The Interaction Effect between Business Dynamism and Innovation Capability on Performance of Inbound Tourism

This study analyzes the effects of business dynamism and innovation capability on performance of inbound tourism. Also, this study analyzes the interaction effect between business dynamism and innovation capability on inbound tourism. The purpose of this study is to emphasize the importance of dynamism and the role of innovation in the industrial ecosystem for the growth of inbound tourism, which is undergoing rapid change, and to derive meaningful implications for the sustainable promotion of the tourism industry. To achieve the research purpose, two multiple regression models were used to analyze 776 observations from 120 countries from 2012 to 2019. The multiple regression model used the inbound tourism revenue per capita as the dependent variable, and the business dynamism and innovation capability of the Global competitiveness index as independent variables. Economic growth, national income, foreign direct investment, and international trade were considered as control variables to control possible effects on inbound tourism. The results show that business dynamism and innovation capability do not show significantly positive effects on inbound tourism revenue individually. However, the interaction between business dynamism and innovation capability significantly increases inbound tourism revenue. Therefore, it suggests that the economic effect of inbound tourism can be enhanced by simultaneously strengthening innovation capability that promotes cooperation with various stakeholders and product development capacity while developing business dynamism that facilitates the entry, exit, and restructuring of companies.