The Effect of Entrepreneurial Orientation, Service Innovation on Firm Performance: A Perspective of Star Rating Hotel in Sarawak

Abstract

The hotel industry is characterized as a human-intensive service provider, therefore, innovation, particularly service innovation, does not generally depend on technological and scientific contributions. Most often, innovation in this industry is derived from human interaction that often leads to little adjustments or continuous improvement to meet potential customer expectations and to satisfy the current customers. Although several recent studies have begun to address this issue, an understanding of service innovation in low-technology and service industries, particularly hotel firms, is less understood. This research builds on the resource-based view (RBV) of the firm to examine the effects of entrepreneurial orientation on service innovation and service innovation on hotel performance. Utilising a quantitative approach, 73 hotel operators were taken as the sample of this study. A non-probability sampling of purposive sampling was used in this study whereby only hotels that have a star rating from one to five stars were chosen and included in the sample based on the list of registered hotels provided by Sarawak Ministry of Culture, Arts and Tourism Malaysia. The findings of the study found that there is a positive relationship between entrepreneurial orientation, service innovation and performance. This study makes a considerable contribution to the existing literatures on entrepreneurial orientation, service innovation, particularly in regards to explaining the performance of hotel industry in Sarawak.