Do Services Innovate (Differently)? Insights from the European Innobarometer Survey

TLDR

In advanced economies, services dominate but little is known about how they innovate, as existing knowledge largely derives from manufacturing and services are often seen as non‑innovative recipients of technology. The study proposes that services innovate differently, emphasizing softer aspects such as skills and inter‑organisational cooperation that are overlooked in manufacturing research. To test this, the authors analyze data from a 2002 European firms survey.

Abstract

Although advanced economies are increasingly dominated by services, relatively little is known about whether and how services innovate. Instead, our understanding of innovation and innovation processes has been very largely derived from studies of manufacturing, and the production of technologically advanced artefacts. As services do not generally produce technologically advanced artefacts, they are often considered to be non‐innovative, or "supplier‐dominated" recipients of technologies rather than "true innovators". An alternative perspective is that services tend to innovate differently from manufacturers, or at least that innovation in services brings to the fore "softer" aspects of innovation based in skills and inter‐organisational cooperation practices which are pervasive across the economy but which do not tend to be prominent amongst manufacturers, and are therefore neglected. We examine these issues through an empirical analysis of a survey of European firms which was carried out in 2002.