Harnessing Green Dynamic Capabilities for Sustainable Tourism Performance: The Mediating Role of Green Service Innovation in Bali’s Tour and Travel SMEs

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

Section	Comments
Title & Abstract	·     I think the title is clear and relevant. It reflects the core constructs effectively. ·     The abstract could be sharper. It tells me what the study does, but not what exactly is novel. A quick line about the key contribution would strengthen it.
Introduction & Literature Review	·     The introduction does a good job of setting the stage, especially around green tourism and SMEs. ·     However, I found the literature review quite descriptive. It lists what others have said but doesn’t critically engage with the key debates. ·     There’s not enough distinction between general dynamic capabilities and “green” dynamic capabilities in tourism SMEs. ·     A few regional studies (like recent Southeast Asian tourism innovation work) are missing and could add depth.
Theoretical Framework & Hypotheses	·     The framework is relevant, but I found the hypotheses too linear and confirmatory. Everything seems to assume a positive, direct relationship. ·     I’d like to see more nuanced thinking… maybe a moderating factor like SME size or policy support? ·     The role of green service innovation is central, but it’s not unpacked deeply enough from a theoretical angle.
Methodology	·     The methodology is sound, and using PLS-SEM makes sense here. ·     That said, I wish there were more clarity on whether the instruments were localized or culturally adapted for the Balinese SME context. ·     Also, in my opinion, the scales used for the study may be summated in a table format. Like the questions, their sources, a bit of description as well. This will provide clarity for the readers and enhance the validity. ·     A bit more detail on sample representativeness would help. Bali’s tour operators are diverse like how well does the sample capture that mix?
Results & Analysis	·     The results are clearly presented, and the SEM outputs are well reported. ·     But I found the discussion of findings too mechanical. For instance, GDC → GSI is confirmed, but what does that look like in real life? ·     The mediation effect is statistically there, but I wanted more interpretation like what’s the scale of the impact? Is it partial or full mediation?
Discussion & Implications	·     The paper reiterates findings nicely, but doesn’t fully dig into what they mean for Bali or similar regions. ·     There’s almost no mention of policy, tourism regulation, or institutional enablers. For a topic like this, that’s a big miss. ·     Practical implications like “invest in green innovation” are too broad. What kinds of tools, incentives, or collaborations are actually useful for SME managers?
Conclusion	·     The conclusion does wrap up the study well, but I’d suggest adding one or two future-looking insights. ·     For example, how can this model be tested in another island economy? Or what should future researchers investigate next?
Language & Presentation	·     The English is clear overall. I didn’t find anything grammatically wrong. ·     Some sentences could be tightened for impact. For example, vague phrases like “this is one way to move forward” could be reworded for precision.

Author Response

Title & Abstract
Comment: The abstract could be sharper. It tells me what the study does, but not what exactly is novel. A quick line about the key contribution would strengthen it.
Response: Thank you for your suggestion. We have revised the abstract (page 1) to highlight the study’s key contribution, particularly the novel integration of green dynamic capabilities and green service innovation within the context of sustainable tourism SMEs in Bali. A concise statement clarifying the uniqueness of the mediating mechanism has also been added.

Introduction & Literature Review
Comment: The literature review is quite descriptive and lacks critical engagement.
Response: This section has been improved (pages 2–3) by adding more critical analysis of existing studies, highlighting theoretical debates, and identifying conceptual gaps.

Comment: Not enough distinction between general and “green” dynamic capabilities.
Response: We have clarified the distinction between general dynamic capabilities and “green” dynamic capabilities specifically within the context of tourism SMEs, drawing upon sector-specific literature (page 2-3).

Comment: A few regional studies are missing.
Response: We have included recent regional studies, such as those in Vietnam (Phong & Tam, 2024), to broaden the Southeast Asian perspective and reinforce the relevance of the study’s focus on the mediating role of green service innovation (page 3). A gap remains in Scopus-indexed research regarding this specific mediation, further strengthening the contribution of our study.

Theoretical Framework & Hypotheses
Comment: Hypotheses are too linear and confirmatory; consider more nuanced thinking.
Response: We acknowledge this point and have now discussed the potential for moderating variables (e.g., SME size, policy support) in the limitations and future research section (page 17). While the current model is intentionally focused, we recognize that future studies could explore these moderating effects to deepen understanding.

Comment: The role of green service innovation is central but not theoretically unpacked.
Response: Additional explanation has been provided (page 4) on how green service innovation functions as a strategic enabler in tourism SMEs, drawing on the resource-based view and dynamic capability theory.

Methodology
Comment: Clarify whether instruments were localised for the Balinese SME context.
Response: This has been addressed on pages 8–9. We explain that the instruments were reviewed and adapted for cultural and contextual relevance, particularly given Bali’s unique socio-cultural tourism landscape and the local dominance of SMEs.

Comment: Scales should be summarised in a table format with sources.
Response: This has been done. Appendix A (pages 19–20) now includes a detailed table listing each item, its source, and its role within the respective constructs.

Comment: More detail on sample representativeness would help.
Response: Additional information is provided on pages 8–9 to clarify that the study used a census approach (416 SMEs), ensuring full coverage of the population registered with the Bali Tourism Office (2019–2023). We also explain the strategic importance of SMEs in Bali’s sustainable tourism policy.

Results & Analysis
Comment: The discussion of findings is too mechanical; more interpretation is needed.
Response: We have revised the discussion (pages 14–15) to include more contextual interpretation. For instance, we illustrate what green dynamic capabilities and green service innovations mean for tour operators in Bali (e.g., eco-tour packages, waste reduction strategies).

Comment: More explanation on the scale of the mediation.
Response: We have clarified that the mediation effect is partial (page 15) and explained its practical implication: green dynamic capabilities directly and indirectly affect business performance, with green service innovation strengthening that pathway.

Discussion & Implications
Comment: Missing mention of policy, regulation, or institutional enablers.
Response: We agree and have expanded the practical implications (pages 16–17) to include specific suggestions regarding government support, including financial incentives, regulatory encouragement for green certification, and collaborative platforms between stakeholders.

Comment: Practical implications are too broad.
Response: We have refined this section by offering concrete examples such as providing tax relief for green innovation, launching sustainability workshops in collaboration with local associations, and introducing green certification schemes for SMEs.

Conclusion
Comment: Add one or two future-looking insights.
Response: This has been addressed in the conclusion (page 17), with suggestions for testing the model in other island economies and expanding it to include moderating factors such as government support and organisational digital readiness.

Thank you once again for your thoughtful and constructive feedback, which has substantially improved the clarity, depth, and practical relevance of our manuscript.

Author Response File: Author Response.pdf

Reviewer 2 Report

Comments and Suggestions for Authors

The researchers successfully answered their initial research question regarding the impact of green dynamic capabilities on business performance  in Bali Island's tour and travel SMEs, specifically focusing on the mediating role of green service innovation. The study directly addressed this objective by testing four hypotheses using SEM on survey data collected from 387 tour and travel SMEs in Bali Island. The overall setup and execution of the study is appreciated.

There are four areas for potential improvement. The discussion of the findings in the paper could be significantly improved by addressing the limitations outlined in the study, which would lead to a more nuanced, comprehensive, and generalizable interpretation of the results. 

First, the study employed a cross-sectional design, which inherently limits its ability to establish definitive causal inferences between green dynamic capabilities, green service innovation, and tourism performance. While the discussion confirms the statistical significance of relationships (e.g., GDC significantly influencing GSI and BP, and GSI influencing BP), it could be improved by more explicitly stating that these are associations rather than direct cause-and-effect relationships given the study design. The discussion could then better articulate that longitudinal studies are needed to observe the temporal dynamics and provide stronger evidence for causality, thereby enriching future discussions of these evolving relationships.

Second, the sample for this research was geographically confined to Bali Island, which possesses unique environmental, cultural, and tourism characteristics (i’ve visited there twice; it is everything described). The discussion could be enhanced by including a more cautious interpretation of how broadly the findings can be applied. They should emphasize that the conclusions drawn might be specific to Bali's context and may not directly translate to other regions or countries with differing socio-economic, regulatory, or environmental conditions. It’s an easy statement to make that does not significantly take away from the value of the findings. An improved discussion would highlight the need for comparative studies across diverse tourism destinations to validate the model and allow for a more universally applicable discussion of sustainable tourism practices.

Third, the discussion primarily focuses on the direct and mediating relationships. However, the authors do acknowledges that it does not account for potential moderating variables such as organizational size, digital adoption, government support, or market orientation. The discussion could be improved by speculating on how these external or internal factors might influence the strength or direction of the relationships found. They opened this door when they made this note. Exploring this a bit could aid readers in understanding the point. For instance, how might government support enhance the impact of green dynamic capabilities on innovation, or how might organizational size affect the implementation of green service innovations? Including such considerations would provide a more nuanced understanding of the mechanisms enhancing sustainable tourism performance within the discussion-and help readers understand this better.

Finally, the researchers concentrated mainly on the internal capabilities and innovation practices of the SMEs. An improved discussion would acknowledge the broader ecosystem by briefly addressing how external institutional factors, such as specific tourism policies, green certification schemes, or stakeholder pressures, could jointly shape sustainability outcomes in the tourism industry. While not included in the analytical framework of the study, mentioning their potential influence in the discussion would present a more holistic view and guide future research towards a more comprehensive understanding of sustainability in the tourism sector.

Again, expressed in the paper is how the researchers did accomplish what they set out to do. Addressing these above areas could strengthen the paper just a bit more.

Author Response

We sincerely thank Reviewer 2 for the detailed and insightful feedback, which has significantly helped us improve the depth and clarity of our manuscript. We appreciate the recognition of our study’s successful execution and the acknowledgement that our work addressed the primary research objective effectively. In response to the four suggested areas for improvement, we have revised the manuscript as follows:

1. Clarifying the Limits of Causality Due to Cross-Sectional Design
   We have acknowledged the inherent limitations of the cross-sectional design in establishing causality more explicitly in the Limitations and Future Research section (page 17). While our findings demonstrate statistically significant relationships between green dynamic capabilities (GDC), green service innovation (GSI), and business performance (BP), we now clarify that these should be interpreted as associations rather than direct causal effects. Additionally, we recommend that future studies adopt longitudinal or experimental designs to capture temporal dynamics and provide stronger causal inferences. This addition enriches the interpretation of our results and aligns with the reviewer’s suggestion for a more nuanced discussion.

2. Geographical Context and Generalizability
   We have enhanced the discussion (page 16–17) by clearly stating that Bali Island has unique environmental, socio-cultural, and tourism characteristics, which may influence the generalisability of the findings. Although Bali provides an ideal case for sustainable tourism study, we now emphasise that the results may not directly apply to destinations with different regulatory frameworks, infrastructure, or market dynamics. This limitation has been contextualised, and we now recommend comparative studies across different island and non-island economies in Southeast Asia and beyond to validate and extend the model.

3. Lack of Moderating Variables and External Factors
   We agree that additional discussion of potential moderating factors would strengthen the study. As such, we have now included speculative interpretations in the Discussion section (page 15–16), exploring how variables such as government support, digital technology adoption, and organizational size could shape the strength of the observed relationships. For instance, we suggest that policy incentives may amplify the effect of GDC on GSI, while resource constraints in smaller firms may limit innovation implementation. These considerations offer a more nuanced understanding of how internal and external conditions can affect the success of green innovation strategies within SMEs.

4. External Institutional Factors and Ecosystem View
   We acknowledge the importance of examining the wider tourism ecosystem. Therefore, the discussion has been expanded (pages 16–17) to mention relevant institutional and policy-related enablers that were not part of the analytical model but could influence sustainability outcomes. These include green certification schemes, destination-level sustainability regulations, and stakeholder collaboration initiatives. Although not empirically tested in this study, acknowledging their influence provides a more holistic lens and lays a foundation for future research.

Once again, we express our sincere appreciation to Reviewer 2 for these constructive suggestions. All points raised have been integrated into the manuscript to provide a more balanced, critical, and generalizable contribution to the literature on sustainable tourism and SME strategy.

Author Response File: Author Response.pdf

Reviewer 3 Report

Comments and Suggestions for Authors

The article addresses a topical and important topic. The paper is well structured, and the methodology used is appropriate and correctly applied. The hypotheses are clearly formulated and supported by the results of the statistical analysis. The article has publication potential, but some minor improvements are needed, aimed at clarifying the content and increasing the academic impact.

Suggestions for improvement:
1. References: Although the paper is well documented, some sections contain too many citations in a single paragraph, which affects clarity. It is recommended to select more relevant key sources for a more focused expression.
2. Clarity of scientific language: It is recommended to simplify some theoretical paragraphs, especially in the introductory and literature review sections. Some formulations can be condensed to increase readability.
3. Research instrument: It would be useful to include in the annexes the complete questionnaire used in the study or a detailed description of the items, to increase the transparency and replicability of the research.
4. Limitations and future directions: The section on the limitations of the research could be expanded to include aspects such as: response bias, the cultural specificity of the studied region or the potential impact of external public policies on the results.
5. Practical implication: The managerial implications can be improved by presenting concrete examples or application scenarios (for example, what a tourism operator could do to implement green innovations in practice).

 

Author Response

We are sincerely grateful to Reviewer 3 for the thoughtful and constructive feedback. We have carefully considered each recommendation and have made substantial revisions to enhance the clarity, transparency, and practical value of the manuscript. Our responses to each point are outlined below:

1. References and Citation Clarity
We appreciate the comment regarding the concentration of citations in certain sections. In response, we have revised the Introduction and Literature Review (pages 2–4) to reduce citation density by selecting only the most relevant and recent key references. This has improved the clarity and focus of the arguments while retaining the necessary theoretical grounding.

2. Scientific Language and Readability
   We have reviewed and revised several theoretical paragraphs, particularly in the Introduction and Literature Review sections, to simplify complex formulations (pages 2–4). Sentences have been condensed and language has been refined to improve readability without compromising academic rigour or conceptual precision.

3. Research Instrument Transparency
   To increase the transparency and replicability of the study, we have included the complete research questionnaire as Appendix A (pages 19–20), containing all measurement items along with their original sources. This provides readers and future researchers with a clear reference for replication or adaptation.

4. Expanded Limitations and Contextual Constraints
   We have significantly expanded the Limitations and Future Research section (page 17) to incorporate important considerations raised by the reviewer. In particular, we now address the potential for response bias, the cultural specificity of the Bali tourism context, and the influence of public policy and institutional factors that may affect the outcomes. This more comprehensive treatment improves the generalizability and critical reflection on the findings.

5. Enhanced Practical Implications
   The Practical Implications section (pages 16–17) has been enriched with more concrete examples and actionable suggestions for SME managers. For instance, we now detail how tourism operators can implement green service innovation through collaborations with local eco-guides, adoption of waste-reduction technologies, and offering eco-certified tour packages. These scenarios help translate the findings into practical strategies tailored to the realities of SMEs in Bali and similar tourism destinations.

Once again, we extend our sincere thanks to Reviewer 3 for the constructive input. We believe that the revisions made in response to your feedback have significantly improved the manuscript’s clarity, depth, and practical relevance.

Author Response File: Author Response.pdf

Round 2

Reviewer 1 Report

Comments and Suggestions for Authors

I see significant and strategic modifications made in the paper based on the comments that I had forwarded. Thereby, I recommend Acceptance in the present form. Congratulations!