Market Turbulence and Service Innovation in Hospitality: Examining the Underlying Mechanisms of Employee and Organizational Resilience

With changing customer demand, fierce market competition, and uncertainties, service organizations are facing dynamic or even highly turbulent environments. Fostering employees’ ability to innovate is an effective business strategy that can enable firms to overcome market turbulence and cope with these challenges. Drawing on resilience theory, this study examines (1) the mediating effect of employee resilience on the relationship between market turbulence and service innovation, and (2) whether such mediating process was moderated by organizational readiness for change. Data were collected from employees in the hospitality industry in a developing country, Ethiopia, and the results indicated that employee resilience partially mediates the relationship between market turbulence and service innovation. Moreover, the indirect link was stronger for hotels with higher readiness for change than for those with lower readiness for change. Implications for managers and directions for further research are also discussed.