Innovation diversity and uncertainty in small and medium sized tourism firms

Abstract

In increasingly uncertain and competitive markets, small tourism firms are often pressured to innovate across a diverse range of innovation types. Innovation diversity creates synergies in that capabilities developed for one type can enhance the outcomes of other types of innovation. This paper defines and examines innovation diversity, and its relationship with small and medium enterprise (SME) performance. It then considers the role of uncertainty and dependence on tourism markets in this relationship. The paper is original in that it first finds that innovation diversity mitigates the negative effect of uncertainty on performance, and second that this relationship is especially strong in more tourism-dependent SMEs. Whereas most research on tourism innovation relies on cross-sectional data, this paper is methodologically novel in using longitudinal data collected from 358 SMEs over a period of 18 months.