Potential drivers of innovation in the MSMEs in hospitality industry in Istria

Purpose – The importance of innovation in the micro, small and medium-sized enterprises (MSMEs), despite today’s turbulent business environment, continues to be undervalued. Tourism and hospitality industry are among the most important economic drivers worldwide but still approaches to hospitality industry innovation are in an early phase of research development. Because of their ability of providing differentiated products and services, innovative hotels and rural vacation houses are more successful than their non-innovative competitors. Therefore, hospitality industry should develop new innovative offer. To date, potential drivers of innovation in the MSMEs in Istria destination have not been systematically investigated and have not considered the needs of MSMEs. This paper is aimed to span this gap. Design/methodology/approach – By integrating cognition from up to date conducted researches as well as adding some new potential drivers, the author proposed set of 16 potential drivers of innovation in the MSMEs in hospitality industry, which is believed to be more suitable. A quantitative survey was carried out in Istria MSMEs. Findings – The research results show five main groups of potential drivers of innovation in the MSMe in hospitality industry and the best rated in Istria hospitality industry such as owners/management and employee engagement; and information technology. Potential drivers within the group of innovation network should be improved by owners/managers. It is essential to emphasize more activity and connections between the academic community and entrepreneurs, as well as between stakeholders and entrepreneurs in tourist destination. Originality – This study is the first to provide potential drivers of innovation in MSMEs in hospitality industry in Istria. It gives information which should help owners/managers in developing new tourist product. In addition to practical implications, the study has academic contributions to the existing literature of innovation activities in hospitality industry which is presently an under-researched area. Keywords potential drivers of innovation, innovation activities, contribution of external factor, MSMEs, hospitality industry, Istria destination