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This research aims to study of Market Orientation and Alliance Orientation has direct and indirect effects to Firm performance through Service Innovation as a mediator of small and medium hotels in Phitsanulok, Thailand. In this research, the qualitative research was conducted by in-depth interviews with 5 SMEs hotel entrepreneur. The results showed that the entrepreneurs focused on the market orientation, especially under the Indicators of customer orientation and respond for customer demand. As part of the alliance orientation, the entrepreneur focuses on the business partners in the same business category first because it directly impacts the firm performance. For the different industry’s business partner are often based on customer needs and cause service innovation in the hotel. Which these factors, directly and indirectly result in hotel performance is better.
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