ARTICLE IN PRESS

Tourism Management 26 (2005) 787–796

www.elsevier.com/locate/tourman

Emerging e-commerce development model for Taiwanese travel

agencies
Hsien-Tang Tsaia, Leo Huangb,, Chung-Gee Linc
a
Department of Business Management, National Sun Yat-Sen University, Kaohsiung, Taiwan
b
Department of Travel Management, National Kaohsiung Hospitality College, No. 1, Sung-Ho Road, Hsiao Kang, Kaohsiung 812, Taiwan
c
Department of Business Mathematics, Soochow University, Taipei, Taiwan
Received 10 October 2003; accepted 7 April 2004

Abstract

The electronic commerce model has made a significant impact on Taiwan’s travel industry, as there are multiple distribution
channels on the Internet. New technology customers have begun to buy directly from suppliers’ websites, resulting in price-sensitive
customers who love to shop around and who have now become natural constituents of on-line travel agencies. This study uses
multiple methods to collect data from various sources in order to improve study validity by using qualitative and quantitative
surveys. A longitudinal survey and a three-stage research design are also adopted. This study explores effective mechanisms for
maintaining competitive advantages, and the results provide an in-depth understanding of the impact of e-commerce on travel
agency performance. Because the development of e-commerce has had a revolutionary effect on Taiwan’s travel industry, an optimal
e-commerce business model and e-commerce development strategy for travel agency business management are proposed.
r 2004 Elsevier Ltd. All rights reserved.

Keywords: Internet marketing; E-commerce; Strategy; Travel industry

1. Introduction now look out for a consumer’s best interest by using IT

In the past 4 years, e-commerce has significantly
changed the distribution channels of the travel industry.
Ever since the 1970s, the distribution channel was
dominated by traditional travel agencies using computer
reservation systems (CRSs) and global distribution
systems (GDSs). Developing and maintaining a power-
ful CRS seemed to be the important electronic distribu-
tion issue for the future (O’Connor & Frew, 2002).
However, the role of traditional intermediaries has
changed in recent years due to the introduction of the
Internet and e-commerce technologies. Travel agencies
Corresponding author. Tel.: +886-7-8060505x2400; fax: +886-7-
8062449.
E-mail addresses: htt@mail.nsysu.edu.tw (H.-T. Tsai),
leo@mail.nkhc.edu.tw (L. Huang), cglin@bmath.scu.edu.tw
(C.-G. Lin).
to help them find the best products. The suppliers
believe they no longer need an intermediary to sell their
products. Direct marketing on the Internet is cutting
into the traditional intermediaries’ business.
Using information technology to develop and tighten
supply chain relationships can reduce costs and bring
higher quality travel products to the market. This
technology can also contribute to minimizing transac-
tion costs, lowering uncertainty, sharing market infor-
mation, and aiding in distribution channel efficiency.
Providing computer systems that integrate travel busi-
nesses with suppliers, distributors, and retailers is the
crucial first step toward developing a successful e-
commerce business model. The goal of this research is to
investigate how IT and e-commerce has been used to
develop e-commerce development strategies for travel
agencies in Taiwan. This pioneer survey allows for real-
time inventory management and efficient customer

0261-5177/$ - see front matter r 2004 Elsevier Ltd. All rights reserved.
doi:10.1016/j.tourman.2004.04.009
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788 H.-T. Tsai et al. / Tourism Management 26 (2005) 787–796
travel services. E-commerce enables more efficient
transactions and helps travel-related suppliers obtain
better customer services. As such, an e-commerce
development model for travel agencies is proposed.
2. Literature review
The rapid growth of on-line travel agencies has caused
traditional indirect distribution channels through tour-
ism intermediaries to decline. More direct channels are
evolving (Walle, 1996; Williams & Palmer, 1999), and
the causes for this change include the airlines’ drive to
reduce costs, airlines seeking more direct contact with
their clients, and technology providing the possibility for
a direct channel between the airlines and their customers
(Alamdari, 2002). The retail business premise involves
wholesalers, suppliers, and other intermediaries in the
travel distribution system, reducing costs at all levels in
the distribution system through disintermediation and
direct compensation or commission cuts, where these
cuts can be rationalized. This has led to an increasing
intermediary elimination at all levels. Suppliers now
strive to get closer to their customers and rebel against
the insulation imposed by distributors (Wardell, 1998;
Law, Law, & Wai, 2001; Park, 2002; Law & Wong,
2003).
Disintermediation seem inevitable, because informa-
tion technology provides the means and rationale for
eliminating intermediaries. According to Online Travel
Marketplace, roughly 51% of the market is generated
from suppliers’ websites. Online agencies, consolidators,
wholesalers, and other intermediaries make up the
remaining 49% (Sileo, 2001). A vast, new, horizontal
set of mergers, acquisitions, and alliances has therefore
occurred to achieve a global scale. Firms have an
extraordinary opportunity to seize advantages in both
efficiency and profitability (Zonis, 1999).
Airlines are attacking distribution costs in other ways.
Distribution costs are being reduced in parallel with
slicing commissions, rewriting productivity incentives
and creating new payment forms. Big travel agencies are
also reducing distribution costs (Feldman, 1999). Air-
lines continue to recognize that online agencies are
efficient channels for moving discounted inventory while
allowing them to maintain some brand or price integrity
(Sileo, 2001). Travel agencies, hence, must continue to
upgrade on-line business systems and work with travel-
related suppliers to ensure that distribution costs are
kept low, thus enhancing the value to customers (Gilbert
& Bacheldor, 2000). According to the above viewpoints,
airlines should not absolutely adopt a disintermediation
policy.
The disintermediation of travel agencies has not
occurred as some have forecast. We are seeing small
agencies in local markets using the Internet as a tool and
doing very well in that environment (Marino, 1999;
Maselli, 2002). Although many observers have predicted
the demise of the agency distribution system, there are
still plenty of agencies with thriving businesses, and
while the number of agency locations is decreasing it is
not on a massive scale (Anderson, 2000). In the future
intermediaries could play four key roles: (1) act as
information brokers, passing information between
guests and managers; (2) processing transactions by
booking rooms and transferring money; (3) providing
advice to customers, be they individual guests or
members of an association attending a convention;
and (4) providing value-added services by integrating
customer requirements for hotels with other travel
needs, while juggling the options, constraints, rules,
and policies offered by each provider. Travel agencies
and meeting planners remain very important to the hotel
distribution chain, even as most hotel chains experiment
with their own electronic distribution methods (Dube &
Renaghan, 2000).
The role of agents has changed from taking reserva-
tions to offering advice and consultancy services for
corporations (Chu, 2001; Alamdari, 2002). Despite the
doom and gloom about the airline and travel agent
industries, the agent’s role may increase, not decrease
(Bush, 2000, 2001). Resource advantages involve the
travel agencies’ relationship with their suppliers and
include product sourcing, purchasing process manage-
ment, and accounts payable management. Due to the
increase in applied IT in the travel industry; more
traditional travel intermediaries are adopting IT to
provide added value to travel consumers. IT has thus
become a vital competitive advantage for travel
agencies, as they use e-commerce development strategies
to retain performance advantages. Therefore, e-com-
merce creates opportunities for the re-intermediation of
the on-line travel agency.
Mahadevan (2000) proposed several business models
for Internet-based e-commerce. However, his study
lacks empirical evidence. Although Chu (2001) found
that adopting e-commerce to transform the traditional
ways of doing business means more than just increasing
efficiency and effectiveness, he did not offer practical
suggestions for travel agencies. Siebenaler and Groves
(2002) provided four types of adaptation/adjustment
strategies used by agencies and responded to the e-
commerce impact, but their study adopted the Q sort
methodology and did not provide quantitative analysis.
In a word, the existing articles in the travel and tourism
literature emphasize the importance of e-commerce and
conceptual effects of the Internet on the travel industry.
The empirical evidence and realistic suggestions for
managing those impacts, thus far, have been lacking.
The goal of this study is to explore the impact of e-
commerce on Taiwan’s travel agencies and offer possible
development strategies. We attempt to examine the
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Seizing Acquiring Retaining
Resource Strategy Performance
Advantage Advantage Advantage
Fig. 1. Travel agencies’ electronic commerce strategy framework.
effect of various IT applications on the travel agency
structure and IT values for travel intermediaries in
Taiwan. Travel agencies in Taiwan are divided into
three categories: general travel agencies (GTAs), tour
operator travel agencies (TOTAs), and domestic travel
agencies (DTAs). The development of e-commerce has
generated a revolutionary effect in the travel industry,
especially among travel agencies. This research will
focus on whether two of three types of travel agencies in
Taiwan differ in their use of IT applications and shall
investigate whether an optimal business model for e-
commerce applications exists.
In the past, we investigated the e-commerce strategies
of travel agencies. There is also a suggested framework
for resource, competitive and performance advantages
as illustrated in Fig. 1. Our study is built on this
framework to uncover the in-depth resource, competi-
tive, and performance advantage relationships by
conducting a large-scale survey.
3. Objectives of this study
The existing literature on e-commerce applications
indicates that few studies have investigated the impact of
e-commerce on the productivity of the travel industry.
Therefore, an exploratory survey was first conducted to
obtain data on existing applications. Research that is
more comprehensive will be used to subsequently
identify the critical issues. In this study both qualitative
interviews and quantitative analysis were adopted.
Qualitative interviews focused on primary on-line travel
agencies so as to obtain more in-depth information and
identify the important factors. A survey was then
conducted on 1885 travel agencies. There are five
specific objectives of this study:
1. Examine the characteristics and industrial structure
of the travel industry. Qualitative research is consti-
tuted, using a set of follow-up interviews with travel
industry experts, through which more in-depth opinions
and comments on the subject can be obtained.
2. Conduct a large-scale survey on the target
population, including GTAs and TOTAs, which are
the prominent travel agencies in Taiwan. Their re-
sponses will provide much insight into the e-commerce
development of travel agencies.
789
3. Discern the variables relating to the resource,
competitive, and performance advantages of developing
e-commerce travel agencies.
4. Provide suggestions for travel agencies to adopt
e-commerce strategies, thereby achieving profits.
5. Use the data collected from the survey and case
study to model the impact of e-commerce on
the travel industry structure and firm productivity
and discover better practices for adopting this new
technology.
4. Methods
This study uses multiple methods to collect data from
various sources to improve the study’s validity. The
results from a 3-year longitudinal field study that
investigated the e-commerce development strategy for
travel agencies is presented.
The five stages adopted are:
First stage: The first stage examines the travel
agency characteristics and e-commerce development
structure. Qualitative research is constituted using a
set of follow-up interviews with travel industry experts,
including 26 CEO-level experts among 23 on-line travel-
related businesses. They ran from December 2000 to
May 2001.
Second stage: The second-stage questionnaire instru-
ment, consisting of four parts, was developed according
to the first-stage results. The first stage was designed to
identify resource advantages including 12 attributes. The
second part presents the competitive advantages, in-
cluding 12 attributes; travel product, brand, service, and
tour price. The third part shows six attributes that cover
various performance advantage aspects, including mar-
ket share, sales growth, public relationship, employee
training, running cost, and ROI. The final part deals
with the demographic backgrounds of the travel agency
managerial level respondents. They are asked to rate the
importance of each attribute in competitive and
performance advantages. Attributes are rated on a 5-
point Likert-type scale, ranging from 1 (extremely
unimportant) to 5 (extremely important) but the
resource attributes are based on multiple choice ques-
tions. All of these attributes were developed
from information in the literature review and personal
interviews with travel-related business CEOs. A pilot
test was conducted to assess the reliability of the
resource and performance attributes, by interviewing
30 travel agents from the Kaohsiung area. Some
question wording was rephrased after the pilot test to
clarify the text better. This survey period was from May
2001 to July 2001.
Third stage: This stage’s questionnaire instrument also
comprised four parts. The questionnaire design is
similar to and linked to the second stage. The only
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difference is that the resource attributes are revised and Twelve competitive advantage attributes and 6
rated on a 5-point Likert-type scale to see if there are performance advantage attributes are used. The compe-
any significant differences between the two quantitative titive and performance attributes were factor analyzed
surveys. The survey period was from January 2003 to to determine whether any underlying dimensions ex-
March 2003. isted. Reliability analysis is also used to assess the
interval consistency of the variables retained in each
dimension. The linear structural relationship (LISREL)
is adopted to build the e-commerce development model
5. Sampling
using the resource, competitive, and performance
advantage dimensions’ correlations (derived from factor
The first stage of this study adopts snowball sampling.
analysis).
The second stage includes members from the Taipei,
Taichung, Tainan, and Kaohsiung areas. The survey
was carried out over a three-month period from May
7. Results
2001 to July 2001. The sample population size is 1481.
Because this survey is based on respondents with e-
7.1. E-commerce development strategy
commerce business model experience, random data
collection sampling techniques cannot be used. Conve-
E-commerce has changed the global business environ-
nience sampling techniques are used instead.
ment and produced a dramatic impact on the future of
Although convenience sampling is adopted, several
the travel industry. More and more travel agencies have
criteria are in place. First, the respondents included
set up their own corporate websites using the Internet to
members of the Travel Quality Assurance Association,
work collaboratively with travel consumers, related
R.O.C. Second, the respondents are from a managerial
travel suppliers, and partners. On-line travel agencies
level and directly responsible for e-commerce or the
that effectively market themselves using e-commerce
sales department. Third, only members that are from
development have a distinct advantage. This study finds
GTAs or TOTAs were chosen for this survey. If the
three e-commerce development strategy dimensions for
chosen respondent did not match any one on the above
gaining those advantages.
criteria or was unwilling to participate in the survey,
then the next immediate convenient sampling unit was
7.2. Resource advantage
approached and interviewed.
Two hundred and seventy travel agencies were
The strong pressure to seize resource advantages,
selected from the population. Ninety-five GTAs and
acquire greater competitive advantages, and retain
175 TOTAs were chosen, constituting a total sample size
performance advantages has prompted travel agencies
of 270 travel agencies, representing about 18.23% of the
to act rather quickly. Qualitative interviews with a pool
target population which is 1481. The third stage expands
of expert respondents helped to identify resource
the target population and includes members from the
advantages and clarify the points of each advantage.
Taipei, Taoyuan, Hsinchu, Taichung, Tainan, Kaoh-
Table 1 shows that 12 items are deemed as resource
siung, and Hualien areas—all primary cities in Taiwan.
advantages having important elements that classify the
The survey was carried out over a 3-month period from
three dimensions: enterprise reputation, travel profes-
January to March 2003. The sample population size was
sionals, and selling capability advantages. Table 2
1572. Three hundred and forty travel agencies were
provides the results of the factor analysis.
selected from the population. One hundred and five
Factor one (enterprise reputation dimension): The
GTAs and 235 TOTAs were chosen, constituting a total
reputation and brand of the on-line travel agencies
sample size of 1572 travel agencies, representing about
or alliance enterprises is perceived important by
21.63% of the target population.
69.6% of GTAs and 66.3% of TOTAs. Related items
include contracts with related businesses and the
organizational culture. Because travel products are
6. Data analysis intangible and quality is unstable, one of the keys to
the success of an e-commerce transactional model’s
The first stage occurred over a period of 6 months. development is enterprise reputation. In other
Each target respondent was interviewed more than two words, enterprise reputation enhances customer tran-
times. The second and third stages used a quantitative saction safety, brand awareness, and therefore the
survey that discerns the dimension variables. Data were customers’ trust.
initially analyzed using univariate descriptive statistics, Factor two (travel professional capability dimension):
including the frequencies and mean ratings, while factor Offering the right product to the right customer is the
analysis condensed the 12 resource advantage attributes. travel professional’s specific ability. This is also an
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Table 1
EC development resource advantage attributes

Items Travel agencies

GTAs(N ¼ 95) TOTAs(N ¼ 175)

Numbers % Numbers %

Reputation and brand 66 69.5 116 66.3

Professional capability 50 52.6 84 48.0
Product diversification 45 47.7 62 35.4
Stable customer resource 37 38.9 90 51.4
Travel information data base 31 32.6 55 31.4
Timely departure date 26 27.4 65 37.1
Contract with related businesses 25 26.3 50 28.6
Management capability 20 21.1 46 26.3
Tour planning capability 16 16.8 44 25.1
Innovation capability 15 15.8 35 20.0
Convenience of transaction 14 14.7 24 13.7
Organizational culture 9 9.5 23 13.1

Table 2
EC development competitive advantage attributes

Factor loading Eigenvalue Proportion(%)

Factor one (product competitive advantage) 4.545 37.7

Offer diversified products 0.797
Provide unique differentiated products 0.807
More specific market segmentation 0.525

Factor two (brand competitive advantage) 1.332 11.10

Better image construct 0.781
Broader customer resource 0.590
Better personalized service 0.532

Factor three (service competitive advantage) 1.053 8.78

Better customer privacy 0.813
Better advertisement efficiency 0.672
Better customer relationship 0.454

Factor four (price competitive advantage) 1.003 8.36

Much more cost savings 0.792
Better price competition 0.626
Shortened remittance time 0.405

essential factor in seizing resource advantages. Fifty-
three percent of the GTAs and 48.0% of the TOTAs
reveal that travel professional capability is the main
travel agency factor that new entrants lack. Other travel
professional capabilities of note are the possession of a
travel information database and management, tour
planning and innovation capabilities.
Factor three (travel selling capability dimension): An
effective travel selling capability also determines the
ability to seize resource advantages. Adding sales
capability through the e-commerce transactional model
can help travel agencies acquire and retain competitive
and performance advantages. If they are successful, then
on-line travel agencies have a greater chance of
developing an e-commerce transactional model. This
option is supported by 47.7% of GTAs and 35.4% of
TOTAs. Interviewees universally chose the selling
capability dimension, including product diversification,
stable customer resources, timely departure dates, and
convenience of transactions.
The interviewees believe that seizing resource advan-
tages could enhance the competitiveness of on-line travel
agencies. Using these resource advantages, it is possible
for traditional travel agencies to penetrate new market
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segments and realize their presence across as many
distribution channels as possible. They can demonstrate
that they offer alternative ways of delivering their
products to travel customers.
7.3. Competitive advantage
This study uses factor analysis to better define the
dimensions of competitive advantage for travel agencies
developing e-commerce. These factors are identified
using eigenvalues larger than one. A scree plot of the
eigenvalues show a change in the slope of the curve at
four factors, verifying that four dimensions are ade-
quate. The four factors account for over 66.1% of the
variance with approximately 37.8%, 11.1%, 8.8%, and
8.4% attributed to each, respectively. All items in these
three factors have higher loads greater than 0.3
(Gorsuch, 1983). The adequacy of the factor model
was checked using Kaiser’s Measure of Sampling
Adequacy (MSA). All three-factor scales have a
Cronbach alpha of 0.841 and the data are shown in
Table 2.
Factor one (product competitive advantage dimension):
The first factor contains three items related to product
competitive advantage attributes: diversified products,
providing unique differentiation products and more
specific market segmentation. Hence, factor one was
entitled ‘‘the product competitive advantage’’ dimen-
sion.
Factor two (brand competitive advantage dimension):
Factor two clearly relates to brand competitive advan-
tage. The related attributes are a better image construct,
broader customer resources and better customer rela-
tionships.
Factor three (service competitive advantage dimension):
Items representing service competitive advantage attri-
butes are predominant in the third factor, consisting of
three items: better customer privacy, better advertise-
ment efficiency and better customer relationship.
Table 3
EC development performance advantage attributes
Factor one (sales performance advantage)
Better market share
Better sales growth
Factor two (reputation performance advantage)
Better public relationship
Better human resource management
Factor three (financial performance advantage)
Better cost savings
Better return on investment (ROI)
Factor four (price competitive advantage dimension):
Items representing price competitive advantage attri-
butes are predominant in the fourth factor, consisting of
three items: more cost savings, better price competition,
and shortened remittance time.
7.4. Performance advantage
This study also adopted factor analysis to analyze
‘‘performance advantage attributes’’. As before eigen-
values of one were used as a criterion in conjunction of
an inspection of the scree plot. The three factors
accounted for over 71.30% of the variance in the data
with approximately 37.02%, 17.35%, and 16.39%
attributed to each. All items in these three factors have
higher loads of more than 0.3. The Kaiser’s measure of
sampling adequacy (MSA) was used to measure
sampling adequacy. The results are shown in Table 3.
Factor one (sales performance advantage dimension):
The first factor contains two items related to sales
performance advantage attributes. The two items ‘‘a
better market share’’ and ‘‘better sales growth’’.
Factor two (reputation performance advantage dimen-
sion): Factor two clearly relates to the reputation. The
related attributes are ‘‘better public relationship’’ and
‘‘better human resource management’’.
Factor three (financial performance advantage dimen-
sion): Items representing financial performance advan-
tage attributes are predominant in the third factor,
consisting of two items: ‘‘better cost savings’’ and
‘‘better return on investment (ROI)’’.
8. E-commerce development model
8.1. Development of measures
How these measures are developed is now briefly
discussed (Fig. 2). The conceptual framework was
derived from Mizik and Jacobson’s (2003) study. All
Factor loading Eigenvalue Proportion(%)
2.221 37.02
0.797
0.807
1.042 17.35
0.798
0.769
1.016 16.93
0.865
0.552
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Broader customer
resource (y1)

Better advertisement
0.63 0.67
efficiency (y2)
Reputation & brand (x1)
Competitive
Advantage(Y) 0.32
0.63 Better customer
0.42 relationship (y3)
0.72(7.06)
Contract with related
0.55
businesses (x2)
0.58(3.72) Better price
Resource
competition (y4)
0.47 Advantage(X)
Tour planning
capability (x3)
0.29(2.04) 0.78 Better market share
(z1)
0.46
Performance
Organizational 0.76
Advantage (Z)
culture (x4)
Better sales growth
(z2)
0.63

Better return on
investment (z3)

Fig. 2. E-commerce development model.

Table 4
Summary of measures

Model construct dimensions Mean Std.dev Factor loading Eigenvalue Pro. (%) Cronback’ a

Resource advantage
Reputation and brand ðx1 Þ 3.794 0.816 0.837
Contract with related business ðx2 Þ 3.650 0.812 0.898 1.583 39.59
Tour planning capability ðx3 Þ 3.694 0.749 0.817 1.553 78.42 0.8586
Organizational culture ðx4 Þ 3.632 0.777 0.869

Competitive advantage
Broader customer resource ðy1 Þ 3.891 0.751 0.875 1.442 36.05
Better advertisement efficiency ðy2 Þ 3.677 0.742 0.797 0.8028
Better customer relationship ðy3 Þ 3.335 0.902 0.848 1.413 71.37
Better price competition ðy4 Þ 3.312 0.860 0.794

Performance advantage
Better market share ðz1 Þ 3.618 0.773 — 2.080 69.33
Better sales growth ðz2 Þ 3.624 0.695 — 0.519 86.64 0.8089
Better return on investment ðz3 Þ 3.497 0.822 — 0.401 100.00

antecedent items are scored on a 5-point scale
ranging from ‘‘1=strongly disagree’’ to 5=strongly
agree’’. The exogenous construct acts only as a pre-
dictor for the resource advantage. Endogenous
constructs are the outcome of at least two
causal relationships that consist of the competitive
advantage and performance advantage.
Table 4 summarizes the measure characteristics,
sample measurement items, and is an assessment of
the reliability of the multi-item scales. The resource
advantage is measured using four indicators such as
reputation and brand ðx1 Þ, contract with related
businesses ðx2 Þ, tour planning capability ðx3 Þ, and
organizational culture ðx4 Þ. The competitive advantage
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is also measured by four indicators such as broader
customer resources ðy1 Þ, better advertisement efficiency
ðy2 Þ, better customer relationship ðy3 Þ, and better price
competition ðy4 Þ. The performance advantage consists
of three indicators, such as better market share ðz1 Þ,
better sales growth ðz2 Þ, and better return on investment
ðz3 Þ.
9. Model and hypotheses
The conceptual framework of this study is divided
into resource, competitive, and performance advantages
(also see Fig. 1). It also summarizes the e-commerce
business model tested in this study.
9.1. Antecedents
Because few studies are directed toward assessing the
relative correlation among resource, competitive, and
performance advantages, we explore the model con-
struct dimensions in two stages. Only Mizik and
Jacobson (2003) defined exogenous variables affecting
sustainable competitive advantage as organizational
resources and superior financial performance. Hence,
in our structural model the three-model construct
dimensions are developed as exogenous variables and
these variables are defined as affecting the e-commerce
development strategy. We propose the following hy-
potheses.
H1: There is a positive relationship between a
resource advantage and competitive advantage.
H2: There is a positive relationship between a
competitive advantage and a performance advantage.
H3: There is a positive relationship between a
resource advantage and a performance advantage.
10. Confirmative factor analysis and correlation analysis
This study uses several statistical techniques, includ-
ing an exploratory, confirmatory factor analysis, corre-
lation analysis, and a linear structural relationship
Table 5
Item purification
Research design Constructs
Resource Competitive Performance
advantage advantage advantage
First stage 4 6 5 index (AGFI) is 0.93. Other diagnostics include
Second stage 12 12 6
Third stage 4 4 3
(LISREL). A structural equation is used to test the
model and hypotheses previously stated.
The set of items initially corresponding to each
theoretical construct is subjected to examining the
item-to-total correlation and exploratory factor analysis
(Churchill, 1979; Reisinger & Turner, 1999) (see Table
5). After the third-stage analysis, the entire set of items
are subjected to confirmatory factor analysis to verify
uni-dimensionality. Specifically, a measurement model is
estimated in which every item is restricted to load in its a
priori specified factor. The factors themselves are
allowed to correlate (Gerbing & Anderson, 1988). A
confirmatory factor analysis is then conducted for all
three constructs and their indicators. An adequate
degree of model fit is obtained as a result
(Normed Chi-square=2.2, GFI=0.96, AGFI=0.93,
RMR=0.04, IFI=0.97, CFI=0.97, RMSEA=0.06,
NFI=0.95).
The global measurement model overall provides
satisfactory evidence of uni-dimensionality for the
measure. Table 6 represents the means, standard
deviations, and inter-correlations for 11 indicators of
the 3 constructs. The correlation among each construct
is significant at the 0.01 (**) and 0.05(*) levels.
11. Reliability test
The final stage in the measurement validation involves
computing the coefficient alpha for each set of measures
to test reliability. Cronbach’s alpha is most often used to
test the reliability of a multi-item scale. The cutoff point
is generally 0.6 (Hair, Anderson, Tatham, & Black,
1992). Because all of the a values are between 0.80 and
0.86, and all are above 0.6, the constructs in our model
are therefore deemed reliable (also see Table 4). The
evidence suggests that our scale shows adequate
measurement properties.
12. Overall model fit
The relationships among the variables are assessed
simultaneously via correlation analysis. The correlation
matrix is used to understand the relationship patterns
among the resource, competitive and performance
advantages. The Lisrel method has been described as
being well suited for modeling, testing and development.
The model fit assessment approach is involved, using
several diagnostics to judge the simultaneous fit of the
measurement and structural models to the data collected
for this study. The goodness-of-fit index (GFI) for the
overall model is 0.96 and the adjusted goodness-of-fit
RMR=0.04, IFI=0.97, CFI=0.97, and RMSEA=
0.06. This model had a normed fit index (NFI)
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Table 6
Correlation matrix

Mean S.D. x1 x2 x3 x4 y1 y2 y3 y4 z1 z2 z3

Reputation and brand 3.80 0.82 1

Contract with related businesses 3.65 0.81 0.55** 1
Tour planning capability 3.69 0.75 0.33** 0.21** 1
Organizational culture 3.63 0.78 0.29** 0.23** 0.57** 1
Broader customer resource 3.89 0.75 0.19** 0.21** 0.16** 0.18** 1
Better advertisement efficiency 3.68 0.74 0.31** 0.33** 0.25** 0.19** 0.44** 1
Better customer relationship 3.34 0.90 0.19** 0.24** 0.13* 0.12* 0.14* 0.22** 1
Better price competition 3.31 0.86 0.20** 0.23** 0.13* 0.16** 0.19** 0.30** 0.39** 1
Better market share 3.62 0.77 0.42** 0.31** 0.25** 0.31** 0.44** 0.26** 0.23** 0.27** 1
Better sales growth 3.62 0.70 0.26** 0.24** 0.27** 0.23** 0.45** 0.36** 0.16** 0.32** 0.59** 1
Better return on investment 3.50 0.82 0.24** 0.27** 0.18** 0.20** 0.24** 0.24** 0.17** 0.24** 0.49** 0.55** 1

Significant at the 0.01 (**) and 0.05 (*) levels.

Table 7
Structural model results

Model parameter Path coefficient T value Hypothesis testing

Endogenous constructs
Resource advantage ðX Þ ! Competitive advantage (Y) 0.72 7.06* H1: supported
Competitive advantage ðY Þ ! Performance advantage (Z) 0.58 3.72* H2: supported
Resource advantage ðX Þ ! Performance advantage (Z) 0.29 2.04* H3: supported

Normed Chi-square (Chi-square/df) 2.2

GFI 0.96
AGFI 0.93
RMR 0.04
IFI 0.97
CFI 0.97
RMSEA 0.06
NFI 0.95
*
Significant at the 0.05 level.

value of 0.95, which means that 95% of the observed-
measure covariance is explained by the composition
model. The structural model results in Table 7 show
that the overall structural model fit is within an
acceptable level.
With the path exceptions from mutual disclosure to
the resource, competitive, and performance advantage
relationships, three hypothesized paths are supported at
the 0.05 significance level. In the initial hypothesis,
mutual disclosure is found to be significantly related
to the resource advantage and competitive advantage
relationships (path coefficient = 0.72, t ¼ 7:06).
Thus, this result indicates that H1 is supported.
The resource advantage attributes are all positively
related to the competitive advantage. The competitive
advantage is positively related to the performance
advantage (path coefficient = 0.58, t ¼ 3:72). Thus,
the result supports H2. The resource advantage is also
positively related to the performance advantage (path
coefficient = 0.29, t ¼ 2:04). Thus, the result also
supports H3.
13. Conclusion
After our 3-year survey, a few online travel agencies
have survived the commission cuts and e-commerce
impact that caused other agencies to go bankrupt.
Only those agencies that successfully adopted an
e-commerce development model can thrive. They
must offer added value and carve out niche products
or services such as unique vacation packages, tailor-
made package tours and typical travel-related applica-
tion procedures such as visa or passport applications.
In the face of travel-related suppliers that bypass all
travel agencies, the surviving agencies can survive
disintermediation. All travel agencies should improve
their customer service and maintain their inter-
mediary roles and functions through e-commerce
development, and by seizing resource, competitive,
and performance advantages. The revolution in
e-commerce does impact traditional travel agencies
and will challenge all traditional travel agency
businesses.
 ARTICLE IN PRESS
796 H.-T. Tsai et al. / Tourism Management 26 (2005) 787–796
Acknowledgements
We do appreciate the research budget from MOE
Program for Promoting Academic Excellent of Uni-
versities under the Grant Number 91-H-FA08-1-4.
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