A grounded theoretical approach to understanding innovation in destination marketing organizations

Abstract

As competition for scarce resources increases, cities are turning toward marketing strategies to attract economic and social development. Innovation is a key component of success for destination marketing organizations (DMOs), but there is a need for additional empirical and theoretical development. Findings from this research based on analysis of interviews with 12 DMO leaders illuminate the need for (1) an innovation-centered organizational culture, (2) the ability to use external stakeholders as knowledge sources, and (3) the ability to use and develop knowledge internally. An organizational capabilities perspective is used to understand these influences. The results offer managers a road map for successful innovation implementation and benefit researchers by providing clarity into the antecedents of the innovation capability with the DMO context.

Keywords

City marketing innovation local government qualitative interviews

Introduction

Understood broadly, innovation refers to technological improvements, process improvements, or new ways of executing policies or practices that help organizations to gain or maintain a competitive advantage (Porter, 1991; Zach et al., 2010). Innovation studies often focus on private sector firms while leaving behind organizations within other sectors such as government, nonprofit, and service industry (Barczak et al., 2006; Camisón and Monfort-Mir, 2012; Dinnie et al., 2010; Hjalager, 2002, 2010; Zach, 2012; Zach et al., 2010). Studies specifically regarding innovation within the tourism industry are growing in necessity and importance, considering the increase in competition for scarce social, economic, and human resources (Camisón and Monfort-Mir, 2012; Hall, 2009; van den Berg and Braun, 1999; Zach, 2012). Tourism-related organizations that do not innovate risk falling behind in light of this competition (Baggio and Cooper, 2010; Gibson, 1997).

Typically, innovation studies focus on manufacturing and patents (Hjalager, 2010); thus, a weakness remains regarding theoretical and empirical studies of innovation in tourism organizations (Thomas and Wood, 2014). Despite the tourism industry contributing more than US$1159 billion to the international economy in 2013 (United Nations World Tourism Association, 2014), there are few studies that examine innovation within tourism-related organizations (Szymanska, 2012). Additionally, Hanna and Rowley (2013) note the paucity of research about how destination marketing managers operate in their roles of organizational leaders and chief marketers. Responding to this dual gap, our exploratory research relies on a grounded theoretical approach (Hobson, 2003) to (a) examine how innovation takes place within destination marketing organizations (DMOs) and (b) understand the relationships among influences related to innovation. DMOs were chosen as the unit of analysis because tourism marketing is quickly becoming a networked, connected enterprise that relies upon knowledge sharing between organizations rather than individuals (Baggio and Cooper, 2010). Moreover, we chose DMOs because studies of innovation typically focus on a specific sector, such as hotels or other service providers, and rarely on innovation in DMOs themselves (see Zach, 2012, for an exception).

The purpose of this research is to better understand how innovation takes place in DMOs, so this article begins with an overview of innovation research within destination marketing before detailing the methods and findings. Given the findings that indicate successful innovation relies upon the interaction of several key factors, we use an organizational capabilities perspective to offer propositions based on our findings that are useful for future empirical examination. Finally, conclusions, limitations, and avenues for future research are offered.

Innovation within DMOs

From a Schumpeterian (1927, 1934, 1950) perspective, innovations are closely related to inventions (Hjalager, 1997). Innovation occurs when repeated retooling of the original invention occurs within a specific domain. In this situation, entrepreneurs, the focus of Schumpeter’s work, earn a profit by making changes to existing units of production, thus the difference between invention and innovation is the ability to commercialize to earn ‘entrepreneurial profit’ (Schumpeter, 1934: 133). For Schumpeter, innovation is the lifeblood of organizational success and means, for instance, introducing a new good or service, entering a new market, or gaining/breaking a monopoly (Schumpeter, 1934) in the name of creative destruction (Schumpeter, 1950).

According to the Organization for Economic Cooperation and Development’s (OECD) Oslo Manual (OECD, 2005), innovation is broadly divided into technological and nontechnological realms. A distinction is made between product and process innovation within the technological realm, while a nontechnological innovation is conceptualized as anything that does not involve the use or reuse of technology (OECD, 2005). Typically nontechnological innovations fall into organizational, managerial, institutional, and marketing categories (Camisón and Monfort-Mir, 2012; Hjalager, 2010; OECD, 2005). These kinds of innovations emerge within the administrative and social systems of the organization and relate to changes in human resources, leadership, stakeholder management, and external relations (Camisón and Monfort-Mir, 2012). Innovation is an ongoing process that spills over into other areas of the organization (OECD, 2005), because it is geared toward change—either incremental or radical—which alters some aspect of the organization and influencing, either positively or negatively, its ability to compete within a given market space (Dinnie et al., 2010; Garcia and Calantone, 2002; Huang and Rice, 2012; Schumpeter, 1934; Zahra and Covin, 1994). Managers play a central role in fostering a culture of innovation that allows employees to think creatively and appreciate the centrality of innovation within the organization (Naranjo-Valencia et al., 2011).

The focus of this research is on a specific kind of organization called a DMO (Pike and Page, 2014). Typically, organizations in charge of developing a brand identity and brand strategy for a defined place are called DMOs. A popular example of a DMO is the Las Vegas Convention and Visitors Authority, the organization responsible for the famous ‘What Happens in Vegas Stays in Vegas’ advertising campaign. That organization has the goal of promoting tourism, conventions, meetings, and special events within Las Vegas and Clark County (Las Vegas Convention and Visitors Authority, 2015). Certainly Las Vegas has a specific image and attracts a certain kind of tourist. DMO managers in other cities and locations try to execute the same mission by attracting economic and social capital into their given geographic locales.

Place and destination branding often proves more difficult than corporate branding because of the myriad stakeholders involved (Kavaratzis, 2004). DMOs must satisfy local residents, political officials, appointed governing boards, city officials, and local hospitality industry professionals, to name a few. Managers in DMOs balance demands for economic and social improvement to the place with organizational duties such as leadership, personnel management, budgeting, and marketing (Hanna and Rowley, 2013). One way DMOs can stay competitive in today’s environment is through innovation (Szymanska, 2012; Zach, 2012), especially marketing innovations related to ‘the implementation of a new marketing concept or strategy which is significantly different from the marketing methods applied previously in a given enterprise’ (Szymanska, 2012: 1108). A current example of a marketing innovation would be the emergence of digital technologies such as cell phone applications (apps) and social media sites that engender a new way of marketing and communicating as opposed to traditional advertisements. Innovations of all kinds, technical and nontechnical, help the DMO achieve competitive advantage (Szymanska, 2012; Zach, 2012) and its goal of attracting positive social and economic capital.

The innovation divide

Within tourism, services industry, and destination marketing studies, a divide among internal and external perspectives of innovation emerges. For example, Zach (2012) examined the role of innovation within American DMOs, with an express focus on the influences of organizational culture, leadership, and collaboration. Ultimately, the study sheds light on internal mechanisms through which American DMOs undertake innovation, yet the ways in which knowledge from a partner is utilized were not specifically addressed. Similarly, Sørensen et al. (2013) examined the influences of an innovation climate stemming from organizational leadership within the service sector, finding that internal culture greatly influences customer-service-based innovations. Exploring Web-based marketing, Zach et al. (2010) wanted to better understand the organizational elements that fostered innovation success within a digital realm. Also reflecting an internal focus is research by Morgan et al. (2012) who use Visit Wales as a case study to better develop internal measures of brand development success.

Prats et al. (2008) take the opposite approach by positing the Tourism Local Innovation System (TLIS) model that examines the networked elements that go into tourism innovation. In that model, tourism agents are the foundation and include research and development centers, public administrators, private firms, and the local community. The view of the TLIS is expressly on the external environment of innovation and the networked relationship of actors. Hjalajer and Nordin (2011) offer an extensive literature review regarding the role of external, user-driven suggestions that help toward DMO innovation. Their review shows the large focus on external stakeholders as well as the rare crossover between external and internal environments. In other example, Dinnie et al. (2010) also explore the vital role of networks in DMO innovation by presenting a case study of Sapporo, Japan, highlighting how key groups work together to build and disseminate the brand.

It remains unclear whether this internal–external divide captures the multifaceted process of organizational innovation. Certainly, it makes sense to take such a broad phenomenon as innovation and study it on a smaller scale (internal causes of innovation vs. external causes of innovation). The concern, however, is that for DMOs, this internal–external divide might not capture the complexity of stakeholder interactions that are part and parcel of DMO internal management and external branding communications. Therefore, we investigated how innovation manifests in practice in order to better inform DMO theory development.

Method

As noted in the introduction, the purpose of our investigation is to understand how DMOs themselves undertake innovative practices rather than innovations in destination marketing itself. Given the knowledge gap in this area, we chose a grounded theoretical approach to better understand how innovation manifests in local-level DMOs. We conducted in-depth, semi-structured interviews with 12 DMO managers throughout a Southern state in the United States (‘the state’). The sample included representation from each of the state’s five major tourism regions, as determined by the state’s Tourism Association, showcasing diversity in population size, socioeconomic makeup, and culture. As such, DMOs were selected on a purposive basis (Yin, 2011) to ensure sampling from each of the state’s official tourism regions. Yin (2011) notes that purposive sampling, often a hallmark of qualitative research, allows researchers to choose broad and plentiful data.

The internal organizational size of DMOs was mixed, with the smallest DMO in the sample having 3 employees and the largest with 20 employees. In the state in which the interviews were conducted, legislation specifies the mandates of each DMO, including region served and amount of funding available through local hospitality taxes. Some interviewees represented cities, while others represented counties and regions. Most have the label ‘convention and visitors bureau’, but others were termed development partnerships or regional partnerships (see Pike and Page, 2014, for a detailed explanation of DMO nomenclature). Therefore, we chose the broad term, ‘DMO’, to minimize potential confusion in terminology. Table 1 shows the composition of DMOs in the study.

Table 1.

DMOs included in sample.

Respondent	Title	Area served	Population served	DMO staff (FTE)
DMO 1	Executive director	County	38,000	3
DMO 2	CEO	City	25,000	6
DMO 3	Tourism director	County	30,000	1
DMO 4	Executive director	County	165,000	4
DMO 5	Communications manager	City	23,000	9
DMO 6	Director of marketing	City	175,000	20
DMO 7	Executive director	3-County region	370,702	14
DMO 8	Deputy director	City	24,000	5
DMO 9	Executive director	City	17,000	3
DMO 10	Deputy director	City	35,000	12
DMO 11	President and CEO	County	11,000	9
DMO 12	Executive director	County	50,000	3

DMOs: destination marketing organizations; FTE: full time employees.

Note: The author would like to thank Dr. Frank G. Adams for assistance with constructing this table.

To conduct this research, prescriptions from Lincoln and Guba’s (1985) naturalistic inquiry were followed. Naturalistic inquiries are useful for examining practice from a viewpoint of the practitioner through the use of a grounded approach nested in behavior, language, definitions, and similar notions familiar to the respondents (Denzin, 1971: 166). Naturalistic inquiries are used to better understand human interactions through a systematic study of these lived experiences (Athens, 2010). In their interpretation of a naturalistic inquiry, Lincoln and Guba (1985) elucidate 10 steps, which were incorporated into this research design. For example, research should take place in a natural setting (the DMO managers in their offices, in this case), humans are the subject of inquiry, and data are collected for the purpose of deep understanding rather than broad generalizations (Lincoln and Guba, 1985).

Given the nature of the research question to better understand how innovation manifests in DMOs, such an interpretive, open methodology would allow us to discern answers without predetermined hypothesis testing. A grounded theoretical approach such as naturalistic inquiry answers calls in the tourism literature to develop better theoretical propositions (Hobson, 2003). Grounded theoretical approaches have been previously used in tourism research. For example, Papathanassis and Knolle (2011) used a grounded theory approach to better understand vacation reviews in an online setting. From their analysis, they developed a theoretical framework and propositions for future testing, and we have followed a similar process herein. Minnaert (2014) also used grounded theory to study how anxiety and uncertainty influence tourism decisions. While more examples exist, tourism literature and tourism studies need to focus on building more theory instead of only testing theory (Hobson, 2003).

To carry out the investigation, semi-structured interviews were chosen, because they allow the interviewee to respond freely and from their own frame of reference (Hankinson, 2009: 104), and the structure also allows the researcher to respond and clarify as needed (Hankinson, 2001). Within a tourism context, Hankinson (2001) followed a similar methodological approach by interviewing 12 respondents from English cities and towns to better understand brand management. We chose telephone interviews because interviews could be easily recorded, and geographical and financial constraints prevented the research team from traveling for in-person interviews; therefore, telephone interviews were deemed most appropriate (Cooper and Schindler, 2006: 259).

According to Cooper and Schindler (2006), while this method of surveying does have merits, including the ability for researchers to ask probing questions and ease of interview termination, there are drawbacks. Limitations include the time limit allocated to the interview (respondents usually do not like to talk for a long time via phone unless the topic is of interest), less participant–research interpersonal exchange, and a potential barrier to asking complex questions (Irvine, 2011). Despite the known limitations, telephone interviews were selected because the sample was not generated randomly, so the research team was not concerned with incorrect numbers or dropped calls, which often are issues for telephone interviews (Irvine, 2011).

Each telephone interview was recorded for later transcription (Krippendorff, 2013). Interviews lasted an average of 55 min, and to ensure anonymity, the responses from each interviewee were coded using DMO 1, DMO 2, DMO 3, and so on. The research questions are included in Appendix 1. As can be seen, the findings presented here relating to innovation come from a portion of a larger study of DMO brand development, communication, and evaluation efforts. We focused on innovation, given the emergence of scholarship related to that topic within destination marketing and management (Camison and Monfort-Mir, 2012; Szymanska, 2012).

Once transcription of recorded interviews was complete, each researcher coded data for emergent patterns. We undertook what is described as an inductive content analysis (Bowen, 2008; Thomas, 2006). According to Thomas (2006: 238), inductive analyses in qualitative approaches ‘refers to approaches that primarily use detailed readings of raw data to derive concepts, themes, or a model through interpretations made from the raw data by an evaluator or researcher’. Deductive analysis, on the other hand, is more often used to test theories of hypotheses. An inductive approach to content analysis aligns with naturalistic inquiry in that patterns are allowed to emerge from analysis rather than a priori assumptions (Bowen, 2008). In this case, we asked broad questions about innovation in general rather than asking respondents specifically about internal innovation, external innovation, or a combination. We did not set out to test hypotheses but rather wanted to inquire about how innovation takes place within DMOs as part of our larger study. Our findings are based upon analyzing the transcripts and deriving patterns from what respondents replied to our broad questions about place branding and marketing efforts.

Numerous questions specific to innovation were examined, and other references managers made to innovation were also noted during the content analysis. Managers who mentioned employee training, individual research time, internal information sharing, and so on were coded as ‘internal innovation’. Alternatively, managers who mentioned regional meetings, conference attendance, talking with stakeholder groups, online questionnaires were coded as ‘external innovation’. Finally, references to leadership and creating cultures of innovation and openness were coded as ‘organizational culture’. Throughout the content analysis process, the research team noted when and how managers made reference to the interactions of any of the identified codes. For example, it was marked in the transcripts when managers discussed how their leadership influences employee proclivity toward innovation. Differences among the authors regarding patterns and coding were discussed, and the findings exhibit agreed-upon patterns. Figure 1 is an example of our coding scheme.

Figure 1.

Coding example.

After this initial coding of all transcription was complete, the research team conducted an exploratory analysis in QSR’s NVivo 10. NVivo sheds light on terms most used, and the findings from the software aligned well with the codes the research team identified.

Findings: Antecedents of DMO innovation

Analysis of transcribed data (more than 300 pages) showed that DMO leaders in the study noted three general trends respective to the influences on innovation: (1) the existence of an innovation-centered organizational culture, (2) the use of external stakeholders for purposes of gaining new knowledge, and (3) an ability within the DMO to manage and use knowledge. The findings suggest that innovation is not predisposed solely by an external source of knowledge or internal knowledge use; rather, both external and internal mechanisms are used in conjunction, and with a strong organizational culture, to enhance the innovation capability of the organization.

First, we provide examples of the three patterns and then offer a capabilities framework as a theoretical way of understanding potential relationships among the three identified components. Table 2 provides additional quotations from the data set related to innovation in DMOs.

Table 2.

Sample innovation quotes.

DMO leader	Example quote
DMO 2	It definitely starts at the top, and so I try to stay as educated as possible. To me that’s something about innovation is that the trends and the best practices are ever changing and … it’s really difficult to keep up with it. You can never learn too much, and so I try to stay really on top of it about through reading blogs or Twitter accounts and … I will try to connect our staff with some of those to get them motivated and to encourage them to perhaps try some of those new practices out on their events.
DMO 5	There are some things that are kind of, you know, standard that I have to do with my job but I can also research things. I can see what’s out there. I can find a social media network that we might not be on and that would be perfect for travel, you know, that we should tap into. I can find new ways to market our city. I can bring in an idea somebody on the street told me.
DMO 7	Oh innovative to me, especially now, is the Internet capabilities, all of the social media and ways to contact people and to get people to talk about you, to get people to talk about the pictures of food, the pictures that people put on food spots, tweets about whatever. The innovative part about this industry and probably anyone who has a product in the last decade is social media and the Internet capabilities promoting anything to whatever you’re wishing for.
DMO 8	I guess one way we’re being innovative is looking to our dining partners, with our lodging partners, with our event partners and what’s going on the city to collaborate with them and making the experience a little bigger or more enticing.
DMO 10	We charge our employees to keep up, especially our director of marketing. So we don’t have any problem with him with his door closed, on his computer doing research trying to figure what’s next thing past Facebook or Twitter, Flickr or Blogspot, or whatever those things are. We rarely are doing anything that haven’t talked about 4 years ago that we didn’t get up on whiteboard and we don’t just pull stuff out of air. I mean we really look forward and try to project what’s gonna come, what technology has hit, what that can mean to us … what would we do with it, how would that affect us. We do forward thinking.

Organizational culture and innovation

The first pattern to emerge based on our content analysis was the necessity for a strong organizational culture that supports innovative ideas, policies, and practices. Organizational culture is:

a pattern of shared basic assumptions learned by a group as it solved its problems of external adaptation and internal integration, which has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think and feel in relation to those problems. (Schein, 2010: 18)

Organizational culture becomes a combination of formal rules and policies as well as informal norms, values, stories, and symbols that guide member behavior (Hatch, 1997). Leveraging unique organizational culture attributes can turn into a source of sustained competitive advantage for the DMO (Barney, 1986).

Several managers in the study, in line with Barney’s (1986) findings, mentioned the important role of leadership in not only helping employees carry out daily job functions but also encouraging creativity and outside-the-box thinking that spurs innovation. As the leader of DMO 1 explained

I don’t want for this to sound self-serving, but there’s definitely a lack of ego and an admission that I in no way, shape, or form know everything, and the more opinions we get in the process, the better the end result is and that’s my mind-set. I think that’s fostered throughout our department, and it reaches out to our community.

As destination marketing merges into destination management, the role of the leader will become even more important when setting an overall organizational culture and climate (Ford and Pepper, 2007; Gretzel et al., 2006) that supports innovation. As a manager in DMO 5 explained, the DMO’s top leader:

encourages us to stay on top of trends and bring him ideas, and it’s very nice because he lets you be creative in your job. One of the things that I love about my job is that I get to be creative. I don’t come to work 8 to 5 every day and have the same day every day …. I can see what’s out there, I can find a social media network that we might not be on and that would be perfect for travel … that we should tap into. I can find new ways to market our city.

When describing the role of leadership in fostering a culture of innovation, managers emphasized the importance of creativity, open communication, and ability to share knowledge (see also Ford and Pepper, 2009). For the leader of DMO 2, this means thinking strategically about innovations and how those innovations can help promote an overall organizational strategy. As stated:

I think [innovation] means trying something new, even if it’s not popular, and really thinking strategically. That’s something that we really focus on here, is that we don’t just make decisions because which way the wind blows. We try to always have a strategic purpose for our decision-making whether it is to enhance the quality of life or to produce economic impact through tourism events or things like that. So we’re constantly trying to use newest and best practices especially through social media and online marketing, I think that’s one way we are being innovative is that compared to other community development organizations.

External knowledge acquisition

The second pattern to emerge from the analysis is what we labeled external knowledge acquisition. Extant literature confirms the important role that stakeholder collaboration plays in destination marketing and innovation (Dinnie et al., 2010; Ford and Pepper, 2009; Hankinson, 2004; Jamal and Getz, 1995; Pastras and Bramwell, 2013; Wang, 2008; Zach, 2012), especially gaining knowledge through stakeholder networks (Kallio et al., 2010; Thomas and Wood, 2014). External knowledge can help foster innovations by allowing the DMOs managers to consider reallocating organizational resources toward these new processes, sharing information through and with networks, and feeding information gained from both of these processes into the overall organizational culture of innovation (Camisón and Monfort-Mir, 2012; Daspit and Zavattaro, 2014; Zach, 2012). Coordination among stakeholders, though difficult, becomes important for destination managers to build buy in and trust (Anholt, 2007; Kavaratzis, 2012; Zenker and Seigis, 2012) and to innovate (Thomas and Wood, 2014).

Managers in our study described the ongoing process to be innovative as a way to remain informed of, and ideally set, current industry trends. Such a finding aligns with Hjalager’s (2010) conceptualization of marketing and management innovations as well as the OECD’s (2005) nontechnological innovation. The leader of DMO 9 explained the importance of attending professional conferences and networking to learn more about innovations in the industry:

I also think it’s very important that I have a network because one of the things that I’ve learned in my time in this industry is that our colleagues are a wealth of knowledge. I think that that’s kind of what sets destination marketers apart in a lot of ways, especially in (the state).

Based on analyzing responses, most practitioners noted the importance of collaboration when developing new marketing strategies (Hjalager, 2010). As the leader of DMO 11 explained, ‘You have to be innovative in the marketing message, how you fight through the clutter, how you get your name or your brand or your community’s destination to cut through the marketing clutter’. Several practitioners told stories of listening to ideas from local residents to devise innovative marketing campaigns. In one story, the manager recounted how a resident suggested that the city’s downtown area have a distinct name to attract more visitors because, as the manager said, this resident did not think there was anything unique about a downtown—everyone has a downtown. That suggestion for a branded name for the downtown area was brought back into the organization and, after planning, was implemented, giving the downtown area a unique nomenclature and brand identity that can then be leveraged as an inimitable resource to attract business development (Barney, 1991).

In another example, the manager of DMO 5 detailed the initiative one employee took to develop a bike trail map for the city:

Lots of visitors come in and ask about where can you go to ride your bike in (our city)? You know, that’s something we haven’t really put any maps out where to bike ride, and she said that she really would like to work with marketing department on coming up with some materials on plotting out some trails for great places to bike ride. That’s very innovative of her, and she took the initiative, and she already started working on it and brought it to us, asked us our thoughts and it’s a fabulous idea, and it’s something that’s very trendy in all of the USA.

The findings from discussions with DMO managers generally highlight that organizations with a more innovation-centered culture are more likely to engage in the acquisition of external knowledge via stakeholders. Whether through collaboration with peer organizations, the local business community, local city leaders, or other stakeholders, the knowledge gained from such interactions was helpful in developing innovative ideas related to improved destination marketing practices. When describing innovation in her organization, the leader of DMO 1 explained how her leadership changed the organizational culture to one of innovation and inclusion, thus tying the first two patterns together. As she explained:

When I came on board in October of last year, [staff had] really cemented-like mind-sets if you will. Everyone was anxious for our tourism to grow. In our opinion, it had been stagnant, so we really melded together and our department is very innovative, very creative, very progressive, very inclusive, which was not our forte in the past, where we invite all sorts of entities to come in and be part of our process, and that’s been very well-received in our community.

Internal knowledge exploitation

The final pattern to emerge from our content analysis of interview transcripts was one we labeled internal knowledge exploitation. This refers to how organizations put to use information gathered through means such as conferences, networking, surveys, research, and the like. The bike map example above showcased the process of turning knowledge into action. Organizations successful at implementing innovations have an enhanced ability to acquire and exploit new knowledge (Cohen and Levinthal, 1990; Thomas and Wood, 2014; Zahra and George, 2002). Managers in our study described the importance of allowing employees the flexibility to spend work time learning about emerging trends, new marketing strategies, and focusing on open communication between managers and line employees. As such, this stems directly from organizational culture. For example, the leader of DMO 10 detailed allowing the marketing director to keep up with industrial shifts, especially related to technology. ‘So we don’t have any problem with him with his door closed, on his computer doing research trying to figure what’s next thing past Facebook or Twitter, Flickr or Blogspot or whatever those things are’.

Moreover, practitioners noted the importance of information exchange, then taking that externally generated information back into the organization and transforming it into a meaningful policy or practice. As the leader of DMO 2 explained:

To me that’s something about innovation is that the trends and the best practices are ever changing … It’s really difficult to keep up with it, and you can never learn too much, and so I try to stay really on top of it about through reading blogs or Twitter accounts and just trying to stay up on it through news articles … I will try to connect our staff with some of those to get them motivated and to encourage them to perhaps try some of those new practices out on their events.

Our analysis shows that the extent to which the DMO is able to manage internal knowledge is influenced by the overall organizational culture. For example, while most of the managers working in larger DMOs detailed the importance of formal weekly staff meetings for knowledge sharing, managers in smaller DMOs noted the equal importance of being able to walk into someone’s office with an idea or call an informal meeting to exchange information. In addition to using external stakeholders as a source of knowledge, the organization may also generate knowledge internally, given an appropriate, innovation-focused culture. As the leader of DMO 2 illustrates:

I think one way is to give people the power to be innovative. I try not to box anyone in. I try to make sure that they know this is a culture of trying new things and creativity, and so I want people to feel like they have the power to come up with something new and really run with it and try to implement it so I think creating that culture is a role that I see myself as having and then trying to implement it in my own daily practice and not being afraid to take a suggestion from a staff member or a community member or whatnot.

Thus, the DMO’s innovation-centered culture is positively related to the internal knowledge exploitation capability. The next section explores proposed relationships between our three antecedents and how they work together to create an innovation capability for DMOs.

Relationships among innovation capability antecedents

Findings from our analysis revealed three keys to innovation in DMOs: (1) the existence of an innovation-centered organizational culture, (2) the use of external stakeholders for purposes of gaining new knowledge, and (3) an ability within the DMO to manage and use knowledge. Given that such factors exist, we posit that a more holistic view of innovation in DMOs is needed that takes into account how these three antecedents work together to produce successful innovation. What emerged from data analysis of interview transcripts was the realization that successful innovation relies on a strong culture of innovation that begins with top leadership as well as the successful gathering and exploitation of information from external and internal sources. While we understand that the antecedents work together to drive the innovation capability, what remains to be understood is how the antecedents are interrelated.

The three patterns noted about emerged from our grounded theoretical examination of the data. To offer a conceptual framework for understanding the interrelationships among the factors derived from the data analysis, we integrate theory from management to offer conceptual structure to the findings. Specifically, we employ a capability-based perspective as a means to provide insight into how the observed factors of culture, external stakeholders, and internal DMO factors work together to influence the innovative capability of the DMO. We offer propositions for future empirical testing based upon our findings.

Studies about the importance of capabilities within destination marketing are emerging (Camisón and Monfort-Mir, 2012; Daspit and Zavattaro, 2014; Kallio et al., 2010; Nieves and Haller, 2014; Thomas and Wood, 2014), and findings from this study build upon that stream to develop a framework for innovation in DMOs. A capability lens acknowledges how organizations configure (and reconfigure) resources to innovate (Camisón and Monfort-Mir, 2012). Our specific focus here is on an innovation capability, understood within the strategic management literature as an organization’s ability to develop new products, services, or ideas that develop and maintain competitive advantage (Crossan et al., 2009; Daspit, 2012; Day, 1994; Li, 2011; Liao et al., 2007). Camisón and Monfort-Mir (2012) extended the Schumpeterian perspective of innovation within the tourism sector by arguing for the need to integrate dynamic capabilities into tourism scholarship and practice because of the means through which capabilities can capture the constant intermingling of internal organizational abilities with external environmental punctuations.

Capabilities typically exist in a three-tier hierarchy (Verona and Ravasi, 2003). The highest order capabilities are described as higher order ‘strategic insights’, which are based on the goals, culture, and dominant logic of the organization (Cernas-Ortiz and D’Souza, 2010; Prahalad and Bettis, 1986). The intermediate type of capabilities consists of dynamic capabilities, which support configuration and reconfiguration of lower level capabilities (Eisenhardt and Martin, 2000; Teece, 1980; Teece et al., 1997). Last, the lowest order capability consists of ordinary capabilities that create day-to-day value for the firm (Winter, 2000). The innovation capability is one type of lower level capability (Daspit, 2012) influenced by higher level capabilities. We use this multilevel, hierarchical classification of capabilities to describe how our findings relate to the innovation capability of the DMO. Figure 2 outlines the framework and noted relationships among the three antecedents of innovation identified in our analysis.

Figure 2.

Antecedents of the innovation capability in DMOs. DMOs: destination marketing organizations.

A DMO innovation capability

The figure represents the way in which the three antecedents work together to create successful innovation in DMOs. Our findings reveal that the internal–external divide present in the literature is not comprehensive of the whole process related to innovation within DMOs. Instead, we find that an organizational culture that is welcoming to innovative thinking and practices makes the organization more likely to seek external sources of knowledge, then exploit those within given organizational resources to gain competitive advantage. In other words, knowledge exploitation is the link between organization culture and the innovation capability (Nieves and Haller, 2014).

A successful innovation capability arises when the DMO integrates new knowledge into existing processes or practices to deliver an improved product, service, or experience because said knowledge was meaningfully absorbed (Chen and Huang, 2009; Cohen and Levinthal, 1990; Nieves and Haller, 2014; Thomas and Wood, 2014). Such is the benefit of a dynamic capabilities perspective in that this view acknowledges the relationships among leadership, internal resources, and external environments. As the deputy director of DMO 8 indicated in line with all of the elements of Figure 2 (emphases added to show the three antecedents of innovation):

Internally we have a very small staff. We’re a small bureau compared to other major destinations or destinations in (the state). We have five employees, and we have someone who is focused on the communications area, someone focused on the sales area, and an executive director and me as the deputy director really serving as over side of communication and sales. So we find that it’s very important to attend professional development conferences on latest trends in tourism. We’re out in the field. Particularly, our salesperson is out in the field and hearing the conversation and what the tour operator or the travel agent or the general visitor is looking for so we meet regularly and being a small office there’s always conversation daily, all the strategy and new ideas and how we can take the brand to the next level and promotions that we can do.

Based upon relationships revealed through data analysis, several propositions regarding the manifestation of an innovation capability in DMOs are offered for future empirical investigation. Each proposition derives from combining findings with extant literature and are shown in Figure 2.

Proposition 1: The DMO’s organizational culture is positively related to the external knowledge acquisition capability.

Proposition 2: The DMO’s external knowledge acquisition capability is positively related to the internal knowledge exploitation capability.

Proposition 3: The DMO’s organizational culture is positively related to the internal knowledge exploitation capability.

Proposition 4: The DMO’s internal knowledge exploitation capability is positively related to the innovation capability.

Scholars can utilize this framework to further test these propositions within a different state, within a larger geographical area, or even within the context of nation branding. As the levels increase, the propositions might need more detail and expansion, making this an area ripe for further theoretical and empirical development.

Discussion and conclusion

Following calls to better understand innovation within a tourism context (Hjalager, 2010; Thomas and Wood, 2014), as well as from Hanna and Rowley (2013) to understand the lived experiences of destination marketing practitioners, this study aimed to find out how the innovation capability manifests and is influenced within DMOs. We chose a grounded theoretical approach to build theory (Hobson, 2003) in this emerging knowledge area within tourism study and practice. The role of grounded theory is to explore a phenomenon that is not well-known, or needs more development, to understand the patterns that emerge rather than testing hypotheses. Naturalistic inquiry (Lincoln and Guba, 1985) relies upon a grounded approach that uses iterative and constant coding processes to understand what is happening in the data. This kind of methodology was appropriate, given the need to build theory about lived experiences within tourism research.

Based upon a content analysis of interview transcripts with 12 DMO managers throughout a Southern US state, it was revealed that practitioners utilize a holistic approach to understanding and implementing innovative policies and practices. Specifically, we found three broad influences upon the DMO’s innovation processes: (1) an innovation-centered organizational culture, (2) an external knowledge acquisition ability, and (3) an internal knowledge exploitation ability. To understand our findings, we used theories of organizational capabilities to develop testable hypotheses that highlight the way these processes work together to create innovation in DMOs rather than, as literature suggested, innovation happening piecemeal.

Extant models of innovation within a tourism context often do not encapsulate the necessity of both internal and external factors; therefore, we offer an integrated framework that integrates both internal and external factors and details the influence on innovation. To this end, we employed a capability perspective (Camisón and Monfort-Mir, 2012; Chen and Huang, 2009; Daspit and Zavattaro, 2014; Denicolai et al., 2010; Nieves and Haller, 2014; Thomas and Wood, 2014) to suggest that identified factors are capabilities that work together to influence the innovation capability of the DMO. There are several implications for both theory and practice based upon these findings.

First, the framework offers a more complete view of how innovation manifests within DMOs. Through the lens of capabilities, innovation is a product of a focused organizational culture and enhanced knowledge exploitation capability that allows for the absorption of knowledge (Cohen and Levinthal, 1990; Nieves and Haller, 2014). Scholars studying innovation within destination marketing and tourism management have a framework that offers a broader understanding of how innovation is influenced in such organizations and are encouraged to expand these findings by conducting similar analyses within other regions, states, and nations. DMO managers can apply the findings within their organizations to foster a culture of innovation that rewards employees for ‘thinking outside of the box’. Managers also can make it known that employees should actively seek new information and then brainstorm ways to incorporate that new knowledge into service- and marketing-based innovations.

Second, this contribution provides additional grounding for adapting practices from strategic management into destination marketing and tourism literature. Given the results from interviews with DMO leaders, we found that leaders generally stated that multiple types of capabilities are used by DMOs to create an innovation capability. At the highest order, the organizational culture influences innovation-related goals and attitudes. We suggest that an innovative culture directly influences the extent to which the firm acquires external knowledge and manages knowledge internally. Once knowledge is acquired by the DMO, it is then managed internally and leveraged by the innovation-related capabilities in the organization. Scholars can then take the framework offered herein and refine each component for use within tourism studies.

Finally, practitioners in DMOs can adopt a strategic management approach to better understand how organizational culture influences employees’ willingness to innovate. The leader ideally should set out to detail for employees how their position fits with an overall organizational strategy as well as success of the destination as a whole. Sometimes employees need to see this larger connection to understand how their efforts toward innovation help in several avenues. We understand that not all of the innovations the managers mentioned fall in line with radical innovation, but they certainly are process or marketing innovations. It should be noted that most of the DMOs in this study have small budgets, few employees, and serve rural communities. For those managers, being able to implement a Facebook page is certainly a valuable process innovation—perhaps not radical, but certainly innovative for that manager.

As with any study, there are inherent limitations. First, the focus is on a specific geographic region within the United States limits the generalizability of results. Although the goal of qualitative studies is depth description of a phenomenon within a context (Lincoln and Guba, 1985), additional studies through the United States and even internationally would further the findings presented herein. Second, the findings are not longitudinal and thus represent one element of time. Studies could take a longitudinal approach to understand how innovation practices and policies change through time in response to environmental and technological demands. Third, telephone interviews were selected, and there are known limitations to using this kind of inquiry (Szymanska, 2012), but phone interviews remain powerful survey tools (Cooper and Schindler, 2006). Fourth, the study is based upon analysis from 12 managers. As noted earlier, DMOs were selected on a purposive basis to ensure representation from the state’s five regions, which all are geographically, economically, socially, and politically diverse. Finally, as readers will note in our attached questionnaire, there were questions asked to managers about internal and external collaboration. We want to make clear these questions were not asking about innovation. Instead, answers to those questions dealt largely with managerial processes (internal staff meetings and e-mails) and external associations (working with other local groups, industry professionals, tourism writers, etc.). As such, the codes we presented herein regarding internal and external influences on innovation were derived based upon the open, inductive coding detailed above. We believe these findings add to the overall capabilities-based literature emerging without tourism scholarship by drilling down into a specific capability: innovation. Our propositions offer further testing of this emerging area.

Footnotes

Appendix 1 Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

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