotels personnel reveals that possessing sufficient physical and financial resources is an instrument towards achieving effective green marketing strategies. Furthermore, the study confirms that there is a significant effect of environmental marketing strategy on the competitive advantage level in the hospitality industry

Keywords: NTDC; Environmental Marketing; Capabilities; Resources-Base View; Hotel; Ecology

JEL Classification: M19; O31; O32

1. Introduction

The Nigerian Tourism Development Corporation (NTDC) is one of the agencies in the Federal Ministry of Culture and Tourism in Nigeria. The agency is largely in charge of coordinating and regulating the activities of the hospitality industry in which hotels are a major focus of the agency among others. Over time, the tourism sector has become a source of environmental concerns due to the over – utilization of natural resources, excessive energy consumption and destruction of the biophysical environment (Rodriguez and Cruz 2007)

Several tourist centres in Nigeria may have been a source of environmental pollution through their poor disposal attitudes. Recently, there has been a paradigm shift in the tourism-environment terrain. People are now moving from Recreational opportunities and natural resources management to some unorthodox forms in the tourism sector like sustainable tourism and ecotourism. As such, the scope of the tourism-environment interface has experienced a serious shift from emphasizing more traditional concerns about natural resources management and recreational opportunities towards introducing more unorthodox forms of tourism, such as sustainable tourism and ecotourism (Knowles, Macmillan, Palmer, Grabowski, and Hashimoto, 1999).

Africa has witnessed a uniqueness that characterizes a symbiotic relationship that exists between natural environment and the hotel; however the issues of environmental marketing have not been delved into (Hudson and Miller, 2005).NTDC however has distinguished itself as a revenue generating unit of the ministry as it was able to generate 26 percent of total revenue accrued to the Ministry outside budgetary allocation (Ibru, 2004). This paper therefore seeks to study the influence of the resource and capability in the Nigerian tourism industry. The rest of the paper is arranged into the literature review which was then followed by the research methodology. The paper finally analyses, presents and discusses the data and results. Hence the following hypotheses were proposed and validated in this study:

H₁: The greater the firm’s physical resource, the greater is the possibility of developing an environmental marketing strategy in the hospitality firms.

H₂: The higher the firm’s financial resource, the higher is the possibility of developing an environmental marketing strategy.

H₃: the higher the firm’s share vision capability, the greater is the possibility of the developing an environmental marketing strategy

2. Literature Review

2.1. Environmental Marketing and Strategies

Kotler and Levy (1969) opined that early researches and societal issues originated from marketing scholars. However, the management researchers have taken the lead. The intensification of government, public, and company concerns with protecting the environment in the 1990s was responsible for the exponential growth of the discipline, which continues relentlessly to the present day (Banerjee, 2002; Menon and Jarworski and Kohli, 1997).

This has resulted in a voluminous and widely diverse line of research in ecological issues, which could be described as too fragmented. Some of these researches focused on environmental issues in the tourism industry in general and the hotel sector particularlly (Kasim, 2006). Furthermore, several literatures have been written on the green dimensions that hotels have taken (Leonidou, Leonidou, Thomas and Zeriti, 2013).

Drivers of green behaviour relate either to macro forces, such as managerial traits and values, ownership status and organizational culture has been identified as factors obstructing or driving implementation of eco-friendly practices in hotels to encourage proactive practices. (Kasim, 2007; Lopez Gamero, Claver-Cortes, 2011; Lopez-Gamero, Molina-Azorin, and Claver Cortes, 2011; Rivera, 2004; Shah, 2011)

Generally, financial and ethical reasons have been behind the adoption of a green approach by hotels (Bohdanowicz, Zientara, and Novotna, 2011; Garay and Font, 2012; Tzschentke, Kirk and Lynch, 2004). Bonilla, Priego, Najero and Font (2011) Most hotels are internally driven in their purpose and improve their decision making, with a limited understanding of externally driven benefits and motivation for most systematic management systems. In Nigeria today, self-efficacy beliefs, context beliefs, and goal orientation may be seen as potential motivations explaining environmental engagement among small firms.

The RBV was used to explain the positive impact of environmentally responsible behaviour on financial performance (Garay and Font 2012). According to them (2012), the hotel’s unique resources and capabilities related to environmental protection can provide the basis for a new strategy that improves its competitiveness, usually leading to favourable financial results. Improvement in critical business areas of the hotel, such as quality of products, satisfaction of employees, and satisfactory relationships with the community at large have been identified as factors necessary to achieve a sustainable environmental advantage. Lopez-Gamero, Molina-Azorin, et al.(2011) attest to the importance of complementary resources and capabilities in developing proactive green management schemes in hotels.

2.2 History and Background of the Tourism Industry in Nigeria

Nigeria’s first international tourist attraction could be traced back to the 1472, when a set of Portuguese merchants visited Lagos to look for trade. The tourism industry since then can be said to have continued to develop progressively. Organized Tourism in Nigeria actually dates back to 1962 to showcase the country’s tourism potentials and give support to international and domestic tourism activities. Nigeria secured a full member of the International Union of Official Travel Organization (IUOTO) now United Nations World Tourism Organisation (UNWTO) in 1964 and the promulgation of Decree 54 of 1976 establishing the Nigerian Tourism Board commenced its tourism operations. The Decree was subsequently amended to meet the challenges of the times and in line with the tourism policy, gave birth to Nigeria Tourism Development Corporation (NTDC) Decree 81 of 1992. It has since then became the apex tourism agency of the Federal Government of Nigeria charged with the overall responsibility of promoting, marketing and coordinating tourism activities in Nigeria.

The NTDC renders services in the area of, coordination, regulation and promotion of tourism activities in Nigeria. Evidences in this service delivery includes the classification, registration, and grouping of hospitality and tourism enterprises (HTE'S) to achieve standard facilities and efficient service delivery. In addition, it has to ensure the organisation and promotion of outstanding cultural events with the motive of attracting international tourists to events like Ojude –Oba festival in Ijebu Ode, Riv-Fest in Rivers State, Osun Osogbo cultural festival, Eyo festival in Lagos, Argungun International Fishing, and Durban Festivals in the North among others.

2.3 Trends in Tourism Development Industry

In 1998, the National Tourism Policy was introduced to formulate and evaluate policy initiatives geared towards increasing the contribution of the sector to the GDP.  One of the notable achievements towards implementing the Policy Initiatives is the establishment of the Presidential Council on Tourism which is chaired by The President. In addition, to tackle the articulation of policies geared towards enhancing the contribution of the tourism industry to the national economy, the National Council on Culture and Tourism was established in the year 2000.

The National Council on Culture and Tourism, which is the highest policy-generating forum, is made of the Federal Ministry of Culture and Tourism, its Parastatals, State Commissioners in charge of Culture and Tourism and Stakeholders in the Private sector. The National Tourism Development Master Plan has poverty alleviation as its primary focus.  Similarly, the main objective of the ‘Abuja Carnival’ 2005 is centred on promoting and marketing the rich and robust cultural heritage of Nigeria and her artistic expressions.  The carnival is to be held annually to serve as an essential tourism product.

2.4 The Challenges in the Tourism Industry in the Year 2014

How do other countries such as Israel, Dubai China, Saudi Arabia and even Egypt in spite of their crisis, sustain their tourism? How can the industry be made more attractive and less reliant on government subventions? Would the NTDC of Nigeria still be organizing events if there were no subventions from government? These and many more are the questions begging for answers if the tourism master plan objectives are to be achieved. The year 2014 was supposed to be an epoch year for Nigeria being 60 years since Nigeria, through the Nigerian Tourism Association (NTA), joined the United Nations World Tourism Organization in 1964. Many expected much within the years, but unfortunately, not much was achieved due to the following according to Mrs Garba.

2.4.1 Fund Constraints

Budgetary allocation has been observed as the major problem facing the corporation. Mrs Sally Mbanefo, the Director-General of the Nigerian Tourism Development Corporation (NTDC) made this observation in a public forum. Provision of adequate funding would go a long way in improving staff training. In addition, collaboration with private sector operators will assist in forging new ideas for the sector, boost the tourism sector in Nigeria, market and promote Nigeria locally and as a result, giving a boost to domestic tourism. She encouraged local and international tourists to visit the over 7,000 tourist sites and the 4,279 hotels in Nigeria, saying ‘Tourism can help us achieve the Nigeria of our dreams, not only for the present but also for generations to come. Therefore, I am appealing to big businesses and individuals to adopt tourist sites and develop them as part of their contributions to the development of domestic tourism in Nigeria.’

190,000 International air visitors came into Nigeria in 2004 (the benchmark year). N 36 billion (US$ 280million) is the estimated level of spending by the international tourists in 2004. An NTDC director suggested that to be effective and efficient in stimulating investment in development of the tourism clusters, the current conditions of the funding schemes for SME companies will need to be amended as they are too complicated and difficult for SMEs, . He amazingly revealed that no hotel or hospitality projects and hotels have suffered setbacks in securing facilities from banks. The funds available for lending to SME Enterprises in the Bank of Industry in the Bank of Industry have also been inaccessible because of the complex processes of application and the unnecessary bureaucracy attached to preparing business plans. There is gross underfunding of the tourism sector in Nigeria. Collaterals are below international standards and not customer friendly.

2.4.2 Low Capacity Building Drive

Due to budgetary constraints and the inability of the agency to generate sufficient funds, the NTDC has failed to take advantage of international conferences and seminars which could have helped in the training of its staff. In January, 2014, the Nigerian Tourism Development Corporation was expected to participate in the FITUR tourism expo to market the country. Unfortunately, the NTDC failed to attend, having earlier assured the organizers to participate. The next event was the ITB-Berlin in March.  It is the biggest tourism fair in the world where virtually all the top players, countries and corporate organizations participate. It was an embarrassment for the country as the organizers left a space for Nigeria. Unfortunately, the Nigerian stand at Berlin was left empty. Many Nigerians at the fair were disappointed.

2.4.3. Ebola and Nigerian Tourism Industry

Nigeria’s hospitality industry is the fastest growing in Africa. Annually, bed spaces above 1,000 are being added by new international hospitality brands. Although the hospitality industry is still growing with new hotels springing up, 2014 turned out to be the most difficult year for the hospitality industry in recent times. The biggest single event that impacted on tourism in Nigeria was the Ebola virus disease. Ordinarily, most hotels in Nigeria’s two major cities, Lagos and Abuja run at average room occupancy of 70 per cent, but year 2014 was so different.

This external environmental variable was completely beyond the control of the NTDC. It all started on July 20, 2014, when an Asky Airline flight originating from Liberia landed at the Murtala Muhammed International Airport, Lagos. One of the passengers, Mr. Patrick Sawyer, collapsed and was rushed to the First Consultant Medical Centre, Obalende, Lagos. It turned out that Mr. Sawyer had contracted the dreaded Ebola disease. The ripple effect sent the Nigerian hospitality industry crashing. Because of the failure of the late Sawyer to disclose his health status, some health workers were infected. There was genuine fear that the country would soon see an outbreak of Ebola. This sent the country into panic. Many foreigners took the next available flight out of Nigeria. Many airlines cancelled flights to Nigeria and many countries treated visitors from Nigeria with suspicion. Countries like Australia out-rightly denied visitors from Nigeria visas.

It was a nightmare for international hospitality brands in the country, as they saw the occupancy rate crashing overnight from 70 to 90 per cent to less than 10 per cent.  Suddenly, hoteliers were faced with the problem of survival. Many were forced to cut down their budgets and devise means of survival. They had empty rooms with fixed costs. It was an industry on the verge of collapse that heaved a sigh of relief when on September 21 Nigeria was declared an Ebola-free country by the World Health Organization (WHO). However, four months after this declaration, the hospitality industry is yet to recover from the effect.

2.5 Staff Training and Private/Public Partnerships as a Strategy

The Director-General of the Nigerian Tourism Development Corporation (NTDC), Mrs Sally Mbanefo, has been described by the management and staff of the corporation being God-sent to the nation’s tourism industry and the corporation. In 2013, a two-day retreat was organized, as a way of ensuring the capacity building of staff of the corporation, which according to the staff, was a revelation of the progressive strides of Mbanefo since she resumed office in May 2013. Many of the staff opined openly, “it is an undeniable fact that it has been long NTDC held a retreat. We, in our zone, have never held one for the past seven years. The retreat also enabled the staff of NTDC to know the amazingly difference between the capital coming to the corporation during the past administration and this administration. The current capital is extremely low.

The D.G, as usual, reaffirms her determination to promoting domestic tourism in Nigeria and developing one tourist site in each geo-political zone in the country. The members of staff of the corporation are one of the core stakeholders in the Nigeria’s tourism industry; their neglect is the reason why the Nation’s tourism master plan never worked. The Director General said ‘Why all the tourism master plans we have been having in the country did not work is that they abandoned the staff, and pay no or less attention to the welfare of the staff, that are going to drive the master plan project, direct the strategic imperative of the organization. Staff of the NTDC, the implementers of the corporation’s strategic imperatives, is the core stakeholders in the industry; hence, they must be well equipped and practically made ambassadors of the Nigeria’s tourism industry to drive development in the industry. As a result, capacity building and staff welfare are the priority on my agenda in repositioning the Nigeria’s tourism industry and promoting domestic tourism in the country. And this, I will execute to the letter.’

2.6 Project Development as a Strategy

The Corporation has taken the first step of identifying six projects in the six geo-political zones in the country that will benefit from tourism investment and bring these investments up to a world standard. According to the Director General of NDTC, ‘I see Nigerian tourism competing effectively with countries like Morocco, Tanzania, Vietnam, Zambia, Rwanda, South Africa, parts of the Caribbean and even Peru in terms of creating a unique experience, not to mention beach experience and golfing experience, where with the right type of investment will provide alternatives to morocco and parts of the Caribbean. We are a friendly nation welcoming visitors’. Once these six specific projects are identified, the corporation intends to produce a prospectus that would be a document that forms the compendium of opportunities we are inviting people to invest in.

3. Research Methodology and Design

This study employed a cross sectional survey design to examine the relationships that exist between capabilities and environmental marketing strategy in the Nigeria hotel service industry. The study applied regression analysis which helps in predicting behaviours and examine whether or not a relationship exists between the variables of study (Kerlinger, 1973; Bordensand Abbott 2002). Data were generated from hotels in Nigeria on a wide basis relating to resources and capabilities as key indicators of environmental marketing strategy in the hotel services. The study populations considered were hotel personnel of various hotels within Nigeria. Lagos was considered a good representation of the hotel services from which the samples were derived. Therefore the population sample was taken from Lagos state. The questionnaires were administered to the hotel personnel with the help of field research assistants.

The techniques used in the selection of participating hotels and respondents were simple random sampling technique.200 questionnaires were administered to hotel personnel however, 151 were completely filled and returned. This represents 75.5% response rate. Sampling is a part of the entire population carefully selected to represent that population. In order to eliminate bias of the Simple random sampling technique was employed to eliminate any bias which may occur as a result of individual preference (Bordens and Abott, 2002). Another justification is that it is particularly essential when one wants to apply research findings directly to a population (Mook, 1983). The participating hotel personnel constituted the analysis. The administration of the questionnaire was done on at least three senior managers or CEO, and middle level staff at each hotel surveyed. The use of primary data method is justified since according to Cowton, (1998), it is the quickest and simplest of the tools to use, if publication is the objective.

4. Empirical Results

4.1. Variables and measures

4.1.1 Firms resources and capabilities

Concerning, firms resources and capabilities a five-point likert scale involving three items developed Garay and Font (2012) was adapted. The scale ranges from “strongly agree” to “strongly disagree” was applied to assess a firm’s resources and capabilities. Respondents rating on all items were summed up and averaged to obtainfirm’s resources and capabilities index. Firm’s resources and capabilitiesindex is classified high when the index is equal to or greater than 4.0 and low when it is lower than 4.0. A reliability score of 0.98 was obtained from the Cronbach’s alpha test using the adapted scale fromGaray and Font (2012).

4.1.2 Marketing Strategy

For marketing strategy, a five-point likert scale involving six items developed by Kaplan and Norton (1992). The scale range from “strongly agree” to “strongly disagree”. The scores of three items were summed up and average to determine the index of balanced scorecard relational. An index of less than 4.0 was considered as low while an index of 4.0 and above was considered as high. The scale has a reliability score of 0.85 generated from Cronbach’s alpha test.

4.2. Mean indices, correlation coefficient, regression analysis and independent samples test

Table 3. Mean index of firms resources and capabilities

Sources: Survey 2014

With respect to resources and capabilities as drivers of hotel environmental marketing strategy in the Nigeria hotel services, the mean index of participating hotels were 4.09 and 4.21 respectively (see Table 3 and 4). Ho1 was tested through correlations coefficient test. Pearson’s product moment correlations coefficient (0.812**) indicates that the greater the firm’s physical resource, the greater is the possibility of developing an environmental marketing strategy at 0.01 level of significance. Therefore, the null hypothesis of the smaller the firm’s physical resource, the smaller is the possibility of developing an environmental strategy. Therefore, there is a significant relationship between the greater the firm’s physical resource, the greater is the possibility of developing an environmental marketing strategy.

Table 4. Mean index of marketing strategy

Sources: Survey 2014

Hypothesis (Ho₂) was tested by a means of a Regression Analysis. The result of the regression analysis of the relationship between the higher the firm’s financial resources, the higher is the possibilities of developing an environmental marketing strategy are shown in Table 5. Table shows the analysis of variance of the fitted regression equation in significant with F value of 971.616. This is an indication that the model is a good one. It shows a statistically significant relationship between the variables at 95% confidence level.

The R² statistics in Table 5(a) tested the third hypothesis. The R square showed that the model as fitted explains 87.3 of the total variability of hotel services. In order words, 87.3% of the total variability of can be explained by resources and capabilities as drivers of hotel environmental marketing strategy. The value of R² = 0.825 shows that the higher the firm’s experiential resource, the higher is the possibility of developing an environmental marketing strategy. The standardized coefficients (Beta) value in Table 6(c) reveals that the independent variable is statistically significant at 0.05 significance level.

Table 5a: Model summary

Table 5b: ANOVA

Table 5c: Coefficients

Dependent Variable: Environmental Marketing Strategies

p< 0.05

Table 6a: Group statistics

Table 6b: Independent samples test

Hypothesis (Ho₃) was tested using independent sample test. The results of the independent sample t-test as revealed in Table 6(a) show that the higher the firm’s share vision capability, the greater is the possibility of the developing an environmental marketing strategy mean index (4.23) of firms with high share vision capability. The difference between the two mean was found to be statistically significant at p < .05 [Table 6(b)]. Therefore, the null hypothesis of no significant difference is rejected. Thus, there is a significant difference between the higher the firm’s share vision capability, the greater is the possibility of the developing an environmental marketing strategy.

5. Summary, Conclusions and Implication for Management

This study therefore shows that the resource-based view can provide a sound theoretical platform in determining the antecedents and outcomes of the implementation of an eco-friendly marketing strategy among hotels being supervised by the NTDC in Nigeria. It demonstrates that certain organizational resources and capabilities that can lead to the formulation of an environmental marketing strategy. When this strategy is formed and implemented, a unique competitive advantage will follow. Furthermore, such an advantage is likely to be even stronger for hotels and its regulating agency, NTDC, operating in highly competitive environments because it helps differentiate them from other competitors. In turn, an environmentally-based competitive advantage should enable firms to achieve superior market and financial performance, and market performance is expected to affect financial performance favourably.

Several implications can be drawn from the study’s findings for both corporate and public policy makers. Corporate policy makers must realize that though environmental marketing strategies require the deployment of significant resources and the use of specific capabilities, their proper handling will pay-off in the end. Towards this end, it is important to cultivate an organizational culture centred on principles such as developing eco-friendly products/services, training employees on environmental issues, facilitating customer collaboration on ecological issues among others. In light of today’s realities, characterized by cut- throat competition, growing public concern, and strong regulatory systems, the astute manager should adopt a more proactive stance toward environmental issues and implement environmentally friendly marketing strategies. In this respect, demonstrating a long-term environmental commitment through, for example, the allocation of necessary resources/capabilities, the execution of regular environmental audits, and the preparation of environmental marketing plans is of paramount importance.

Participating in environmental initiatives, such as those adopted by some hotels, which focuses on programs aimed to save water, conserve energy, and reduce waste, would also help boost the firm’s reputation among guests and attract ecologically sensitive consumers and as well retain tourist. It is also important to adopt schemes that will reward employees who take eco-friendly initiatives. Hotels should also team up with other members of the supply chain, such as suppliers, to enhance environmental protection arrangements, as well as embark on promotional and communication efforts that will high light their firm’s green marketing efforts.

Directions for further research could include examining the effect of additional resources (such as the scope of resources, human resources, top management qualities) on the formation and implementation of an eco-friendly marketing strategy. Research should also investigate the role of temporal effects on the associations between the constructs of models through the execution of longitudinal studies. This is because some time needs to elapse before resources and capabilities lead to an eco-friendly strategy, before strategy yields competitive advantage, and before competitive advantage results in positive market and financial performance.

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