Limited take-up of ecocertification by tourism firms: a goldilocks effect?

Abstract

Using club theory, Mzembe et al. (2020) examined why tourism operators adopt or abandon ecocertification. Their results resolve a longstanding paradox in tourism ecocertification, whereby programs persist despite low take-up amongst potential members. The mechanism is that programs start by signing up high-performing enterprises, creating an attractive club, but to sign up additional members they then lower entry standards, opening membership to poorly performing enterprises. This makes the certification club less exclusive, and dilutes benefits. In addition, if only few tourist clients rely on ecocertificates, it creates intra-club rivalry for benefits. Therefore, early-joining, high-performing members leave, creating member turnover and keeping overall take-up low. This is an example of a Goldilocks effect, a couplet of mechanisms that jointly prevent a parameter taking very large or very small values, or render the parameter observable only within a certain range. This effect applies only for private third-party ecocertification programs that rely on member fees to remain in business. It may not apply to programs operated by government agencies, or by private entities with government monopolies. It applies for ecocertification, where financial rewards of membership are limited; but not necessarily for luxury labels, which can sustain high price premiums.