PARTNERS AS SUPPLIERS FOR INNOVATION: THE DEVELOPMENT OF NEW SERVICES BY AMERICAN DESTINATION MARKETING ORGANIZATIONS

Abstract

Extant literature identified the value of innovative firm behavior for organizational success for manufacturers and service providers (Christensen, 1998; Damanpour, 1991; de Brentani, 1993; Easingwood, 1986; Schumpeter, 1939; Senge, 1994). Increasing complexity of consumer markets, information technologies and an economic environment that forces organizations to rethink their business strategies are especially characteristic for service providers, making the development of new services an essential, but also risky task. A series of organizational conditions, such as a formalized new products/service development process, managerial support for innovation and a culture that encourages innovation were identified as critical for the successful development of innovations. Little research, however, has been done to understand the role of partners for the development of new service, and in particular to evaluate which aspects of new service development benefit the most from partner involvement. To understand the link between organizational settings for innovation and inter-organizational relationships in the new service development process, this study incorporates three areas of research: innovation, supply chain management and inter-organizational relationships. This study was framed within tourism destinations, especially destination marketing organizations (DMOs). They are responsible to market and develop a destination and, due to their role as information intermediaries, their need to collaborate with destination businesses to deliver a seamless tourism experience. This study consists of two major phases. First, a national study among the population of American DMOs was conducted to identify the extent of innovation, the drivers of partner integration in new service development as well as their impact on new services. Second, the value of organizational innovation settings on partnership integration was identified. Study results provide insight into the current status of innovation development and partner integration in the new service development process. The results also indicate that the nature of DMOs was changing from pure marketing organizations to management organizations that actively participate in destination development through innovation. In this study innovation was measured by three core elements: orientation towards demand, strategic and corporate fit as well as newness. DMOs do collaborate with partners to develop new tourism products and services. Partner integration was driven by top management support, as well as a strategic and long-term perspective towards partnerships. Furthermore, partner integration was found to have a positive effect on the strategic and corporate fit as well as market orientation. Lastly, DMOs that organize for the development of new services were found to achieve a more positive effect on innovation. This study concluded that organizations strategically need to engage in inter-organizational relationships with the goal to incorporate partners in the new service development process. Furthermore, organizational strategies towards innovation are critical as they enable the organization to achieve better results. Partnerships, thus, are critical for innovation, whereby innovation can be programmed given that it is supported through organizational settings.