Corporate governance and business performance of hotels in Western Australia: analysis of market orientation as a mediator

This study examines whether corporate governance enhances the financial and social business performance of three-to five-star hotels in Western Australia (WA) through the three dimensions of market orientation (i.e. customer orientation, competitor orientation and inter-function coordination) as mediators.

Data were collected from managers of hotels in the WA capital city of Perth and its surrounding areas using a questionnaire. Partial least squares structural equation modelling (PLS-SEM) was used to analyse the data.

The overall result shows interesting findings of market orientation’s mediating role. It is found that corporate governance may lead to better financial business performance through competitor orientation but not through customer orientation and inter-function coordination. Complementary, corporate governance may lead to better social business performance through customer orientation and inter-function coordination but not through competitor orientation.

This paper offers contributions to both literature and practice on what dimensions of market orientation are important to enhance the performance of hotels when corporate governance is applied.