Service Innovation: What Makes it Different? Empirical Evidence from Germany

Abstract

Services have been largely overlooked by innovation researchers - and largely neglected by innovation and technology policymakers. Despite their diversity, the treatment of services in analyses of economic and technological change has, until recently, been very one-dimensional, if attempted at all. Services' roles in technological change, in particular, were largely seen as so insubstantial as to be barely worth examination. They were, and still generally are, assumed to be innovative laggards - 'supplier-driven' industries. The point that R&D and technology management activities are themselves services was rarely noted - something that is much more difficult today as specialised service firms carrying out such activities have become more prominent. Given the unarguable growth in the importance of service sectors, increasing numbers of researchers and policymakers have taken a fresh look at service activities. This includes questioning received wisdom about the innovative capacity of these firms and sectors. The changes that have taken place in some services have made it evident that preconceptions about the sector as supplier-driven and relatively slow in the uptake of innovation are no longer valid - if they ever were. Of particular interest to the study of innovation systems are Knowledge-Intensive Business Services (KIBS). KIBS are among the most rapidly growing sub-sectors of the service economy. These exemplify the general process of knowledge-intensification in industrialised economies, and play, we argue, an important role in innovation processes across the economy. Their growth reflects increased demands for certain types of knowledge in the economy, together with trends in the division of labour which lead to specialised services emerging and playing prominent roles in knowledge accumulation and transfer. The essays in this book explore these themes from different perspectives. The three chapters in Part I provide background discussion of the innovation systems perspective, and consider conceptual frameworks in relation to innovation systems and innovation in services. .Part II contains a group of essays which either directly or by reflection draw upon new databases in relation to innovation and services. While providing an overview of recent results, they also point to major challenges in data gathering which need to be faced and surmounted if we are to have a clear understanding of the modus operandi of innovation in the service economy. Finally, Part III contains a group of case studies of different aspects of services and the innovation process. Taken together the essays demonstrate convincingly, contrary to received opinion, that services are important loci of innovations in their own right and they are an integral part of innovation systems in modern economies. The essays also provide several pointers to the nature of modern economies and the innovation processes they contain the distributed nature of these innovation processes, the extended division of labour and a strong degree of interdependence between manufacturing and service activities, the heterogeneity of service activities and functions, and the significance of knowledge accumulation processes in relation to services. Contents List of Contributors Preface Chapter 1: Introduction, Overview and Reprise J.S. Metcalfe and I. Miles PART I: CONCEPTUAL FRAMEWORKS Chapter 2: Distributed Innovation Systems and Instituted Economic Processes B. Andersen, J.S. Metcalfe and B.S. Tether Chapter 3: Innovation as a Loosely Coupled System in Services J. Sundbo and F. Gallouj Chapter 4: Recombination and the Production of Technological Knowledge: Some International Evidence C. Antonelli PART II: MEASURING SERVICE INNOVATION Chapter 5: Innovation, Measurement and Services: The New Problematique R. Coombs and I. Miles Chapter 6: Rethinking Innovation Comparisons between Manufacturing and Services: The Experience of the CBR SME Surveys in the UK A. Hughes and E. Wood Chapter 7: Service Innovation: What Makes It Different? Empirical Evidence from Germany B. Preissl Chapter 8: Information Flows and Knowledge Creation in Knowledge-Intensive Business Services: Scheme for a Conceptualization C. Hipp Chapter 9: Indicators of Manufacturing and Service Innovation: Their Strengths and Weaknesses A. Kleinknecht Chapter 10: Structural Change and Technological Externalities in the Service Sector: Some Evidence from Italy G. Antonelli, G. Cainelli, N. De Liso and R. Zoboli PART III: CASE STUDIES Chapter 11: Information Technologies in Non-Knowledge Services: Innovations on the Margin? K. Ducatel Chapter 12: Innovation in Services: The Dynamics of Control Systems in Investment Banking P. Nightingale and R. Poll Chapter 13: Research and Technology Outsourcing and Systems of Innovation J. Howells Chapter 14: Horndal at Heathrow? Incremental Innovation Through Procedural Change at a Congested Airport B.S. Tether and J.S. Metcalfe