A Predicting Performance Through Strategy and Innovation in Small Hotel Industry

Abstract

Despite having a great advantage of potential natural resources and cultural resources, the Kelantan small hotels industry is still perceived to have great potentials to be developed as par as other states in Malaysia. The small hotel industry performance is generally linked to the selection of strategy and innovation type they used. Therefore, this study aims to explore the current practice of strategies and innovations among small hotels in Kota Bharu, Malaysia. The data was collected through questionnaires and employed SmartPLS3 to analyze data. Findings of this study suggest that a cost leadership strategy and differentiation strategy are significantly relating to incremental and vitality of innovation. However, the blue ocean strategy is not found to be significantly related to innovation and the perceived performance of the small hotels. Besides, radical innovation is also found not mediating the relationship between the blue ocean strategy and perceived performance. In contrast, small but active incremental innovation relates to the productivity of the small’s hotel. The study contributes to the present pool of knowledge about the impact of competitive strategy that matches with the type of innovation practices that affect the performance of small hotel business in the country.