Blessing in Disguise? Environmental Shocks and Performance Enhancement

72 Pages Posted: 24 Jul 2018

See all articles by Sumit Agarwal

Sumit Agarwal

National University of Singapore

Long Wang

ShanghaiTech University - School of Entrepreneurship and Management

Yang Yang

The Chinese University of Hong Kong - CUHK Business School

Multiple version iconThere are 2 versions of this paper

Date Written: June 20, 2018

Abstract

This paper studies how hotels and their guests respond to exogenous detrimental environmental shocks. We employ a unique dataset of online reviews covering all the hotels in Singapore and Hong Kong from three prominent hotel-booking platforms. The results show that the review scores of hotels in Singapore dropped sharply by up to 0.35 points during the haze periods and reverted immediately to and exceeded eventually their previous level after the haze shock. We discuss possible explanations for the observed effects, including hotels' service quality, managers' efforts and guests' mood. Negative environmental shocks motivate managers to reflect on their operating efficiency, and active communication on online travel reviews prompts reflection and service improvements. At the same time, large-scale improvement in service quality is not persistent and increases at a decreasing rate during subsequent environmental shocks. Our findings shed light on the importance of realizing deficiencies on management and operation in the presence of negative shocks and contribute to a growing literature on environment, interruption, and management at the micro level.

Keywords: Air pollution, Productivity, Performance, Tourism, Information and Learning

JEL Classification: Q51, Q53, Z30, D83, D22

Suggested Citation

Agarwal, Sumit and Wang, Long and Yang, Yang, Blessing in Disguise? Environmental Shocks and Performance Enhancement (June 20, 2018). ShanghaiTech SEM Working Paper No. 2018-012. Available at SSRN: https://ssrn.com/abstract=3218812 or http://dx.doi.org/10.2139/ssrn.3218812

Sumit Agarwal

National University of Singapore ( email )

15 Kent Ridge Drive
Singapore, 117592
Singapore
8118 9025 (Phone)

HOME PAGE: http://www.ushakrisna.com

Long Wang (Contact Author)

ShanghaiTech University - School of Entrepreneurship and Management ( email )

100 Haike Rd
Pudong Xinqu, Shanghai
China

Yang Yang

The Chinese University of Hong Kong - CUHK Business School ( email )

7/F, Cheng Yu Tung Building
12 Chak Cheung Street, Hong Kong
Hong Kong
Hong Kong

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