Strategic thinking and innovation as panaceas for hotel performance in turbulent business environments

Abstract

As the hospitality industry grapples with unprecedented crises, the relationship between innovation, strategic thinking and hotel performance during crises emerges as a critical area of exploration. The study investigates the mediating role of innovation in the relationship between strategic thinking and hotel performance during times of crisis. The study employs a quantitative approach and uses a questionnaire to solicit responses from 291 hospitality firms. Partial least squares (PLS) have been used to conduct confirmatory factor analysis (CFA) and subsequently structural equation modeling (SEM) to test the hypothesis paths of the study. The study establishes strategic thinking as a catalyst for enhanced organizational performance in the hospitality sector. The study found a positive synergy between strategic thinking and innovation, as strategic thinking catalyzes innovation, which in turn influences overall hotel performance. This synergistic relationship is essential for organizations seeking to survive and thrive in a rapidly changing business environment. The study offers practical insights for practitioners on leveraging strategic thinking and innovation synergy as a strategic tool for enhanced performance in dynamic business environments, as well as positioning themselves for long-term success and resilience.

Keywords:

• Strategic thinking
• strategic innovation
• hospitality
• firm performance
• crises

Reviewing Editor:

• Diego Corrales-Garay, Universidad Rey Juan Carlos, Spain

SUBJECTS:

• Strategic Management
• Management of Technology & Innovation
• Hospitality Management
• Management of Technology & Innovation
• Hotel Management
• The Hospitality Industry
• Hospitality

1. Introduction

Hotels in the dynamic business environment frequently face various crises, including economic volatility and global pandemics (Lai & Wong, 2020; Liu et al., 2021; Ritchie, 2004; Rossello et al., 2020). As crises become more frequent and unpredictable, the hospitality sector is compelled to reassess its strategies for sustained success (Allahveisi et al., 2019; Ansell & Boin, 2019; Breier et al., 2021; Furr & Eisenhardt, 2021; Marco-Lajara et al., 2022). Success in navigating crises and recovering from them requires the implementation of a strategic approach that goes beyond traditional perspectives. Strategic thinking has thus risen as a prominent dynamic capability that can be construed to achieve organizational resilience in the hospitality industry.

The dynamic capability theory (DCT) posits that an organization’s ability to adapt and reconfigure its resources is central to its success in changing environments (Alcalde-Calonge et al., 2022; Teece et al., 1997; Teece, 2007; Yalcinkaya et al., 2007). As dynamic capabilities are an organization’s ability to integrate, build and reconfigure internal and external competencies to address rapidly changing environments (Ferreira et al., 2020; Teece et al., 1997), strategic thinking can be viewed as a crucial component of dynamic capabilities, influencing how hotels sense, seize and transform their resources to enhance overall performance. The study therefore conceptualizes strategic thinking as a unique dynamic capability that is significant for enhancing hotel competitiveness and overall performance in a turbulent business environment.

Strategic thinking is a catalyst for superior firm performance (Benito-Ostolaza & Sanchis-Llopis, 2014; Dixit et al., 2021). Firms that engage in strategic thinking are better positioned to identify emerging market trends, technological advancements and competitive forces (Alatailat et al., 2019; Dixit et al., 2021). This is because strategic thinking enables organizations to anticipate opportunities and threats in the external environment (Acar & Özşahin, 2018; Bouhali et al., 2015). Anticipating these changes allows organizations to proactively capitalize on opportunities and mitigate potential threats, thereby influencing overall performance (Olaniyi & Elumah, 2016; Shaik & Dhir, 2021).

Furthermore, the importance of innovations for a firm’s survival and success has been emphasized in the literature (Ashton & Stacey, 1995; Ferreira et al., 2021; Yalcinkaya et al., 2007). Consequently, firms must possess the capability to make market decisions that facilitate and promote innovation in order to prosper in an environment characterized by market uncertainty. In line with this, innovation has widely been recognized as a key driver of firm performance (Bouhali et al., 2015; Calabrese & Costa, 2015; Ferreira et al., 2021; García-Sánchez et al., 2019; Olaleye et al., 2020). The study contends that the relationship between strategic thinking and innovation is fundamental to an organization’s capacity to flourish in a dynamic and competitive environment. Strategic thinking and innovation are interconnected processes that mutually fuel one another, producing organizations characterized by adaptability and creativity (Calabrese & Costa, 2015; Moghadam et al., 2018). Strategic thinking therefore provides the platform where innovation can be strategically utilized to achieve a competitive advantage.

First, while there is a growing body of literature acknowledging the importance of strategic thinking (Acar & Özşahin, 2018; Dixit et al., 2021; Olaniyi & Elumah, 2016; Shaik & Dhir, 2021), the relationship between strategic thinking and hotel performance during crises remains inadequately explored. As the hotel industry navigates through dynamic market conditions, the role of strategic thinking in shaping the performance of hotels emerges as a pivotal yet underexplored area. Second, while the literature recognizes the significance of strategic thinking in driving firm performance, a noteworthy gap exists in understanding the mechanisms through which strategic thinking translates into firm performance in the hotel sector. Therefore, there is a notable gap in understanding how strategic thinking and innovation interact, particularly in the context of the hotel industry, despite the available literature recognizing the importance of both strategic thinking and innovation in navigating crises (Ardito et al., 2021; Alzoubi & Jaaffar, 2020; Breier et al., 2021; Leta & Chan, 2021). Against this background, the purpose of this study is to address the research question: ‘To what extent does strategic thinking anchor hotel performance during crises via an indirect mechanism of strategic innovation?’

The findings offer practical implications for hotel practitioners and management. The study highlights the pivotal role of strategic thinking in initiating and guiding sustainable responses to crises and offers a roadmap for hotels to navigate turbulent environments. This contributes to a strategic decision-making framework tailored to crisis management, ultimately promoting hotel resilience and sustainability. Additionally, the study demonstrates how hotels can build dynamic capabilities that contribute to the development of a sustainable competitive advantage. Grounded in DCT, the study unpacks the mechanism through which strategic thinking influences the strategic deployment of innovation, particularly in times of crisis. The study illuminates that strategic thinking serves as the catalyst for innovative responses that are strategically aligned with organizational goals. The study therefore offers a strategic roadmap for leveraging innovation as a transformative force during crises in the hospitality sector, ultimately enhancing hotel performance as well as positioning themselves for long-term success and resilience. Lastly, the findings have implications for industry policies and regulations. Governments and industry associations should consider promoting a supportive environment for strategic thinking and innovation within the hospitality sector. This could involve creating incentives, offering grants, or providing resources to encourage hotels, especially small-scale hotels that may have suffered as a result of the crisis, to invest in strategic initiatives and innovative practices.

The rest of the sections are as follows: theoretical background, empirical review and hypothesis development, material and method, results, discussion and conclusion of the study.

2. Theoretical review and hypothesis development

2.1. Theoretical background

According to dynamic capabilities theory, firms must develop specific capabilities and engage in continuous learning in order to remain competitive in a changing marketplace (Teece et al., 1997). In a typical changing environment, the absence of dynamic capabilities will possibly make it difficult for a firm to achieve sustainable competitive advantage, as the process of maintaining competitive advantage is dynamic and infinite (Alcalde-Calonge et al., 2022; Ferreira et al., 2020; Teece, 2007). The study suggested that in a crisis-ridden era, organizations with dynamic capabilities may respond to changes in the business environment more effectively by exploiting and applying knowledge, as well as resolving difficulties related to capability inflexibility. In line with this, firms with strong dynamic capabilities will be able to develop and redeploy internal and external skills in order to respond to a crisis or a changing environment, particularly in the hospitality industry sector, which is vulnerable to crises. The COVID pandemic has had a significant impact on the hospitality industry, thereby multiplying the importance of strategic thinking. In such circumstances, strategic thinking and innovation may be viewed as key mechanisms to respond appropriately, flexibly and promptly to unexpected events, particularly during crisis recovery. Strategic thinking coupled with innovation will better handle the complexities and uncertainties of crises and respond to crises effectively and quickly, allowing firms to prosper competitively in the crisis era.

Absorptive capacity theory elucidates the process by which organizations obtain, integrate and leverage external knowledge in order to foster innovation and enhance their overall performance (Cohen & Levinthal, 1990). The theory highlights the significance of an organization’s capacity to proficiently identify, assimilate and use novel knowledge from other entities, such as suppliers, consumers and competitors (Cohen & Levinthal, 1990). The ability to absorb new knowledge and skills is essential for organizations, especially in dynamic and competitive contexts, such as the hospitality sector, as it enables them to proactively adjust and generate novel ideas. In line with this, hotels that possess greater absorptive capacity have a better probability of engaging in innovation and capitalizing on market opportunities. Hotels that possess a strong ability to absorb and utilize new knowledge may effectively and promptly adjust to dynamic market conditions and emerging opportunities.

2.2. Relationship between strategic thinking and firm performance

Strategic thinking is defined in various capabilities that include: (1) strategy formulation –cognitive activity that involves the identification, interpretation, and formulation of strategies to enhance organizational performance and achieve competitive advantage (Racelis, 2006; Dixit et al., 2021); (2) strategic sensitivity – the capability to synthesize information, anticipate future trends and create adaptive strategies that align organizational actions with the changing environment (Alatailat et al., 2019; Benito-Ostolaza & Sanchis-Llopis, 2014); (3) capability – encompasses the ability to connect internal capabilities with external opportunities, resulting in the development and execution of successful business strategies (Racelis, 2006; Shaik & Dhir, 2021), and involves the continuous process of sensing and seizing opportunities, anticipating challenges and adapting to the evolving business landscape for sustained organizational success. Taking these definitions of strategic thinking into consideration, the study conceptualizes strategic thinking as a dynamic capability that is unique or difficult to imitate and can potentially be a source of competitive advantage for hospitality firms.

Firm performance has become a significant concept in strategic management research and is frequently used as a dependent variable (Bhat & Sharma, 2022; Elbanna et al., 2015). Firm performance refers to a business’s capacity to effectively use its existing resources in order to meet its goals as outlined in the company’s objectives (Bhat & Sharma, 2022). As a strategy formulation mechanism, strategic thinking helps companies identify and understand their competitive environment by identifying their strengths, weaknesses, opportunities and threats (Bonn, 2005; Calabrese & Costa, 2015; Navid Adham & Shafizadeh, 2019). This information can then be used to develop strategies and align their actions with the strategic goals of the organization, which will help the company compete effectively. Further, strategic thinking plays a pivotal role in resource allocation and operational efficiency (Bouhali et al., 2015; Racelis, 2006). Organizations that engage in strategic thinking are adept at allocating resources – financial, human and technological – in a manner that aligns with their strategic objectives (Acar & Özşahin, 2018; Shaik & Dhir, 2021). This efficient use of resources contributes to improved operational performance and the achievement of organizational goals. Furthermore, strategic sensitivity and strategic thinking assess risks and uncertainties within the business environment. It aids in proactively identifying potential risks and developing strategies to mitigate them, which can contribute to better firm performance (Bouhali et al., 2015; Alatailat et al., 2019; Racelis, 2006). Strategic thinking thus minimizes the negative impact of uncertainties and enhances the organization’s ability to navigate crises.

Lastly, dynamic capabilities are an organization’s ability to integrate, build and reconfigure internal and external competencies to address rapidly changing environments (Alcalde-Calonge et al., 2022; Teece et al., 1997). Strategic thinking as a dynamic capability enables firms to anticipate changes in the competitive landscape, market trends and customer preferences (Acar & Özşahin, 2018; Alatailat et al., 2019; Bouhali et al., 2015; Olaniyi & Elumah, 2016; Shaik & Dhir, 2021; Racelis, 2006), aligning with the sensing aspect of dynamic capabilities. In line with this, hotels can identify emerging opportunities and threats, allowing them to adapt swiftly to evolving conditions. Further, as dynamic capabilities involve the ability to make strategic decisions effectively (Teece et al., 1997; Teece, 2007), strategic thinking provides the foundation for decision-making, allowing hotels to capitalize on opportunities identified during the sensing phase. Thus, strategic thinking informs the seizing of opportunities. Hotels that consistently engage in strategic thinking are more likely to adapt their strategies over time, building enduring value, ensuring resilience and sustainable competitiveness in the long run. The first hypothesis is:

H1: Strategic thinking has a significant and positive relationship with hotel performance

2.3. Relationship between strategic thinking and innovation

Innovation is the process of introducing new products or services, creating new production methods, exploring new markets or implementing new organizational and managerial structures (Ferreira et al., 2020; Tidd & Bessant, 2018). Innovation requires the implementation of a new or significantly improved product (good or service), process, a new marketing method or a new organizational method in business organization (Bhat & Sharma, 2022; Mansury & Love, 2008; Moghadam et al., 2018). One of the fundamental factors that spur innovation is radical strategic thinking.

Strategic thinking plays an integral role in organizational innovation (Bonn, 2005; AlQershi, 2021; Moghadam et al., 2018). Strategic thinking has a significant impact on innovation, and companies that engage in strategic thinking are more likely to be innovative and successful. First, strategic thinking helps companies identify and understand their competitive environment, leading to the development of innovative strategies that will help the company compete effectively (Bonn, 2005; Calabrese & Costa, 2015; Kazmi et al., 2016). DCT admonishes organizations to develop and adapt their capabilities to achieve a competitive advantage in a rapidly changing environment (Ferreira et al., 2020; Teece, 2007). As dynamic capabilities involve the ability to sense changes in the external environment and seize opportunities effectively, strategic thinking serves as the foundation for sensing opportunities that are potential areas for innovation. Strategic thinking provides a visionary direction for the organization (Bonn, 2005; Bouhali et al., 2015; Kazmi et al., 2015; Olaleye et al., 2020), which often involves anticipating future trends, opportunities and challenges. This guides innovation efforts toward areas that align with the long-term goals and aspirations of the organization.

Moreover, dynamic capabilities also emphasize strategic flexibility and adaptability in response to changes in the business environment (Teece, 2007). Strategic thinking encourages organizations to be flexible and adaptable in their approach to achieving strategic objectives (Acar & Özşahin, 2018; Calabrese & Costa, 2015; Kazmi et al., 2015; Navid Adham & Shafizadeh, 2019; Olaleye et al., 2020). This supports the development of dynamic capabilities that enable organizations, especially hotels, to adjust their innovation strategies based on evolving market conditions, especially during crises. Hotels that strategically align their innovation efforts with their overall objectives are better positioned to differentiate themselves in the market, stay ahead of competitors and adapt to industry changes. This ability to innovate and adapt to changing circumstances is often reflected in improved firm performance, especially in dynamic and competitive markets. The second hypothesis is:

H2: Strategic thinking has a significant and positive relationship with innovation

2.4. Relationship between innovation and firm performance

In a highly competitive business environment, firms need to embrace innovation in order to survive and for value creation (Ashton & Stacey, 1995; Ferreira et al., 2020). Moreover, in a fast-changing business environment and a crisis-prone environment such as the hospitality sector, it is therefore necessary to realize the need to explore, exploit, and deploy innovative strategies in order to manage crises and stay competitive during crises (Ardito et al., 2021; Breier et al., 2021; Leta & Chan, 2021; Moghadam et al., 2018). The ability to form strategic innovation is thus vital in order to provide effective and efficient hotel performance. Hotels with higher absorptive capacity are more likely to engage in innovation and take advantage of market opportunities. Thus, hotels with a high capacity to assimilate and use new knowledge can quickly and efficiently adapt to changing market conditions and developing opportunities.

Research has widely shown a positive relationship between innovation and firm performance, such as sales growth, profitability and market share (Ashton & Stacey, 1995; Bhat & Sharma, 2022; Calabrese & Costa, 2015; Ferreira et al., 2021; García-Sánchez et al., 2019; Mansury & Love, 2008; Kazmi et al., 2016; Olaleye et al., 2020; Yalcinkaya et al., 2007). For example, innovation enables firms to differentiate themselves in the market. Products, services or processes that result from innovation can provide a competitive advantage, contributing to enhanced business performance through increased market share and customer loyalty (Kazmi et al., 2016; Yalcinkaya et al., 2007; Navid Adham & Shafizadeh, 2019; Olaleye et al., 2020). Further, innovations that address market needs or create new opportunities often lead to revenue growth for firms. Successful introduction of innovative products or services can open new revenue streams, positively impacting the overall financial performance of the business (Ashton & Stacey, 1995; Mansury & Love, 2008; Moghadam et al., 2018). Moreover, innovations in operational efficiency can result in cost savings, improved productivity and streamlined workflows, directly influencing the operational performance of firms. Innovations that focus on cost-effective solutions or resource optimization contribute to efficient cost management. Effective cost control positively influences the financial performance of firms, impacting their overall business performance (Olaleye et al., 2020; Tidd & Bessant, 2018).

As dynamic capabilities are an organization’s ability to integrate, build and reconfigure internal and external competencies to address rapidly changing environments (Alcalde-Calonge et al., 2022; Ferreira et al., 2020; Teece et al., 1997), innovation is a dynamic capability that allows firms to adapt, evolve and stay competitive in changing markets. Firms that prioritize innovation are better positioned to introduce new products, services or processes that set them apart from competitors, leading to enhanced performance (Bhat & Sharma, 2022; García-Sánchez et al., 2019). Firms with strong innovation performance are better equipped to adapt to changing market conditions. The ability to respond to technological advancements, shifts in consumer preferences and emerging trends enhances the resilience of the business, impacting its overall performance (Ferreira et al., 2021). Thus, innovative firms tend to outperform their competitors and achieve higher levels of success, as supported by the DCT. The third hypothesis is:

H3: Strategic Innovation has a significant and positive relationship with hotel performance

2.5. The mediating role of strategic innovation in strategic thinking and hotel performance nexus

The hospitality industry is highly competitive and constantly evolving; therefore, staying ahead of trends and changes in the market is crucial for success in the industry. As crises disrupt traditional business models, strategic thinking becomes crucial for adapting to rapidly changing circumstances (Ansell & Boin, 2019; Furr & Eisenhardt, 2021; Marco-Lajara et al., 2022). Strategic thinking creatively assists in the development of strategies that will help the organization achieve its goals (Calabrese & Costa, 2015; AlQershi, 2021; Navid Adham & Shafizadeh, 2019). Therefore, there is a strong relationship between strategic thinking and business performance (Acar & Özşahin, 2018; Alatailat et al., 2019; Shaik & Dhir, 2021). Companies that engage in strategic thinking are more likely to be successful; they are more likely to generate higher revenue growth and profitability. This is because strategic thinking helps companies identify and understand their competitive environment, ultimately helping them to make better decisions about resource allocation, product development, and marketing (AlQershi, 2021; Bonn, 2005; Calabrese & Costa, 2015; Moghadam et al., 2018). This is important because the hospitality business environment is constantly changing, and companies need to be able to adapt in order to survive and thrive. More specifically, in the face of unprecedented challenges and uncertainties, the hotel industry is compelled to reassess its strategies to not only survive but also thrive during times of crisis.

The DCT posits that an organization’s ability to adapt and reconfigure its resources is central to its success in changing environments (Teece et al., 1997; Teece, 2007). Organizations need to possess the ability to integrate, build and reconfigure internal and external competencies to address rapidly changing environments (Ferreira et al., 2020; Teece et al., 1997). Thus, hospitality firms need specialized competencies to cope with complex and dynamic business environments through the exploration of creative knowledge assets adapted to the local market. This points to the importance of strategic innovation as a missing link between strategic thinking and firm performance. Strategic innovation represents a core and distinctive mechanism through which strategic thinking translates to stellar hotel performance. This is consistent with the primary tenets of the DCT, whereby hotels need dynamic capabilities to design and implement mechanisms that can possibly anchor their competitive advantage in a turbulent business environment (Teece, 2007).

Therefore, the study argued that the relationship between strategic thinking and innovation is foundational to an organization’s ability to thrive in a dynamic and competitive environment. Both strategic thinking and innovation are interlinked processes that fuel each other, fostering a culture of agility and creativity (AlQershi, 2021; Calabrese & Costa, 2015; Kazmi et al., 2016; Navid Adham & Shafizadeh, 2019; Moghadam et al., 2018; Olaleye et al., 2020). Strategic thinking provides the overarching vision, guiding principles and a structured approach to aligning innovation efforts with organizational goals, while innovation complements strategic thinking by serving as the mechanism through which organizations bring strategic visions to life (AlQershi, 2021; Moghadam et al., 2018). Therefore, strategic thinking guides the identification of opportunities for innovation and helps identify areas where innovation can lead to a positive impact on the organization. For example, strategic thinking drives innovation within hotels; this innovation, in terms of operational processes, guest experiences or service delivery, represents a transformative process that enhances a hotel’s capabilities to perform effectively. Therefore, in the context of a crisis, innovation serves as a vehicle that translates strategic thinking into organizational outcomes. Hotels that employ strategic thinking and innovation will enhance their ability to not only survive but thrive during crises, ultimately influencing and optimizing their overall performance. The fourth hypothesis is:

H4: Strategic innovation mediates the relationship between strategic thinking and hotel performance

The study draws insight from DCT to establish a framework and the hypothesis of the study, as demonstrated in Figure 1. The H1 and H3 depict the direct relationship strategic thinking and strategic innovation have with firm performance, respectively. The H2 depicts the direct relationship between strategic thinking and strategic innovation. The H4 depicts the indirect relationship of strategic thinking to firm performance channeled through strategic innovation.

Figure 1. Conceptual model.

3. Material and methods

3.1. Research philosophy

The study adopts a positivist philosophy. Positivism holds that knowledge should be derived from observable facts and phenomena. This means that theories and hypotheses should be based on empirical evidence gathered through sensory experience or experimentation (Saunders et al., 2003). The study adopts positivist philosophy because it prioritizes empirical evidence and scientific methods, which can provide a rigorous and systematic approach to understanding phenomena.

3.2. Research design

Explanatory research aims to explain why and how certain phenomena occur. It goes beyond merely describing or correlating variables to establish causal relationships and understand underlying mechanisms (Saunders et al., 2003). Explanatory research design was adopted because it allows researchers to go beyond mere description or correlation to investigate causal relationships between variables.

3.3. Target population

The study’s target population is the hospitality industry, specifically focusing on hotels with mostly three- to five-star ratings. The sampling frame consisted of hotels having a rating of 3 stars or higher, which were selected from the Ghana Hoteliers Association (GHA).

3.4. Sampling and sampling method

A total of 291 valid responses were ultimately utilized for the purpose of data analysis, employing Cochran’s (1977) sampling procedure. The study employs a key informant approach to purposefully select the hospitality industry’s top executives, who are presumed to possess extensive knowledge and a deep awareness of their organizations’ operations, as well as the ability to make strategic decisions on behalf of the company. Verbal consent was obtained from each respondent before their participation in this study. The respondents were provided with comprehensive information regarding the research purpose of the study and emphasized that participation was voluntary. The respondents therefore provided verbal affirmation of their consent to participate before proceeding with the study.

3.5. Instrumentation and scaling

The study employs questionnaire to solicit responses from Ghanaian hospitality firms. The development of the measurement instrument was undertaken subsequent to an extensive examination of the relevant scholarly literature. The constructs were assessed on Likert scales ranging from 1 to 7, with 1 representing significant disagreement and 7 indicating strong agreement.

3.5.1. Independent variable

In this study, strategic thinking involves the continuous process of sensing and seizing opportunities, anticipating challenges and adapting to the evolving business landscape for sustained organizational success, as well as understanding the competitive landscape and envisioning the direction in which the business needs to move to remain successful (Alatailat et al., 2019; Dixit et al., 2021). The study measures strategic thinking using six (6) items adopted from AlQershi (2021). These items or scales are relevant for hotels in Ghana as they comprehensively capture the ability of firms to formulate strategies to capture value for the firm.

3.5.2. Mediating variable

Innovation is the process of introducing new products or services, creating new production methods, exploring new markets or implementing new organizational and managerial structures (Ferreira et al., 2020; Tidd & Bessant, 2018). In this study, strategic innovation is a deliberate and systematic process of introducing new and valuable ideas into an organization’s strategy to drive growth, create a competitive advantage, and enhance overall performance. The study adopted six (6) items from Jansen et al. (2009) to measure innovation. This measure is particularly important as it captures exploratory and exploitative aspects of innovation that are useful to the hospitality industry.

3.5.3. Dependent variable

In this study, hotel performance is the outcome of the hotel’s ability to leverage its unique capabilities, competencies and strategic actions to achieve superior results in the marketplace, leading to sustained competitive advantage. Hotel performance was measured 5 items adopted from Elbanna et al. (2015). This scale helps to capture various aspects of the hotel’s functioning, including financial health, customer satisfaction, operational efficiency, competitive positioning and the overall success of the hotel in achieving its operational and strategic goals.

3.5.4. Control variable

The control variables considered in this study were firm size, firm age, managerial position and R&D function.

3.6. Reliability and validity

The study employs Cronbach’s alpha (CA) to assess the reliability of the research instrument, and convergent and discriminant tests were conducted to assess the validity of the measurement model.

3.7. Structural equation modeling (SEM)

The dataset was analyzed using Smart PLS version 4. The study employs a two-step structural equation modeling (SEM) approach. In the initial step, the study validated the measurement model using confirmatory factor analysis (CFA). In the second step, the study tested the hypothesized paths in a structural model.

3.8. Profile of the respondents’ profile

The firms’ characteristics are presented in Table 1. The firms are small to medium-sized (SMEs), with 33.0% having less than 30 employees, followed closely by 37.5% having 30–99 employees. For firm age, firms with operational years less than 5 years are 62 (21.3%), 6–10 years are 97 (33.3%), 10–15 years are 74 (25.4%) and above 15 years are 58 (20.0%). Owner Manager/CEO: 80 firms (27.5%), General Manager/Senior Executive: 149 (51.2%) and Head of Operation: 62 (21.3%). The majority of respondents are general managers or senior executives, comprising over half (51.2%) of the sample.

Table 1. Firm characteristics (N = 291).

Sample description	Frequency	Percentages
Firm size (employees)
Less than 30	96	33.0
30–99	109	37.5
100 or more	86	29.5
Firm age (years)
0 − 5 years	62	21.3
6–10 years	97	33.3
10–15 years	74	25.4
Above 15 years	58	20.0
Job position
Owner Manager /CEO	80	27.5
General Manager/senior executive	149	51.2
Head of operation	62	21.3
Industry
Hospitality	291	100

4. Result

4.1. Descriptive statistics

The mean value of strategic thinking is 5.07, with a standard deviation of 1.097. The mean value of strategic innovation is 5.33, with a standard deviation of 1.068. The mean value of firm performance is 5.65, with a standard deviation of 1.025.

4.2. Construct and convergent validity

The study conducts CFA to substantiate the measurement model. The factor loadings presented in Table 2 demonstrate a positive correlation between the observed variables and the latent constructs as all the factor loadings surpasses the suggested threshold of 0.5 (Hair et al., 2020). Further, the study assesses the internal consistency and convergence validity of the constructs using composite reliability (CR), average variance extracted (AVE) and CA. The AVE, CA and CR values for strategic thinking are AVE = 0.652, CA = 0.918 and CR = 0.921. For strategic innovation, the values are AVE = 0.622, CA = 0.908 and CR = 0.912. Lastly, for hotel performance, the values are AVE = 0.586, CA = 0.876 and CR = 0.885. In general, it is anticipated that the average variance derived will exceed 0.50 (Hair et al., 2020), that CA will surpass 0.70 (Hair et al., 2020) and that CR will surpass 0.60 (Hair et al., 2020). From the results in Table 2, the study achieved internal consistency and convergent validity, as all the latent constructs had values exceeding their respective recommended thresholds, indicating internal consistency and good convergence validity. The study evaluates the model fit based on key fit indices: Chi-square = 211.289; DF = 116; Chi-square/DF = 1.821; CFI = 0.955; NFI = 0.927; TLI = 0.951; GF1 = 0.918; RMSEA = 0.050; SRMR = 0.029. The model fit indices collectively suggest a good fit for the proposed model as they meet the various recommended thresholds, supporting the adequacy of the model in explaining the observed data.

Table 2. Confirmatory factor analysis.

	Loading	CA	CR	AVE
Strategic thinking		0.918	0.921	0.652
The hotel is quick to adapt its strategies in response to changes in the market or industry.	0.786
The hotel regularly reviews and updates its strategic plan in light of changing conditions.	0.807
The hotel has a process in place for identifying and assessing new opportunities and threats.	0.835
The hotel has a process in place for developing and implementing strategies to exploit opportunities and mitigate threats.	0.813
The hotel is proactive in making decisions to adapt to changes in the business environment.	0.832
The hotel actively learned from crisis and adapted strategies for future resilience.	0.769
Strategic innovation		0.908	0.912	0.622
The hotel accepts demands that go beyond existing products and services	0.780
The hotel experiments with new products and services in our local market, e.g. utilizes new opportunities in new markets	0.804
The hotel commercializes products and services that are completely new to our organization	0.837
The hotel effectively integrates technology to improve guest services.	0.754
The hotel frequently refines the provision of existing products and services for our local market	0.788
The hotel regularly implements small adaptations to existing products and services	0.766
Hotel performance		0.876	0.885	0.586
The hotel adapts well to changing market trends and customer preferences, e.g. achieving predicted room and occupancy rates.	0.781
The hotel demonstrates efficient operational processes, e.g. booking, room service	0.778
The hotel has demonstrated strong financial performance.	0.810
The hotel has achieved a strong market share growth.	0.750
The hotel actively engages practices to enhance overall guest experience, e.g. check in, serving customers on time.	0.706

4.3. Discriminant validity analysis

The discriminant validity of the constructs – strategic thinking, strategic innovation and hotel performance – is assessed utilizing the Fornell and Larcker (1981) criterion. The analysis aims to ensure that each construct is distinct from the others, preventing issues of multicollinearity. Fornell and Larcker (1981) proposed a criterion for assessing discriminant validity. According to this criterion, the square root of the AVE for each construct should be greater than its correlation with any other construct. From the result in Table 3, the study secured discriminant validity as none of the correlations are above the square root of the AVE for any of the constructs. The square root of the AVE for each construct is greater than its correlation with other constructs, indicating that the constructs are measuring distinct concepts.

Table 3. Correlation matrix.

Variables	1	2	3	4	5	6	7
Firm age	1
Firm size	−0.109	1
R & D Function	−0.059	−0.035	1
Managerial position	0.071	−0.043	0.027	1
Strategic thinking	−0.024	−0.049	−0.008	0.023	0.807
Strategic innovation	−0.014	−0.012	−0.010	−0.008	0.434**	0.789
Firm performance	0.054	−0.056	0.026	0.022	0.450**	0.440**	0.766

**Correlation is significant at the 0.05 level (2-tailed). √AVE are bold.

The Fornell–Larcker criterion has faced criticism due to its perceived lack of sensitivity and specificity, as well as its limited justifiability in detecting issues of discriminant validity (Henseler et al., 2015). Henseler et al. (2015) have presented a novel method for evaluating discriminant validity known as the heterotrait-monotrait ratio of correlations (HTMT), which is presented in the next section.

4.4. Heterotrait-monotrait ratio (HTMT)

This report evaluates the discriminant validity of the constructs – strategic thinking, strategic innovation and hotel performance – using the HTMT criterion. The HTMT assesses the extent to which the constructs are more strongly related to their own measures than to other constructs. HTMT values closer to 1 are considered to lack discriminant validity; however, the HTMT should not exceed 0.85 (Kline, 2011) or 0.9. From the result in Table 4, the HTMT for the correlation among the constructs is less than the commonly suggested threshold of 0.85 (Kline, 2011). The HTMT values for all construct pairs are below the recommended threshold of 0.85, signifying that the constructs are more strongly related to their own measures than to the measures of other constructs. This provides confidence in the discriminant validity of the measurement model.

Table 4. Heterotrait-monotrait ratio.

Variables	1	2	3
Strategic thinking
Strategic innovation	0.637
Firm performance	0.651	0.644

4.5. Hypothesis testing

In this study, we applied PLS path modeling with bootstrapping to examine the relationships between latent constructs, strategic thinking, strategic innovation and hotel performance. The section presents the results of the PLS bootstrapping analysis, shedding light on the parameter estimates, the significance of paths, and the overall model fit. Bootstrapping allows for the calculation of standard errors, confidence intervals and p values. The result is presented in Figure 2, and the output is also presented in Table 5.

Figure 2. SEM model.

Table 5. Hypothesis path.

	β	S.E	T	p Value	95% CI	Decision
Controls
Firm age	0.321	0.283	1.132	0.258	−0.192–0.922
Firm size	−0.611	0.314	1.950	0.051	−1.298 – −0.048
R & D Function	0.030	0.036	0.839	0.402	−0.035–0.106
Managerial position	0.465	0.380	1.278	0.201	−0.258–1.242
Direct effect
ST → FP	0.449	0.064	7.054**	0.000	0.320–0.570	Supported
ST → SI	.0765	0.052	14.637**	0.000	0.648–0.848	Supported
SI → FP	0.372	0.064	5.824**	0.000	0.240–0.491	Supported
Indirect effect
ST → SI → FP	0.285	0.055	5.178**	0.000	0.175–0.391	Supported
Fit indices
R square, DV = FP, 0.697
R square DV = SI, 0.586

ST: strategic thinking; SI: strategic innovation; FP: firm performance

**Significant at the 0.05 levels.

First, the study presents the results of the relationship between the independent variable, strategic thinking and the dependent variable, strategic innovation, while controlling for various factors, including firm age, firm size, R&D function and managerial position. Each coefficient represents the change in the dependent variable (hotel performance) for a one-unit change in the respective independent variable, while holding other variables constant. The study found that firm age, R&D function and managerial position have a positive but statistically insignificant relationship with hotel performance. Firm size, on the other hand, has a negative relationship with hotel performance. The inclusion of control variables enriches the understanding of the relationship between strategic thinking and hotel performance.

Second, a crucial metric for determining the model’s goodness-of-fit is the R-square value, which represents the percentage of variance that the independent variable explains. The model yields an R-square value of 0.697 for hotel performance. This suggests that the influence of strategic thinking and strategic innovation combined can account for about 69.7% of the variability in hotel performance. Thus, the model accounts for a substantial proportion of the variability observed in hotel performance. Furthermore, the model also reveals an R-square value of 0.586 for strategic innovation, indicating that approximately 58.6% of the variability in strategic innovation can be explained by the influence of strategic thinking.

On the hypothesis paths, the study found that strategic thinking has a positive and significant relationship with hotel performance (β = 0.449, t = 7.954, p $<$ 0.05). Thus, hypothesis 1 – that strategic thinking has a positive relationship with hotel performance – is supported. The study also found that strategic thinking has a positive and significant relationship with strategic innovation (β = 0.765, t = 14.637, p $<$ 0.05). Thus, hypothesis 2 – that strategic thinking has a positive relationship with strategic innovation – is supported. The study also found that strategic innovation thinking has a positive and significant relationship with hotel performance (β = 0.372, t = 5.824, p $<$ 0.05). Thus, hypothesis 3 – that strategic innovation has a positive and significant relationship with hotel performance – is supported. Lastly, the study found a significant indirect effect of strategic thinking on hotel performance via strategic innovation (β = 0.285 [0.175–0.391]). The significance of this path is evaluated using a 95% bootstrapping confidence interval, which is expected not to contain zero for a mediation to be achieved. From the result, the mediation effect is significant as the lower and upper confidence intervals contain no zeros. Thus, hypothesis 4 – that strategic innovation mediates the relationship between strategic thinking and hotel performance – is supported. The results suggest that strategic innovation plays a significant role in translating strategic thinking into improved hotel performance. Organizations focusing on enhancing both strategic thinking and strategic innovation are likely to experience greater success in the hospitality industry.

5. Discussion

The study assesses the mediating role of strategic innovation in the relationship between strategic thinking and hotel performance. The study establishes a robust connection between strategic thinking and hotel performance. This aligns with the works of and Alatailat et al. (2019), AlQershi (2021), Acar and Özşahin (2018), Bouhali et al. (2015), Moghadam et al. (2018), Olaniyi and Elumah (2016), and Shaik and Dhir (2021), who emphasized the pivotal role of strategic thinking in shaping organizational success. The findings echo the tenets of DCT, emphasizing the importance of strategic thinking as a core dynamic capability. Strategic thinking therefore serves as a foundational element for an organization’s adaptive capacity and long-term success. The study also found that strategic thinking has a positive and significant relationship with strategic innovation. This echoes the sentiments of Calabrese and Costa (2015), Kazmi et al. (2015), Kazmi et al. (2016), Navid Adham and Shafizadeh (2019) and Olaleye et al. (2020), who highlighted the transformative power of strategic thinking in fostering innovation within organizations. From a dynamic capability perspective, strategic thinking emerges as a precursor to strategic innovation. Organizations with heightened strategic thinking capability are better equipped to drive innovation.

In addition, the research revealed a statistically significant and positive correlation between strategic innovation thinking and hotel performance. This is consistent with the findings of several studies (Ferreira et al., 2021; Calabrese & Costa, 2015; Ferreira et al., 2021; García-Sánchez et al., 2019; Kazmi et al., 2016; Mansury & Love, 2008; Olaleye et al., 2020), which have all identified strategic innovation as a driving force behind improved organizational performance. Additionally, our findings regarding the positive correlation between strategic innovation and hotel performance are corroborated by the DCT. Strategic innovation serves as a dynamic capability that promotes the dynamism and responsiveness of organizations, particularly within the ever-changing hospitality industry. Lastly, the study found that strategic innovation mediated impact of strategic thinking on hotel performance. DCT explains how organizations can achieve sustained competitive advantage in a dynamic environment by developing and reconfiguring their resources and capabilities (Alcalde-Calonge et al., 2022; Teece et al., 1997). Strategic thinking and innovation are essential for developing dynamic capabilities, as they allow organizations to identify and exploit new opportunities and adapt to changing threats. DCT posits that dynamic capabilities are not static but rather evolve over time in response to environmental changes (Teece, 2007). Strategic thinking and innovation therefore play a key role in this process, as they allow organizations, especially the hospitality sector, to anticipate and prepare for change. The results suggest that strategic innovation plays a significant role in translating strategic thinking into improved hotel performance. For example, strategic thinking allows hotels to identify emerging market trends, customer preferences, and unmet needs and the hotels innovate in response to these opportunities by developing new products, services or experiences that differentiate them from competitors and attract more customers. Thus, strategic innovation enables hotels to enhance the overall customer experience by introducing new technologies or services that address evolving guest expectations. For example, hotels innovating in areas, such as digital check-in processes or eco-friendly initiatives can create memorable experiences that drive customer satisfaction and loyalty, which are crucial determinants of firm performance (Ardito et al., 2021; Breier et al., 2021; García-Sánchez et al., 2019; Leta & Chan, 2021). Thus, hotels focusing on enhancing both strategic thinking and strategic innovation are likely to experience greater success in the hospitality industry.

6. Implication of the study

The findings offer practical and theoretical implications. The study underscores the importance of embedding strategic thinking into decision-making processes. Integrating strategic thinking into hotel routine operations can enhance their adaptive capacity and responsiveness to market dynamics. The study highlights the pivotal role of strategic thinking in initiating and guiding sustainable responses to crises and offering a roadmap for hotels to navigate turbulent environments, ultimately promoting hotel resilience and sustainability. More so, the study equips hotels with a strategic roadmap for leveraging innovation as a transformative force during crises, ultimately influencing and optimizing hotel performance amidst crises. Our findings suggest hotels should allocate resources to technological advancements and streamlined processes that align with strategic objectives, as well as embrace enhancing strategic innovation capabilities. The dynamic nature of the hospitality industry necessitates a commitment to continuous learning and adaptation. This adaptive learning approach contributes to the overall strategic capabilities of the organization.

Strategic innovation emerges as a pivotal mediator in the relationship between strategic thinking and hotel performance. The study unpacks the mechanism through which strategic thinking influences the strategic deployment of innovation, particularly in times of crisis. The study found that strategic thinking serves as the catalyst for innovative responses that are strategically aligned with organizational goals. The study therefore advocates for a holistic approach that integrates strategic thinking and innovation into the fabric of hotel management. The study therefore equips hotels with a strategic roadmap for leveraging innovation as a transformative force during crises, ultimately enhancing hotel performance as well as positioning themselves for long-term success and resilience in the post-crisis landscape.

On theoretical implication, the study contributes to the DCT by extending the theoretical framework by showcasing how strategic thinking acts as a foundational dynamic capability, influencing not only organizational adaptability but also driving strategic innovation as an indirect mechanism for enhanced performance. The findings deepen the theoretical understanding of strategic innovation by positioning it as a mediating factor in the relationship between strategic thinking and hotel performance. This theoretical extension underscores that strategic innovation is not merely an outcome but a dynamic process influenced by the cognitive and strategic capacities within the organization.

The study advances theoretical discussions on the interconnectedness of strategic elements within the hospitality context. It emphasizes that strategic thinking and strategic innovation should not be viewed in isolation but as integral components of a synergistic system. This interconnected view enriches theoretical perspectives on organizational strategies, providing a more holistic lens for researchers and practitioners alike. The study unveils a nuanced understanding of the causal pathways between strategic thinking and hotel performance. The study bridges the gap between cognitive capabilities, exemplified by strategic thinking, and dynamic capabilities, exemplified by strategic innovation. This integration contributes to theoretical discussions surrounding the intersection of cognitive and dynamic capabilities, showcasing how cognitive processes influence the development and deployment of dynamic capabilities in the pursuit of organizational goals and offering theoretical insights that can inform and enrich discussions within the broader field of organizational strategy and management.

7. Conclusion

As crises become more frequent and unpredictable, the hospitality sector is compelled to reassess its strategies for sustained success. Strategic thinking emerges as a pivotal force in influencing firm performance. While existing literature acknowledges the individual significance of both strategic thinking and innovation in navigating challenges, the understanding of how these elements synergize, especially during crises, remains a critical gap. The study assesses the mediating role of strategic innovation in the relationship between strategic thinking and hotel performance.

Our research confirms that strategic thinking is crucial for achieving effective organizational performance. Strategically aligning organizational goals with market dynamics is considered a crucial requirement for gaining and sustaining a competitive advantage. Strategic thinking plays a crucial role in shaping decision-making processes, which in turn impact the entire performance of hotels and contribute to gaining a competitive advantage. Moreover, innovation has become a crucial factor in gaining a competitive edge in the hospitality industry. The study has shown a strong correlation between innovation and hotel performance, indicating that hotels that effectively innovate are more are better positioned to meet the evolving demands of the market.

The study provides additional evidence of the impact of strategic thinking on innovation processes in hotels, and how these innovations ultimately improve the performance of hotels. Strategic thinking determines the essential strategies for maintaining competitiveness, whereas innovation offers the methods to attain and maintain that competitiveness. Essentially, the relationship between strategic thinking and innovation is symbiotic; strategic thinking lays the foundation for innovation, by recognizing opportunities and innovation exploit and the opportunities resulting into better firm performance. This synergistic relationship is essential for organization to survive and thrive in a turbulent business environment. Strategic thinking plays a critical role in developing dynamic capabilities that allow organizations to innovate and achieve sustained competitive advantage in a dynamic environment. Therefore, organizations that successfully integrate strategic thinking and innovation are better positioned to achieve a sustainable competitive advantage.

While the sample size in this study was sufficient for our analyses, it is important to acknowledge that the study’s sample may not fully represent the diversity of the hotel industry in Ghana. Future research could benefit from larger and more diverse samples to enhance the generalizability of findings across different hotel contexts and especially geographic regions. Further, this study focused on the context of the hospitality industry and may not fully capture the influence of broader contextual factors, such as economic conditions or regulatory environments, on the relationships examined. Future research could explore these contextual factors in more depth to better understand their impact on strategic thinking and strategic innovation. Future studies should also consider potential internal boundary conditions, such as organizational culture or leadership styles, which could enhance our understanding of the conditions under which strategic thinking and strategic innovation are most beneficial for hotel performance.

Author contribution

Conception and design: Klenam K. Ledi; Analysis and interpretation of the data: Bandoma Stephen and Klenam K. Ledi; Drafting of the article: Klenam K. Ledi and Rebecca B. Dumeda; Revising for intellectual content: Enya Ameza –Xemalordzo; Final approval for publication: Klenam K. Ledi & Enya Ameza –Xemalordzo. All authors are accountable for all aspects of the work.

Disclosure statement

No conflict of interest.

Data availability statement

Data that support the findings of this study are available from the corresponding author, KKL, upon reasonable request.

Additional information

Notes on contributors

Klenam Korbla Ledi

Klenam Korbla Ledi is a researcher at the department of marketing and corporate strategy at Kwame Nkrumah University of Science (KNUST) Business School. His main research areas are sustainability, marketing, corporate strategy, entrepreneurship, and innovation.

Rebecca Bridget Dumeda

Rebecca Bridget Dumeda is an MPhil student at the Department of Vocational and Technical Education (VOTEC), University of Cape Coast. Her main research fields are nutrition among children, home economics, tourism, and hospitality.

Stephen Bandoma

Stephen Bandoma is a research assistant at the Department of Teacher Education, Faculty of Educational Studies, Kwame Nkrumah University of Science (KNUST). His main research fields are educational technology, inclusive education, innovation, digital transformation, and entrepreneurship.

Enya Ameza-Xemalordzo

Enya Ameza-Xemalordzo is a lecturer at the department of marketing and corporate strategy at KNUST Business School and a Chartered Management and Administration consultant. His research areas are corporate governance, corporate social responsibility, marketing, and entrepreneurship.