Abstract:
Purpose – While acknowledging the importance of innovation capability and its potential for creating
competitive advantage for firms, the purpose of this paper is to further explain how firms can gain the most
from this potential. In the face of the low success rate of innovations and innovation activities in the
hospitality sector, this study explains – through the dynamic capability perspective – that building a flexible
organization is instrumental in creating competitive advantage out of innovation capabilities.
Design/methodology/approach – The study uses data from hospitality firms operating in an emerging
economy with a fast-growing hospitality sector. As this study uses survey and statistical methods, the
possibility of common method bias is addressed by partial least squares structural equation modeling to test
the hypothesized relationships.
Findings – The study finds that organizational flexibility (OF) is an important mediator in the relationship
between innovation capabilities and competitive advantage. The study explains that building a flexible
organization is instrumental in creating competitive advantage out of innovation capabilities in hospitality
firms.
Originality/value – This study suggests that relying only on innovation capability offers hospitality firms
just a fraction of what would be gained if such capabilities are properly aligned with OF. This is because such
alignment generates better response power to changing needs as the firm becomes more mobile, responsive
and agile to rapidly identify market trends, adjust internal operations and respond quickly to new market
demand.