Knowledge Combination Capability in Tourism Related SMEs in Indonesia: Does the marketing innovation moderate the product innovation-performance relationship?

This study aimed to identify the relationship between knowledge combination capability and product innovation and their influence on company performance. It tested the moderating effect of marketing innovation on a product innovation-company performance relationship on Small and Medium Enterprises (SMEs) of tourism related industry in Indonesia. Based on quantitative approach, data collected from 105 SMEs owners with questionnaire. These SMEs were selected based on two main criteria: producer and seller of food products, and mainly targeting tourists. A Partial Least Square (PLS) was performed to analyse the data. Statistical analysis revealed that marketing innovation does not moderate the relationship between product innovation and business performance. Meanwhile knowledge combination capability was found significantly affect business performance. This research offers companies with important insights that marketing innovation is important aspect in boosting the business performance but it is also important to pay attention to the manage knowledge combination capability. Innovation in marketing helps company to renew product design, to improve pricing technique, to manage distribution channel and to design appropriate communication that will significantly deter business performance. The paper provides insights for academics and professionals in the field of small and medium size business and adds to the literature on tourism industry in emerging economies. Keywords—marketing innovation; product innovation; knowledge combination capability; performance; SMEs; tourism