Social capital and innovation in the services sector

Purpose - The aim of this paper is to analyze the role of social capital on innovation through the analysis of the selective nature of network alliances in the tourism sector which is subject to a complex competition – cooperation context. Design/methodology/approach - The paper approximates social capital via active and purposeful engagement in network alliances and estimates several probit models in order to test for the effect of social capital on innovation activity using cross‐section tourism data for Greece. Findings - Overall results indicate that a firm's knowledge base is conducive to innovation activity. Nevertheless, the explanatory power of knowledge base variables weakens once the underlying social capital generation mechanisms are taken into consideration. The selective nature of network links is also evidenced. Research limitations/implications - The use of cross‐section data might be viewed as a limitation. Nevertheless, the robust methodological approach and the very satisfactory fit of the estimated econometric model allow for the findings to be a contribution in the field and a reliable comparison basis for future evidence. Practical implications - The study provides us with useful insights as regards the selective nature of network alliances and their effect upon the innovative activity of tourism firms. Also, the importance of such findings to managerial decision‐making processes is evident as firms are themselves responsible for participating in successful, high impact, network alliances. Originality/value - Innovation in tourism is a critical aspect of the sector's growth potential. Yet, research in tourism innovation and the factors that are conducive to innovation is rather limited. In that sense the paper makes a contribution to the existing body of knowledge.