Effects of perceived threat of informal entrepreneurs in improving operational performance and customer bonding of formalised firms through service quality

Underpinned by resource-based and disruptive innovation theories, this study examines the effects of informal players’ perceived threat on the formalized tour operators’ operational performance and customer bonding. The study involved a sample size of 130, collected from the inbound tour operators in Zanzibar. Using partial least squares (PLS-SEM) to analyze the data, our study found that the perceived threat of informal players is positively associated with service quality, which is linked to increased operational performance. Equally, operating performance was found to have a direct positive impact on customer bonding. While perceived threat directly enhances operational performance, customer bonding is only enhanced through service quality. Finally, the study advances the literature on tourism by providing theoretical and practical implications and recommending future studies.