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Prospects For Innovation In Tourism

K. Weiermair
Published 2006 · Economics

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SUMMARY The tourism product is a composite one with its production, distribution and marketing being configured along a value chain involving many activities which are vertically, horizontally and diagonally related and integrated in varying degrees. Both orthodox and non-orthodox economists agree that innovations will only be undertaken when there is a sufficiently high innovation dividend which pays for the added cost and risk of innovation. Thus profitability appears to be the strongest explanatory variable both behind investment and innovation. Based on the notion that expected profitability from innovation can serve as the primary independent variable determining innovation behaviour across different economic sectors and/or sub branches of tourism, the paper sets out to establish the innovation potential for each of the tourism value creating economic activities from the provision of information to prospective customers (tourists) in the sending region to post-trip (after sale) services. In addition to the usual profit-generating forces of costs and revenues, such dimensions as firm size and economics of scale, proximity to relevant science and technology (know-how for innovation) through human capital and forms of organisation (e.g., network-organisation and/or clusters) will equally be taken into consideration. This analysis will therefore help in pinpointing those areas of the tourism value chain where innovations are most likely to occur. The paper concludes with the presentation of a model aimed at empirically testing innovation behaviour across the tourism value chain.
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