The Impact of Entrepreneurial Orientation Capabilities on the Growth of the Tourism Sector in Lao Pdr: the Service Quality Capabilities as a Mediating Factor

This study investigates the impacts of entrepreneurial orientation capability and service quality on the development of the tourism industry in Champasak Province, Lao PDR. The tourism sector in Laos has demonstrated significant potential for economic growth and poverty alleviation, yet it faces substantial challenges, including a shortage of skilled labor, inconsistent service quality, and economic volatility. Utilizing a quantitative approach, a structured questionnaire was administered to a sample of 238 service businesses in Champasak Province. The data was analyzed using Structural Equation Modeling (SEM) to test the hypothesized relationships. The findings confirm that both entrepreneurial orientation capability and service quality capability have a positive and significant impact on tourism industry development. The research establishes three key relationships: (H1) entrepreneurial orientation positively and significantly impacts tourism industry development, (H2) entrepreneurial orientation positively and significantly impacts service quality capability, and (H3) service quality positively and significantly impacts tourism industry development. All latent variables—Entrepreneurial Orientation Capability, Service Quality Capability, and Tourism Industry Development—exhibited high reliability and validity, with Cronbach's alpha and Composite Reliability values exceeding 0.9 and Average Variance Extracted values above 0.78. These results underscore the critical importance of fostering an entrepreneurial mindset and enhancing service standards to drive sustainable tourism growth. The study provides empirical evidence that effective management of entrepreneurial capabilities and consistent improvements in service quality are vital for overcoming the current challenges and maximizing the sector's contribution to the regional economy. The findings offer practical insights for policymakers and business owners in Laos, emphasizing the need for strategic interventions that support entrepreneurial ventures and uplift the quality of tourist-related services.