Market structures, strategy and innovation in services A study applied to the tourism sector

The objectives of this paper are twofold – first we discuss innovation in the service sector, especially in tourism. Secondly, we apply the diagnostic test of the integrated model of innovation (Sarkar 2005, 2007) to present the results of an empirical study applied to tourism in a small open economy. The study applies multivariate analysis using a data set consisting of survey responses from 158 Portuguese firms. The study uses an archetype and the market outcome resulting from the innovation strategies pursued to compare similarities and differences according to the geographical localizations of the firms in order to identify innovative patterns in tourism firms. The study identifies the linkage between service, market structures and innovation strategies considering geographical agglomeration of firms in a small economy. The identification of different innovation trajectories and positions in the model could justify different public politics to incentivise and promote innovation in tourism firms.