Local government involvement in small tourism firms investment: The case of Phu Tho Province, Vietnam

Abstract

Small tourism firms in developing countries like Vietnam have proven to be a rapidly growing sector of regional tourism industries and this sector development is being promoted as a path for enhancing local economies. However, due to typical characteristics of tourism, it requires the government to play an active role in facilitating and promoting its development. The current literature is unclear regarding the relationship between small tourism firms and local government involvement. Hence, this study aims to determine the local government involvement in small firms’ investment, and reports an empirical test on 209 small tourism firms in Phu Tho province, Vietnam. The results support the general hypothesis that active government involvement, both managerial and developmental, is positively related to the investment intention of small tourism firms. The research demonstrates that policy and operation implementation along with public investment in generating local tourism demand of local government have the most robust effects on these firms’ investment decisions, among other factors.