Sustainable Tourism Strategies: Examining Green Service Innovation as a Mediator Between the Marketing Mix and Business Performance in Bali’s Tour and Travel SMEs

Elizabeth Elizabeth (), Harjanto Prabowo, Rini Setiowati and Agustinus Bandur
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Elizabeth Elizabeth: Doctor of Research in Management, Management Department, Bina Nusantara University, Jakarta 11480, Indonesia
Harjanto Prabowo: Doctor of Research in Management, Management Department, Bina Nusantara University, Jakarta 11480, Indonesia
Rini Setiowati: Doctor of Research in Management, Management Department, Bina Nusantara University, Jakarta 11480, Indonesia
Agustinus Bandur: Doctor of Research in Management, Management Department, Bina Nusantara University, Jakarta 11480, Indonesia

Tourism and Hospitality, 2025, vol. 6, issue 3, 1-23

Abstract: Sustainable tourism has become a strategic imperative, particularly in Bali Island, where tourism drives regional economic growth. In this study, we investigate the mediating role of green service innovation in the relationship between the marketing mix and business performance among small and medium-sized enterprises (SMEs) in Bali Island’s tour and travel sector. We seek to understand how sustainability-oriented innovation contributes to enhancing SME competitiveness and long-term performance. A quantitative approach was adopted, using structured survey data from 387 tour and travel business owners registered with the Bali Provincial Tourism Office. Structural Equation Modeling (SEM) was employed to assess both the direct effects of the marketing mix on business performance and the indirect effects mediated by green service innovation. The findings indicate that the marketing mix does not directly influence green service innovation or business performance. However, green service innovation significantly enhances business performance, confirming its mediating role. This suggests that traditional marketing strategies are insufficient unless aligned with sustainability-driven innovation. Green service innovation acts as a strategic resource that strengthens business performance in tourism SMEs. We provide theoretical and practical insights into how integrating sustainability into marketing and operational strategies can enhance SMEs’ competitiveness and support sustainable tourism development.

Keywords: marketing mix; green service innovation; business performance; sustainable tourism; tour and travel SMEs; island tourism (search for similar items in EconPapers)
JEL-codes: Z3 Z30 Z31 Z32 Z33 Z38 (search for similar items in EconPapers)
Date: 2025
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