The importance of the firm and destination effects to explain firm performance

An interesting question in tourism management is why tourist firms obtain different performance levels. Firm performance in the tourism industry depends mainly on the destination where the company operates (location or destination effect), and on firm internal resources and characteristics (firm effect). The purpose of this paper is to determine the relative importance of the firm and destination effects using a multilevel approach and hierarchical linear models. The findings show that both effects impact significantly on firm performance, and also that the firm effect is more important than the destination effect. We equally provide some insights about the relationships between these two levels with the aim of building bridges between them.