How digital orientation impacts service innovation in hotels: The role of digital capabilities and government support

Abstract

Digitalization is increasingly recognized as a strategy that enables firms to achieve financial performance. However, current literature does not provide ample evidence on how digital orientation influences service innovation in the hotel industry. This study employs the dynamic capabilities perspective within the Motivation-Opportunity-Ability (MOA) framework to investigate the relationship between digital orientation and service innovation in hotels. We explore the mediating role of digital capabilities and the moderated-mediation role of government support. The hypotheses are tested with data from 320 hotels in China. The results indicate that, first, a hotel’s digital orientation has a significant and positive impact on service innovation. Second, this impact is mediated by digital capabilities. Third, government support reinforces the first-stage indirect effects of digital orientation on service innovation via digital capabilities. This study adds to the academic community by bridging the digitalization literature and service innovation literature in the context of the hospitality industry.