Internationalisation and innovation in the service sector: the role of international migrants and UK(London) hotels

Lead Research Organisation: University of Exeter
Department Name: Management


This project is focused on combining two under-researched elements: First, despite recognition that innovation in services is distinct from manufacturing, there is still very little research on several sub-sectors, one of which is hospitality. This is especially so in the United Kingdom, which includes the hotel industry - accounting for between four to five per cent of UK employment. It is the hotel industry that forms the focus of this study. Secondly, whilst the globalisation of innovation processes is acknowledged, the roles of international migration and mobility have received little attention. However, inter and intra firm international migration and mobility are highly significant in the UK, and influence innovation through the transfers of tacit knowledge amongst owners, managers and service employees with the hotel industry.

The research is organised around three main objectives:

  • Understanding innovation processes in the UK hotel industry

  • Analysing the role of international migration in enabling or obstructing innovation in terms of ownership, resources and knowledge transfer

  • A comparative international evaluation of innovation in UK hotels

Description The project has researched its key objectives using a mixed methodology developed across four main stages. From these various stages and aspects of the research analysis the following critical findings have been identified:
o There is considerable evidence that many large hotel co-operations are quick to adopt and exploit innovations developed outside of the industry. In this context they exhibit strong characteristics of learning organisations. Our survey data (in-depth interviews) of large hotels suggest however that there are differences in levels of knowledge absorption - but that these do not necessarily favour the international hotel organisations. The project identified many examples of national hotel organisations that exhibited all characteristics of innovative, learning organisations.
o In terms of organisational teaming within large hotels a key challenge has been the development of competences relating to innovations - particularly the impact of innovations in IT and these associated with Web 2.0 (social network sites). These are mainly innovations in e-marketing systems and product development that have also led to the increasing importance of co-creation or forms of 'open innovation' as hotels engage in a variety of ways with their customers. In our project this has led us to form conceptual links with the literature on Service-dominant logic as a framework for understanding the importance of co-creation in marketing management and the innovation process
o Hotels of all types have relatively low levels of R&D but nevertheless they have adopted a range of innovations. In terms of IT (including energy/sustainability aspects). These have been extensive and our research has uncovered evidence of strong linkages between suppliers of IT and hotels. These exhibit the characteristics of co-production networks regarding software innovations. Such innovations are somewhat hidden even by those perspectives and measures used by NESTA. A number of our case studies have highlighted the importance of these networks. The hotel industry is critical to the development and survival of a number of UK based IT companies.
o Our research highlighted a series of evolving management models within large hotel organisations. This is suggestive of innovations concerning financial management - in particular the impact of the 'asset light' business model and the role of private equity funds.
o The project also detailed innovation in hotel formats and their relationships with building design and the growth of the 'experience economy'. This links format innovations to innovations in service quality.
o Findings from the study of SMEs indicated relatively lower levels of innovation as expected. Also developments are highly concentrated in particular types of SMEs and in terms of innovation types. A number of statistical models were used to examine the determinants of the distribution of different types of innovation. For example, ordered-response models have been used. Such models identified the importance, in statistical terms, of structural, operational and/or managerial/human capital factors.
o The project identified much higher levels of international migrant ownership and management of SMEs than originally envisaged - some 60-80% of the labour force being migrants. These aspects of ownership were related to particular types of innovations relating to marketing and management structures as identified in the statistical models and supported by the interviews with SME owners/managers
Exploitation Route Recent developments have led to unexpected impacts including:
• An invitation by AIM to produce an Executive Report on Innovation Processes in the Hotel Industry (to be completed end of June 2011). This will help spread knowledge of the project findings to a wider group and beyond the academic community.
• An invitation to the PI and Co-I to present some of our findings to an ESRC seminar with the Institute of Travel and Tourism. This is the major trade body for the tourism industry, including CEOs of major global companies. We presented papers on innovation processes and the opportunity for the industry to work with academia.
• The PI was in addition invited to the ITT annual conference to participate in a workshop on extending industry links with academia.
Whilst these are potential opportunities for future impacts other related research via ESRC-CASE awards will also have future non-academic impacts.
Sectors Leisure Activities, including Sports, Recreation and Tourism
Description Our research findings have had a direct impact on the development of conceptual ideas within the area of tourism management. This can be shown through the evidence of citations for our papers; for our 2009 paper in Tourism Management there are already 17 cited uses, but it is too early for our other outputs to have recorded citations. Many of these papers are by key researchers in tourism such as Hjalager who has cited our work in tow key papers. In this context our work has significantly contributed to stimulating debates about knowledge transfer within the tourism literature. Other impacts have come via the conference papers and the requests from colleagues to present our findings at various international conferences (see end of award report). There has been a take up of our ideas into the younger research workers from our ESRC-AIM Capacity Building Workshops. Indeed evidence from Exeter shows an increase of PhDs developing our ideas on knowledge management in tourism. Many of these are ESRC-CASE awards based around the ESRC Cluster at Exeter and have therefore links with a variety of public sector and commercial partners. At least 3 PhD students at Exeter have developed/developing the ideas of knowledge management in their research.
First Year Of Impact 2011
Sector Leisure Activities, including Sports, Recreation and Tourism
Impact Types Societal,Economic
Description Innovation in tourism : the case of the hotel industry 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Other academic audiences (collaborators, peers etc.)
Results and Impact Presented at a management studies workshop on tourism innovation.

Year(s) Of Engagement Activity 2009,2010,2011