Influences on and Effects of the Innovation Processes in the Hotel Industry - Literature Review 2008-2013 Nataša Artič University of Primorska, Ph.D. student at Faculty of Tourism Studies - Turistica natasa.k.artic@gmail.com Purpose - The purpose of this paper is to identify current research in the literature regarding different influences on and the effects of the innovation process in the hotel industry in the previous five years and to analyse data on the basics of research questions. Methods - The method applied in the paper applied is the "systematic literature review" of a limited time frame (the previous five years) in the field of innovation in the hospitality industry. Results - This paper improves knowledge of the influences and effects of innovation in the hotel industry in general (presentation in Figure 1); it presents the latest influences on and the effects of the innovation process from literature (presentation of literature review in the Table 1) and it gives particular attention to special approaches (such as open innovation) regarding upcoming trends in innovation activities in the hotel industry. Conclusion - A survey of different research examples of innovation processes in the hotel industry will show different approaches to innovation through different influences and effects. The findings add to the knowledge of hospitality innovation; supported with the effects, they show potential for the company's performance. The survey also provides information about open innovation to the hotel industry as a future trend in hotel innovation processes. Further research is needed regarding the development of open innovation in the hospitality industry, as the financial pressures in hotels increase and the search for an innovative and sustainable influences or effects on companies' performance will continue. The originality of this paper is in its systematic literature review of the previous five years. Keywords: innovation, open innovation, hotel industry, influence, effect Introduction In the twenty-first century, innovative cultures continue to advance over routinized cultures. The importance of innovation for the success of an individual, company, region, country, or a particular activity is continually increasing. The gap between prosperous countries that foster innovation and less successful countries where innovation is not being encouraged is obvious (Florida, 2005; Mulej, 2008). According to Pivcevic and Petric (2011), in recent years, the analysis of innovation in tourism has become an increasingly important issue in discussions regarding tourism policy and development; according to Hjalager (2010), it is helpful to understand its economic dynamics and, in this regards, several authors have studied different facets of hotel innovation: Jacob, Florido, and Aguiló (2010) exame ine environmental innovation as a competitive factor; Smerecnik, and Andersen (2010) examine the dissemination of environmental sustainability innovations in hotels and ski resorts; Fernandez, Cala, and Domecq (2011) identify critical external factors that influence innovation; Weng, Ha, Wang, and Tsai (2012) explore customer satisfaction in relation to service innovation and customer value; Krizaj, Brodnik, and Bukovec (2012) present a tool for measuring the newness and adoption of innovation in tourism firms; Mattsson and Orfila-Sintes (2012) explore the dynamics of hotel innovation and its impact on hotel performance; Nicolau and Santa-Maria (2013) analyse the effect of innovation on hotel market value; Tajeddini and Trueman (2012) investigate the link between corporate culture, indicators of innovative-ness and business performance in the hotel industry; Hashim, Murphy, Purchase, and O'Connor (2010) explore the relationship between hotel characteristics and Internet adoption; Huang and Chen (2010) examine effects of technological diversity and organizational slack on innovation performance; Chang, Gong and Shum (2011); Chen and Cheng (2012), and Martinez-Ros and Orfila-Sintes (2009) analyse innovation through human resource and customer relationship management practices; Chen (2011) examines relationships among service innovation culture, proactive personality, charged behaviour and innovation. According to Hertog, Gallouj, and Segers (2011), studies on innovation in the hospitality industry are mostly rooted in either innovation or entrepreneur-ship studies within hospitality and tourism or studies on innovation in services. The first of the two streams refers to an extant industry-specific literature, covering various aspects, levels of analysis and points of departures for analysing innovation in the hospitality and the related tourism industry. Most hotel managers realize that innovations, whether in service models or customer relation management, are the essence of success in modern hotel operations (Chen, 2011). However, the innovation process also influences the value of the hotels, as shown by research work of Tseng, Kuo, in Chou (2008), stating that "effective management of technical, organizational and human capital, accelerates innovation [in the] hotel company and also an innovative company outperforms other competitors in the industry". Searching with the term "innovation and hotels" on the Google search engine in June 2013 yielded 69,100,000 hits; there were 418,000 on Google Books and 123,000 on Google Scholar. Based on the increasing amount of information and data on this topic and its importance as a result of the development of innovation in the hotel industry, this paper was designed with the purpose of identifying the most current resources in the area of influence on and effect of innovation in the hotel industry in the past five years and, on the basis of the following criteria (research questions), to analyse data from previously published sources. The aim was to create a basis of the theoretical proposal of special approaches to the innovation processes in the hotel industry. Our central research question, therefore, discusses the significant influences on and the effects of innovation in the hotel industry, considered by literature in the last five years. Below, we have attempted to answer it through me-ta-analysis and research sub-questions. Methodology This paper is based on a database and literature review on the subject. The literature review provided information on the state of research, on scientific definitions of innovation in the hotel industry from a general perspective, and on special approaches to innovation in the hotel industry in particular. The methodology includes a combination of research methods with an emphasis on meta-analysis, which Kastrin (2008) describes as "a special form of statistical analysis by a very thorough protocol in which a systematic manner the results of mutually independent studies are combined" (p. 25). According to Kastrin (ibid.), meta-analysis refers to the statistical analysis of a large collection of independent observations for the purpose of integrating results. The benefits of meta-analysis include the more efficient exploitation of existing data from independent sources and contributions to more powerful domain knowledge. It may also serve as a support tool to generate new research hypothesis. In order to find an answer on our central research question, a variety of literature covering primary, secondary and tertiary sources was reviewed. Sourc-ing was done by inspecting the data obtained from online databases in the period between March and June 2013. The baseline survey was published in ear- ly 2013 by the authors Nicolau and Santa-Maria with the title: "The effect of innovation on hotel market value". As a fundamental research problem, we are interested in the major influences on and effects of innovation in the hotel industry, considered by literature in the last previous years. For the purposes of meta-analysis, we will attempt to answer the research problem through the following three sub-questions: 1. Who are the authors and which topics are explored in the field of the influences and effect of innovations in the last five years and the hotel industry? 2. What is the geographic area where the surveys on the influences on and the effects of innovation in the hotel industry were carried out? 3. What influence or effect could be identified as the basic special approach to innovation in the hotel industry? The research questions represent grading criteria on the basis of which the resources will be analysed. The selection of resources will be done on the basis of their ranking and analysis, which will include inductive and deductive methods, a method of analysis and synthesis, a descriptive method, and a method of compilation and comparison. The answers to the research problem are presented in the discussion. Limitations of this meta-anal-ysis are related to doubts that the data on some resources included in the selection can be compared directly, either according to the form or according to quality. Research and Discussion Business development in the twenty-first century is accompanied by globalization, economic recession and other continuous changes that require rapid adjustments of the business environment. One of the most important factors that affects economic strength is the ability to successfully manage innovation. According to Crossan and Apaydin (2010), two main dimensions of innovation can be recognized: innovation as a process and innovation as an outcome. However, in the Slovenian language, there are different terms for each dimension (we use the term "inoviranje" for a process and the term "inovacija" for the outcome of this process). According to Mention (2012), innovation as a process focuses on the drivers (motivation for innovation), sources (inputs for innovation) and location (where innovation happens) of innovation. Innovation as an outcome pertains to the type of innovation (product, process, organizational, marketing), the magnitude (incremental or radical) and the referent (firm, market, industry). According to Mention (2012), the performance of innovation has been defined as a multidimensional concept, encompassing financial and non-financial aspects. Our research is focused on latest theory developments on the different influences that affect the innovation process and the different effects of the innovation process in the hotel industry. Influences on Innovation Process in the Hotel Industry In this section, we present the main inputs or influences on the process of innovation in the hotel industry. A literature review was developed in thematical-ly linked sets, which are presented below on the basis of criteria from the general to the specific influence. Five General Influences on the Innovation Process in the Hotel Industry As the hotel industry is an important part of the tourism industry, so too is tourist activity deeply involved as an important co-creator of internationalization. According to Williams and Shaw (2010), internationalization has a fundamental influence or impact on the innovation process in the hotel industry. In their research, Williams and Shaw (2011) explore how the relationships between innovation and internationalization can be conceptualized, by stating that "innovation theories can provide insights into the driving forces, nature, and processes of internationalization, and internationalization is an essential dimension of tourism innovation, evident in terms of markets, knowledge transfer and production conditions" (p. 27). There are several ways in which internationalization constitutes innovation in tourism (and consequently also in the hotel industry). "One of the main axes is how firms innovate in respect of ownership of, and extraction of rent from, their assets, whether in material, brand, or intellec- tual property terms. In the internationalization processing, marketing, organization and institutional innovations may be more important than product innovations" (p. 30). Under the second general influence, we present current problems that are affecting the innovation process in general and which are applicable to the hotel industry. According to Nicolau and Santa-Maria (2013), in general terms, four problems still affect innovation management and its current practice: the human problem of managing attention; the process problem of managing ideas into profit; the structural problem of managing partial-whole relationships; and the strategic problem of institutional leadership. Further research is suggested, with the main question being what kind of influence hotel managers need so that the solutions for the abovementioned problems will result in successful firm performance. The third general influence on the innovation process is the influence of information and technology. In particular, information and communication technologies (ICT) can provide competitive advantages by improving a firm's knowledge of its own internal structures and of the environment in which it operates. Fernandez et al. (2011) in their study, therefore, identify and analyse the critical external factors that influence innovation and ICT investment in hotel businesses by evaluating the impact of hotel investment strategies. The methodological approach is an adaptation of the PESTEL model to the particular case of hotel management. This model identifies the factors (political, economic, social, environmental, technological and legal) that affect any given organization. The authors also apply Porter's "five forces model", which assesses the competitive environment in which firms act, taking into account the power of buyers, intermediaries, current and potential competitors and substitutive products. We also need to mention the effects of technological diversity, which were examined by Huang and Chen (2010) in their research on the effects of technological diversity and organizational slack on innovation performance. The results indicate that there is an inverse relationship between technological diversity and innovation performance. Moreover, the moderating role of organizational slack is recognized; absorbed slack positively moderates while unabsorbed slack negatively moder- ates the effect of technological diversity on innovation performance. The fourth general influence on the innovation process in the hotel industry is linked to company and market characteristics. For example, Martln-ez-Ros and Orfila-Sintes (2009) provide evidence for different innovation activities in the hotel industry. In particular, they explore the influence of a variety of firm and market characteristics on radical and incremental innovations. They consider the learning of new attributes (radical) and the addition of characteristics to existing attributes (incremental) to represent two different paces or degrees of managing the innovation process in this specific industry. Their main conclusion is that radical and incremental innovations appear to be interrelated. Furthermore, the primary determinants of innovation are the form of hotel management, the hotel market strategy, and the size and location of the hotel. The status of the firm is another characteristic; according to Schulz (2008), mergers and acquisitions are both instruments for growth and competitive advantage with regard to innovation. Therefore, they are fundamental to each firm's competitive strategy. Unfortunately, only few studies available focus on the interplay of these two instruments. Schulz's main conclusions state that generalizing principles cannot be supported with sufficient scientific rigor. However, in-depth studies of specific industries are called for, from both theoretical and empirical perspectives. We found a study older than five years, by Cassiman, Colombo, Garrone, and Veugelers (2005), which shows that dimensions, such as similar product markets, similar production technologies or similar science-based research, are necessary in order to assess the impact of a merger on innovation. Focusing only on organizational innovation, Mol and Birkinshaw (2009) find that their introduction is affected by contingent factors (size, geographical scope of the market). The level of education of the workforce and the variety of information sources to which the firm has access also influences the introduction of organizational innovations. Their findings indicate that such innovation coincides with higher future performance, in the form of productivity growth. The fifth general influence on the innovation process in the hotel industry is the influence of hu- man resource management (HRM) and customer relationship management (CRM). There is a variety of studies showing that HRM influences the innovation process. In their study, Chang, Gong and Shum (2011) investigate how hospitality companies can promote incremental and radical innovation through human resource management practices (i.e., selection and training). Their data show that hiring multi-skilled core customer-contact employees and training core customer-contact employees for multiple skills have both significant and positive influences on incremental and radical innovation among hotel and restaurant companies. The two human resource management practices were also found to have a negative joint impact on incremental but not radical innovation. To date, there has been relatively little substantive research focusing on these issues. Hu, Horng and Sun (2009) present how knowledge-sharing and team culture have been found to have a significant influence on service innovation performance. The main overall practical implication that can be drawn from the findings of the survey is that to achieve high service innovation performance, organizations first need to develop knowledge-sharing behaviours as well as better team cultures. Interactions of Various Factors that Influence the Innovation Process in the Hotel Industry Not only do different aspects influence the innovation process, the may also affect each other. Measuring innovation seems to be an important issue, given that there is a large amount of literature about this topic. Several authors (e.g. Schulz, 2008; Hu et al., 2009; Mol & Birkinshaw, 2009; Huang & Chen, 2010; Williams & Shaw, 2010, 2011; Chang et al., 2011; Her-tog et al., 2011; Fernandez et al, 2011, Nicolau & Santa-Maria, 2013) discuss and analyse different influences on the innovation process. Martinez-Ros and Orfila-Sintes (2009) extensively measure and analyse innovation in the hotel industry; for example, the determinants of incremental and radical innovations and how the two affect each other. To identify the processes that ensure excellent service and innovative performance, Chen's (2011) research work examines the relationships among service innovation culture, proactive personality, charged behaviour and innovation. His work contributes to the service innovation literature by demonstrating that environmental forces outweigh individual forces in shaping innovation behaviours. The growing competition arising from burgeoning global markets exacerbates the demand for hotels to innovate their services and processes in order to continuously ensure success. Furthermore, tourists are increasingly seen as active participants in the co-production of innovation in tourism. This leads to our theory of the new influence on innovation in the hotel industry that can be addressed as a special approach. Williams and Shaw (2011) claim that tourists often act as pioneers, signalling opportunities for tourism businesses. They are sources of knowledge, and there is a need to understand both how this differs from "domestic" tourists and how businesses can harvest and apply this knowledge to innovation. Joint efforts towards human, structural and relational capital development lead to higher overall levels of innovation and performance, including in non-knowledge-intensive businesses, such as the lodging sector (Tseng et al., 2008). Different influences can be related to each other differently, and the result of their action is reflected in the effect of the innovation process. Below, the most common effects (from literature) of the innovation process in the hotel industry are presented. The Main Effects of the Innovation Process on the Hotel Industry In this section of the paper, we would like to present the main outputs or effects of the innovation process on the hotel industry. The introduction to the chapter discusses the importance of measurement of effects in the innovation process. The paper of Hertog et al. (2011) illustrates that the level of innovation in this service industry is much higher and more varied than regularly reported. It further indicates that innovation activities in so-called low-tech industries can be put into practice with less formalized forms of (service) innovation management. Finally, it shows that higher innovation intensity is associated with better firm performance. Based on this, some implications for managing innovation in the hotel industry are discussed in their paper and some fundamental issues in the measurement of service innovation are raised. They see the need for more specific innovation measurements in the hospitality and other service industries, and they make some suggestions regarding measuring service innovation in the hospitality industry. If service innovations are to be taken seriously by innovation researchers, policy-makers and statisticians in the near future, greater sensitivity to the particular characteristics of service innovation is needed. We need to map, measure and analyse service innovation in greater detail and subsequently translate these into an enlightened innovation policy and innovation management practices, following the synthesis approach. Notwithstanding the need to define the measurement of the innovation process, three main effects will be further identified, encompassing financial and non-financial aspects and taking into account the fact that all effects lead to higher firm performance. The first is the direct impact on business performance, followed by the effects of the development of HRM and CRM, while the third effect is the effect of sustainability, which contains economic point of view and leads to the positive business performance. Direct Effects of the Innovation Process in the Hotel Industry on Firm Performance While researchers have explored the relationship between customer orientation, entrepreneurship and innovativeness with business performance in different organizations, few such studies exist on the hotel industry. Tajeddini (2010) investigates the potential influences of these variables on hotel industry performance. The findings simultaneously provide some new insights by exploring customer orientation and innovativeness and reveal how these factors impact the performance of the hotel industry. In the article of Ordanini and Parasuraman (2011), the authors invoke insights from the emerging service-dominant logic perspective and propose a conceptual framework for investigating the antecedents and consequences of service innovation. They test their proposed model using data from a sample of luxury hotels and find that collaborating with customers fosters innovation volume but not radi-calness; a firm's customer orientation (both directly and in interaction with an innovative orientation) contributes to innovation radicalness; collaborating with contact employees enhances both innovation volume and radicalness; the use of knowledge integration mechanisms contributes to innovation rad- icalness (but not volume); and innovation outcomes have significant but somewhat different effects on the two performance measures. According to Nicolau and Santa-Maria (2013), the assessment of innovation on firm performance has generally been carried out through accounting measures that rely on figures that appear in the company's balance sheet and income statement. Aldo Orfi-la-Sintes and Mattsson (2009) measure performance through average occupancy rate and attempt to explain it by employing historical data on innovation (specifically, an aggregated measure of innovation over the previous three years). These authors attempt to identify the determinant factors that lead hotels to choose from four different types of innovations (service scope, back-office, management and external communication), and find that additional services on offer, bookings made through tour operators, hotels being part of a hotel chain and hotel ownership are explanatory factors of the types of innovation decisions. Additionally, they study the impact of innovation on performance. In this analysis, they test the effect of the aforementioned types of innovation on the average hotel occupancy rate, finding that greater performance is achieved by hotels with a network of business relationships with both tour operators and chains, and whose ownership is in total control of outlays and new services. In general terms, they find (as expected) a positive impact of innovation on performance. On the basis of an earlier developed model of innovation types, Mattsson and Orfila-Sintes (2012) investigate the effect on performance of different types of innovation and find that two combinations of innovation types impact hotel performance in a positive way: full innovation and service&back-office innovation. They, therefore, suggest that these combinations be used to create synergies for hotel performance. In order to explain these findings, the arguments are as follows. To increase performance, a concerted effort must be carried out (Roberts & Amit, 2003). The choice can be between an integrated effort, including all innovation types (dull innovation) or a focused approach aiming at improving the core of hotel operations by combining service&back-office innovation types. In terms of the model and estimations, the latter combination had a greater impact on hotel occupancy, which suggests that it may be a good idea for small hotels to start with a focused approach directed at the core service portfolio and back-office efficiency. The full innovators were on average significantly larger in size than the focused innovators. Therefore, there could be two productive kinds of innovation type combinations: one holistic, used by larger hotels, and one focused, carried out by smaller hotels. Research into innovativeness and customer orientation in the service industry is burgeoning, yet understanding of the antecedents and consequences of both activities in hospitality management remains unclear. To address this problem, Tajeddini and Trueman (2012) investigated the link between corporate culture, indicators of innovativeness and business performance. They suggest that cultural dimensions are positively associated with customer orientation, innovativeness, and company performance. Not only the general effect on firm performance but also the effect of innovation on hotel market value was analysed due to the research of Nicolau and Santa-Maria (2013). With a different approach, this article relies on market value. Market value has the advantage that it is based on growth prospects: assuming that shareholders behave rationally, share prices should reflect the present value of future cash flows and, therefore, it constitutes a good indicator to measure the impact of innovation activities on firm performance. Market value is defined as a product of a number of shares by the share price, which is considered to be the best unbiased estimate of the value of any investment. In an efficient stock market, share prices reflect all the available information on the company. In fact, any information received by the market (e.g. on innovation activities) will be instantly incorporated into the share price. The research results show that innovations are perceived to have a positive impact on the future sales of the company, and that each innovation needs to be treated differently and individually, not only between but within categories, on account of cost differences among innovations. Pivcevic and Petric (2011) focus their paper on innovation in Croatia; the results of empirical research show that Croatian hotels are only moderately innovative. They can be grouped into two clusters (high-innovative and low-innovative) whose innovation activity is statistically different. The research indicates that service innovations are the most com- mon innovation type, followed by marketing innovation. Contrary to previous research, organizational innovations are found to be at the lowest level. It can be concluded that there is a place for improvement in all areas of innovation, especially organizational ones. Furthermore, the relationship between the innovation activity and hotel performance was investigated. It showed that hotels with higher innovation activity experienced lower decreases in occupancy percentage change/decline compared to the previous year. Furthermore, the results show that the hotels belonging to the high-innovative cluster record higher positive effects of innovation activity in all observed areas/aspects of their business. These two findings demonstrate the importance of innovation implementation in the hotel business. The results suggest that hotel managers need to rethink and reinforce their innovation efforts in all four areas in order to increase the competitiveness of their business. Regulatory bodies should also reconsider their actions and activities needed to stimulate such behaviour. Human Resource Management and Customer Relationship Management Effects of the Innovation Process in the Hotel Industry While business operators in the hotel industry manage to provide consumers with comprehensive facilities and quality services, they are increasingly concerned with the willingness of consumers to repeat or continue their patronage, i.e., customer repurchase intention. Therefore, business operators must consider how to attract consumers in the formation of their management strategies to remain competitive within the industry. The empirical study of Weng et al. (2012) was conducted with a survey of consumers to explore customer satisfaction in relation to service innovation and customer value. The results of this study indicate that both service innovation and customer value have significant positive correlations with customer satisfaction, and that service innovation has a significant intervening (or moderating) effect on the relationship between customer value and customer satisfaction. It suggests that higher customer satisfaction arises when hotel customers perceive higher customer value and higher service innovation. Vila, Enz, and Costa (2012) carried out another study, considering a framework that includes four types of innovation (i.e., product innovations, process innovations, enhanced knowledge of market, and management innovations). The survey found that the hotel chains focused their greatest innovation efforts on improving the management; however, the innovations, the most frequently used are mentioned above, involve enhanced knowledge of the market, including the use of new sales channels and communication improvements. The survey of Lee, Chen, Tsui, and Yu (2013) studies the relations between open innovation (for a definition of open innovation, see the third paragraph of Chapter "Open Innovation as a Special Approach with the Specific Influence on and the Effect of the Hotel Innovation Process" of this paper), climate and job satisfaction, in particular the causal effects of various dimensions of open innovation climate on different facets of job satisfaction. We assume firms that pursue open innovation climate will experience a higher level of employee job satisfaction. Both an open innovation climate and job satisfaction are assumed to be multidimensional constructs (second-order model). Meanwhile, the difference caused by employees' organizational level was also investigated. This study provides valuable materials for hoteliers who want to promote an open innovation climate in their organizations. Doing so is imperative for firms to survive in fiercely competitive market environments. According to Mention (2012), few empirical studies have concentrated on the influence of intellectual capital (as a whole) on innovation, either as a process or as an outcome. Intellectual capital has an obvious inherent role in services, because they are characterized by a close interaction between providers and users in the production process and the intrinsic customization process that may be knowledge-intensive and is highly dependent on individuals. Further research on intellectual capital in connection with innovation in the hotel industry is recommended. Sustainable Effects of the Innovation Process in the Hotel Industry Presented below are some of the key findings of research in the hotel industry, which has been arranged in reverse chronological order. As an intro- duction into this chapter, the latest study of Chou, Chen, and Wang (2012) is noteworthy; it proposes an integrated model that combines the theory of planned behaviour and the innovation adoption theory to investigate the attitudinal and behavioural decision factors on adopting green practices in the restaurant industry. The results demonstrate that the attitude and perceived behavioural control have positive effects on behavioural intention while the social influence is insignificant. Perceived innovation characteristics have direct positive effects on attitude and indirect positive impacts on behavioural intentions to adopt green practices. Managerial implications are discussed. The importance of environmental innovations as a key competitiveness factor for tourism firms was analysed by Jacob et al. (2010); according to this research, the environmental innovations are mainly process and technological ones. When investing in new destinations, hotel chains transfer and incorporate environmental technologies in new establishments. Finally, the main objectives when introducing environmental innovations are to satisfy customer needs and to improve service quality and the image and competitiveness of the firm. The study of Smerecnik and Andersen (2011) examines the dissemination of environmental sustain-ability innovations in hotels and ski resorts. The results of this study reveal that the perceived simplicity of sustainability innovations and high levels of opinion leadership of hotels/resorts were most strongly associated with the adoption of sustainability innovations. The perceived relative advantage of sustain-ability innovations and the general innovativeness of the hotels/resorts also correlated to some extent with the adoption of innovations leading to increased sus-tainability. Sustainability communication must emphasize the simplicity and ease of adopting sustain-ability innovations in order to increase the rate of adoption. These findings provide useful theoretical knowledge and advice for change agents, opinion leaders and suppliers in the resort industry on how to further diffuse sustainability in the sector. According to Schultz (2008), there is a lack of innovation literature dealing with the effects in the innovation process. It is true that some fundamental forces have been identified. Among them are the efficiency effect (escape the competition), the replacement effect (profit effect), and the knowledge effect. These help structure ideas and perceptions about which firm would succeed in a race to an innovation. However, it does not incorporate the full wealth of causes. If one aspect is changed, the innovative outcome is different. Geographic Area of Surveys: The Influence on and the Effect of Innovation in the Hotel Industry In this chapter, we attempt to answer the research question from the introduction to this article. The question refers to the geographical area where most of the research on the influences on and the effects of innovation in the hotel industry was carried out. Geographic criteria show that research mostly took place in Europe; studied sources were restricted to Spain (Lopez & Vargas-Sanchez, 2012; Vila et al, 2012; Lopez & Vargas-Sanchez, 2011; Fernandes et al., 2011) and its Balearic Islands (Martinez-Ros & Orfila-Sintes, 2009; Jacob et al., 2010; Vadella Garau, 2008) as well as Switzerland (Tajeddini & Truemar, 2012; Tajeddini, 2010), Croatia (Pivcevic & Petric, 2011), Slovenia (Artič, 2013), the countries of Northern Europe (Hjalager & Flagestad, 2012), the Netherlands (Hertog et al., 2011), Denmark (Fuglsang, Sundbo, & Sorensen, 2011) and Alpine region (Gris-semann, Plank, & Brunner-Sperdin, 2012). Outside of Europe, the research on innovation in the hotel industry (influences or effect) was carried out in North America (Smerecnik & Andersen, 2011), in Thailand (Tseng et al., 2008), Taiwan (Lee et al., 2013; Weng et al., 2012; Chou et al., 2012; Chen, 2011), in the People's Republic of China (Chang et al., 2011) and in India (Munjal & Sharma, 2012; Aveek & Chek-itan, 2011). Based on the studied literature, we find that there are no data on the topic of innovation in hotel industry from South America, Central America, Africa, Russia, or Egypt. Nevertheless, they are a successful tourist destinations. Open Innovation as a Special Approach with the Specific Influence on and the Effect of the Hotel Innovation Process This chapter attempts to present an answer to the previous research question: can one find or name the influence or effect that could stand for a special approach. What influence or effect could be identified as the basic special approach to innovation in the ho- tel industry? On the basis of literature review and especially on the basis of the paper of Lee et al. (2013), who cited our initial research paper of Nicolau and Santa-Maria (2013), we have decided to promote open innovation in the hotel industry as a possible special approach to the innovation process in the hotel industry. This section of the paper addresses the latest theory of innovation, because the innovation process has changed into an open innovation process over the past decade. Open innovation is certainly one of the most important influences on innovation in the hotel industry, which can be defined as a special approach, and further research of this field is recommended. The term "Open Innovation" was first coined by Henry Chesbrough in his book from 2003, in which he defined it as follows: "Open innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology". Open innovation should, according to Colombo, Dellera, and Frattini (2011) "first be implemented in multinational companies within the technology sector, and afterwards in the service industry" (p. 167). In contrast, Mulej, Ženko, and Po-točan (2009) believe that "a model of open innovation for small businesses has long been a common practice, which just was not ever named as open innovation but was practised as such" (p. 83). This is confirmed by the evidence that a large number of authors have dealt with innovation and open innovation, but surveys administered to the field of hotel industry are less common. In the field of open innovation within tourism, the authors' focus is directed to the issue of the innovation of services (Pompl, 2006), the introduction of approaches towards innovation (Liburd & Hjal-ager, 2010), destination management (Ronningen, 2010) and of the Internet as a tool for the introduction of open innovation in the field of tourism (Tud-jarov & Anisic, 2011). Upon reviewing the scope of resources in the field of hospitality, we could find two sources from 2013 that would directly link the theoretical foundations of open innovation with hotel industry: the research of Lee et al. (2013) on open innovation and job satisfaction in hotel industry, and that of Artič (2013) on open innovation as a chance for ho- tel industry to overcome the economic crisis. As an essential source, we refer to the argument of Talwar (2012) who gives a leading role to open innovation regarding the development of the hotel industry's forecasts until 2020. According to Mention (2012), concurrently with the advent of the open innovation, (touted as the superior if not the only innovation model), the relationships an organization develops with suppliers, customers, competitors and research organizations have been increasingly explored. Convincing evidence on the effects of cooperation with customers and suppliers on performance has been found. When reviewing the sources in the field of open innovation and hotel industry, we would also like to highlight a case study of the Hilton hotel chain (Idea connection, 2012) as an example of good practice. Hilton believes that competition is a model that contributes a large "pool of innovation" that can directly improve the quality and work processes. Moreover, all these are significant reasons for considering open innovation to be a special approach to the hotel innovation process. Conclusion This paper presents results of a literature review in the area of influences on and effects of the innovation process in the hotel industry. The aim was to develop an overview on input sources on the innovation process and effects of the innovation process as innovation outputs in the hotel industry. The literature review is presented in Table 1, and all the influences and effects that are stated in this article are presented in Figure 1. The article is about... Year Author Title Source Influence Effect Introduction to influences 2011 Williams, Internationalization and innova- Annals of Touri- Internationalizati- A. M., & tion in tourism. sm Research, 38(1), on is a key dimensi- Shaw, G. 27-51. on of tourism inno- vation Interactions of various factors that influence the innovation process in the hotel industry 2008 Tseng, C. Configuration if innovation and The Service Indu- Y., Kuo, performance in the service indu- stry Journal, 28(7), H.Y., & stry: evidence from the Taiwane- 1015-1028. Chou, S. S. se hotel industry. Human, structural and relational capital development lead to higher overall level of innovation and performance 2009 Martinez- Innovation activity in the hotel -Ros, E., & industry. Investing in technology Orfila-Sin- for tourism activities: Perspecti- tes, F ves and challenges. Technovation, 29(9), 632-641. The analysis of determinants of incremental and radical innovations and how the two affect each other. Chen, W.-J. Innovation in hotel services: International Jou- Relationships Culture and personality. rnal of Hospitality among service Management, 30(1), innovation culture, 64-72. proactive personali- ty, charged behaviour and innovation The article is about... Year Author Title Source Influence Effect 2011 Williams, A. M., & Shaw, G. Internationalization and innovation in tourism. Annals of Tourism Research, 38(1), 27-51. Tourists, who are increasingly seen as active participants in the co-production of innovation, including tourism 2011 Hertog, PP. D., Gallo-uj, F., & Segers, J. Measuring innovation in a "low-tech" service industry: The case of the Dutch hospitality industry. The Service Industries Journal, 3(9), 1429 -1449. The need for more specific innovation measurements in the hospitality, suggestions regarding measuring service innovation in the hospitality industry Current problems that are affecting the innovation process in general 2013 Nicolau, J. L., & Santa - Maria, M. J. The effect of hotel innovation on market value. International Journal of Hospitality Management, 32(March 2013), 71-79. Problems that are affecting innovation management and its current practice The influence of human resource management and customer relationship management 2009 Hu, M., Horng, J., & Sun, Y. Hospitality teams: Knowledge sharing and service innovation performance. Tourism Management, 30(1), 41-50. Knowledge-sharing and team culture 2011 Chang, S., Gong, Y., & Shum, C. Promoting innovation in hospitality companies through human resource management practices. International Journal of Hospitality Management, 30(4), 812-818. Hiring multi-skilled core customer-contact employees and training core customer-contact employees for multiple skills The influence of information and technology 2010 Huang, Y-F., & Chen, C-J. The impact of technological diversity and organizational slack on innovation. Technovation, 30(7-8), 420-428. Technological diversity and organizational slack on innovation performance 2011 Fernandez, J. I. PP., Cala, A. S., & Domecq, C. F. Critical external factors behind hotels' investments in innovation and technology in emerging urban destinations. Tourism Economics, 17(2), 339-357. The impact of hotel investment strategies The article is about... Year Author Title Source Influence Effect The influence of company and market characteristics 2008 Schulz, N. Review of the Literature on the Impact of Mergers on Innovation. Journal of Strategic Management Education 4, 19-64. Influence of mergers and acquisitions 2009 Martinez--Ros, E., & Orfila-Sin- tes, F Innovation activity in the hotel industry. Investing in technology for tourism activities: Perspectives and challenges. Technovation, 29(9), 632-641. Influence of a variety of firm and market characteristics on radical and incremental innovations 2009 Mol, M. J., & Birkin-shaw, J. The sources of management innovation: When firms introduce new management practices. Journal of Business Research, 62(12), 1269-1280. The level of education of the workforce and the variety of information sources to which the firm has access Direct impact on business performance 2009 Orfila--Sintes, F., & Matts-son, J. Innovation behaviour in the hotel industry. Omega, 37(2), 380394 The performance measurement through average occupancy rate. 2010 Tajeddi-ni, K. Effect of customer orientation and entrepreneurial orientation on innovativeness: Evidence from the hotel industry in Switzerland. Tourism Management, 31(2), 221-231. Effect of customer orientation and entrepreneurial orientation on innovati-veness 2011 Ordani-ni, A., & Parasura-man, A. Service Innovation Viewed Through a Service-Dominant Logic Lens: A Conceptual Framework and Empirical Analysis. Journal of Service Research, 14 (1), 3-23. Proposal of a conceptual framework for investigating the antecedents and consequences of service innovation 2011 Pivcevic, S., & Pe-tric, L. Empirical Evidence on Innovation Activity in Tourism: The Hotel Sector Perspective. The Business Review, 17(1), 142-148. The relationship between the innovation activity and hotel performance 2012 Mattsson, J., & Orfila--Sintes, F. Hotel Innovation and Its Effect on Business Performance. International Journal of Tourism Research, 7(2), 131-142. The effect on performance of different types of innovation 2012 Tajeddini, K., & True-man, M. Managing Swiss Hospitality: How cultural antecedents of innovation and customer-oriented value systems can influence performance in the hotel industry. International Journal of Hospitality Management, 31(4), 1119-1129. The link between corporate culture, indicators of inno-vativeness and business performance. The article is about... Year Author Title Source Influence Effect 2013 Nicolau, J. L., & Santa - Maria, M. J. The effect of hotel innovation on market value. International Journal of Hospitality Management, 32(March 2013), 71-79. The effect of innovation on hotel market value 2013 Artič, N. Open innovation as a chance to overcome the economic crisis in the hotel industry. Open innovation as a tool for business performance. The effects of the development of HRM 2012 Weng, M.-H., Ha, J.-L., Wang, Y.-C., & Tsai, C.-L. A study of the relationship among service innovation, customer value and customer satisfaction: an empirical study of the hotel industry in Taiwan. The International Journal of Organizational Innovation, 4(3), 98-112. Customer satisfaction in relation to service innovation and customer value 2012 Vila, Enz and Costa Innovative Practices in the Spanish Hotel Industry. Cornell Hospitality Quarterly, 53(1), 75-85. The chains and the innovation efforts 2012 Mention, A.-L. Intellectual Capital, Innovation and Performance: a Systematic Review of the Literature. Business and Economic Research, 2(1), 1-37. The influence of intellectual capital on innovation 2013 Lee, C-S., Chen Y-C., Tsui P-L., & Yu T-H. Examining the relations between open innovation climate and job satisfaction with a PLS path model. Retrieved from: http://link.springer. com/article/10.1007/ s11135-013-9869-6#- page-1 The relationship between open innovation climate and job satisfaction. The effect of sustainability 2010 Jacob, M., Florido, C., & Agu-iló, E. Environmental innovation as a competitiveness factor in the Balearic Islands. Tourism Economics, 16(3), 755-764. The importance of environmental innovations for tourism firms 2011 Smerecnik, K. R., & Andersen, PP.A. The diffusion of environmental sustainability innovations in North American hotels and ski resorts. Journal of Sustainable Tourism, 19(2), 171-196. The diffusion of environmental susta-inability innovations in hotels and ski resorts. Table 1 Literature Review This study has answered all three research questions, revealing the latest research topics and the authors of the research on the influences and effects of the hotel innovation process. There are different influences of the innovation process, which can be divided on general influences and specific ones. General influences were divided into five parts; they were presented in this paper in the following order: in- ternationalization, the current problems that affect innovation process in the hotel industry, the influence of information and technology, firm and market characteristics, and the influence of human resource management and customer relationship management. Not only do the different influences influence the innovation process, they may also affect each other. Different influences can be related to each other dif- ferently, and the result of their action is reflected in the effect of the innovation process. Feedback on the innovation effects are suggested for further research. Figure 1 Influences on and Effects of the Innovation Processes in the Hotel Industry by Nataša Artič, 2014 In general, we can divide them into financial and non-financial effects, but in this paper, we are presenting the most common effects (from literature) of the innovation process in the hotel industry, i.e. direct effects, HRM and CRM effects and sustainable effects of innovation in hotel industry. According to Schultz (2008), there is a deficit in the innovation literature regarding the effects in the innovation process. Therefore, the present research points out those different effects of the innovation process that are widely discussed in the literature and considered to be critical for success. The literature review illustrates that the effects are divided into three groups. Regardless, the research lacks a holistic view. Many positive and negative influences/effects are thus probably neglected. The answer to the second research question refers to the geographical area where most of the research on the influences on and the effects of innovation in the hotel industry were carried out. On the basis of the geography criteria, the research shows that the research mostly took place in Europe; and based on the studied literature, we have determined that there is no data on the topic of innovation in the hotel industry from South America, Central America, Africa, Russia, Egypt, although they are successful tourist destinations. There is an article by Di Foggia, Laz-zarotti, and Pizzurno (2012) mentioning the economics and management of innovation in travel and tourism services on the case of European cruise industry in Dubai, which is indirectly connected with the hotel industry. The paper also presents an answer on the third research question in which open innovation is suggested as a special approach to the innovation process in the hotel industry. Open innovation is a new concept first addressed by Chesbrough (2003). The difference between open innovation and traditional innovation theory is that open innovation emphasizes innovation in an open system. The diverse types of research (quantitative, qualitative) and case studies indicate the particular advantages of open innovation in the innovation process, from which it can be concluded that it can bring advantages (and positive effects) of the innovation process in the hotel industry. Further research suggests a focus on effects of open innovation in hotel industry, on measurement of open innovation in hotel industry; the future challenge is also to focus on different possibilities of affecting different influences on each other; moreover, the feedback of different innovation effects are suggested for further research. Changing one influence or input of the innovation process in the hotel industry means that the innovative outcome is different. This in itself is not inherently bad, as this situation simply mirrors the acknowledgement of the fact that details matter; however, thus far, they matter on the theoretical level. It is not clear whether all these contingencies truly matter in practice. It would be very helpful to determine which influences are particularly important for different hotel firm performance. The performance of innovation has been defined as a multidimensional concept, encompassing financial and non-financial aspects. This shows that each innovation needs to be treated differently and individually, not only between but within categories, on account of cost differences among innovations. All influences and effects need to be carefully studied according to each particular innovation process in order to achieve positive effects and firm performance in the hotel industry. References Artič, N. (2013). Open innovation as a chance to overcome the economic crisis in hotel industry. In S. Janković & D. 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