Click Here to View the Executive Summary and Focus Groups
Click Here to View Perspectives of DMCs
Click Here to View Perspectives of Meeting Planners
Click Here to View Comparison of DMC and Meeting Planners Views

In This Section

4. Comparisons between DMCs and MPs 

4.1. Strengths 

4.2. Weaknesses 

4.3. Opportunities 

4.4. Threats 

5. The DMC-MP Relationship 

5.1. Social Exchange Theory 

5.2. Measurement of Variables 

5.3. Regression Analysis Results 

6. Conclusions & Suggestions 

6.1. Conclusions & Suggestions 

6.2. Limitations 

In this section, we aim to compare the mean ratings between the DMC and MP groups on the SWOT factors of DMCs by using a series of independent sample t-tests. Directly comparing the mean ratings of these two groups will provide valuable information about how DMCs are aware of their own business conditions vs. how their potential clients, competitors, and/or business partners—that is, MPs—view the same business conditions. While matching ratings are desirable, gaps between the two groups’ ratings will point to directions for DMCs’ future strategy planning. The survey questionnaires for each of the DMC and MP groups contained the SWOT factors that were comparable in meaning, albeit slightly different in wordings due to the group-specific statements. We compared the groups on each pair that we believed meant the same fact. 

4. Comparisons between DMCs and MPs

4.1. Strengths 

On all the 10 selected strengths of DMCs, the DMC professionals gave more positive, higher ratings than did MP professionals. The mean score differences across all strength factors were statistically significant beyond sampling errors. DMCs’ self-rating scores of their strengths ranged from 4.39 to 4.82, while MPs’ rating scores ranged from 3.74 to 4.55. The two groups had substantively different views on the same strength factor for DMCs (Figure 4.1). 

4.2. Weaknesses 

Of the eight weaknesses compared, DMCs disagreed more strongly than did MPs on two weaknesses: (1) their lack of creativity by relying on the same local vendors repeatedly and (2) many DMC services replaceable by MPs’ own work when dictated by budget situations. In contrast, DMCs agreed more strongly than did MPs on their two weaknesses: (1) the role and value of DMC services to MPs and MPs’ clients and (2) lack of collaboration among DMCs. The two groups’ ratings on the other four weakness factors were essentially identical in mean scores, even if there were minor differences within the range of sampling errors (Figure 4.2). 

4.3. Opportunities 

Both DMC and MP groups rated nine opportunities for the DMC business of which six were rated differently. Of these six differently rated opportunities, five resulted in stronger agreement from the DMC than MP group and they included: (1) need for more education about DMCs among clients, (2) more creative programs needed for DMCs to be more successful, (3) additional promotion such as demonstrations and presentations needed for DMCs, (4) online technology and social media for more use by DMCs, and (5) DMCs’ need for deep involvement in local legislative issues. One opportunity factor disagreed more strongly by the DMC than MP group was some DMC services being vulnerable to elimination. The other remaining three opportunities were rated equally agreeable by the two groups (Figure 4.3). 

4.4. Threats 

The eight threat factors also resulted in mixed evaluations between the two groups. The DMC group disagreed more strongly than did the MP group on three threat factors such as (1) some DMC services not needed for some events, (2) DMCs not being present in smaller cities, limiting collaborative opportunities with MPs, and (3) some DMCs struggling to survive. On the other hand, DMCs agreed more strongly than did MPs on the two threat factors such as (1) MPs being unethical to get info from DMCs and contact vendors directly and (2) MPs learning and performing some DMC services on their own. There was no significant difference in ratings between the two groups on the remaining three items; that is, the two groups agreed equality with (1) more hotels having in-house DMCs, (2) Internet providing destination information and trying to replace DMCs (Figure 4.4). 

5. The DMC-MP Relationship 

5.1. Social Exchange Theory 

In this section, we attempt to examine a mental mechanism underlying the strategic partnership or relationship between DMCs and MPs in application of social exchange theory (Homans, 19581). According to social exchange theory, people enter a relationship based on a rational calculation of the payoff resulting from comparing rewards to costs. People also determine whether they will continue staying in the relationship or not based on the ongoing outcome of the reward-cost comparison and their satisfaction. Thus, social exchange theory predicts that people will maintain a relationship as long as what they get is disproportionally larger than what they have to sacrifice. 

Applied to various business-to-business relationships in industry (Lambe, Wittmann, & Spekmann, 20012), social exchange theory can be useful in predicting the business partner’s commitment to as well as propensity to leave the relationship. For instance, we can predict whether an MP will continue committing to or leave the business relationship with a DMC by having a few variables as predictors in a social exchange theory model. Figure 5.1 depicts the conceptual model we constructed by incorporating a few widely supported variables such as trust, opportunistic behavior, communication, financial dependence, and social dependence. In the figure, the arrows indicate “prediction” or flow of influence, while the +/- signs mean the direction of prediction or influence. For example, the more the MP partner behaves opportunistically the less (-) the DMC partner will trust the MP. In the meantime, the more trust the DMC has in its MP partner, the more likely the DMC will commit to the business relationship with the MP in the future. 

 5.2. Measurement of Variables 

We measured each of the variables in the model in multiple question items to achieve a rich measurement and understanding. All measurement items were anchored in a 5-point scale with 1=strongly disagree, 2=disagree, 3=neutral, 4=agree, and 5=strongly agree, except for propensity to leave, relationship satisfaction, and substitutability. Table 5.1 displays the operationalized question items of each variable, their mean value and standard deviation, the reliability score alpha of the multi-item variables, and statistical test results comparing the DMC and MP group mean on each item. For example, we measured the partner’s opportunistic behavior with five question items; the mean values ranged from 2.80 to 3.25 for the DMC group and from 1.89 to 2.69 for the MP group. These five measurement items appeared to be highly reliable as shown in the alpha value of .90 for both the DMC and MP groups. The DMC group tended to agree with all five statements more strongly than did the MP group, beyond the margin of sampling errors, according to the t-test results. 

The five items measuring the partner’s communication performance were highly reliable as reflected in the alpha of .88 and .91 for the two groups. The mean values ranged from 3.21 to 3.85 for the DMC and from 3.19 to 3.82 for the MP group, respectively. The two groups’ mean values were not significantly different for two items measuring communications about (1) the partner’s expectations of the other partner’s performance and (2) potential business opportunities for the other partner. However, the MP gave a significantly high score than the DMC did on two items evaluating (1) the partner’s update on new developments in the business and (2) the partner’s frequency of discussion about business ideas for mutual benefits. In contrast, the DMC gave a higher score to the MP than did the MP to the DMC for providing performance feedback. 

The variable financial dependence had four measurement items achieving an acceptable level of reliability at .73 for the DMC and .78 for the MP group. Their means ranged from 3.64 to 3.93 for the DMC and from 3.37 to 3.69 for the MP group. While both groups scored equally on financial dependence built upon frequent business transactions, the DMC group rated its relationship with its major MP partner more financially motivated than did the MP group. That is, the DMC group reported to have had significantly stronger financial motivations than the MP group for the business partnership. 

Measure also with four question items, the social dependence scale achieved an acceptable reliability level with an alpha value of .67 for the DMC and .78 for the MP group. The mean values ranged from 2.70 to 3.68 for the DMC and from 2.60 to 3.84 for the MP group. The differences in the mean scores between the two partner groups were not substantively different across all four items concerning the relationship (1) built on personal networking and acquaintance, (2) relying on exchanging a favor to each other, (3) based on shared feelings about the business, and (4) embracing close friendship between the partners. 

The five-item scale measuring one partner’s trust in the other was highly reliable, with an alpha of .96 and .95 for the DMC and MP groups, respectively. The DMC group rated the MP partner’s trustworthiness in the mean score range of 4.02 to 4.10, while the MP group trusted the DMC partner in the score range of 4.30 to 4.40. The mean difference was substantive across all five trust measurement items; the MP group tended to trust the DMC partner significantly more than the other way around. 

We measured each partner’s commitment to the relationship with four items and this relationship commitment scale was highly reliable (alpha = .93 for the DMC and .90 for the MP group). The DMC group’s relationship commitment ranged from 4.07 to 4.33, while the MP group ranged from 3.46 to 4.19. The two groups did not 

show a significant difference in their current commitment to the existing business partnership. However, the DMC group exhibited a significantly stronger commitment to investing further in the relationship than did the MP group. 

Each partner’s propensity to leave the business relationship was operationalized into three items measuring the partner’s intent to terminate the relationship within the next (1) six months, (2) one year, and (3) two years. We asked both groups to rate the likelihood of terminating the relationship by using a 5-point scale ranged from 1=very low to 5=very high. This three-item scale achieved high scale reliability in both groups (alpha = .95 and .94). The mean scores were low overall ranging from 1.57 to 1.95 for the DMC and from 1.62 to 1.68 for the MP group. Both groups did not show any significant difference across the three item mean scores. 

Relationship satisfaction with the business partner was measured with three items operationalized into (1) 1=very dissatisfactory...5=very satisfactory, (2) 1=terrible…5=delightful, and (3) 1=of no value…5=of very high value. This three-item scale resulted in high reliability in both the DMC (alpha=.92) and MP group (alpha=.88). The mean scores ranged from 3.86 to 3.99 for the DMC and from 4.28 to 4.36 for the MP group. The MP group’s mean scores were consistently higher than the DMC’s across all three items. 

Finally, we asked each partner as to how difficult or easy it was to replace—hence partner substitutability—the current major business partner by using a 5-point scale with 1=very difficult…5=very easy. On this scale, the DMC group scored 2.50 while the MP group scored 2.98. The DMC group found it significantly more difficult to replace the current major MP partner than the MP group found it to replace its current major DMC partner. 

 5.3. Regression Analysis Results 

We analyzed the DMC-MP relationship model shown in Figure 5.1 from each partner group’s perspective. Our statistical analyses relied on a series of regression methods for computations of the relationship strengths shown in the model. These analyses were based on the aggregated sum score of each variable, as supported by the generally high levels of measurement reliability earlier. Table 5.2 summarizes the results of the model for the DMC group. First, the MP partner’s opportunistic behavior, engagement in communication activities, and mutual financial dependence are significant determinants of the DMC’s relationship trust. The MP partner’s opportunistic behavior is a much stronger, negative determinant of the DMC’s trust than is either communication or financial dependence both of which are positive contributors to the DMC’s trust in the business partner. Social dependence between the two partners did not contribute to mutual trust substantively. 

Second, the DMC’s trust in its MP partner was a significant determinant of its commitment to the business relationship. However, trust in the partner did not affect the DMC’s intention to terminate the business relationship. Perhaps there are other reasons causing the DMC to leave its business relationship with MPs. 

The relationship model based on social exchange theory predicts about 49% of variance in the DMC’s trust in the MP partner through the DMC’s perceptions of the MP’s opportunistic behavior, communication, and financial dependence. The model also determines about 34% of variance in the DMC’s relationship commitment through trust perceptions and 19% in its intention to terminate the relationship through, again, trust perceptions alone. Of course, the model’s power to predict the DMC’s intention to leave the relationship is not substantive enough to consider. 

Table 5.3 provides summary statistics of the regression analyses for the MP group about the business relationship model in Figure 5.1. Consistent with the DMC group results above, opportunistic behavior, communication, and financial dependence are significant determinants of the MP’s trust in the DMC partner. Of these, opportunistic behavior is the strongest determinant of the trust; that is, the DMC partner’s opportunistic behavior undermines (due to the negative sign) the MP’s trust in the partnership more strongly than communication and financial 

dependence between the two partners can contribute. In contrast, social dependence between the two partners has no substantive role in building mutual trust. 

Trust in the DMC partner is a significant determinant of the MP’s commitment to as well as propensity to leave the business relationship. Apparently, the stronger the MP’s trust in the DMC partner is, the stronger the MP is committed to the relationship. At the same time, the MP’s trust in the partner tends to deter the MP’s likelihood to terminate the relationship. Hence, building trust in the business relationship brings about positive outcomes to sustain the relationship. 

The model has a medium range of predictive power. It accounts for about 38% of variance in trust, 47% in relationship commitment, and 41% in propensity to leave. More specifically, the DMC’s opportunistic behavior, communication, and financial dependence with the MP partner determined 38% of its trust in the partner, while its trust alone determined 47% and 41% of its commitment to and propensity to leave the relationship, respectively


6. Conclusions & Suggestions 

6.1. Conclusions & Suggestions 

 One of our overarching goals of this project was to identify current issues and concerns of DMCs from both their own and their clients’ perspectives with a particular focus on the changing dynamics of market competition due to advancing technology. Our DMC focus group suggests several general issues for the DMC business such as the economic climate and slow recovery, escalating competition due to increasing technology applications, a balance between creative program deliveries and standardizing services through growing DMC consortiums, and need for client education about DMC services. Our MP focus group observes additionally that DMCs tend to have small planning teams, that MP clients do not understand the role of DMCs in event planning, and that MPs generally appreciate the contributions DMCs make. 

Key competitors identified include the Internet (e.g., search engines), local CBVs, MPs, other DMCs, and local vendors such as hotels having in-house DMCs and transportation companies providing similar services. Depending upon how DMCs approach, technologies such as websites and social media can bring new business opportunities for DMCs but, at the same time, they also can shrink the role of DMCs in the future as clients can have ready access to a variety of information they need. 

Both DMC and MP professionals have somewhat different views on the SWOT of DMCs. DMCs appear to be optimistic and confident about their ability to provide high quality events based on their expertise and bargaining power in the local market. While MPs generally endorsed such self-confidence of DMCs, they do not necessarily share the view to the same extent DMCs see themselves. DMCs need to examine carefully the differential views provided by MPs as their client, potential business partner, and fierce competitor. We described detailed comparison results along with necessary, minimum statistical tests in this report. We hope DMCs will study what we report here as part of their strategic thinking for the future of their business. 

We attempted to explain how the business partnership between DMCs and MPs is created and maintained over time by relying on the widely adopted theory of social exchange. Mutual trust appears to play an important role in inducing the partner’s commitment to the relationship and, at the same time, reducing the partner’s intent to terminate the relationship. Such trust seems to be built on reduction in opportunistic behavior by the partner, frequent quality communications, and mutual financial dependence. However, social dependence between the partners does not seem to contribute to mutual trust in this particular DMC-MP relationship, which was against our expectation. 

Based on the findings of our study, we suggest the following to DMCs: 

  • Continue building a strong niche around local expertise through the reputation and network with local vendors. 
  • Proactively take advantage of available new technologies to provide more convenient services to MPs. 
  • Differentiate services through creative program development and satisfaction guarantee programs. 
  • Build stronger site inspection and risk management services for MPs. 
  • Develop programs to easily persuade the clients of MPs about the role of DMCs and their necessity. 
  • Differentiate in quality what MPs can perform without needing DMCs’ services. 
  • Work with larger DMC consortiums to create more business opportunities, but without jeopardizing the unique, customizable programs DMCs can deliver based on their local expertise and flexibility. 
  • Develop promotional programs such as office presentations and demos to raise the visibility and awareness of DMC services in general and to MPs and their clients in particular. 
  • Conduct frequent self-assessments and assessments of the client’s perspectives to close the gap in understanding about DMCs’ role and value. 
  • Create a strong, positive brand image of DMC services that will reduce the low visibility problem as well as convince more clients for additional businesses. 
6.2. Limitations 

While we attempted to gather data for more generalizable results, we caution that readers need to consider some limitations of our study when interpreting our findings. First, our findings are based on relatively small samples for both focus groups and national surveys. Second, we could not identify why both DMC and MP study participants provided significantly different views on a variety of DMCs’ SWOT factors even if they listed similar factors. Third, we are unable to assess how representative our samples of DMCs and MPs were as we did not have a clear understanding of the respective populations. Another limitation could be the relatively low response rates around 10%, although the surveys were highly demanding for these busy professionals. Despite these potential limitations, our study is the first of its kinds examining closely the current status of the DMC business and opportunities and directions it should pursue in the future. 

Click Here to View the Executive Summary and Focus Groups
Click Here to View Perspectives of DMCs
Click Here to View Perspectives of Meeting Planners
Click Here to View Comparison of DMC and Meeting Planners Views

Footnotes

  1. Homans, G. C. (1958). Social behavior as exchange. American journal of sociology, 63(6), 597-606. 
  2. Lambe, C. J., Wittmann, C. M., & Spekman, R. E. (2001). Social exchange theory and research on business-to-business relational exchange. Journal of Business-to-Business Marketing, 8(3), 1-36.