RiskanddisintermediationintourismArneWiigWP2004:6RiskanddisintermediationintourismArneWiigWP2004:6Chr.MichelsenInstituteDevelopmentStudiesandHumanRightsCMIWorkingPapersThisseriescanbeorderedfrom:Chr.MichelsenInstituteP.O.Box6033Postterminalen,N-5892Bergen,NorwayTel:+4755574000Fax:+4755574166E-mail:cmi@cmi.no:©Chr.MichelsenInstitute2004iiiContents1.INTRODUCTION..............................................................................................................................................................12.THEORYANDLITERATUREREVIEW..................................................................................................................23.METHODOLOGYANDEMPIRICALRESULTS..................................................................................................53.1DATASOURCESOFTHEDEPENDENTVARIABLE.........................................................................................................53.2INDEPENDENTVARIABLES.............................................................................................................................................73.3MAPPINGOFWEBHITSANDPOLITICALRISK..............................................................................................................93.4MECHANISMSANDRESULTS.......................................................................................................................................104.CONCLUSION..................................................................................................................................................................13REFERENCES......................................................................................................................................................................15APPENDIX1.SUMMARYSTATISTICS.....................................................................................................................17APPENDIX2.CORRELATIONMATRIX...................................................................................................................18APPENDIX3.LISTOFCOUNTRIES...........................................................................................................................1911.IntroductionInformationistheglueinthesupplychainoftourism(UNCTAD,2001;Wiig,2003).Intheso-called‘neweconomy’,informationisdigitalisedandprovidedoverlargenetworks(Tapscott,1996;ShapiroandVarian,1999).TheInternethasrevolutionalisedsupply-chainmanagement,forexamplebyprovidingconsumersinformationabouttouristdestinationsandtheirmainattractions.ConsumersmayalsosearchtheInternetforinformationaboutspecifictouristproductsandtheirrespectiveprices.E-mailmakesitpossibletocommunicatedirectlywiththesupplieratlowcost,andifserviceprovidersdevelope-commercesolutions,ordering(e.g.booking)andpaymentcanbeundertakeninteractivelybetweenthecustomerandthesupplier.Serviceprovidersindevelopingcountries,whoarenotaccessibleontheInternet,aredependentonintermediariestoprovideinformationandbundletheirtouristproduct.Indevelopingcountriesalargeshareoftouristproductsisbookedthroughmiddlemen,andrevenueretentionislow;approximately30percentaccordingtotheWorldTradeOrganisation(1998).Commissiontointermediariesconstitutesalargeshareofrevenue(intherangefrom10to40percent,dependingonthemarketinquestion).Awebpage(eitherintermsofanindividualhomepageorbyregisteringatawebportal)isaprerequisiteornecessaryconditionfordirectcontactwithcustomers,particularlywhentouristslackinformationaboutthepotentialserviceprovidersandtheirproducts.Potentialcustomerscanthencommunicatedirectlywiththeserviceprovidersthroughe-mailorfax.Increasingly,customersusetheInternettovisittravel-relatedwebsites.Onein25internetvisitsistoatravelwebpage(),andtheInternetmaythereforefacilitatedirectorderinganddisintermediation.ThisarticleanalysesconditionsunderwhichtheInternetfacilitatesdisintermediationintourism.Disintermediationisimportantbecauseitmayincreasetherevenueretentionrate.ThereisnoclearanswerastowhethertheInternetleadstodisintermediationornot.ChircuandKauffman(2000)providealiteraturereviewoftheimpactofinformationandcommunicationtechnology(ICT)onthestructureofthesupplychainand,fromthisliterature,theevidenceismixed.Mypointofdepartureisthatintermediariesplaytheroleofbothbundlerofgoods(‘makeapackage’)andcertifiers(guaranteethequality).ThepossibilityofdisintermediationdependsonwhethertheInternetinfluencestheseroles(Wiig,2003).Inthispaper,Ifocusontherolemiddlemenhaveascertifiers.Thecertificationroleislinkedtothefactthattourismisaninformation-intensiveproductcharacterisedbyasymmetricinformation.Serviceprovidersgenerallyhavemoreinformationabouttheproductthancustomers,andintermediariesmayguaranteethequalityoftheproductinquestion.Withouttheguarantee,thecustomermaynotbewillingtobuydirectlyfromthesupplier.AlthoughtheInternetisanecessaryconditio