Event Title
Parallel Session 31, Mega Events & Music Festivals Track: The Eclectic Economics of Music Festivals Occurring in Small Island Destinations
Location
Classroom 205
Start Date
14-12-2017 4:45 PM
End Date
14-12-2017 5:10 PM
Description
Purpose
The purpose of this study is to examine the economic benefits that a music festival may bring to a confined economy when observed within the theoretical lens of the eclectic economics paradigm and the internationalization theory by way of the OLI framework. Traditionally, the concepts of eclectic economics and the internationalization theory are applied within the context of manufacturing goods where corporations seek to determine if the manufacturing process will bring the firm comparative advantages pertaining to ownership, location, and internationalization (OLI framework) (Ferdinand and Williams, 2013). The framework is used to determine if it is best for a firm to produce a product itself or contract the production to a third party (Hill, 1999).
The eclectic economics paradigm, internationalization theory, and the OLI framework all function from the assumption that most businesses will avoid transactions in the open market when internal transactions carry lower costs and/or increased economic gains (Clark et al., 1997; Dunning, 2000). While it may be unusual to apply manufacturing frameworks to the tourism industry, a service industry with experience-based products (e.g. music festivals), the research will demonstrate that confined economies must also determine if the production of a tourism event will generate positive economic gains and whether those gains may be achieved via open market or internal transactions thus qualifying the use of the OLI framework.
Design/methodology/approach
The Curaçao North Sea Jazz Festival (CNSJF) This is a longitudinal survey case study that includes a five-year assessment (2010-2014) for the CNSJF. Curaçao is a small island located in the Caribbean. Over the last decade, the tourism industry's growth has stagnated and its continued contribution to the wider economy has become a growing concern to Curaçao government officials. Therefore, activities that increase foreign exchange earnings through ownership, location, and internationalization (OLI) are desired opportunities to increase economic growth on the island. The CNSJF is considered one such opportunity.
The O-advantages are measured through income bearing activities such as total international tourist arrivals and the share of repeat attendees to the festival. The L-advantages are measured by the destination's production of the festival and the attendees' consumption of tourism related products so that tourists may attend the CNSJF. The attendees' length of stay and purpose of travel to Curaçao constitutes this measurement. The I-advantages are measured by inward and outward movements. Inward movements are analyzed through the backward economic linkages and indirect economic impact; whereas the outward movements are assessed through the forward economic linkages and direct economic impact.
An I-O Model was used to capture the internationalization benefits of the CNSJF for Curaçao. The I-O model was provided by the Curaçao Bureau of Statistics and consists of an 11x11 matrix based on the 2008 National Accounts. The foundational notation of the I-O model used follows Miller and Blair (1985 p. 102) and is expressed as X = (I – A)-1 Y. Where Y represents the final demand; A is a square matrix defining the relations of production; and (I-A)-1 is the Leontief inverse matrix. The I-O model provides multipliers that may be used as the first step to quantify the effects of demand change that may influence the internationalization benefits for a destination.
The Leontief multipliers are the first set of multipliers and reveal backward linkages within the economy that reflect partial economic activities (i.e., purchases from one sector to that of others) and the potential for inward internationalization movement. The backward linkage multiplier follows Cai et al., (2006) and will be denoted as BL and is given by BLi = 1+e'(I – Ajj)-1 Aji, where 1 represents the initial unit output change in industry i, while e is a sub vector that aggregates the elements of ∆Xj. In order to compare the BLs across industries a BL index is referenced. The corresponding BL index is calculated by dividing the Leontief multiplier by the average multiplier for all industries and is expressed as BLi / ∑k BLk /k.
Because the Leontief multipliers are grounded on demand pull considerations they are not able to capture the forward linkages (FLs). Therefore, the study also applied the Ghosh model to calculate the FLs as a form of the potential outward movement of internationalization. The FLs are the economic transactions that occur between the vendors and the CNSJF attendees. As suggested by Cai et al., (2006) the Ghosh forward multiplier was used and is given by FLi = 1+Bij (I – Bjj)-1 e. The corresponding FL index is calculated by dividing the Ghosh multipler by the average Ghosh multipler and is expressed as FLi / ∑k FLk /k.
These multipliers and indices will measure the absolute and relative strength of the BLs and FLs vis-à-vis other industries.
Findings
A total of 1,940 CNSJF attendees completed the participant intercept survey from 2010-2014. The study found that the CNSJF sufficed the three main comparative advantage factors observed within the eclectic economics paradigm. The O-advantages captured a relative position of the potential internationalization benefits for the destination, the L-advantages conferred Curacao's internationalization strength by examining the consumption, duration, and the longitudinal vitality of repeat CNSJF attendees to the island.
Traditionally, I-advantages are recognized when the product is consumed on a global scale. Curaçao's I-advantages from the CNSJF come through the global distribution and consumption of the destination's offerings via international arrivals and foreign exchange earnings. Overall, the outward movement provided an initial I-advantage for Curaçao, but the inward movement I-advantage was a result of the dynamics between the sectors and the island's use of linkages. Both movements demonstrated a positive economic gain for the island.
Research limitations/implications
The study reveals two main limitations. The OLI Framework and the I-O technique are static in nature. Therefore, it is difficult to detect the dynamic evolution of the music festival as well how that evolution impacts the destination. In addition, the economic impact of the CNSJF stems from the specific configuration of the political and social factors present in Curaçao.
Practical implications
When considering that Curaçao is a confined economy, the prospective ability for Curaçao to render the benefits of I-advantages involves sustaining the O and L-advantages. It is important to note that in order for a destination to capture the I-advantages, the O and L-advantages must be sustained and functional in order to initiate an outward movement that would then trigger the consequential positive inward movement. Thus, it seems imperative that the destination management organization efficiently craft complementary products that allow for the cohesive function of the OLI-advantages.
Originality/value
A primary contribution of this study is the objective measurement of the OLI Framework. Traditionally, OLI-advantages are measured subjectively by managers' perceptions (Dunning, 2000). This study evaluates the actual performance of the OLI-advantages.
Parallel Session 31, Mega Events & Music Festivals Track: The Eclectic Economics of Music Festivals Occurring in Small Island Destinations
Classroom 205
Purpose
The purpose of this study is to examine the economic benefits that a music festival may bring to a confined economy when observed within the theoretical lens of the eclectic economics paradigm and the internationalization theory by way of the OLI framework. Traditionally, the concepts of eclectic economics and the internationalization theory are applied within the context of manufacturing goods where corporations seek to determine if the manufacturing process will bring the firm comparative advantages pertaining to ownership, location, and internationalization (OLI framework) (Ferdinand and Williams, 2013). The framework is used to determine if it is best for a firm to produce a product itself or contract the production to a third party (Hill, 1999).
The eclectic economics paradigm, internationalization theory, and the OLI framework all function from the assumption that most businesses will avoid transactions in the open market when internal transactions carry lower costs and/or increased economic gains (Clark et al., 1997; Dunning, 2000). While it may be unusual to apply manufacturing frameworks to the tourism industry, a service industry with experience-based products (e.g. music festivals), the research will demonstrate that confined economies must also determine if the production of a tourism event will generate positive economic gains and whether those gains may be achieved via open market or internal transactions thus qualifying the use of the OLI framework.
Design/methodology/approach
The Curaçao North Sea Jazz Festival (CNSJF) This is a longitudinal survey case study that includes a five-year assessment (2010-2014) for the CNSJF. Curaçao is a small island located in the Caribbean. Over the last decade, the tourism industry's growth has stagnated and its continued contribution to the wider economy has become a growing concern to Curaçao government officials. Therefore, activities that increase foreign exchange earnings through ownership, location, and internationalization (OLI) are desired opportunities to increase economic growth on the island. The CNSJF is considered one such opportunity.
The O-advantages are measured through income bearing activities such as total international tourist arrivals and the share of repeat attendees to the festival. The L-advantages are measured by the destination's production of the festival and the attendees' consumption of tourism related products so that tourists may attend the CNSJF. The attendees' length of stay and purpose of travel to Curaçao constitutes this measurement. The I-advantages are measured by inward and outward movements. Inward movements are analyzed through the backward economic linkages and indirect economic impact; whereas the outward movements are assessed through the forward economic linkages and direct economic impact.
An I-O Model was used to capture the internationalization benefits of the CNSJF for Curaçao. The I-O model was provided by the Curaçao Bureau of Statistics and consists of an 11x11 matrix based on the 2008 National Accounts. The foundational notation of the I-O model used follows Miller and Blair (1985 p. 102) and is expressed as X = (I – A)-1 Y. Where Y represents the final demand; A is a square matrix defining the relations of production; and (I-A)-1 is the Leontief inverse matrix. The I-O model provides multipliers that may be used as the first step to quantify the effects of demand change that may influence the internationalization benefits for a destination.
The Leontief multipliers are the first set of multipliers and reveal backward linkages within the economy that reflect partial economic activities (i.e., purchases from one sector to that of others) and the potential for inward internationalization movement. The backward linkage multiplier follows Cai et al., (2006) and will be denoted as BL and is given by BLi = 1+e'(I – Ajj)-1 Aji, where 1 represents the initial unit output change in industry i, while e is a sub vector that aggregates the elements of ∆Xj. In order to compare the BLs across industries a BL index is referenced. The corresponding BL index is calculated by dividing the Leontief multiplier by the average multiplier for all industries and is expressed as BLi / ∑k BLk /k.
Because the Leontief multipliers are grounded on demand pull considerations they are not able to capture the forward linkages (FLs). Therefore, the study also applied the Ghosh model to calculate the FLs as a form of the potential outward movement of internationalization. The FLs are the economic transactions that occur between the vendors and the CNSJF attendees. As suggested by Cai et al., (2006) the Ghosh forward multiplier was used and is given by FLi = 1+Bij (I – Bjj)-1 e. The corresponding FL index is calculated by dividing the Ghosh multipler by the average Ghosh multipler and is expressed as FLi / ∑k FLk /k.
These multipliers and indices will measure the absolute and relative strength of the BLs and FLs vis-à-vis other industries.
Findings
A total of 1,940 CNSJF attendees completed the participant intercept survey from 2010-2014. The study found that the CNSJF sufficed the three main comparative advantage factors observed within the eclectic economics paradigm. The O-advantages captured a relative position of the potential internationalization benefits for the destination, the L-advantages conferred Curacao's internationalization strength by examining the consumption, duration, and the longitudinal vitality of repeat CNSJF attendees to the island.
Traditionally, I-advantages are recognized when the product is consumed on a global scale. Curaçao's I-advantages from the CNSJF come through the global distribution and consumption of the destination's offerings via international arrivals and foreign exchange earnings. Overall, the outward movement provided an initial I-advantage for Curaçao, but the inward movement I-advantage was a result of the dynamics between the sectors and the island's use of linkages. Both movements demonstrated a positive economic gain for the island.
Research limitations/implications
The study reveals two main limitations. The OLI Framework and the I-O technique are static in nature. Therefore, it is difficult to detect the dynamic evolution of the music festival as well how that evolution impacts the destination. In addition, the economic impact of the CNSJF stems from the specific configuration of the political and social factors present in Curaçao.
Practical implications
When considering that Curaçao is a confined economy, the prospective ability for Curaçao to render the benefits of I-advantages involves sustaining the O and L-advantages. It is important to note that in order for a destination to capture the I-advantages, the O and L-advantages must be sustained and functional in order to initiate an outward movement that would then trigger the consequential positive inward movement. Thus, it seems imperative that the destination management organization efficiently craft complementary products that allow for the cohesive function of the OLI-advantages.
Originality/value
A primary contribution of this study is the objective measurement of the OLI Framework. Traditionally, OLI-advantages are measured subjectively by managers' perceptions (Dunning, 2000). This study evaluates the actual performance of the OLI-advantages.
