How Innovation Affects Tourism Industries: The Dynamic Environment in Iceland

Kristófer Páll Lentz & Markús Vilhjálmsson

Student thesis: Master thesis


The objective of this thesis is twofold: firstly, it seeks to determine how innovation can reinforce the pillars of tourism industries as innovative developments in various areas have caused the flow of tourists to shift from one destination to another according to each market’s competitiveness. Tourism industries therefore must find ways to stay competitive, or else risk falling behind as tourists turns elsewhere. Secondly, the focus of this thesis is the fast growing Icelandic tourism industry and this paper explores how Iceland can facilitate a robust tourism strategy. The point of departure is that stakeholders are not heading the same direction and this problem is further exacerbated by the fact that Iceland as a destination has recently been drifting away from its traditional brand identity by giving the impression of being overly crowded.
Leading to the following research question: How can innovation reinforce the pillars of tourism industries, and what can be done to facilitate a robust strategy within the tourism industry of Iceland?
Secondary data obtained via literature review revealed that the concepts of innovation, and in particular, triple helix innovation systems were central to the research question. Primary data collection was then conducted through seven semi-structured interviews with various individuals who hold unique and varied positions in relation to tourism in Iceland. Interviewees shared their knowledge and experiences from different sources, so that a wide range of opinions and observations were obtained.
The main results from the research reveal the great importance of innovation in determining and developing the competitiveness of each tourist destination. Industry pillars are strengthened by incremental sustainable innovation initiatives spread throughout the industry to anticipate and decrease the damaging impact of external forces. The results also indicate that in order for the Icelandic tourism industry to develop and maintain a robust strategy over time, stakeholders within the industry must take affirmative action: First, they need to establish an organized collaboration forum to guide actions. Additionally, they need to introduce uniform, high quality standards to ensure consistency and coordination in government, educational institution and business sector actions.

EducationsCand.merc.smc Strategic Market Creation, (Graduate Programme) Final Thesis
Publication date2017
Number of pages195