Institutional Dynamics and Sustainability in Maldivian Guesthouse Tourism: Extending the Triple Bottom Line Framework

Abstract

Small-island tourism presents unique sustainability challenges due to limited resources, environmental fragility, and dependence on regulatory frameworks. This study investigates the drivers of guesthouse sustainability in the Maldives by extending the traditional Triple Bottom Line (TBL) framework to incorporate psychological and institutional factors. The research explores both direct and indirect effects of psychological and strategic, economic, social, and environmental dimensions on guesthouse sustainability, with institutional factors hypothesized as a key mediator. Data were collected through structured surveys of guesthouse operators and analyzed using Structural Equation Modeling (SEM) in AMOS 26.0 to validate the measurement model and test hypothesized relationships. Results reveal that psychological, economic, and social factors exert significant direct and indirect influences on sustainability, while environmental factors impact sustainability indirectly through institutional mediation. Institutional factors are confirmed as a critical channel, highlighting the importance of regulatory compliance, governance structures, and policy engagement in translating internal initiatives into tangible outcomes. This study advances theory by extending the TBL framework to integrate institutional mechanisms, offering a more comprehensive understanding of sustainability in small-island tourism. Practically, findings emphasize the importance of enhancing institutional support, building managerial capacity, aligning social and environmental practices with strategic objectives, and enhancing collaboration among policymakers, industry stakeholders, and local communities. Recommendations include the implementation of incentive programs, eco-certifications, internal sustainability policies, and linking environmental initiatives with regulatory frameworks. By examining the interplay between internal capabilities and external governance, the research provides actionable insights for promoting sustainable tourism development in small-island destinations.