Dynamic Capability Building and Social Upgrading in Tourism: Potentials and Limits of Sustainability Standards

The tourism sector is often characterized by precarious working conditions. With the aim of promoting sustainable business practices and addressing labour concerns, many tourism service providers are keen to set and enforce sustainability standards in their value chains. However, there is a contested debate on the local impacts of voluntary standards. This paper focuses on tourism labour and investigates how sustainability standards can contribute to capability building and social upgrading processes at the firm-level. It argues that most research on sustainability standards has analysed the “visible” outcomes of standard implementations while a process-based perspective is largely missing. The paper addresses this gap through a novel approach and makes both theoretical and empirical contributions. Conceptually, it integrates the dynamic capabilities approach into global value chain (GVC) research. This enhances current conceptualisations of capabilities and the understanding of upgrading processes within GVCs. Empirically, the paper investigates the South African standard “Fair Trade in Tourism” through a longitudinal, mixed-methods research design that extended over a period of eight years. The findings show how sustainability standards in tourism can contribute to capability building and upgrading at the firm-level. The paper concludes by arguing that policy makers should better resource local standard-setting organisations.