Exploring important capabilities and their roles based on MO and DC concepts for small and medium local hotels

This article uses the concepts of Market Orientation (MO) and Dynamic Capabilities (DC) to explore a simple and relevant capability construct for Small-Medium Local Hotels. Four capabilities are needed to improve business performance; Market Learning, Integration, Coordination, Market Responsiveness.There are two capability paths to Business Performance: Market Learning influences Market Responsiveness and then Business Performance. Other path, Integration influences Coordination and then Business Performance. These four capabilities, with their respective roles, carry out business processes for the effectiveness and efficiency in achieving business performance.This research also reveals simple and specific items/indicators (activities) that are important in this business context. How digital technology can improve these four capabilities (and activities) needs to be researched in the future. Data analysis shows that the goodness of fit model is in the good category, and the coefficient of determination/R2 of the independent variable on the dependent variable is in the medium-high category.