Host-Guest Value Co-Creation and Sustainable Innovation in Small Tourism Businesses: Evidence From Rural Destination Evolution in China

This study investigates how host–guest interactions drive sustainable innovation in small tourism businesses (STBs) amid rural destination evolution. Grounded in the value co-creation theory and the tourism area life cycle framework, the research draws on 40 in-depth interviews and field observations (2018–2024) to explore how STBs and guests collaboratively generate innovations. This study indicates that STBs can strategically leverage host-guest interactions to navigate contemporary challenges in various stages of development. Findings highlight the pivotal role of value co-creation—encompassing co-production and value-in-use. Specifically, co-production integrates resources from STBs and guests to foster innovative operational practices, while value-in-use leverages relational dynamics to tailor context-sensitive offerings. These insights challenge passive views of resource-constrained STBs in sustainable innovation. It advances theoretical understanding of businesses’ sustainable innovation, value co-creation theory, and tourism area life cycle framework. It offers practical guidance for STBs and destination management organizations within evolving rural destinations.