A research note on geographical isolation and tourism productivity: Who suffers the most?

Abstract

This research note examines the relationship between geographical isolation and firm productivity in the tourism sector. Using a dataset of 50,496 unique Italian firms from 2013 to 2019, the findings reveal that geographical isolation negatively affects productivity, with the strongest impact on low-productivity firms lacking resources to counteract location-based disadvantages. In contrast, high-productivity firms demonstrate resilience by leveraging internal resources to mitigate these challenges. The study employs econometric approaches, including OLS, 2SLS, IV-LASSO, and IV quantile regression, to address endogeneity and capture the heterogeneous effect of geographical isolation. This research note highlights the asymmetric impact of geographical isolation on firm productivity, offering insights into an underexplored aspect of tourism firm productivity. The findings provide a foundation for future research and actionable implications for policymakers and managers.