Value Co-Creation and Regional Innovation Systems in Cultural Tourism: A Multifaceted Framework from a Historical Town ()
1. Introduction
In recent years, cultural tourism has emerged as a pivotal driver of regional development, particularly in areas rich in historical heritage and cultural resources. Beyond its economic contributions, cultural tourism increasingly plays a transformative role in fostering innovation, revitalizing local economies, and enhancing socio-cultural sustainability. Within this context, the integration of cultural tourism and regional innovation systems has attracted growing scholarly attention, especially under the theoretical lenses of value co-creation (Vargo & Lusch, 2004, 2008; Adner, 2017).
The concept of value co-creation emphasizes that value is not unilaterally produced by firms but is collaboratively generated through interactions among multiple actors, including tourists, local communities, governments, and cultural organizations (Vargo & Lusch, 2016; Archpru Akaka et al., 2012). In cultural tourism settings, these interactions are particularly salient, as experiences are inherently co-produced through the integration of cultural meanings, place-based narratives, and participatory engagement (Vargo & Lusch, 2016; Storbacka et al., 2016).
Simultaneously, the literature on regional innovation has evolved from firm-centric perspectives to more systemic approaches, highlighting the importance of networks, institutions, and knowledge flows. Regional innovation systems (RIS) theory underscores the role of institutional infrastructures, knowledge networks, and regionally embedded learning processes in shaping innovation performance (Cooke, 1992; Cooke et al., 1997; Ho, 2009). Within this stream, recent studies have increasingly emphasized the importance of inter-organizational collaboration, strategic agency, and institutional change in driving regional innovation outcomes (Benneworth et al., 2017; Zhao et al., 2015). Moreover, emerging research has begun to explore the integration of industry development and regional innovation systems, highlighting how sector-specific dynamics reshape innovation paradigms and regional competitiveness (Li et al., 2021).
Despite these advances, the intersection between cultural tourism and regional innovation systems remains underdeveloped. Existing RIS research has largely focused on manufacturing sectors, high-technology industries, or knowledge-intensive services, with comparatively limited attention to tourism-driven innovation contexts (Luongo et al., 2023). Even in studies that explicitly examine tourism within regional innovation systems, the emphasis tends to be placed on structural factors such as collaboration networks, competition, and institutional arrangements, rather than on the underlying mechanisms through which value is co-created among diverse actors (Luongo et al., 2023). As a result, the interactional dynamics and configurational patterns that connect cultural tourism activities with regional innovation outcomes remain insufficiently theorized.
Furthermore, prior research has highlighted the importance of linkages and knowledge flows within regional innovation systems (Ho, 2009; Zhao et al., 2015), yet it provides limited insight into how cultural and experiential resources—central to tourism contexts—are transformed into innovation drivers through multi-actor engagement (Benneworth et al., 2017). In addition, although recent research has begun to connect emerging industries with regional innovation systems (Li et al., 2021), cultural tourism remains insufficiently conceptualized as an innovation-driving domain with distinct value creation logics. Specifically, there is a lack of integrative frameworks that explain how cultural tourism contributes to regional innovation through value co-creation and regional innovation systems.
To address these gaps, this study adopts a value co-creation perspective and regional innovation system theory to investigate the interplay between cultural tourism and regional innovation development. Specifically, this study focuses on identifying both the underlying mechanisms and the emergent value co-creation mechanism that connect cultural tourism with regional innovation outcomes in historical towns. In this study, regional innovation outcomes are conceptualized as the observable and measurable outputs generated through value co-creation processes within a regional innovation system (Hauser et al., 2018; Nikolaidis et al., 2012; Zheng, 2025).
To achieve these objectives, this study is guided by the following research questions: 1) What are the key dimensions through which cultural tourism in historical towns drives regional innovation? 2) How do multiple actors engage in value co-creation mechanism that links cultural tourism activities to regional innovation outcomes?
This study contributes to the literature in several ways. Theoretically, it advances the integration of service-dominant logic and regional innovation systems by proposing a multifaceted framework that explicates how cultural tourism-driven value co-creation fosters regional innovation. By emphasizing multiple dimensions, actor configurations, and institutional facets, this study extends prior research from process-based explanations toward more structured and generalizable representations of value co-creation mechanism (Vargo & Lusch, 2016; Adner, 2017). It also contributes to regional innovation systems research by incorporating cultural tourism as a distinct yet influential domain of innovation, responding to recent calls for cross-sectoral integration (Li et al., 2021; Luongo et al., 2023). Empirically, it provides in-depth insights from a representative heritage destination, enriching the understanding of tourism-driven innovation in emerging regions.
The remainder of this paper is structured as follows. Section 2 reviews the relevant literature on cultural tourism, value co-creation, and regional innovation. Section 3 outlines the research methodology. Section 4 presents the empirical findings. Section 5 discusses the theoretical and managerial implications. Finally, Section 6 concludes the study with limitations and directions for future research.
2. Literature Review
2.1. Cultural Tourism and Innovation Dynamics in Historical Towns
Cultural tourism has increasingly been recognized as a central driver of regional transformation, particularly in historical towns where cultural heritage, local identity, and place-based resources converge. Early conceptualizations framed cultural tourism primarily as the consumption of heritage assets; however, more recent scholarship has emphasized its evolution toward experiential, creative, and innovation-oriented processes (Richards, 2018). This shift reflects a broader transition from passive sightseeing to active participation, in which tourists engage with cultural meanings, practices, and local communities, thereby contributing to the co-production of value (Binkhorst & Den Dekker, 2009).
In historical towns, cultural tourism is inherently embedded in localized socio-cultural and institutional contexts. These destinations are characterized by dense accumulations of tangible and intangible heritage, including architecture, traditions, crafts, and collective memory. As such, they function not only as repositories of cultural assets but also as dynamic spaces where heritage is continuously reinterpreted and transformed. As argued by Della Lucia and Trunfio (2018), cultural tourism in heritage-rich environments often stimulates processes of renewal and reinterpretation, enabling destinations to generate new forms of cultural and economic value while maintaining links to their historical identity.
From an innovation perspective, tourism has been increasingly conceptualized as a domain of non-technological and experience-based innovation, where new value emerges through the recombination of cultural, symbolic, and experiential resources (Hjalager, 2010; Richards, 2011). Unlike traditional sectors, innovation in cultural tourism is less reliant on technological breakthroughs and more dependent on creativity, storytelling, and the design of immersive experiences. This aligns with the growing recognition of the “experience economy”, in which value is created through meaningful and memorable interactions rather than purely functional offerings (Pine & Gilmore, 1999). In historical towns, such innovation often manifests in the transformation of heritage into experiential products, such as cultural performances, craft-based workshops, and themed tourism experiences.
At the same time, cultural tourism in historical towns is shaped by a fundamental tension between heritage preservation and market-driven innovation. On the one hand, tourism provides resources for conservation and revitalization, supporting the maintenance of cultural assets and local traditions. On the other hand, the commodification of heritage may lead to issues such as loss of authenticity, cultural homogenization, and overtourism (Ashworth & Tunbridge, 2000; Page & Duignan, 2023). As Kourtit, Nijkamp, and Arribas (2012) suggest, the challenge for historical towns lies in balancing economic development with cultural sustainability, ensuring that innovation processes do not undermine the very resources upon which tourism depends.
2.2. Regional Innovation Systems and Tourism-Driven Innovation
The regional innovation systems (RIS) literature provides a useful framework for understanding how innovation emerges from interactions among firms, institutions, and knowledge networks within a specific geographical context (Cooke, 1992; Cooke et al., 1997). RIS emphasizes the importance of localized learning, institutional infrastructures, and inter-organizational collaboration in shaping regional competitiveness.
Within this perspective, knowledge networks play a critical role in enabling regions to achieve competitive advantages through resource exchange and capability development (Ho, 2009). Similarly, regional collaboration has been shown to enhance indigenous innovation capabilities by facilitating knowledge diffusion and collective learning processes (Zhao et al., 2015). These insights underscore the importance of relational and network-based dynamics in regional innovation systems.
More recent studies have further extended RIS by examining the role of strategic agency and institutional change. For example, Benneworth et al. (2017) highlight how universities and other institutional actors actively shape innovation trajectories through purposive actions and governance mechanisms. In parallel, Li et al. (2021) demonstrate how emerging industries can reconfigure regional innovation systems by introducing new linkages, value logics, and development paradigms.
Despite these advances, tourism remains underrepresented in RIS research. As noted by Luongo et al. (2023), tourism-based innovation systems exhibit distinct characteristics, including the coexistence of collaboration and competition among actors, as well as the integration of cultural, social, and experiential resources. However, current studies primarily focus on structural aspects such as networks and governance, with limited attention to the underlying value creation mechanisms.
2.3. Value Co-Creation and Regional Innovation Systems
The concept of value co-creation, rooted in service-dominant logic (SDL), offers a critical lens for understanding how innovation emerges through interactions among heterogeneous actors. SDL posits that value is not embedded in outputs but co-created through resource integration and service exchange among multiple stakeholders (Vargo & Lusch, 2004). This perspective shifts the analytical focus from firm-centric production toward relational and systemic processes of value creation.
Integrating this perspective with regional innovation systems (RIS) provides a more comprehensive understanding of how innovation is generated within specific territorial contexts. While RIS literature traditionally emphasizes institutional structures, knowledge infrastructures, and network configurations (Cooke, 1992; Cooke et al., 1997), it has been critiqued for insufficiently addressing the micro-foundations of interaction and value creation. In this regard, value co-creation serves as an important conceptual bridge, explaining how actors within RIS actively integrate resources, exchange knowledge, and jointly produce innovation outcomes.
Within RIS, value co-creation can be understood as a dynamic process in which firms, institutions, communities, and other stakeholders collaboratively generate value through continuous interaction. Knowledge networks, for instance, are not merely channels for information transfer but platforms for co-creation, where actors combine diverse resources to develop new capabilities and innovations (Ho, 2009; Zhao et al., 2015). Similarly, strategic agency plays a crucial role in shaping value co-creation mechanism, as institutional actors such as universities, governments, and intermediaries actively orchestrate interactions and influence innovation trajectories (Benneworth et al., 2017).
Recent research has further highlighted the importance of linking emerging industries with regional innovation systems through new forms of value creation and interaction. Li et al. (2021) argue that the integration of emerging sectors reshapes RIS by introducing novel linkages, reconfiguring resource flows, and transforming innovation paradigms. From a value co-creation perspective, these processes can be interpreted as the emergence of new configurations of actor engagement and resource integration within the regional system.
In this regard, actor engagement becomes a critical mechanism through which value co-creation is realized within regional innovation systems. Active participation, interaction intensity, and alignment among actors influence the effectiveness of resource integration and the generation of innovation outcomes. Prior studies have shown that shared narratives and interpretive frameworks can facilitate coordination and collective action, thereby enhancing value co-creation within complex systems (Ketonen-Oksi, 2018). Such mechanisms are particularly relevant in cultural tourism contexts, where meaning-making and symbolic value are central to both experience and innovation.
2.4. Toward a Conceptual Framework of Cultural Tourism and Regional Innovation
Building on the integration of value co-creation and regional innovation systems developed in Section 2.3, this study advances a multifaceted framework that captures the complex and interdependent processes through which cultural tourism contributes to regional innovation. Rather than treating innovation as a function of institutional structures alone, this framework conceptualizes regional innovation as an emergent outcome of ongoing value co-creation among heterogeneous actors embedded within specific regional contexts.
The proposed multifaceted framework encompasses several interrelated dimensions. First, actor configurations refer to the diverse and evolving roles of stakeholders within the regional innovation system. In cultural tourism contexts, actors are not limited to firms and institutions but include tourists and local communities, whose participation actively shapes value creation processes. Second, resource integration mechanisms capture how different types of resources—tangible, intangible, cultural, and experiential—are combined and reconfigured to generate innovative offerings. Third, interactional dynamics emphasize the processes of collaboration, coordination, and competition through which actors engage in value co-creation, aligning with prior research on knowledge networks and regional collaboration (Ho, 2009; Zhao et al., 2015; Luongo et al., 2023). Fourth, institutional arrangements highlight the formal and informal rules, norms, and governance structures that enable or constrain value co-creation within the regional system, consistent with studies on strategic agency and institutional change (Benneworth et al., 2017).
From this perspective, cultural tourism functions as a distinctive domain within RIS, where value is co-created through the integration of cultural, social, and experiential resources. These resources are mobilized and transformed through interactions among multiple actors, including local communities, cultural practitioners, tourism enterprises, governmental agencies, and platform intermediaries. Such interactions extend beyond traditional production networks and involve meaning-making processes, experiential design, and symbolic value construction, thereby enriching the innovation potential of the region.
3. Methodology
3.1. Research Design
This study adopts an exploratory qualitative research design to investigate how cultural tourism in historical towns drives regional innovation through value co-creation mechanism. Exploratory research is particularly appropriate when a research domain is theoretically underdeveloped, conceptually fragmented, or characterized by emerging phenomena that require inductive understanding and theory building (Edmondson & McManus, 2007).
Consistent with the logic of exploratory inquiry, this study seeks to move beyond hypothesis testing toward theory elaboration and conceptual development. Rather than examining predefined relationships, the research aims to identify key dimensions, interaction patterns, and configurations through which cultural tourism contributes to regional innovation. This aligns with prior studies suggesting that exploratory research is particularly suitable for addressing “how” and “what” questions in complex and context-dependent settings (Yin, 2018).
Within this exploratory framework, the study employs a single-case qualitative design. Case study research is widely recognized as an appropriate method for examining contemporary phenomena within real-life contexts, especially when the boundaries between the phenomenon and context are not clearly defined (Yin, 2018). Moreover, single-case designs can provide deep insights into complex processes and generate theoretically meaningful contributions when the case is selected for its revelatory or exemplary nature (Siggelkow, 2007).
3.2. Case Selection and Research Context
This study adopts a purposeful case selection strategy to identify an information-rich and theoretically relevant case for examining the relationship between cultural tourism and regional innovation. In line with qualitative research traditions, case selection is guided by the principle of theoretical sampling, which prioritizes cases that are particularly suitable for illuminating the research phenomenon and advancing theory (Eisenhardt, 1989; Yin, 2018). Rather than aiming for representativeness in a statistical sense, the study seeks to select a case that can provide deep insights into the mechanisms and configurations of value co-creation in cultural tourism contexts.
Dali Ancient City is selected as a critical and revelatory case due to its unique combination of rich cultural heritage, vibrant tourism activities, and ongoing innovation practices. As one of the most prominent historical towns in China, Dali is characterized by a high concentration of tangible and intangible cultural resources, including traditional Bai ethnic culture, historic architecture, and long-standing cultural practices. At the same time, the destination has experienced rapid development in cultural tourism, creative industries, and digital media engagement, making it an ideal context for observing the interaction between cultural tourism and regional innovation.
More importantly, Dali qualifies as a critical case for theory building because it exhibits the simultaneous presence and interaction of the key dimensions central to this study—actor configurations, interactional dynamics, resource integration, and institutional arrangements. These elements are not only observable but also highly active and evolving within the case, enabling the identification of underlying mechanisms and configurations of value co-creation. Following Siggelkow (2007), a well-chosen case can serve as a powerful empirical setting to illustrate, extend, and refine theoretical constructs. In this regard, Dali provides a revealing context in which value co-creation processes can be observed in a relatively complete and intensified form, thereby supporting the development of a multifaceted framework of cultural tourism-driven regional innovation.
The selection of Dali Ancient City is further justified by its recognized achievements and institutional endorsements, which underscore its representativeness and significance as a leading cultural tourism destination. In recent years, Dali has received multiple prestigious awards, including recognition as a “National-Level Nighttime Cultural and Tourism Consumption Cluster”, a designation as a “Characteristic Town of Yunnan Province”, and honors such as the “Great Wall Award—Outstanding Cultural Tourism Brand Case” and the “Excellent Procuratorial Cultural Brand of Yunnan Province”. These recognitions reflect not only the destination’s strong cultural identity but also its capacity to integrate cultural resources, tourism development, and innovative practices at both regional and national levels.
Furthermore, the case demonstrates a high degree of complexity and dynamism, characterized by the coexistence of heritage preservation and market-driven development, as well as the increasing role of digital technologies and platform-based interactions. Such features make it particularly suitable for exploratory research aimed at uncovering multifaceted innovation processes (Yin, 2018).
3.3. Data Collection
To ensure data richness and triangulation, this study employs multiple sources of qualitative data, including semi-structured interviews, secondary documents, and field observations.
Primary data were collected through semi-structured interviews with key stakeholders involved in cultural tourism and regional development. Interviewees were selected using purposive and snowball sampling techniques to capture diverse perspectives across the regional innovation system. Secondary data were collected from multiple sources, including policy documents, government reports, tourism development plans, industry reports, and online platform data. Field observations were conducted to capture on-site interactions, tourism activities, and experiential elements of cultural tourism. The use of multiple data sources enhances the credibility and robustness of the findings through triangulation (Yin, 2018).
Participants were selected based on the following criteria: 1) Direct involvement in cultural tourism activities (e.g., tourism operations, cultural production, digital services, or community engagement); 2) Active participation in or knowledge of innovation-related practices, such as product development, cultural revitalization, or platform-based interaction; 3) Ability to provide informed perspectives on the evolution of cultural tourism in Dali, including institutional, economic, or socio-cultural dimensions.
A total of eight semi-structured interviews were conducted with key stakeholders, including local government officials, tourism business operators, cultural and creative practitioners, community representatives, and digital service providers. The participants were coded as follows: local government officials (A1 - A2), tourism business operators (B1 - B2), cultural and creative practitioners (C1 - C2), community representatives (D1), and digital service providers (E1).
Initial participants were identified based on their visibility and relevance within the local cultural tourism ecosystem, including recommendations from local institutions and publicly available information. Subsequent participants were recruited through referrals from initial interviewees, allowing access to additional stakeholders embedded in the network.
Each interview lasted approximately 45 - 90 minutes and was conducted between January and March 2026. All interviews were audio-recorded with participants’ consent, transcribed verbatim, and anonymized to ensure confidentiality and facilitate systematic analysis. Additionally, the study follows established case study protocols to ensure methodological transparency and reliability (Yin, 2018).
Although the sample size is relatively small, the number of interviews is consistent with qualitative research standards emphasizing depth over breadth. In exploratory and theory-building research, smaller samples can be appropriate when they provide rich, relevant, and diverse insights (Edmondson & McManus, 2007). The adequacy of the sample was assessed based on three considerations: First, theoretical saturation was reached, as no substantially new themes or categories emerged from the later interviews. This suggests that the data were sufficient to capture the key dimensions and patterns relevant to the research questions. Second, the sample includes multiple actor groups, ensuring coverage of the core dimensions of the multifaceted framework, including actor configurations, interactional dynamics, resource integration, and institutional arrangements. Third, the study aims for analytical generalization rather than statistical generalization (Yin, 2018). The goal is to develop and refine theoretical constructs—such as value co-creation models and sub-models—rather than to estimate population parameters. From this perspective, the richness and relevance of the data are more critical than sample size.
This study draws on a multi-source qualitative dataset comprising interviews, documentary materials, field observations, and online-platform data. The documentary dataset includes a range of policy, institutional, and industry-related documents, such as: 1) Local and regional government policy documents related to cultural tourism, heritage preservation, and tourism regulation; 2) Official tourism development plans and reports issued by municipal and provincial authorities: 3) Publicly available industry reports and promotional materials, including destination branding content and cultural tourism initiatives; 4) Archival materials related to intangible cultural heritage programs and cultural revitalization projects. The dataset covers a recent and policy-relevant time frame, primarily spanning 2023-2026.
Field observations were conducted in multiple in-situ tourism and cultural settings within Dali Ancient City, including: 1) Historic streets and commercial areas where cultural and creative products are produced and sold; 2) Cultural venues such as folk art centers, exhibition spaces, and performance sites: 3) Community-based tourism settings, including homestays and local neighborhoods; 4) Tourism interaction spaces where visitor engagement and experience co-creation occur.
To account for the growing role of digitalization, the study also incorporates online-platform data, including: 1) Social media content from platforms such as short-video and content-sharing platforms (e.g., Xiaohongshu); 2) Digital promotional materials and destination marketing campaigns; 3) Online discourse related to cultural tourism phenomena, including viral media content (e.g., TV dramas and tourism-related narratives).
3.4. Data Analysis
This study employs a systematic qualitative data analysis approach combining thematic analysis and iterative coding to identify patterns and construct theoretical insights. First, all interview transcripts and textual data were coded using an open coding approach to identify initial concepts related to value co-creation, actor interactions, and innovation processes. Second, axial coding was conducted to group these concepts into higher-order categories corresponding to the key dimensions of the multifaceted framework, including actor configurations, interactional dynamics, resource integration, and institutional arrangements. Third, selective coding was used to integrate these categories and identify overarching patterns and configurations of value co-creation.
The coding process was primarily conducted by the lead author, who possesses domain expertise in cultural tourism and regional innovation. To enhance analytical rigor and reduce potential bias, the second researcher independently reviewed a subset of the data and coding outcomes. Discrepancies were discussed and resolved through iterative comparison and consensus-building, thereby improving the reliability of the coding scheme.
The study adopted several strategies to enhance analytical rigor. First, iterative coding and constant comparison ensured that the analysis remained grounded in the data while progressively linked to theoretical constructs. Second, researcher triangulation reduced individual bias and strengthened interpretive validity. Third, the integration of multiple data sources supported confirmability and credibility, as recommended in qualitative research (Lincoln & Guba, 1985).
4. Findings
The findings are presented in two parts. First, the study identifies the key dimensions through which cultural tourism drives regional innovation outcomes. Second, it develops value co-creation and its associated sub-mechanisms that explain how these mechanisms are operationalized in practice.
4.1. Dimensions of Cultural Tourism-Driven Regional Innovation
The findings reveal that regional innovation emerges from the interplay of four core dimensions—actor configurations, interactional dynamics, resource integration, and institutional arrangements—which collectively shape the mechanisms and configurations of value co-creation (Figure 1).
4.1.1. Actor Configurations
The findings indicate that actor configurations in Dali extend beyond conventional RIS participants (e.g., firms and institutions) to include tourists, local communities, cultural entrepreneurs, and digital platform providers. These actors play active roles in shaping innovation processes.
Local governments act as coordinators and enablers, providing policy support and infrastructure. Cultural entrepreneurs and small businesses serve as innovators, transforming cultural resources into marketable products and experiences. Notably, tourists are not passive consumers but active contributors to value creation by influencing demand, co-producing experiences, and disseminating cultural meanings through digital platforms.
This expanded actor configuration enhances the diversity of resources and perspectives within the regional innovation system, thereby increasing the potential for innovation.
4.1.2. Interactional Dynamics
The findings reveal that interactional dynamics in cultural tourism are characterized by a hybrid pattern of collaboration and competition. Actors frequently collaborate in organizing cultural events, co-developing tourism products, and sharing marketing platforms. At the same time, competition exists among businesses for visibility, differentiation, and market share.
This dual dynamic fosters innovation by encouraging both knowledge sharing and creative differentiation. Collaborative interactions facilitate collective learning and resource pooling, while competitive pressures drive experimentation and product innovation. These findings align with prior research highlighting the coexistence of collaboration and competition in tourism-based innovation systems (Luongo et al., 2023).
Figure 1. Multifaceted value co-creation framework and mechanism.
4.1.3. Resource Integration
Resource integration emerges as a central mechanism through which cultural tourism drives innovation. Actors recombine diverse resources—including cultural heritage, local traditions, artistic expressions, and digital technologies—to create new tourism experiences.
For example, traditional cultural elements such as Bai ethnic crafts and local storytelling are integrated with modern design, digital media, and platform-based services. This recombination process transforms static cultural assets into dynamic and market-oriented offerings.
Importantly, resource integration is not limited to tangible assets but also involves intangible elements such as narratives, identities, and symbolic meanings. This highlights the unique role of cultural and experiential resources in tourism-driven innovation.
4.1.4. Institutional Arrangements
Institutional arrangements play a critical role in shaping value co-creation mechanism. Government policies, cultural preservation regulations, and tourism development strategies provide both enabling conditions and constraints. One interviewee noted:
“In recent years, the growing number of tourists visiting and residing in the area has prompted increased attention to homestay management and regulation. In response, a series of new regulatory measures have been introduced, including updated policies implemented in January this year” (A1).
On the one hand, supportive policies—such as funding programs, infrastructure development, and digitalization initiatives—facilitate innovation and collaboration. On the other hand, regulatory constraints related to heritage preservation and land use may limit certain forms of development.
In addition, informal institutions, including social norms and community values, influence how actors engage in value co-creation. These findings underscore the importance of institutional contexts in shaping regional innovation processes (Benneworth et al., 2017).
4.2. Emergent Value Co-Creation Mechanism
The findings identify six key mechanisms through which cultural tourism stimulates regional innovation and reveal a set of nested value co-creation models and sub-models, including cultural and creative production, intangible cultural heritage revitalization, performing arts integration, digital media promotion, educational tourism, and wellness services.
4.2.1. Cultural and Creative Production
This sub-mechanism focuses on the commercialization and reinterpretation of cultural symbols, crafts, and heritage elements into creative products. Resource integration occurs through the recombination of cultural heritage elements, artistic creativity, and market-oriented design capabilities, resulting in the transformation of traditional cultural assets into contemporary products and services. Actors integrate traditional aesthetics with modern design and branding strategies, generating new cultural commodities and enhancing regional identity. One interviewee described:
“Walking through the ancient city, one can observe artists who have come for a sojourn selling their self-made products along the streets; these goods are highly distinctive” (C1).
This sub-mechanism leads to the development of new and enhanced tourism products and services, including culturally embedded creative goods, experiential offerings, and market-differentiated tourism formats that reflect the integration of tradition and contemporary design.
4.2.2. Intangible Cultural Heritage Revitalization
In this sub-mechanism, traditional practices such as handicrafts, rituals, and folk arts are revitalized through tourism engagement. Resource integration occurs via the alignment of embodied tacit knowledge (craft skills, rituals), cultural narratives, policy instruments (subsidies, certification, IP protection), and experiential design, enabling heritage practices to be translated into contemporary tourism offerings. Value is co-created through interactions between heritage bearers, tourists, and cultural institutions, enabling the preservation and transformation of intangible cultural heritage into experiential and educational offerings. As one interviewee noted,
“Currently, the cultural tourism formats in Dali are becoming increasingly diversified” (B1).
This sub-mechanism contributes to the enhancement of regional innovation capabilities, particularly in knowledge integration, cultural reinterpretation, and the adaptive transformation of heritage-based practices into innovative tourism offerings.
Importantly, this mechanism is embedded in the well-documented preservation-commercialization tension in heritage and cultural tourism. While commercialization can generate economic value, visibility, and incentives for knowledge transmission, it may also lead to standardization, staged authenticity, and the dilution of cultural meanings (Ashworth & Tunbridge, 2000; Richards, 2018). In this sense, intangible cultural heritage revitalization constitutes a dual process, in which value co-creation simultaneously enables cultural renewal and introduces pressures toward commodification (Hjalager, 2010; Vargo & Lusch, 2016).
4.2.3. Performing Arts Integration
Cultural performances, including traditional music, dance, and theatrical productions, are incorporated into tourism experiences. Resource integration combines performative practices, narrative storytelling, spatial settings, and audience participation, transforming cultural expressions into experiential value. This sub-mechanism emphasizes experiential value creation, where audiences actively participate in cultural interpretation, thereby enhancing both cultural transmission and economic value.
For example, the Jiangzhiji-Dali Folk Art Center was established through the collaboration of folk art inheritors, cultural and creative teams, artists, enterprises, and scholars, integrating contributions from over 20 intangible cultural heritage inheritors.
This sub-mechanism results in the creation of innovative experiential tourism formats, strengthening symbolic and cultural value while enabling new forms of service.
4.2.4. Digital Media Promotion
Short videos, social media content, and live streaming platforms play a critical role in shaping tourism demand and destination branding. Resource integration involves the fusion of digital platforms, visual media, and cultural narratives, enabling rapid dissemination and amplification of tourism-related information. Tourists, influencers, and businesses co-create value by producing and disseminating digital content, which amplifies cultural narratives and enhances destination visibility. As one interviewee noted,
“Using Meet Yourself as an example, the series garnered over 260 million views within two weeks of its release. Related topics generated more than 10 million interactions, while short-video platforms recorded over 4.47 million views, triggering widespread online discussion” (E1).
This sub-mechanism facilitates the formation and strengthening of collaborative and digitally mediated networks, while simultaneously amplifying tourism demand and enhancing destination visibility through platform-based interactions and user-generated content.
4.2.5. Educational Tourism and Study Tour
Educational tourism programs, such as cultural workshops, heritage learning experiences, and field-based learning activities, are co-developed by local communities, educators, and tourism providers. Resource integration occurs through the alignment of educational content, cultural resources, local knowledge, and experiential design, enabling structured knowledge exchange. This sub-mechanism integrates knowledge exchange and experiential learning, contributing to both cultural preservation and innovation. As one interviewee noted,
“For national-level inheritors in Dali, the government provides policy support, including financial assistance, property rights protection, and regulatory guidance for educational and study-tour activities” (A2).
This sub-mechanism strengthens regional knowledge systems and innovation capacity by enabling structured knowledge exchange, experiential learning, and the integration of educational content with cultural and local resources.
4.2.6. Wellness and Health Services
This sub-mechanism leverages natural environments, traditional healing practices, and local lifestyles to develop wellness-oriented tourism services. Resource integration combines natural environments, traditional healing practices, lifestyle concepts, and service delivery systems, leading to the development of new tourism segments. Value co-creation occurs through the integration of health, culture, and experience, attracting new market segments and diversifying tourism offerings. As one interviewee noted,
“Visiting Dali is not merely for tourism, but for experiencing an alternative lifestyle” (B2).
This sub-mechanism drives adaptive changes in institutional arrangements and service systems, including the diversification of tourism offerings, the emergence of new market segments, and the evolution of governance and policy support structures.
The findings demonstrate that the identified sub-mechanisms collectively constitute a multifaceted mechanism of value co-creation. Each sub-mechanism emphasizes different dimensions of the framework—resource integration, interactional dynamics, actor configurations, and institutional arrangements—while remaining interconnected within the regional innovation system.
Specifically, regional innovation outcomes refer to a multidimensional set of results, including: 1) the development of new or enhanced tourism products and services, such as cultural and creative offerings, experiential tourism formats, and digitally mediated services; 2) the formation and strengthening of collaborative networks among diverse actors, including firms, communities, and institutions; 3) the enhancement of regional capabilities, such as knowledge integration, cultural reinterpretation, and service innovation capacity; and 4) adaptive changes in institutional arrangements, including policy innovation, governance mechanisms, and support systems that facilitate ongoing development.
Overall, the integration of these sub-mechanisms reveals that cultural tourism-driven innovation is not confined to a single pathway but emerges from the interaction of multiple value co-creation configurations. This finding supports the proposed multifaceted framework and highlights the dynamic and evolving nature of regional innovation systems in cultural tourism contexts.
5. Discussion
5.1. Value Co-Creation as a Micro-Foundation of Regional Innovation
A key theoretical contribution of this study lies in identifying value co-creation as a central mechanism through which regional innovation is generated. While previous research has emphasized collaboration and knowledge exchange as drivers of innovation (Zhao et al., 2015; Luongo et al., 2023), this study goes further by explicating how such interactions translate into innovation through specific configurations of actor engagement and resource integration.
In line with Storbacka et al. (2016), actor engagement is shown to function as a critical micro-foundation, shaping how resources are mobilized and recombined within the regional system. However, this study extends this perspective by demonstrating that actor engagement in cultural tourism is not limited to firms and institutions but includes tourists, communities, and digital actors, thereby expanding the boundaries of innovation systems.
Moreover, the identification of nested value co-creation mechanisms and sub-mechanisms provides a more fine-grained understanding of how innovation emerges in practice. For instance, sub-mechanisms such as intangible cultural heritage (ICH) revitalization, digital storytelling, and wellness tourism illustrate how different types of resources and interactions generate distinct innovation outcomes. This extends SDL by moving from a general conceptualization of value co-creation toward a configurational and model-based understanding of value creation processes.
In addition, the role of shared narratives and symbolic meaning-making—highlighted in sub-mechanisms such as performing arts and digital media promotion—resonates with Ketonen-Oksi (2018), who emphasizes the importance of narrative alignment in facilitating value co-creation. This suggests that innovation in cultural tourism is not only driven by resource recombination but also by the co-construction of meaning among actors.
5.2. Reconfiguring Regional Innovation Systems through Cultural Tourism
This study also contributes to the understanding of how regional innovation systems evolve through the integration of new sectors and value logics. While prior research has examined the role of strategic actors, such as universities, in driving institutional change (Benneworth et al., 2017), the findings highlight the importance of distributed agency across multiple actors, including communities, entrepreneurs, and platform providers.
Additionally, the findings extend Ho (2009) by showing that knowledge networks in cultural tourism are not limited to formal exchanges but include informal, experiential, and digitally mediated interactions. This expands the notion of knowledge networks to encompass experience-based and symbolic knowledge flows, which are particularly relevant in cultural tourism contexts.
Importantly, the study also highlights the recursive relationship between innovation outcomes and institutional arrangements. As suggested by Li et al. (2021), emerging industries can reshape RIS by introducing new development paradigms. This study provides empirical support for this argument by showing how cultural tourism-driven innovation leads to the evolution of policies, governance mechanisms, and institutional norms, thereby reinforcing the adaptive nature of regional innovation systems.
5.3. Trade-Offs and Boundary Conditions in ICH-Based Value
Co-Creation
The tension between preservation and commercialization in heritage and cultural tourism necessitates several trade-offs. Market-oriented adaptation can enhance scalability and economic sustainability, yet may constrain creative autonomy and privilege tourist-oriented representations over community-defined meanings (Richards, 2011). Similarly, institutional efforts to codify and protect heritage may stabilize knowledge but risk reducing the flexibility and evolutionary nature of living traditions (Ashworth & Tunbridge, 2000).
The effectiveness of this mechanism is further conditioned by several boundary conditions. Positive outcomes are more likely when institutional arrangements provide adequate safeguards—such as intellectual property protection, fair compensation mechanisms, and participatory governance structures—and when co-creation processes enable meaningful involvement of heritage bearers (Benneworth et al., 2017; Luongo et al., 2023). In contrast, when commercialization pressures dominate in the absence of such safeguards, innovation outcomes may be superficial, leading to weakened cultural integrity and limited capability development.
Finally, the mechanism may produce uneven benefits across actors. While entrepreneurs, digital platforms, and highly visible inheritors may capture disproportionate economic value, less visible practitioners and local communities may experience limited returns despite contributing essential cultural resources. This asymmetry highlights the need for inclusive governance and equitable value distribution within regional innovation systems (Ho, 2009; Li et al., 2021).
5.4. Theoretical Contributions
By developing a multifaceted framework, this study demonstrates that regional innovation is neither solely a function of institutional configurations nor purely an outcome of actor-level interactions, but rather emerges from the dynamic alignment between structural conditions and value co-creation mechanisms. This finding extends prior work by showing that value co-creation constitutes the micro-foundation of RIS, complementing the structural emphasis identified in earlier studies (Ho, 2009; Zhao et al., 2015).
Furthermore, this study contributes to RIS literature by conceptualizing cultural tourism as an innovation-driving domain, rather than a peripheral or consumption-oriented sector. Consistent with Li et al. (2021), who argue that emerging industries reshape RIS through new linkages and value logics, the findings demonstrate that cultural tourism introduces novel forms of resource integration—particularly through cultural, symbolic, and experiential resources—that reconfigure regional innovation pathways. This extends RIS theory by incorporating non-technological and experience-based innovation processes into its analytical scope.
Beyond RIS, this study contributes to cultural tourism and service innovation literature by offering a more integrated and theoretically grounded understanding of how tourism generates innovation. First, it extends prior studies on service innovation in cultural tourism (e.g., Lin & Chen, 2024) by demonstrating that innovation is not confined to service design but is embedded in broader value co-creation systems involving multiple actors and resources.
Second, it complements research on value resonance in cultural and creative contexts (Kuo & Chen, 2024) by showing how resonance is operationalized through specific value co-creation mechanisms and sub-mechanisms.
Third, the findings align with studies on sustainable competitive advantage in cultural heritage sites (Ng et al., 2023) by illustrating how innovation emerges from the integration of cultural resources, community engagement, and institutional support. However, this study goes beyond existing research by explicitly linking these elements to regional innovation systems and proposing a multifaceted framework that captures their interdependencies.
6. Conclusion and Suggestions
6.1. Conclusion
This study sets out to explore how cultural tourism in historical towns contributes to regional innovation through value co-creation mechanism. Drawing on the integration of service-dominant logic and regional innovation systems, the study developed a multifaceted framework to explain how innovation emerges from the interaction of diverse actors, resources, and institutional arrangements.
The findings identified four key dimensions—actor configurations, interactional dynamics, resource integration, and institutional arrangements—that jointly constitute the mechanisms through which cultural tourism drives regional innovation. These dimensions reveal that innovation is not merely a function of structural conditions but is shaped by ongoing interactions and resource recombination among heterogeneous actors.
This study further uncovered a set of value co-creation mechanisms, each comprising multiple sub-mechanisms that represent concrete pathways of innovation. These include cultural and creative production, intangible cultural heritage revitalization, performing arts integration, digital media promotion, educational tourism, and wellness-oriented services. Importantly, these models operate in a nested and interdependent manner, reflecting the multifaceted and dynamic nature of regional innovation systems.
The study demonstrates that cultural tourism functions as an innovation-driving domain, capable of reshaping regional innovation systems through new forms of value creation that extend beyond technological innovation to include cultural, experiential, and symbolic dimensions. By bridging value co-creation and RIS perspectives, this research provides a more comprehensive understanding of how innovation emerges in complex socio-cultural contexts.
6.2. Implications for Industry Practice
This study provides important implications for industry practitioners. First, the findings highlight the need for firms to shift from a product-centric logic toward a value co-creation-oriented business model. Rather than treating cultural resources as static assets, firms should actively engage customers, communities, and partners in co-creating cultural and experiential value. This implies that tourism businesses should design participatory experiences—such as workshops, immersive storytelling, and interactive performances—that allow visitors to become co-producers of value, thereby enhancing engagement and differentiation.
Second, the identification of nested value co-creation models and sub-models suggests that firms can strategically position themselves within different value creation pathways. For example, cultural and creative enterprises may focus on product innovation and heritage reinterpretation, while digital service providers can leverage platform-based interactions and user-generated content to amplify visibility and market reach. Similarly, firms operating in wellness tourism or educational tourism can develop specialized offerings that integrate cultural, experiential, and service elements. This indicates that firms should adopt a portfolio approach to regional innovation, combining multiple value co-creation models to enhance resilience and competitiveness.
Finally, the study highlights the need for firms to balance commercial innovation with cultural sustainability. While the commodification of cultural heritage can generate economic benefits, it also poses risks to authenticity and long-term sustainability. Industry actors should therefore adopt responsible innovation practices that respect cultural integrity, involve local communities, and ensure the preservation of cultural resources.
6.3. Limitations and Future Research
Despite its contributions, this study has several limitations. First, the use of a single case study limits the generalizability of the findings. Future research could adopt comparative case studies or quantitative approaches to validate and extend the proposed framework. Second, while this study identifies multiple value co-creation mechanisms, the dynamic evolution of these models over time remains underexplored. Longitudinal studies could provide deeper insights into how value co-creation mechanisms and regional innovation systems co-evolve. Third, the study focuses on a specific cultural and institutional context. Future research could examine how the proposed framework applies to different regions and cultural settings, thereby enhancing its external validity. Finally, further research could explore the role of emerging technologies, such as artificial intelligence and digital platforms, in shaping value co-creation and innovation in cultural tourism contexts.