INSTITUTIONAL GOVERNANCE AND BUSINESS TOURISM: AN EXPLORATORY APPROACH USING STRUCTURAL EQUATION MODELING

This study explores the effects of institutional quality on Business Tourism (BT) and its indirect influence on Leisure Tourism (LT), using an exploratory Structural Equation Modelling (SEM) approach. Drawing on 2019 data from 128 countries, six governance dimensions were analysed: Political Stability, Regulatory Quality, Government Effectiveness, Control of Corruption, Rule of Law, and Voice and Accountability. Regulatory Quality emerged as the most significant positive driver of BT, while Government Effectiveness directly influenced LT. BT also mediates the relationship between institutional quality and LT. Some unexpected findings include the negative effects of Political Stability and Voice and Accountability on BT, suggesting complex institutional dynamics that are context-dependent. The model accounts for 53.4% of the variance in BT and 74.2% in LT, with strong model fit indicators. The article concludes with theoretical and practical implications and offers methodological guidance for further research on institutional factors and tourism competitiveness.