Market structures, strategy and innovation in tourism sector

Abstract

Purpose – This study aims to add to the existing body of knowledge the link between market structures, strategy and innovation by applying the diagnostic test of the integrated model of innovation, and also present the results of an empirical study applied to tourism in a small open economy. The study uses an archetype and the market outcome resulting from the innovation strategies pursued to compare similarities and differences according to a firms’ geographical location to identify innovative patterns in tourism firms. Design/methodology/approach – The study applies a multivariate analysis using a data set consisting of survey responses from 158 Portuguese firms. Findings – The findings indicate links between service, market structures and innovation strategies considering geographical agglomeration of firms in a small economy, and also different innovation trajectories and positions in the model. Research limitations/implications – The results of this study are generalizable to a dynamic industry context of tourism firms operating in a small open economy, such as Portugal. Practical implications – The results suggest that managers need to attend to intangible resources, such as marketing and human resources and their links with innovation and performance, particularly in the case of service firms. Originality/value – The paper highlights the role of intangible resources, especially marketing and human resources, in tourism firms. Geographical location also influences the firm’s strategy and results.