The Impact of Creativity and Innovation in the Hospitality Industry on Customers

Abstract

Introduction Innovation--as an expression of human creativity and lateral thinking--is not result of economic development, but rather source of sustainable economic and social progress (Collins & Fahy, 2011). Baden-Fuller and Stopford (1994, cited by Matthyssens et al., 2006) even indicate innovation as the path to sustain competitive advantage and to rejuvenate mature businesses. However, research in what concerns innovation and creativity in services is still in its beginnings (Sipe & Testa, 2009). This is due to fact that, for several decades, both economists as well as policy makers underestimated importance of innovation in services (Decelle, 2004) as these were considered less intensive in capital and therefore less open to new technologies (Gallouj & Savona, 2008). At time being however, economists and researchers alike accept and acknowledge fact that innovation, generally defined as generation, acceptance and implementation of new ideas, processes, products and services (Kanter, cited by Hall and Williams, 2008), is equally present in as well as in service sector. The hospitality makes no exception. In current economic context, hotels and restaurants alike generate, disseminate and use innovation in order to gain or maintain long-term competitive advantage. In fact, as this article seeks to demonstrate, innovation may act as a determinant of both purchase decisions as well as customer satisfaction, playing a highly significant role in distribution of market share and profits. Theoretical considerations on innovation in business environment Over course of modern history, innovation has proved fundamental for formal organizations. In past decades, as market competition intensified and business environment grew in complexity and uncertainty, innovation became essential not only to an organization's performance, as several studies have demonstrated, but to its very existence and survival (Han, Kim & Srivastava, 1998). Similarly, a company that fails to innovate and remains blocked in industry recipes will eventually lose its competitive advantage (Charitou & Markides, 2003; Sull, 1999, cited by Mattyssens et al., 2006). Thus, innovation may occur either at market level (new-to-market) or at organization level (new-to-firm). According to its scale and impact. Moreover, innovation develops differently in service organizations as compared to production firms. In service firms, distinction between product and process innovation is less relevant, as outputs themselves take form of processes (Mansury & Lov, 2008). The sources of innovation are numerous and greatly depend on economic sector in which an enterprise operates. Nevertheless, regardless of sector organizations operate in, innovation remains an evolutionary process based on (Johannessen et al., 1999). According to Muller and Zenker (2001), necessary for innovation can be either generated within organization (for example, through RandD) or acquired from organization's external environment--from partners, competitors, suppliers, and customers. Although it is possible for innovation to occur in one specific organization, it is frequently associated with interaction between several economic operators. Small and medium firms in particular rarely dispose of resources necessary for generating innovation and thus innovate in co-operation with other firms, creating synergies and sharing competencies (Muller & Zenker, 2001). Thus, innovation implies interaction between various entities working together in production, diffusion and use of new and economically useful knowledge (Lundvall, 1992). Many innovations are technological, as they develop based on technological knowledge. Such innovations are nowadays common not only in capital-intensive industries, such as engineering, manufacturing or mining, but also in service sector, where they generally take form of software, such as computer applications and data bases. …