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At the crossroad of digital and Digital

technologies in
tourism entrepreneurship: hospitality
industry
mediating effect of digitalization
in hospitality industry
Marcin Suder, Joanna Duda and Rafał Kusa Received 11 August 2022
Revised 21 September 2022
Faculty of Management, AGH University of Science and Technology, Accepted 1 October 2022
Krakow, Poland, and
Alexandra Mora-Cruz
School of Business Administration, Technological Institute of Costa Rica,
Cartago, Costa Rica

Abstract
Purpose – This study aims to explore the role of digital technologies in tourism entrepreneurship. In particular,
the main objective of this research is to examine the relationships among proactiveness, innovativeness,
digitalization, and firm performance and growth in the hotel industry.
Design/methodology/approach – The data for this investigation were collected from 110 one- or two-star
hotels that were operating in Poland during the time of this research. This study employs PLS-SEM to analyze
the relationships among the examined variables.
Findings – The results show that digitalization has a significantly positive impact on a hotel’s performance.
Moreover, digitalization mediates the impact of entrepreneurial behaviors on performance. In particular,
digitization is a full mediator for the impact of proactiveness on firm growth and innovation on market
performance. Additionally, there is a partial complementary mediation effect of digitalization in the case of impact
of innovativeness on firm growth; digitization is not a mediator for the impact of proactiveness on firm growth.
Originality/value – Previous studies have not captured the relationships among entrepreneurship,
digitalization, and performance; this study helps to fill the gap and examine these associations in the hospitality
industry. The outcome of this study provides valuable insights for hoteliers for understanding the role (and
importance) of digitalization in the context of proactiveness and innovativeness.
Keywords Hospitality industry, Digitalization, Performance, Entrepreneurial orientation, Innovativeness,
Proactiveness, Risk-taking, Opportunity-seeking, PLS-SEM
Paper type Research paper

Introduction
Tourism has been an entrepreneurial activity since its beginning. The first modern tourist
event is an excellent example: Thomas Cook pursued an opportunity that was sourced in new
technology (namely, rail transportation) when he organized a 12-mile-long train excursion for
a group of tourists in 1841 (Laws, 2020). Since then, numerous entrepreneurs have exploited
different opportunities that are inherent in tourism – both in tourist needs and destination
attractions. They have used entrepreneurship-specific attributes such as proactiveness,
innovation, and risk-taking; this posture is understood under the notion of tourism
entrepreneurship (Ratten, 2018). An entrepreneurial perspective is also accurate, as the
tourism market is quite dynamic and provides numerous opportunities for entrepreneurs
(G€
uzel et al., 2021). Moreover, the tourism and travel industry is represented in 80% of all

European Journal of Innovation

Funding: The research leading to these results was financed by the statutory funds for the maintenance Management
and development of the research capacity of the Faculty of Management of AGH University of Science © Emerald Publishing Limited
1460-1060
and Technology in Krakow, Poland. DOI 10.1108/EJIM-08-2022-0422
EJIM small and medium-sized enterprises (SMEs) (WTTC, 2021), which are believed to reflect an
entrepreneurial spirit to a large extent.
Similar to other entrepreneurial activities, the entrepreneurial process within tourist
enterprises depends on entrepreneurs (Koh and Hatten, 2002); their time, energy, passion,
intuition, creativity, innovation, and finance help determine the success of their businesses
(G€uzel et al., 2021). Entrepreneurial opportunity recognition is possible because of an
entrepreneur’s alertness (Nikraftar and Hosseini, 2016). Along with environmental
facilitators such as changes in the tourism market, changes within the industry, and
changes in the settings/locations, personal factors such as cognitive beliefs, intrinsic needs,
and demographic factors help trigger entrepreneurial motivations (Wang et al., 2019). Besides
those entrepreneurs who are growth-oriented, many entrepreneurs in the hospitality and
tourism sector are lifestyle-oriented (Fu et al., 2019), which is a characteristic that is specific
for tourism. In the last decade, a sharing economy additionally frees entrepreneurship in
tourism (Avgeli, 2018). Tourism entrepreneurship can lead to higher firm performance;
however, different combinations of constituting factors are required in order to obtain
success in different environmental settings (Kallmuenzer et al., 2019).
One of the important characteristics of tourism entrepreneurship is innovativeness
(Gomezelj-Omerzel, 2016). The tourism industry welcomes many new entrepreneurial and
innovative ventures and business models (G€ uzel et al., 2021). Innovating in a business model
allows one to take advantage of new opportunities and increasing his/her business’s
performance (Breier et al., 2021). Among other things, innovativeness in the tourism and
hospitality industry is associated with the implementation of digital technologies.
Currently, the global economy and society that is experiencing the Fourth Industrial
Revolution, which is based on cyber-physical systems and has led to a new stage of
development that is often called “Industry 4.0” (Duda and Ga˛ sior, 2022). The implementation
of new digital technologies helps enable entrepreneurs to improve the operations of their
organizations (Morakanyane et al., 2017; Vial, 2019) and enhances their chances of competing
and surviving in the global market in the medium term (Parra-Lopez et al., 2021). Digital
technologies are radically changing the processes of production, marketing, and
consumption (Teece and Linden, 2017; Zhu et al., 2020). A digital infrastructure offers
collaboration and communication capabilities for innovative solutions to organizational
problems (Elia et al., 2020). Digital transformation affects a customer’s experience
(Morakanyane et al., 2017) and all aspects of the customer’s life (Reis et al., 2018). Digital
technologies can lead to the creation of new products and services (European Commission,
2018). Consequently, the business of numerous companies largely depends on their digital
capabilities (Datta and Nwankpa, 2021). Therefore, the governments of many countries
support digital innovation in order to help create and develop new ecosystems (Bai et al., 2021;
Borowiecki et al., 2021).
Digital technologies create a new space for opportunities and entrepreneurial actions and
can affect an opportunity (Nambisan, 2017). Along with the use of digital solutions for
pursuing opportunities, the quest for such digital opportunities constitutes digital
entrepreneurship. This is associated with digital technology such as new media and the
internet (Davidson and Vaast, 2010), but it is also tied to other advancements such as AI
(Chatterjee et al., 2021). Entrepreneurs can use digital platforms for developing new products
and services (Kraus et al., 2019). Digital entrepreneurship results in the transformation of
traditional entrepreneurial venture formats into digital ones (Hair et al., 2012) as well as the
emergence of digital business models (Hull et al., 2007). Due to the dynamic development of
technology, digital entrepreneurs need to maintain a high degree of innovativeness (Kraus
et al., 2019). Recent studies have shown that digital entrepreneurship enhances business
competitiveness, performance, and productivity (Sion, 2019; Zahra, 2021).
 Digital technologies have been implemented in tourism as well; these include online travel Digital
agencies, accommodation, transport, and destination activities (Buhalis et al., 2019). In the technologies in
hospitality industry, a wide range of solutions that impact a guest’s sensory experiences and
behavior are being utilized (Pelet et al., 2021) through features such as smart environments in
hospitality
guest rooms (Sheivachman, 2018). These solutions include sensors, telecoms networks, the industry
IoT, and AI (Salguero and Espinilla, 2018; Ivanov and Webster, 2019). Big data, machine
learning, and natural language processing are also being used to support marketing
operations (i.e. segmentation and customization) (Filieri et al., 2021). However, the use of these
solutions raises new challenges in the area of privacy and data protection (Yallop et al., 2021).
Digitalization can enhance the recovery of the tourism industry after the COVID-19 pandemic
(which seriously affected the industry) (Skare et al., 2021; P€arl et al., 2022); in particular, SMEs
have been affected the most (European Commission, 2020).
Despite the numerous studies on digitalization, our understanding of the impact of
digitalization on performance is limited and needs further progress (Nambisan, 2017; Kohli and
Melville, 2019; Liu et al., 2022), particularly in the entrepreneurial context (Kapron and Meertens,
2017; Luo et al., 2021) as well as regarding tourism entrepreneurship (Ratten, 2020). To our
knowledge, the role of digitalization in the entrepreneurial activity of hotels has not been examined.
This study addresses this research gap and aims to explore the role of digital technologies
in tourism entrepreneurship. In particular, this study aims to examine those relationships
that firm entrepreneurial behavior and digitalization have with firm market performance and
growth in the hospitality industry. In this study, entrepreneurial behavior is represented by
proactiveness and innovativeness. To achieve its objectives, this study employed the PLS-
SEM methodology to examine the relationships among the variables. The sample consisted of
110 one- and two-star hotels that were operating in Poland during the time of our study.
This study strives to contribute to the literature on entrepreneurship, digitalization, and
tourism management. The study joins the research that is focused on relationship between
organizational entrepreneurship and firm performance. Due to the increasing role of
digitalization in business, the intended explanation of its positions regarding entrepreneurial
behaviors and a firm’s growth and performance can be substantial for the development of the
theory. In particular, the study aspires to identify the mediating effects of digitalization in
reinforcing an impact of entrepreneurial behaviors (proactiveness and innovativeness) on
hotel performance and growth. Moreover, this study intends to support hoteliers during the
process of digitalizing their hotels.
The remainder of the article is as follows. First, literature regarding variables is reviewed,
and research hypotheses and models are proposed. Second, the research procedure and method
are described. Third, the results of the examination are presented and discussed. Finally, the
study’s limitations are indicated, and potential directions for future research are proposed.

Theoretical background
Entrepreneurial performance in tourism
Firm performance is a multidimensional construct. Business performance can refer to financial
outcomes (e.g. profit, return on capital), market results (e.g. market share, brand recognition), or
firm growth (e.g. increases in numbers of employees or products offered). To measure a hotel’s
operational performance, variables such as room occupancy, average daily rate (ADR) and
revenue per available room (RevPAR) are considered (Pereira-Moliner et al., 2021).
Many factors influence the performance of a hotel; e.g. its location (Xiao et al., 2012),
human resource management (HRM), quality management (QM), sustainability, corporate
social responsibility, strategy (Sainaghi et al., 2019; Pereira-Moliner et al., 2021), ownership
structure (Chen and Yeh, 2012), brand, and diversification (Yang et al., 2017; Woo et al., 2019;
Kim and Lin, 2021).
EJIM The performance of tourism firms can be positively affected by entrepreneurial behavior
(Alrawadieh et al., 2021). Fu et al. (2019) found that sales growth, market share, and
profitability were among the most-often-observed outputs of entrepreneurial activity in
hospitality and tourism studies. Kallmuenzer et al. (2019) identified several combinations of
entrepreneurial behaviors that can lead to increased firm performance. There is evidence that
entrepreneurial orientation (whose dimensions are proactiveness, innovativeness, and risk
taking) positively impacts the success of a new product (Kam-Sing Wong, 2014) and the
performance of a tourism firm (Palacios-Marques et al., 2017; Peters and Kallmuenzer, 2018;
Tajeddini et al., 2020). However, entrepreneurial orientation can also play the role of
moderator (Urban and Maphumulo, 2021).

Proactiveness
Proactiveness (PR) is one of the manifestations of entrepreneurship (Covin and Slevin, 1989).
Miller (1983, p. 771) defined a proactive firm as a firm that “is first to come up with ‘proactive’
innovations.” Proactiveness is aimed at introducing new products or services before one’s
competitors do (Rauch et al., 2009; Venkatraman, 1989); thus, a firm needs to incorporate a
forward-looking course of action (Covin et al., 2016). Consequently, proactive firms are often
perceived as leaders by those competitors who follow their examples (Covin et al., 2016).
One of the development trends is digitalization. As proactiveness is about a forward-
looking perspective and the anticipation of future opportunities and demand (Venkatraman,
1989; Rauch et al., 2009), we can expect that proactive firms will use digitalization to introduce
new products or services before their competitors do. Recent studies have highlighted the role
of EO (of which proactiveness is a dimension) in capturing digital opportunities and finding
digital solutions (Penco et al., 2022). Proactiveness has an impact on a firm’s performance; in
particular, marketing proactivity (Narver et al., 2004; Jaeger et al., 2016) and proactive market
orientation (Gotteland et al., 2020) affect a company’s market performance. This can also be
observed in SMEs (Lomberg et al., 2017) and tourism firms (Fadda, 2018) – including hotels
(Njoroge et al., 2020). Based on the above observations, we posit the following hypotheses:
H1pr. Proactiveness positively impacts market performance;
H2pr. Proactiveness positively impacts firm growth;
H3pr. Proactiveness positively impacts firm digitalization.

Innovativeness
Entrepreneurship is also exhibited with innovativeness (IN). Innovativeness enables a firm to
pursue new opportunities (Lumpkin and Dess, 1996). According to Schumpeter (1911),
entrepreneurs recognize promising inventions and introduce such inventions to market.
Innovativeness is one of the three main dimensions of EO (Covin and Slevin, 1989). This is visible
in the hospitality industry as well; according to the study of Hernandez-Perlines et al. (2019),
innovativeness is the most important dimension of entrepreneurial orientation in Spanish hotels.
Despite the fact that tourism often used to be perceived as less innovative than manufacturing
industries (Gomezelj-Omerzel, 2016), many innovative solutions have been absorbed and
developed in the tourism industry over the past decades (Wang et al., 2016). These innovations
have mostly been incremental (Grissemann et al., 2013); however, disruptive innovation has also
occurred, resulting in changes to market structures (Viglia et al., 2018). One such example is a
platform that connects hosts and guests that was introduced by Airbnb (Guttentag and Smith,
2017). Due to the extreme importance of the human component in providing tourist services
(which are simultaneously produced and consumed) (Gomezelj-Omerzel, 2016), employee
innovative work behavior needs to be enhanced (Chang et al., 2011; Farrukh et al., 2022).
The study of innovative service firms shows that their main characteristics include the existence Digital
and efficient use of intangible assets, leader experience (or employee qualification), and an technologies in
organizational culture toward innovation (Peixoto et al., 2022). Other factors that impact a firm’s
ability to manage innovation are its management style, leadership, resources, corporate
hospitality
strategy, technology, and knowledge management (Smith et al., 2008). Innovation in hotels can industry
also be influenced by their size (Jacob and Groizard, 2007), location (Vila et al., 2012), and
categorization (Orfila-Sintes et al., 2005). Among those external factors that positively impact
innovation development are market demand and competition (Anning-Dorson, 2017). The
tourism industry is dominated by small firms; these firms often lack sufficient resources, so open
innovation can be an option (or even a requirement) for their development (Lichtenthaler, 2011).
Innovations have the potential to positively impact a firm’s performance (Camarero and
Garrido, 2008; Kallmuenzer and Peters, 2018) and its growth (Petrou and
Daskalopoulou, 2009).
In the tourism industry, innovativeness is considered to be a key factor for a firm’s
competitive advantage (Dang and Wang, 2022) and success (Paget et al., 2010). Additionally,
innovation activities can improve quality standards (Melhem et al., 2018). Innovativeness can
also influence the digitalization of a firm (Agostini et al., 2020; Penco et al., 2022); however,
Gomezelj-Omerzel’s 2016 review of research regarding innovation in hospitality and tourism
showed that there are many areas in which innovation is still needed. Based on the above
considerations, we posit the following hypotheses:
H1in. Innovativeness positively impacts market performance;
H2in. Innovativeness positively impacts firm growth;
H3in. Innovativeness positively impacts firm digitalization.

Digitalization
As stated earlier, digitalization (DIG) augments those areas where opportunities can appear
or be created. Moreover, opportunities can be affected by digital artifacts, digital platforms,
and digital infrastructures (Nambisan, 2017). These opportunities can trigger entrepreneurial
actions that can lead to increases in performance. In particular, IT technology offers the
opportunity to create new products, new channels of communication with customers, or even
new means of payments; this refers to the tourism sector as well. Besides reservation systems
and tourist social media, advanced digital technologies such as machine-learning algorithms
(Zhang et al., 2017), blockchain technology (Valeri and Baggio, 2021) as well as AI-based
robotics, AR/VR, and chatbots (virtual assistants) are being used in the hospitality industry
(Doborjeh et al., 2022).
Numerous studies have indicated that the implementation of digital technologies
positively affects a company’s operation and performance (Teece, 2018; Chatterjee et al., 2020;
Liu et al., 2022). Digital innovations can lead to the increased satisfaction of customers (Gale
and Aarons, 2018) and employees (Bueechl et al., 2021) as well as increased customer loyalty
(Balci, 2021). Additionally, digitalization enables individuals and enterprises to co-create and
share value (Nambisan, 2017) and enhance their process-innovation capabilities (Tajudeen
et al., 2022). Digital innovations (triggered by the digitalization process) can be an important
source of a company’s competitive advantage (Volkoff and Strong, 2013; Chatterjee et al.,
2020). Digital transformation plays an important role in organizational development (Svahn
et al., 2017; Sestino et al., 2020), leading to changes in company business models (Rodrıguez-
Anton and Alonso-Almeida, 2020; Bueechl et al., 2021). However, some studies have reported
that the adoption of digital innovations can lead to different results in manufacturing
companies (e.g. Hanelt et al., 2021).
EJIM Digital solutions play an important role in the tourism sector as well. In particular,
digitalization enhances a firm’s innovation capabilities (Sigala, 2012) and operational efficiency
(Hashim and Murphy, 2007), and they enable the development of new services (Gomezelj-
Omerzel, 2016). These solutions can help lead to the economic growth of hotels (Martin-Rojas
et al., 2014).
Thus, we propose the following research hypotheses:
H1dig. Digitalization positively impacts market performance;
H2dig. Digitalization positively impacts firm growth.
Previous studies have suggested that the relationship between a hotel’s characteristics and
performance can be affected by other factors. For example, the relationship between quality
management and a hotel’s performance is fully mediated by its differentiation competitive
advantage (Pereira-Moliner et al., 2021), the relationship between brand diversification and a
hotel’s performance is moderated by its ownership structure and location (Kim and Lin, 2021),
and the impact of internationalization on a hotel’s performance is moderated by
agglomeration-related factors (namely, differentiation within the cluster, and the location
of the cluster) (Woo et al., 2019). The effect of product diversification on a hotel’s performance
is moderated by its location, diversification expansion rate, and foreign ownership/operation
(Yang et al., 2017).
In the digitalization context, Zhao and Kong (2022) observed that the relationship between
a firm’s openness in specialized searches and ambidextrous digital-process innovation can be
mediated through an absorptive capacity and moderated by organizational innovativeness.
The impact of entrepreneurship on performance can also be moderated or mediated by
other factors (e.g. Adam et al., 2022; Liu and Wang, 2022Khan et al. (2021) found that
entrepreneurial orientation positively moderates the association between organizational
learning capabilities and business-model innovation in SMEs, while Chaudhary (2019) and
Sen et al. (2022) found that entrepreneurial orientation can mediate the relationship between
strategic flexibility and firm performance). The studies focused on moderating and mediating
effects related to organizational entrepreneurship–performance relationships develops in
past years (see examples in). Moreover, entrepreneurship can play the role of moderator or
mediator toward other factors that affect performance (e.g. Khan et al. (2021) found that
entrepreneurial orientation positively moderates the association between organizational
learning capabilities and business-model innovation in SMEs, while Chaudhary (2019) and
Sen et al. (2022) found that entrepreneurial orientation can mediate the relationship between
strategic flexibility and firm performance). The studies focused on moderating and mediating
effects related to organizational entrepreneurship–performance relationships develops in
past years (see examples in Wales et al., 2021). In turn, digitalization can play the role of
mediator in the innovation–performance relationship (Tsou and Chen, 2021) or product
innovation and servitization (Vilkas et al., 2022). However, service innovation can mediate the
connection between intellectual capital components and the competitive advantage, while big
data analytics capabilities can moderate this relationship (Alkhatib and Valeri, 2022).
Mediation refers to “. . . existence of a significant intervening mechanism between antecedent
and the consequent variables” (Venkatraman, 1989, p. 428), and a mediator enables us to
specify how (or the mechanism by which) a given effect occurs. Thus, we hypothesize that
digitalization can mediate the impact of entrepreneurship on performance based on our
previous hypotheses that a) proactiveness, innovativeness, and digitalization can affect a
firm’s performance and growth and b) proactiveness and innovativeness can affect
digitalization. In particular, we propose the following hypotheses:
H4pr. Digitalization mediates the relationship between proactiveness and market
performance;
 H5pr. Digitalization mediates the relationship between proactiveness and firm growth; Digital
H4in. Digitalization mediates the relationship between innovativeness and market technologies in
performance; hospitality
H5in. Digitalization mediates the relationship between innovativeness and firm growth. industry
Our hypotheses regarding the associations among proactiveness, innovativeness,
digitalization, market performance, and firm growth (including mediating the role of
digitalization) are presented in the research model that is depicted in Figure 1.

Methodology
Sample
This study’s sample consisted of one- and two-star hotels that were operating in Poland
during our research. According to the Central List of Hotel Facilities (Ministry of Sport and
Tourism of the Republic of Poland, 2021), there were 680 entities as of November 10, 2021.
One-hundred-and-seventeen hotels were randomly selected for the sample. The data were
collected during the period of November–December 2021 by a specialized pooling company.
To gather the data, an entrepreneur’s self-assessment questionnaire (which is a commonly
used tool in small tourist firm surveys (Fu et al., 2019)) was employed. One-hundred-and-ten
fully completed questionnaires were received; these represented 14.85% of the target
population. Based on formula proposed by Sudman and Bradburn (1982), we estimated a
sample error – it is 9.04% (with an assumed 95% confidence level), which is an acceptable
value. The characteristics of the sample are presented in Table 1.

Variables
In this study, we examined the relationships among five variables: proactiveness (PR),
innovativeness (IN), digitalization (DIG), market performance (MP), and firm growth (FG). All
of the variables were indices; each was comprised of several items, and each item was
measured with a seven-degree Likert scale. Those coefficients that represented performance,

Proactiveness
H1pr

Market
H3pr H2pr Performance
H1dig
H4pr
H5in

Digitization

H5pr
H4in

H3in H1in H2dig

Firm
Growth
H2in

Innovativeness Figure 1.
Research model
EJIM Characteristic Range Percentage

Age 0–5 7.0%

6–10 18.8%
11–20 31.6%
21–30 30.7%
above 30 11.9%
Type of enterprise Micro 51.5%
Small 44.6%
Medium 3.9%
Family enterprise Yes 50.0%
No 50.0%
Standard category One-star 27.3%
Two-star 72.7%
Number of beds 20–50 63.6%
51–100 22.7%
more than 100 13.7%
Managing more than one hotel Yes 23.6%
Table 1. No 76.4%
Characteristics of Member of hotel chain Yes 16.4%
sample No 83.6%

proactiveness, and innovativeness were based on previous entrepreneurial orientation scales

(Hughes and Morgan, 2007; Kusa et al., 2021); however, they were adapted to the hotel
industry. The coefficient of firm growth was adapted from previous studies (Kusa et al., 2022).
Finally, the digitalization index was a newly proposed index. Regarding our constructs,
common method bias has been controlled through a full collinearity assessment approach. In
particular, we employed VIF values for the variables; in each case, this value was lower than
3.3. This indicates that the model is free from common method bias (Kock, 2015). The
characteristics of each index (including their reliability) are presented in Table 2.

Method and procedure

Due to the explorative nature of the study and the non-normal data distribution of the Likert
scale-based measures, the partial least squares (PLS) technique was applied to structural
equation models (SEMs) based on variance. PLS-SEM is a “regression-based” approach that
minimizes the residual variances of the endogenous constructs (Hair et al., 2022). This
technique works well with the mediation analysis that is presented in this paper (Nitzl et al.,
2016; Cepeda-Carrion et al., 2017). SmartPLS software (V.3.3.5) was used to build the models
and assess their validity (Ringle et al., 2015).
The analysis was conducted in three steps. First, the reliability of the items was analyzed by
evaluating the loads (λ), which explain the variances between each construct and its indicator
(Palos-Sanchez and Saura, 2018). Second, the hypotheses were tested through the structural
models. Finally, the type and strength of the mediating effect of the digitalization were estimated.

Results
Measurement model evaluation
The measurement model evaluates whether the considered constructs are correctly measured
through the indicators (Klarner et al., 2013); therefore, the model must be assessed for its
reliability and validity. The results for the measurement model are presented in Figure 2 and
Tables 2 and 3.
 Construct reliability and
Digital
Std. validity technologies in
Constructs Indicators Item Mean dev VIF α rho_A CR AVE hospitality
Proactivity We excel at identifying PR1 4.34 1.83 2.11 0.84 0.85 0.89 0.68 industry
(PR) opportunities and market
needs
We initiate actions to PR2 4.54 1.65 1.79
which other organizations
respond
We search for new PR3 3.75 1.53 2.20
opportunities more
intensively than our
competitors do
We always try to take the PR4 3.75 1.37 2.27
initiative in each situation
Innovation (IN) Our organization seeks IN1 4.73 1.37 1.33 0.74 0.77 0.83 0.56
out new ways to do things
We actively introduce IN2 3.69 1.63 1.74
improvements and
innovations in our
organization
Innovation is the source IN3 4.13 1.49 2.02
of our success
Relative to competing IN4 4.42 1.72 1.35
products, those of our
business are more
innovative
Digitalization We use many digital DIG1 2.55 1.53 1.70 0.89 0.89 0.92 0.69
(DIG) solutions in our activities
We are more digitalized DIG2 2.82 1.48 2.68
than our competitors are
Our results are improving DIG3 3.14 1.53 4.52
due to digitalization
Digitalization has enabled DIG4 3.45 1.72 4.20
us to significantly
improve our operation
We are advanced in terms DIG5 2.98 1.62 1.92
of the digitalization
process
Market Relative to competing MP1 3.97 1.50 2.20 0.84 0.86 0.89 0.68
performance products, our products
(MP) are more successful in
terms of sales
Relative to competing MP2 3.01 1.44 2.48
products, those of our
business achieve and
maintain a higher market
share
Relative to our MP3 2.87 1.40 2.75
competitors, our income is
greater
Relative to our MP4 3.23 1.23 2.44
competitors, our profit is
greater Table 2.
Measurement model
(continued ) evaluation results
EJIM Construct reliability and
Std. validity
Constructs Indicators Item Mean dev VIF α rho_A CR AVE

Firm growth Our market FG1 3.94 1.15 1.58 0.86 0.87 0.9 0.7
(FG) recognizability has
increased this year
Our income has increased FG2 3.75 1.19 4.79
Our profitability has FG3 3.40 1.12 4.84
increased
Our business has grown FG4 3.39 1.09 1.63
faster than those of our
competitors
Note(s): α 5 Cronbach’s alpha; CR 5 composite reliability; AVE 5 average variance extracted;
Table 2. rho_A 5 reliability coefficient; VIF 5 variance inflation factor

Figure 2.
Measurement
structural model

Construct Fornell–Larcker discriminant validity criteria HTMT discriminant validity criteria

1 2 3 4 5 1 2 3 4 5

PR 0.824
Table 3. IN 0.672 0.747 0.847
Fornell–Larcker and DIG 0.481 0.507 0.832 0.550 0.588
HTMT discriminant MP 0.568 0.522 0.518 0.822 0.657 0.612 0.592
validity criteria FG 0.358 0.452 0.471 0.621 0.834 0.401 0.527 0.525 0.699

Figure 2 shows the indicator outer loading for each construct. A value that is above 0.5 is
acceptable for an indicator; however, 0.7 is required for more-stringent assumptions. Only one
indicator outer loading for the innovation construct was slightly lower than the 0.7 threshold.
The indicators for all of the remaining constructs were greater than 0.7. According to Hair Digital
et al. (2022), values that are between 0.60 and 0.70 are considered to be acceptable in technologies in
exploratory research, while values between 0.70 and 0.90 can be considered satisfactory in
more-advanced phases of research. The values for internal consistency reliability and
hospitality
convergent validity are presented in Table 2. The acceptance of the reliability of the construct industry
was established with a minimum Cronbach’s alpha of 0.6–0.7 (Fornell and Larcker, 1981).
Table 2 shows the calculation of this coefficient for the constructs of the proposed model. As
shown, all of the latent variables presented values that confirmed their high internal
consistency. Regarding redundancy, the values did not exceed 0.95 (Diamantopoulos et al.,
2012); therefore, no problems were evident. The rho_A statistic provides a reliability value.
As proposed by Dijkstra and Henseler (2015), rho_A should be greater than 0.7 and should lie
between the values of composite reliability and Cronbach’s alpha; this condition holds for our
data (see Table 2). To assess convergent validity, the average variance extracted (AVE) was
analyzed, which provides information on how much variance a construct shows. Hair et al.
(2017) stated that an AVE of 0.50 or greater can be interpreted as more than 50% of the
variance of the construct being due to its indicators. The results observed in Table 2 support
the convergent validity of the reflective constructs. As can be seen, all of the values exceeded
0.50 (ranging between 0.50 and 0.70); therefore, the constructs met this condition.
Table 2 also includes the values of the variance inflation factor (VIF) for each item.
According to Diamantopoulos and Winklhofer (2001), values below the cut-off level of 5
assure the absence of the undesirable property of multicollinearity.
To evaluate the discriminant validity, the square root of the AVE of each variable was
analyzed; according to Fornell and Lacker (1981), this criterion must be greater than the
correlation that each variable has with any other in the model. Henseler et al. (2015) pointed
out that the lack of discriminant validity is better-detected with the Heterotrait-Monotrait
(HTMT) relationship (whose values must be below 0.90). The results of the discriminant
validity met both criteria (as is shown in Table 3).
Along with the results that are presented in Tables 2 and 3 and Figure 2, the above analysis
proves that the construct that was proposed in the model was correctly constructed (as was the
model itself). As the one of the approximate model fit criteria, the standardized root mean square
residual (SRMR) was additionally calculated to estimate the level of the model fit (following the
guidelines of Henseler et al. (2015)). A value of less than 0.10 is considered to be a good fit (or
lower than 0.08 in a more conservative version; see Hu and Bentler, 1999). In our model, the
SRMR equaled 0.84; this means that an acceptable level of fit was achieved.
The results that are included in the measurement model (presented in Figure 2)
enabled us to determine the impact strengths of the individual exogenous variables on
the endogenous variables and to what extent they explained their variability. In
particular, IN had a stronger effect on DIG (0.332) than it did on PR (0.255). Moreover,
these two constructs explained 29.3% of the variance of the DIG construct (R2 5 0.293)
(as indicated by the value in the circle). In turn, PR had the strongest effect on MP (0.326),
followed by DIG (0.280) and IN (0.161). In all, 41.4% of the variance of the MP construct
was explained by three constructs: PR, DIG, and IN. The DIG variable had the strongest
impact on the endogenous FG variable. The value of this path coefficient equaled 0.322;
for a comparison, this was equal to 0.278 in the case of IN and only 0.016 for PR. Together,
DIG, IN, and PR explained 28.3% of the variance of FG (R2 5 0.283). The obtained values
of the coefficients gave us the opportunity to determine the strengths of the relationships
of the subject as well as the preliminary verifications of the hypotheses put forth. We can
conclude (Hair et al., 2022) that PR did not affect FG and that IN did not affect MP because
the sizes of the path coefficients were less than 2. Nevertheless, making definite
statements about a path coefficient’s significance requires us to determine the coefficient
estimates’ standard error.
EJIM Assessment of structural model
Applying the bootstrapping procedure with 5,000 iterations enabled us to verify the
statistical significance of the path coefficients marked in Figure 2; in this way, it was possible
to verify the research hypotheses. In the model with a mediator, we tested the statistical
significance of the path coefficients for both the direct and indirect effects. The results of this
analysis are presented in Table 4.
Based on the results that are shown in Table 4, we can conclude that six of the eight-tested
direct effects were significant (with t-statistic >1.96 and p-value <0.05). A statistical
significance was not obtained for only two paths: PR → FG, and IN → MP (the p-values were
greater than 0.05). Following Ramayah et al. (2018), we also calculated the corrected
confidence interval errors (which are presented in Table 4). If this range does not contain 0,
this is a confirmation of the significance of the determined coefficient. In the case of PR’s effect
on FG and IN’s effect on MP, the ranges contained 0; the remaining dependencies did not. This
conclusion confirms the assumptions that were formulated during the analysis of the
measurement model. Thus, the results confirmed six out of the eight hypotheses regarding
direct effects; i.e. H1pr, H3pr, H2in, H3in, H1dig, and H2dig. Hypotheses H2pr and H1in were not
confirmed; therefore, the analysis of the direct relationships showed that proactiveness does
not significantly directly affect a company’s growth, while innovation does not have a
significant impact on the market performance of hotels.

Bootstrapping
Type of Original Sample Confidence interval
effect Hypothesis Path sample mean T-statistics p-values (bias-corrected)

direct H1pr PR → 0.326** 0.333 2.602 0.009 (0.061, 0.559)

MP
H2pr PR → 0.016 0.022 0.123 0.902 (
0.227, 0.277)
FG
H3pr PR → 0.255* 0.251 2.483 0.013 (0.056, 0.442)
DIG
H1in IN → 0.161 0.161 1.553 0.121 (
0.044, 0.37)
MP
H2in IN → 0.278* 0.28 2.153 0.031 (0.001, 0.498)
FG
H3in IN → 0.336*** 0.349 3.925 0.000 (0.159, 0.487)
DIG
H1dig DIG → 0.28** 0.275 2.736 0.006 (0.073, 0.468)
MP
H2dig DIG → 0.322** 0.324 3.329 0.001 (0.111, 0.509)
FG
indirect H4pr PR → 0.072 0.071 0.043 0.094 (0.011, 0.181)
DIG →
MP
H5pr PR → 0.082* 0.08 0.041 0.044 (0.023, 0.198)
DIG →
FG
H4in IN → 0.094* 0.097 0.045 0.037 (0.019, 0.192)
DIG →
MP
Table 4. H5in IN → 0.108* 0.115 0.049 0.026 (0.031, 0.215)
Structural model DIG →
statistics (direct and FG
indirect effects) Note(s): *** p-value <0.001; ** p-value < 0.01; * p-value < 0.05
 In turn, the bootstrapping analysis showed that three of the four indirect effects (assumed Digital
in a theoretic model [see Figure 1]) were significant (with the assumed levels of significance). technologies in
The mediation effect of digitization for the impact of IN on both MP and FG was significant
(in both cases, the p-value was less than 0.05). On the other hand, the impact of the PR that was
hospitality
mediated by DIG was only significant for the endogenous FG variable and was not significant industry
for MP. However, the latter conclusion was not confirmed in the 95% confidence interval bias-
corrected analysis for the indirect effect of PR → DIG → MP, as the range did not contain
0 (0.011,0.181). Therefore, we can conclude that the effects of three out of the four hypotheses
about the mediation of digitization (i.e. H5pr, H4in, and H5in) have been confirmed. On the other
hand, Hypothesis H4pr was preliminary not confirmed due to the ambiguity of the results (an
additional analysis in the forthcoming chapter is meant to confirm the correctness of such a
decision).
Table 5 shows additional criteria for evaluating the structural model in PLS (Hair et al.,
2022), which are the coefficient of determination (R2), the adjust coefficient of determination
(R2adj), and the cross-validated redundancy (Q2) (Geisser, 1974). In addition, the statistical
significance of the R2 and R2adj coefficients was verified. The obtained results indicated that
the model had a significant predictive significance; namely, the values of the coefficients of
determination for all of the endogenous dimensions were greater than 0.1 and were
statistically significant (Falk and Miller, 1992), and the Stone-Geisser Q2 statistics were
greater than 0 (Geisser, 1974).

Analysis of mediation effect

Based on the values of the path coefficients (both for the direct and indirect effects) as well as
the verification of their significance, it is possible to test the hypotheses about the mediation
nature of the DIG construct (see Nitzl et al., 2016; Hair et al., 2022). If mediation is confirmed, it
is additionally possible to test whether we are dealing with full or partial mediation
(complementary or competitive) (MacKinnon et al., 2007). It is also possible to compare the
strength of the mediation for the individual paths.
As suggested by Zhao et al. (2010) and Nitzl et al. (2016), a mediation effect occurs if a path
coefficient for an indirect effect is significant. In addition, we are dealing with full mediation if
the path coefficient for the direct effect is not significant; otherwise, we have partial
mediation. In partial mediation, a division into complementary partial mediation and
competitive partial mediation is taken into account. The former refers to a situation in which
the path coefficient signs (for the indirect and direct effects) are the same, while the latter
indicates that the mediation is interpreted as being competitive.
Some researchers use Variance Accounted For (VAF) (Hair et al., 2017) to verify the
mediation effect and its strength. For a simple mediation, the proportion of the mediation is
defined as follows:
a3b
VAF ¼ $100%;
a 3 b þ c0

where a 3 b reflects the indirect effect, and c0 represents the direct effect.

Endogenous constructs R2 R2adj Q2

DIG 0.293*** 0.280*** 0.196

MP 0.414*** 0.398*** 0.252 Table 5.
FG 0.283*** 0.263** 0.166 Endogenous construct
Note(s): *** p-value <0.001; ** p-value < 0.01; * p-value < 0.05 assessment
EJIM The VAF varies between 0 and 100% for models where a 3 b and c0 have the same sign.
Helm et al. (2010) proposed that VAF values above 80% indicate full mediation, those between
20 and 80% indicate partial mediation, and those below 20% indicate no mediation effect.
Ramayah et al. (2018) suggested that the VAF concept may provide some deeper insights into
mediation analysis but that it should be interpreted very cautiously without mixing the use of
full, partial, and no mediation. Moreover, some researchers (e.g. Hair et al., 2017) have advised
the calculation of VAF only when the absolute value of standardized total effect c 5 a 3 b þ c0
is at least 0.20. VAF also works well if a researcher would like to compare the strengths of
multiple mediators in a model on each indirect relationship. In our analysis of the mediator
effects, we based it on a previously conducted analysis of direct and indirect effects as well as
on the designated VAF values (which are summarized in Table 6).
According to the results of our analysis that are presented in Table 6, it can be concluded
that digitization is not a mediator for the impact of proactiveness on market performance.
First, the indirect effect is not significant, and second – the VAF 5 18.1% (i.e. it is less
than 20%).
Based on the analysis of the direct and indirect effects, we conclude that the effect of the
full mediation occurs in the case of proactivity on firm growth and innovation on market
performance. For both paths, the indirect effect is significant and the direct effect is not. While
the conclusion for proactivity was confirmed by the VAF value (which was greater than 80%
for the PR → FG path), the VAF was relatively low in the case of the IN → MP path (36.9%);
this would indicate partial mediation. Taking the previous considerations into account, we
nevertheless conclude that digitization is a full mediator for the impact of innovation on a
firm’s market performance.
Finally, we come to the conclusion that there was a complementary partial mediation
effect after analyzing the coefficients for the IN → FG path, as both the direct and indirect
effects were statistically significant and had the same sign. Moreover, the VAF 5 28% value
indicates this type of mediation.
Based on the characteristics of each mediation path (presented in Table 6), we can verify
our hypotheses regarding mediating effects of digitalization. In particular, H4pr has not been
confirmed, H5pr and H4in have been confirmed, and H5in has been partially confirmed (due to
the observed complementary mediation).

Discussion
The study’s results confirm that entrepreneurial behaviors affect a hotel’s performance. This
is in line with numerous studies that have evidenced such an impact in tourism firms
(e.g. Palacios-Marques et al., 2017; Peters and Kallmuenzer, 2018; Tajeddini et al., 2020;
Alrawadieh et al., 2021). However, the results indicate that different entrepreneurial behaviors
are effective depending on the performance type (market performance versus firm growth).
This somehow confirms the findings of Kallmuenzer et al. (2019), who observed that different
combinations of entrepreneurial behaviors can lead to an increase in a firm’s performance.

Direct effect Indirect effect Relevant Hypothesis

Path (c0 ) (a 3 b) VAF hypothesis confirmation

PR → MP 0.326** 0.072 18.1% H4pr Not confirmed

PR → FG 0.016 0.082* 83.7% H5pr Confirmed
Table 6. IN → MP 0.161 0.094* 36.9% H4in Confirmed
Summary of mediating IN → FG 0.278* 0.108* 28.0% H5in Partially confirmed
effect test Note(s): *** p-value <0.001; ** p-value < 0.01; * p-value <0.05
The current results regarding proactiveness confirm its impact on tourism firm performance, Digital
which was previously reported by Fadda (2018) and Njoroge et al. (2020). Specifically, this technologies in
study unveils that proactiveness affects market performance while not having a significant
influence on firm growth. In turn, innovativeness positively impacts firm growth, while it
hospitality
does not significantly affect market performance. This augments our understanding of the industry
importance of innovativeness in the hospitality industry, which was previously reported by
Kallmuenzer and Peters (2018) and Hernandez-Perlines et al. (2019). The results of this study
highlight the role of innovative solutions for the long-term development of the tourism
industry (Wang et al., 2016). Both proactiveness and innovativeness affect digitalization; this
confirms the previous findings regarding the role of EO (Penco et al., 2022) and
innovativeness (Kraus et al., 2019; Agostini et al., 2020; Penco et al., 2022) in the digital
development of a company.
The current study corresponds with numerous studies regarding the relationship between
digitalization and performance (Teece, 2018; Chatterjee et al., 2020; Liu et al., 2022). In
particular, it confirms the role of digital technologies in the hospitality industry (which has
been reported in previous studies; e.g. Zhang et al., 2017, and Doborjeh et al., 2022).
Specifically, digitalization positively affects both hotel growth and market performance; this
observation confirms the findings of other studies that were focused on the digitalization–
performance relationship in the tourism sector (Hashim and Murphy, 2007) as well as
digitalization’s impact on hotel growth (Martin-Rojas et al., 2014). Additionally, this study’s
findings correspond with studies that have demonstrated the role of digital entrepreneurship
in increasing a firm’s performance (Sion, 2019; Zahra, 2021).
This study confirms that the effect of performance antecedents can be mediated by other
factors (as has been indicated in recent studies on the hospitality industry; e.g. Woo et al.,
2019, Yang et al., 2017, Kim and Lin, 2021, and Pereira-Moliner et al., 2021). This study shows
that the relationship between entrepreneurial behaviors and a hotel’s performance can be
mediated by digitalization. This observation corresponds with the study of Tsou and Chen
(2021), who reported the mediating role of digitalization in the innovation-performance
relationship. The results of this study can explain the ambiguity regarding the effectiveness
of implementing digital solutions (Hanelt et al., 2021) – according to our results, the types of
results as well as any associations with other factors need to be considered to fully
understand the role of digitalization.

Conclusions
Summary of findings
Our study confirms the positive impact of an entrepreneurial approach (embodied in
proactiveness and innovativeness) on a hotel’s market performance and firm growth. The
results confirm the positive role that digitalization can play as a mediator in this relationship.
Moreover, our findings indicate those configurations (models) of digitalization and
dimensions of EO that can lead to market performance and firm growth.

Contribution
This study contributes to the literature on firm digitalization; in particular, it shows that
digitalization impacts both market performance and firm growth. Additionally, digitalization
is affected by proactiveness and innovativeness. Moreover, this study has unveiled the
mediation effect of digitalization on the entrepreneurship–performance relationship in the
hospitality industry. The latter findings contribute to the digital entrepreneurship concept.
This study contributes two-fold to the ongoing discussion regarding the impact of
entrepreneurship on firm performance. First, this study examines the relationships between
EJIM the dimensions of entrepreneurship (proactiveness and innovativeness) and performance
(market performance and firm growth) in detail. As a result, it shows that proactiveness
impacts market performance and innovativeness impacts firm growth. Second, this study
identifies the mediating effect of digitalization. Such an effect enables us to explore the
mechanism between an antecedent and a consequent variable; in this case, digitalization
specifies how entrepreneurship affects a firm’s performance.
In particular, digitalization fully mediates the proactiveness–firm growth association and
the innovativeness–market performance link, and it partially mediates the innovativeness–
firm growth relationship. Additionally, this study contributes to the literature on
entrepreneurial orientation (particularly its multidimensionality – Lumpkin and Dess,
1996), as it has identified the complex interplay of proactiveness and innovativeness (which
are EO dimensions) with digitalization.
With its findings, this study contributes to the hospitality management literature. In
particular, it highlights the role of entrepreneurship and digitalization in increasing market
performance and hotel growth. In the context of tourism entrepreneurship, this study
explains the associations among the dimensions of entrepreneurship and performance.

Managerial implications
This study offers implications for managers and policy-makers. Hoteliers can observe that
different entrepreneurial behaviors should be activated depending on which results are to be
obtained (proactiveness to increase market performance, and innovativeness to achieve firm
growth). When a hotel is to improve its digital development, it is worth increasing both
proactiveness and innovativeness (which positively affect digitalization). In turn,
digitalization impacts both market performance and firm growth. The observed
relationships, including the role of digitalization, can be significant for policy-makers who
are responsible for supporting business development, in particular within the tourism
industry. The development of tourism entrepreneurship can positively impact society, for
example, by improving the offer for tourists as well as the living conditions of tourism
entrepreneurs. This can be important in the recovery of the economy after the crisis.

Limitations
This examination has some limitations that need to be considered when generalizing its
findings. First, the sample represents a part of the hospitality industry (one- and two-star
hotels) and a single country (Poland). Consequently, the identified ties among the variables
may not be valid in other industries or other segments of the hospitality industry. In a similar
manner, they can be irrelevant in other locations (which can be determined by social and
economic backgrounds as well as the degree of the digital development of a country).
Finally, the obtained results could have been impacted by the COVID-19 crisis, as the data
were collected during the fourth wave of the pandemic that was caused by the virus. As
numerous entrepreneurs were seriously affected by the crisis (including hoteliers), they were
forced to limit or postpone their investments. Despite the fact that digitalization can seem
helpful for mitigating the impact of a crisis, these limitations in investments can refer to
digitalization as well. Consequently, similar surveys from before and after the COVID-19
crisis could provide differing results.

Recommendations for future studies

Based on the limitations indicated above, we can recommend at least three avenues for future
research. First, similar studies can be replicated within other segments of the hospitality
industry (as well as in other industries). Second, studies that focus on other locations (that are
different in terms of their degrees of social, economic, and digital development) can augment Digital
our understating of the investigated relationships. Third, a similar study can be conducted in technologies in
the future under different market conditions (e.g. during economic prosperity) when
entrepreneurs are more capable of investing in digitalization.
hospitality
industry
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Corresponding author
Joanna Duda can be contacted at: aduda@zarz.agh.edu.pl

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