Academic journal article Asian Social Science

Does Service Innovation Act as a Mediator in Differentiation Strategy and Organizational Performance Nexus? an Empirical Study

Academic journal article Asian Social Science

Does Service Innovation Act as a Mediator in Differentiation Strategy and Organizational Performance Nexus? an Empirical Study

Article excerpt

Abstract

The study determines how service innovation impacts differentiation strategy and the impact on organizational performance. The target population of this research was 475 hotels, which are three to five star hotels in Malaysia. Due to the small population and the nature of the research, questionnaires were sent by mail and email to all the targeted three to five star hotels' managers. Regression was used to analyse the relationship of differentiation strategy, service innovation and organizational performance. The result shows that differentiation strategy has a significant effect on organizational performance and service innovation has a significant effect on organizational performance. Remarkably, this study found that service innovation partially mediates the relationship of differentiation strategy and organizational performance. This study found that hoteliers that pursuing a differentiation strategy should simultaneously employ service innovation to attain better organizational performance. Thus, this study contributes a significant knowledge to the Malaysia hotel industry. This study fills in some of the gap and showing the significance of differentiation strategy and service innovation in the hotel industry which has received little empirical attention in current strategic management literatures. It also offers some practical contributions to the development of service innovation in relation to differentiation strategy and organizational performance.

Keywords: differentiation strategy, service innovation, organizational performance, Malaysia hotel industry

1. Introduction

Existing latest advanced technologies and shifting market environment made efficient strategic implementation as a fundamental requirement for every organization (Kaliappen & Hilman, 2013; Wang, Chen & Chen, 2012; Olsen & Connolly, 2000). Specifically, the growing of the hotel industry has seen rivalry progressively increase and guests become gradually classy (Wang et al., 2012). To strive, hotels need an efficient strategic implementation that could transform overall strategic direction to encounter the requirements of the changing marketplace (Okumus, 2003). Hotels in the hunt for developing their performance cannot merely depend on the effectiveness of business strategy, but need to create an operative functional strategy that could well integrate to produce better outcomes. So, this study emphasises differentiation strategy as a business strategy in competing against rivals in the industry. Besides differentiation strategy, hoteliers today cannot escape from service innovation that assists to make enrichment to uphold the existing market and acquire new business. Indeed, equally differentiation strategy and service innovation are linked to the outcome of organizations. It has already been established that the differentiation strategy and service innovation could improve organizational performance (Hilman, 2009; Grawe, Chen & Daugherty, 2009; Allen & Helms, 2006; Frohwein & Hansjurgens, 2005). Many studies also have shown that effective differentiation strategy and service innovation will lead to create competitive advantage and becoming crucial for service organizations in fulfilling the customers' requirements. But, prior studies did not look at the link between differentiation strategy, service innovation and performance of hotels in Malaysia. This paper tried to fill that gap by conceptualizing service innovation as a mediator in the differentiation strategy and performance relationship.

Thus, the present study incorporated differentiation strategy and service innovation for improving organizational performance. Therefore, this study developed two objectives; (1) to observe the relationship of differentiation strategy and organizational performance and (2) to examine the impact of service innovation in mediating the association of differentiation strategy and organizational performance. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.