Repairing Innovation Defectiveness In Tourism

Tourism Management 23 (2002) 465–474

Repairing innovation defectiveness in tourism Anne-Mette Hjalager Advance/1, Science Park, Gustav Wiedsvej 10, 8000 Aarhus C, Denmark Received 26 October 2001; accepted 24 December 2001

Abstract Over the past couple of years, the term ‘‘innovation’’ has increasingly been used to describe the development behaviour of tourism enterprises, destinations and the tourism sector. This article discusses various definitions. Examples of major changes in the tourism sector are given within the framework of a model that distinguishes between regular, niche, revolutionary, architectural innovations. It is stated that the tourism industry per se is not as crucial for innovations as the supplying and regulating sectors. Accordingly, policies aiming at innovation in tourism should not uniformly focus on the industry itself, but take into account the driving forces of other business sectors and the public sector. r 2002 Elsevier Science Ltd. All rights reserved. Keywords: Innovation; Driving forces; Knowledge; Transfer processes; Policies

1. Introduction

2. Some basic definitions

Over the past couple of years, the term ‘‘innovation’’ has increasingly been used to describe the behaviour of tourism enterprises, destinations, and the tourism sector. However, this increasing use has frequently failed to take into account the fact that innovation is actually a core issue in a research tradition that has gained its own respect in social science. Notwithstanding, classical innovation theories have much to offer tourism research. This paper will outline some of the most common concepts and illustrate the potential for tourism research. The paper, which starts by reviewing some mainstream research approaches in the field of innovation studies, is divided into the following sections:

Schumpeter (1939) distinguishes between inventions and innovations. Inventions are connected with basic scientific or technological research, and the term is used to define genuine breakthroughs. Inventions are not aimed at specific industrial use. Innovations, on the other hand, are further developments of inventions, or just bright general ideas for making them into useful products. Thus, innovation is a rather pragmatic term that can also include minor adaptations of existing products and services. This broad definition of innovation is useful if we want to use the term to describe what goes on in tourism. A typology of innovations provides a good guide for research and practice. This one is also inspired by the early works of Schumpeter, but has been adapted to reflect the modern reality of a service sector (Hjalager, 1994). Innovations can take place in one or a combination of the following five categories: Product innovations consist of changed or entirely new services or products which are developed to the stage of commercialisation, and whose novelty should be evident to either producers, consumers, suppliers or competitors. Examples of new tourism products developed in recent years are: Loyalty programmes, environmentally sustainable accommodation facilities, and events based on local traditions.

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Some basic definitions. Examples of innovations in tourism—the Abernathy and Clark approach. How and where is the knowledge crucial to innovation created? Structural preconditions for innovation in tourism. People as repositories of knowledge. The transfer process. Innovation policies—applicable in tourism?

E-mail address: [email protected] (A.-M. Hjalager).

0261-5177/02/$ - see front matter r 2002 Elsevier Science Ltd. All rights reserved. PII: S 0 2 6 1 - 5 1 7 7 ( 0 2 ) 0 0 0 1 3 - 4

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Process innovations tend to raise the performance of existing operations by means of new or improved technology, or by redesigns of the entire production line, e.g. as a result of process re-engineering. Process innovations can be combined with or result in subsequent product innovations. Recent examples of major process innovations in tourism are: Computerised management and monitoring systems, robots for cleaning and maintenance, and self-service devices. Management innovations consist of new job profiles, collaborative structures, authority systems, etc., often in combination with the introduction of new products, services and production technologies. Management innovations can result in staff empowerment through job enrichment, decentralisation, training, etc., or in deskilling enforced by the (re)introduction of scientific management methods. Logistics innovations include a recomposition of external commercial liaisons. This can affect the position of an individual enterprise in the value chain. Flows handled could be materials, transactions, information and customers. Recent logistics innovations in tourism include: Vertical linkages in the food and restaurant industries, integrated destination information systems, CRS systems and Internet marketing, and enhancement of airport hub systems. Institutional innovations go beyond the individual enterprise, representing collaborative and regulatory structures in small or larger communities. Institutional innovations transect public and private sectors, and set out new rules of the game. Examples, with implications for tourism, include: reform of the financial incentives that restructure social or health tourism concepts; destination management systems and units that control access to vulnerable areas; and the setting up or change of credit institutions and changes in the conditions for obtaining finance. On the whole, enterprises are basically conservative; if they are not challenged or threatened they will tend to stick to usual procedures. Innovation research operates with two different motivators that enforce or speed up changes at the enterprise level, namely push and pull mechanisms. Push factors are new technologies and appropriated methods that offer more efficient solutions to the production process, or make the product more attractive to the customer. Pull factors are reflected in the demand from individual customers or (pressure) groups of customers. Both factors operate at the same time, and it is useful to distinguish carefully between them, particularly in the definition of policy initiatives.

Clark (1985) developed a model that also applied to other sectors. The model’s horizontal axis indicates whether specific innovations make existing business linkages obsolete, or whether they lead to an entrenchment of existing linkages between enterprises. The vertical axis indicates the knowledge and competences used for the production of products or services. In some cases, old ideas and qualifications become outdated and need to be replaced, while in other cases adaptation and further development of existing structures are more relevant (Fig. 1). The model illustrates four types of innovations: Regular, niche, revolutionary and architectural. Each has a different constellation of consequences in terms of knowledge and collaborative structures. Architectural innovations are the most wide-ranging, illustrated by the first T-Model Ford, which influenced the concepts of road infrastructure as well as political economy and industrial relations traditions. Accordingly, architectural innovations imply changes not only in the industry, but also in the society in which it will be used. The least radical are regular, incremental innovations, but whose impact over a period of time can become quite considerable. Examples of regular innovations in tourism include: *

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*

*

*

Niche innovations tend to challenge collaborative structures, but not basic competences and knowledge. With regard to innovation in tourism, researchers and practitioners most often focus on opportunities in this category. Examples include: *

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3. Examples of innovations in tourism—the Abernathy and Clark approach *

In their explanation of the establishment and development of the automobile industry, Abernathy and

New investments in larger structures, e.g. bigger hotels with more comprehensive facilities. Removing structural bottlenecks through changes in technology or time-scheduling procedures. Internal training of personnel, resulting in enhanced or speedier service, or enabling additional advantages to be offered to customers. Upgrading quality standards in well-defined ways, e.g. from a two- to a three-star classification. Approaches to new markets with the same methods and products.

New categories of company could be invited to enter the tourist sector or destination as a supplement to existing companies, e.g. a franchiser not previously represented or a foreign investor. Suppliers of other complementary products could be convinced that tourism is a market for them, e.g. certain types of retailers or providers of health services. Establishment of marketing alliances, e.g. with specialised tour operators in order to access new customer groups. New combinations of existing products. There are many types of activity, e.g. theme co-ordinating calendars, signboarding, event-making, etc.

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Conserve/entrench existing competence

Regular innovations

Niche innovations

Promoting new investments that raise productivity

Promote the entry of new entrepreneurs to exploit business opportunities

Training proprietors and staff to operate more efficiently

Conserve/ entrench existing linkages

Incremental raise of quality and standards

Encourage firms to enter new marketing alliances Combine existing products in new ways

Revolutionary innovations

Architectural innovations

Diffusion of new technology to the business firms

Creating new events and attractions that demand a reorganisation

Introducing new methods that shift composition of staff Attachment to the same markets but with new methods

Disrupt existing/ Creating new linkages

Redefining the physical or legal infrastructure Creating centres of excellence that treat and disseminate knew operational research based knowledge

Disrupt/ make obsolete existing competence

Fig. 1. The Abernathy and Clark model—a tourism perspective.

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Activating small-scale tourism resources, e.g. in connection with agriculture.

While revolutionary innovations keep external structures unchanged, they have a radical effect on competences. A whole sector can, for example, be affected by an aggregate shift in required skills and competences over a longer period of time. At the enterprise or destination level, revolutionary innovations can have the following outcomes: *

*

Diffusion of new technology in enterprises, so that staff either stop doing what they used to do or do it in other ways. An extreme case is the combined development of kitchen equipment and the supply of pre-cooked items, which removes cooking skills from restaurants. Electronic marketing and sales is different from distributing brochures and pamphlets, but the customers and suppliers may well be the same.

Architectural innovations tend to change overall structures, and establish new rules that remodel the concept of tourism: *

*

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Exploitation of a new resource, e.g. Arctic tourism, where the building of ice hotels and attractions requires new designers, builders, equipment, marketers, etc. Redefining infrastructure, e.g. in response to environmental regulation. A ban on new tourism facilities along the coast demands a redefinition of the economic potential in other places. Creation of other ways of accessing knowledge in centres of excellence.

The Abernathy and Clark model provides a framework for a clearer understanding of the nature of particular and well-defined innovations. But the model can be blamed for being too static and descriptive. For example, an enhancement of the Internet might be a

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major factor in all quadrants of the figure. Over the next decades, the effects of the Internet might even be aggregated to become a truly architectural innovation, as the Ford-T turned out to be over a similar period of time.

4. How and where is the knowledge crucial to innovation created? Over the years, the linkages between academic research and the business sector have received much attention in innovation research. A basic assumption is that knowledge is created in academia and subsequently transferred to enterprises for further development. In the main, studies of the utilisation of R&D are concerned with science and technology (Adler, 1989; Archibugi & Pianta, 1996; Freeman, Sharp, & Walter, 1991). North American and European studies focus mainly on patenting and business exploitation of patents. This approach has the advantage of providing non-discussable and uniform criteria for success: the more patents obtained by a country or industry, the better. The patent system encourages innovators to protect their discoveries and the system has advantages for the promotion of formal relations between universities and business. However, the strong emphasis on the patent instrument draws attention away from the many ideas and concepts that will never be formally protected by patents. It is very likely that the service sector, including tourism, is the locus for many more unprotectable innovations than, for example, the manufacturing sector. Innovation researchers have long been preoccupied by the fact that so little of the renewal in ‘‘real life’’ is reflected in the patenting system or in other formal registrations of R&D activities. Social scientists interested in the development of the service sector share this frustration. To help overcome what might be referred to as an insight gap, new types of studies are being carried out in the form of systematic and comparative European and OECD surveys (Cohen, 1995; OECD, 1992). The close connection between academia and the business sector are seriously questioned in the surveys, which find that co-operation between formal R&D and enterprises account for very little, and that contacts to customers and suppliers are far more important for the innovation process in enterprises. If we adhere to the assumption that research results produced by academia and research institutions are important to the business sector, it becomes essential to consider how, and in what form, knowledge is disseminated to enterprises for further development. To what extent is knowledge actually disseminated? Through which channels and how fast? And how is that utilisation influenced by the novelty value of the

information, the time factor, bias, and the receiving capacities of the enterprise? There are many questions to be answered, many of which are particularly crucial for the tourist sector, as discussed below. Rogers (1983) points out that if the receiver of knowledge regards the information as new, then it is new, no matter what. Rogers also directs attention to obstacles to the fruitful dissemination of knowledge. Social, cultural or institutional barriers can prevent messages reaching their target. Very often, new knowledge is transferred via university and vocational teaching, and it will be future generations of staff who carry out practical innovations based on what they learned in the classroom. Direct co-operation between researchers and enterprises is another possibility for dissemination, though this might of benefit only a minority of the business sector. The factor ‘time’ constitutes two different types of barriers. First, knowledge has to be acquired, elaborated, implemented and confirmed before it can be fully utilised. Second, it is obvious that not all enterprises are equally good at receiving and utilising information; some are inquisitive early adopters, while others, at a later stage, copy their colleagues; finally, the conservatives accept new ideas only when they are inevitable. With regard to the capacity to absorb new information, the size of the enterprise, the competence profile of employees and managers, the internal division of labour and working routines are of major importance for the adaptation and dissemination of knowledge (Marengo, 1996). The nature of production is decisive for the connection between academia and enterprise. Producers of standardised products have fewer contacts, while the acquisition of knowledge from research institutions is higher in the case of enterprises that supply products or services to order or in small series (Dosi, 1988). With regard to industrial policy, politicians at all levels acknowledge the need to remove all likely barriers to the dissemination of research results. Thus, there is an increased attention to institutional factors, as dissemination is not merely a technical matter but is also heavily dependent on social relations and social systems. The success of the micro-electronic industry in Silicon Valley is an excellent example of how formal and informal institutions facilitate the dissemination of knowledge and subsequent innovative activities of enterprises. Saxenian (1991) and Scott (1993) have identified the following preconditions. First, co-operation contracts between universities and enterprises are widespread. Second, spin-offs from universities often take place. Third, there is an open labour market between enterprises and universities; qualified personnel often change jobs and duplicate their ideas and knowledge in new environments. Fourth, development is

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boosted by strategic public investments that permit enterprises to perform better than they thought possible. Fifth, during the growth phase, geographical proximity is a complementary advantage (Frenkel & Shefer, 1997). Some innovation researchers (Lundvall, 1993; Nelson, 1993) use the term ‘‘national innovation systems’’ to emphasise the presence of permanent cultural ties, and claim that stable regulations and a certain institutional inertia are essential to a flourishing innovation climate. More recent innovation studies, particularly those concerned with high-tech, tend to distance themselves from the regional and national context observing that the dissemination of knowledge is a global phenomenon and that universities and research institutions do not necessarily and exclusively comply with national innovation policies and priorities. Much innovation research focuses on the role of universities’ research capacity (Pavitt, 1993), while other studies look elsewhere for an explanation. Ouchi (1984), for example, in a study of Japanese co-operative structures, finds that the Ministry of Industry was a crucial agent for the innovative progress of Japanese industry in the late twentieth century. Studies of industrial districts in Italy, Germany, Denmark, etc., show that trade organisations, local service centres and vocational training institutions play important roles for innovative behaviour in small and medium-sized enterprises. In addition, some firms that co-ordinate demand and supply take an initiating role in ideas and inspiration, particularly when operating in business environments characterised by trust (Maskell et al., 1998; Pyke, Becattiniog, & Sengenberger, 1990). These studies show that, while university research might be important for the development of business success, its impact should not be overestimated. This section has provided a brief review of important concepts and results of research over the past couple of decades in the fields of innovation and knowledge transfer. However, there is no particular emphasis on tourism in mainstream innovation research. In the next section the findings and concepts of innovation research, with the reference to tourism, will be exercised.

5. Structural and behavioural preconditions for innovation in tourism In some important respects, tourism differs from the types of businesses usually targeted for the dissemination of research-based knowledge. In the following, we will look at the more important features and try to determine whether the word ‘‘innovation’’ is appropriate in this particular economic sector.

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Studies in many countries demonstrate very clearly that the tourism sector is dominated by micro and small enterprises, and that most of them are owned and operated by a single person or family. According to R&D studies, innovation capacity is–not surprisingly– closely and positively correlated with the size of enterprise (Rogers, 1983; Dosi, 1988). Although SMEs can be highly adaptive to external pressures and potentials, R&D results must usually be of a practical nature if they are to be applied in this type of firm. One exception to this observation is where SMEs are units in chains and franchises. Constellations in collaborative structures can help SMEs overcome some of the innovation handicap, since the chain or franchise head office will be responsible for the screening and processing of vast amounts of information into something that member enterprises can use. In fact, changes are taking place in ownership structures partly as a response to the need to be constantly updated. Over the past few decades, increasing numbers of tourist enterprises have become connected through ownership to other similar enterprises (Johnson & Slattery, 1993). Franchising and less formal networking arrangements are also booming, but there are few indications as to how, and to what extent, proprietors join these organisations. Head offices, franchising organisations and network service centres will (indirectly) increase the managerial and professional capacities of the totality of enterprises connected to these structures. These capacities are of major importance in relation to innovation, since daily operations otherwise tend to be the first priority. Some commentators (Moutinho, 1990) seem to regret that the independence and family character of the individual tourism enterprise is withering away. However, given that it results from continual innovation, this is a development that could be seen in a more positive light. Large tourism enterprises are more likely to be portrayed in the trade literature for their innovative behaviour than their smaller colleagues. This is only reasonable since they are generally much faster to implement new ideas, thereby creating a competitive advantage for themselves. Smaller enterprises tend to follow only after they have assured themselves that the investments or changes are feasible. By its very nature, the tourist sector makes it easy for enterprises to observe what others are doing, unless it takes place behind the scenes. Industrial espionage is inevitable, and ideas can seldom be fully protected by patent laws or other mechanisms. Proprietors who want to be market leaders are therefore obliged to innovate constantly, and they have to expect any advantages they gain to be quickly eroded. The jealousies in the tourism trade are often said to be the result of SMEs’ free-riding on the investments, ideas and successes of others.

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There is little mutual trust among enterprises in tourism, who often see each other as competitors, not colleagues. The example of Silicon Valley, where the pool of knowledge and labour is a common repository for development, is rare in the tourism sector. Not even the fact that many destinations are heavily dependent on tourism, and that enterprises could not survive without each other’s presence, limits jealousies. Due to freeriding, collaboration is, therefore, mostly the result of intermediation by other organisations, e.g. tourist offices/boards, where activities are undertaken at ‘‘arms-length’’ from the individual proprietors. This offsets some of the potentials of knowledge transfer, of course. The tourist product comprises services from several segments of suppliers: accommodation, transport, catering, entertainment, etc. Other types of operations are equally important to the provision of tourist services (not least public activities such as protection of and access to nature parks), infrastructure, cultural institutions and events. Such types of facilities are far more likely to cultivate relations to R&D institutions than the primary tourist enterprise, and they benefit more easily from the products of academia. We will elaborate on this indirect infusion of knowledge into the destinations in a later section of this paper. The last structural and behavioural factor we will look at in this article is the survival of enterprises. There is little evidence to show whether new enterprises or newly acquired enterprises are more innovative and change-oriented than old enterprises or enterprises that have existed for a long time under the same proprietor. In tourism, a new owner often makes considerable investments in the enterprise, both in terms of money and energy. However, turbulence is very high. In Denmark, 25 percent of enterprises change owners every year. While high volatility is not necessarily bad for innovative activity, it compromises consolidation of change. Moreover, when ownership changes quickly, the establishment of trust-based collaborative relations in destinations and/or with academia will be hampered. The structural and behavioural issues discussed in this section are well known, and apply to tourism in great many countries. If we filter the characteristics in the innovation literature, we will come closer to answering the question of why innovation is rare—or nonexistent—in tourism. A number of preconditions that facilitate innovation are simply not present in this industry. However, it might be claimed that tourism is in high need of innovation, and that an effort must be made to promote them. The next section presents an alternative view of channels for disseminating research-based knowledge to the tourism sector which reflects the structural and behavioural shortcomings of the sector.

6. People as repositories of knowledge Knowledge can be incorporated in technology, infrastructure, standards, routines, methods, etc. When a firm buys new equipment, it already includes major or minor innovations (Reddy, 2000). The introduction of new technology will make some changes and innovations necessary in the purchasing firm. This idea of codification is contrary to the mainstream assumption that innovation is entirely a human undertaking, and that transfer of knowledge requires at least two persons to be successful. We have to recognise that both codification and human transfer of knowledge takes place simultaneously, and that in tourism the former is probably very important due to the shortage of human resources. The existence of people as repositories of in tourism can be questioned for a number of reasons. First, in most European countries, staff at all levels in tourist enterprises receives little or no industry-relevant training. A majority of workers in tourism have no training beyond primary school level (Richards, 2001). Compared with the total size of the sector, universities and vocational training institutions supply only a small number of graduates every year. It is, therefore, unlikely that even quite drastic increases in the number of trained personnel in tourist enterprise would result in a sufficient transfer of innovative knowledge. Researchbased training for tourism is not exactly a hot issue, and only a marginal proportion of staff have ever received high level training. Second, labour turnover in tourism exceeds that in most other sectors of the economy. Due to seasonal fluctuations, large numbers of personnel are usually engaged on short-term contracts (Hjalager, 1999a). The industry attracts young people who work for a short period of time, e.g. before going on to university, etc. Increasingly, tourism enterprises—particularly in northern Europe—rely almost entirely on highly flexible students on part-time contracts. The turbulence of the sector is worsened by low salaries and non-standard working conditions. Third, while there are, to some extent, dedicated careers systems in the international hospitality business, a career in the traditional sense is not widespread in tourism. Moreover, entrepreneurs come from many— and often irrelevant—sectors, attracted more by the idea of pursuing a certain lifestyle than adhering to traditional career issues of prestige, money and progress (Weiermair, 1993). Management theories about the learning organisation (e.g. Pfeffer, 1994) claim that all employees are crucial for the knowledge base of a firm, and that everybody without exception must contribute to the innovation process. However, this is quite difficult to practice in most segments of tourism, as staff turnover hampers the possibilities for the human-based transfer and

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development of knowledge. Staffs who already have other plans for their working life than a career in tourism are unlikely to have adequate motivation to contribute to development processes in the firm. In most countries, tourism is run by a very small core workforce in managerial positions and a very large and unprofessional peripheral group of employees. Tracer studies show that, even among managers, retention in the industry is quite low (Lucas, 1995). In fact, it could be claimed that highly mobile qualified staff facilitates innovation and the transfer of knowledge. But this is only the case if the reception capacities for new ideas are favourable (Levitt & March, 1996). In many enterprises in tourism, particularly the smallest ones, this is not always the case.

7. The transfer process In the previous sections, arguments and evidence are provided to show that there are serious obstacles to innovation processes and knowledge transfer in tourism

compared with other sectors of the economy. However, this does not mean that tourism ignores new ideas or that tourist enterprises do not continually integrate results of research in their operations. But due to the structural and behavioural features of the industry, the transfer of knowledge has to be seen in a broader context. If we want to identify the push and pull mechanisms correctly, the institutional frameworks that constitute important channels of knowledge transfer also have to be considered. In the following, it is argued that complicated and non-focused research results have to be ‘‘distilled’’, ‘‘codified’’, and ‘‘modulated’’ before they flow into tourism to become part of practical operations. The tourist industry is not itself involved in this stage of the innovation process; other organisations are thus responsible for research, and their activities facilitate the subsequent innovation processes in the individual tourism enterprise. Fig. 2 illustrates four different channels for knowledge transfer: the trade, the technological service, the infrastructural and the regulation systems.

The trade system: Market surveys Best practice Certification Standards IT system Etc,

The technological system Equipment and techn. Semi-manufacturing Outsourcing

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The tourist business

The infrastructural system Natural and cultural attractions Traffic, transport

The regulation system Safety control Economic control Environmental systems Labour regulations Etc

Fig. 2. Knowledge transfer channels to the tourism business.

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7.1. The trade system In most countries, the trade system consists of a number of trade associations, employers’ organisations and unions. Sometimes, the organisations are divided into subsections, confederations, task forces, specialist centres, etc. (Selin, 1993). Research results of relevance to the tourist industry are filtered through all these types of organisations, and selected issues will be disseminated in the trade press, at meetings and conferences, and used in advisory services, etc. Some trade organisations, possibly in competition or co-operation with academic researchers, carry out surveys and studies of various kinds, which is helped by easy access to the industry. The division of labour in tourism is deepening, and this process also influences the trade system. Over the past few decades, the scale and scope of trade services has grown and developed. For example, the emphasis on environmental issues has resulted in a mushrooming of associations geared to undertake certification and labelling tasks, which in many countries have become the key intermediaries for the dissemination of environmental management practices. This means that these organisations must collect and process knowledge and incorporate it in standards and methods. Trade associations can, of course, also communicate directly with research institutions in order to acquire new knowledge of relevance to the industry. Some trade associations are destination-based, and many have departments in major tourism locations. However, a structural centralisation, even globalisation, is taking place (Pearce, 1992). As business, research and development are becoming more global, so are trade associations obliged to create transnational structures, albeit often after a certain time lag. An efficient linking of the national trade systems to international research resources can be of importance for even the smallest tourism provider in the most remote location (Reddy, 2000). 7.2. The technological system Not all knowledge is explicit. As previously mentioned, the tourist sector increasingly utilises knowledge embodied in technology (Evangelista, 1999). When acquired in this form, the technology can fully or partly compensate for the lack of a capacity to screen the environment for innovation resources. In addition, technology reduces the need to rely on human resources and competences. The restaurant sector is a good example of the impact of technology on innovation capacities. The massive development in pre-cooked food and semi-manufactured products have given restaurants a much higher operational flexibility. Basically, there is no longer the same dependency on vocational cooking skills, and

innovative chefs are in less demand. These competences are instead ‘‘imported’’ from the food suppliers, e.g. from segments of the economy that not normally regarded as part of the core tourism sector (Hjalager, 1999b). Some food suppliers are closely connected to producers of technology and equipment, e.g. in the field of sous vite processing. They offer comprehensive turn-key operational concepts to the tourism industry. Potentially, the interdependencies between the tourism sector and its far more research-intensive suppliers are increased. Raw materials and equipment go hand in hand, but managerial systems can also be incorporated, e.g. calculation or timekeeping tools. The suppliers reflect standard deficiencies in many tourism SMEs, and without the technology systems, it is unlikely that the tourism sector could remain profitable. The consequences, for better or worse, are that tourism will increasingly become a destination-based delivery system. Production will then be outsourced to other (in this respect), more professional bodies, possibly with urban locations close to the world’s most efficient research capacities. Critics may deplore this as a ‘‘brain drain’’ from core tourism activities, and not without reason. 7.3. The infrastructural system To a very great extent, tourism is based on ‘‘free goods’’: natural resources, cultural attractions, townscapes, traffic systems, etc. While organisations that represent these resources might choose to consider themselves as part of the tourism system, they are both something else and something more than that. An important point is that administrators of free goods, usually public authorities, are in a much better position to acquire and utilise research results than the individual tourism enterprise. Public authorities have more stable incomes and opportunities for economies of scale, and their personnel is generally better educated than is the case in tourism. There have been many innovations in the infrastructural system. For example, museums keenly pursue new ideas, and they rely on research in their interpretation. Copenhagen City Bicycles is part of the creation of a sustainable transport systems for citizens and tourists. Scientific discoveries can influence how natural park are managed, and there are many more examples. However, the impact of infrastructural systems on innovation in tourism is still poorly understood. 7.4. The regulation system Regulation in the form of mandatory actions, prohibitions and punishments give clear behavioural signals to the industry. But often regulations also contain a substantial bulk of knowledge, which is

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rapidly diffused to potential users, whether they like it or not. For example, if the authorities require higher hygienic standards, this will necessitate an immediate learning process in the enterprises concerned. Hotel fires and shipwrecks lead to a rapid increase in knowledge on safety methods and an equally rapid dissemination of information to relevant enterprises. For example, an industry response to raids by the tax authorities against tax exemption or illegal work could be the upgrading of financial management systems. Knowledge that feeds into regulations comes from many places. In the case of food hygiene, for example, academic bacteriological research is of major importance. But specification into rules and practical instructions is often undertaken by ministry departments, agencies or specialist laboratories. Although systems of this kind are not often regarded as part of the tourism innovation system, they might play a major, albeit far from recognised, role for the renewal and updating of tourist facilities. Most regulations are motivated by safety, health or justice. But it is clear that economic or technical regulations can indirectly be used to provoke structural development. So far, however, tourism research has dealt insufficiently with the impact of regulation on survival of enterprises, speed of innovation and professionalisation in the trade.

8. Innovation policies—some concluding remarks The previous sections have discussed innovation in tourism within various conceptual frameworks, all more or less well known in mainstream innovation research. It is no small challenge to see this particular sector through the eyes of a research tradition most often used to analyse biotechnology, automobiles, and pharmaceuticals. It is very clear that industry structure, development dynamics, heterogeneity and human resource capacities differ considerably. Since the determinants are to be found outside the core tourism sector, innovations in tourism must therefore be seen in a wider economic context. Much of the emphasis in innovation research is on policy aspects (Archibugi, Howells, & Michie, 1999). What instruments should be used to promote the speed of innovation, and what public incentives could change the intensity and direction, if necessary? The same questions are relevant in the case of tourism. Society at large has a genuine interest in upgrading what is regarded as a financially struggling industry with lowquality services to a professional and respected stakeholder in economic life. However, while the policy questions are the same, the answers are different. Efficient innovation policies for tourism are not likely to include R&D subsidies,

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measures to promote university-business collaboration, technology scouts, and the like. The ideology behind the EU’s Fifth Framework Programme does not apply all that well to the realities in tourism. Only large corporations or groups of enterprises flanked by auxiliary bodies are likely to respond. Patents are not feasible in tourism, but much could be gained by enforcing licensing and certification. On the human side, it can hardly be expected that research-based training will create major direct impacts in the industry. Evidence shows that the brightest brains disappear too soon to make a real impact (Iverson & Deery, 1997). This does not mean that managerial and research based training is irrelevant. Bright brains of importance for innovation is tourism are just not employed in the tourism industry, but elsewhere. It is important to acknowledge that the transfer of knowledge to tourism takes place through a range of filters, and that these filters are highly important for a successful implementation of innovation in tourism. Innovation policies should therefore either target or specifically include the trade system, the technology system, the infrastructural system and the regulation system, possibly in collaboration with the primary tourism operators. Strategic public procurement (Edquist & Hommen, 2000) has only been marginally used to promote innovation in tourism, and the regulation has a far more shady reputation than it deserves (Hjalager, 1998). No architectural or niche innovations are likely to take place without some push or pull from these external systems. Eventually, it must also be recognised that innovative capacities are significantly higher in the larger tourist enterprises and in enterprises connected to chains and other horizontal collaborations. These firms are role models for all those small entrepreneurs who are still— and will be for many years to come—the main providers of tourism services. For the purpose of future policy-making, the insight into the dynamics of innovations in tourism is much too scanty. Many nations and destinations recognise innovations, but they want to see changes taking place with higher speed. However patterns of enterprises’ response to external stimuli are not well-mapped. Based on studies of innovation in the service sector, Barras (1986) concluded that enterprises tend to invest quite rapidly in new technology, but only eventually, if at all, they will discover the more subtle, but important potentials for product innovations, changes in organisation etc. There will be considerable time lapses before a full effect of a technology push can be reached. The idea of a technology push is included in a programme launched by the New Zealand Foundation for Research, Science and Technology, under the title: ‘‘Building business capabilities within New Zealand tourism

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industry SME’s trough the adoption of information technology and e-business solutions’’. It is even more difficult to predict the dynamic reactions to stimuli that come out of the institutional, infrastructural and trade systems. It is a task for researchers to track back the impacts on innovation in the tourism enterprises. What did a particular piece of legislation do to tourism, for example an enforcement of hygiene requirements in restaurants, or standards of access for the disabled? Or to what extend and with what results did tourism enterprises participate in R&D programmes with other industries? Or how did a newly designed interactive RTO web-site affect the organisation of marketing in the individual enterprise? For this purpose researchers will have to be sensitive to the fact that the institutional, infrastructural and trade system are possibly even more dynamic that the tourism sector per se.

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