Despite the recognized importance of tourism as an engine of economic growth in developed countries, research on the antecedents of innovation in this sector has been sparse, especially in the context of tourism clusters. Scholars have suggested that social capital is a key determinant of firm innovation in the context of tourism clusters, but empirical evidence has been lacking. The aim of this article is to empirically study the interplay between social capital and innovation in the context of tourism clusters at firm level. More specifically, we analyzed the effects of closed networks and diverse networks on firm innovation using a sample of 215 hospitality and tourism firms located in the World Heritage Cities of Spain. Results showed an inverted-U-shaped relationship between closed networks and firm innovation. Consistent with existing literature, these findings suggest that whereas a certain degree of strength and density helps to promote innovation, a critical point may exist beyond which innovation stabilizes or deteriorates when the information of the network becomes too redundant. In addition, we found that diverse networks positively moderated the relationship between closed networks and firm innovation. In other words, structural holes appear to mitigate the negative effects arising from excess strength and density and encourage the development of innovations beyond what a firm relying solely on closed networks could achieve. In practice, these results suggest firms in tourism clusters should not exclusively focus on typical closed networks but also create connections with diverse agents to maximize their potential for innovation.

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