1. “Services are never going to be as innovative as manufacturing” Ian Webb, PREST, Manchester University 15 th February, 2002 Ref: Pavitt (1984), Barras (1986, 1990), Soete and Miozzo, Uchupalanan (2000), Miles (2001)

2. Perspectives on “Services”  Post-war period:  Manufacturing seen as source of economic growth & innovation  Services defined negatively – as residual or tertiary sector  1960s: service sector growth seen as:  Unproductive, technologically backward, & a drag on the economy  Labour intensive & in need of cost & quality improvements  1970s-1980s: deindustrialization  international division of labour  Geographical shift: manufacturing  newly industrialised economies  Post-industrial society (Bell) vs. Self-service economy (Gershuny)  Services still perceived as lacking ‘technological’ innovation  Gershuny & Miles (1983): transforming role for IT Ref: Miles (2001) “Services Innovation”. PREST Discussion Paper 01-05

3. Classic Studies of Service Innovation  Pavitt (1984) “Sectorial Patterns of Technological change”  Supplier dominated – little innovation role for service industries  Barras (1986, 1990) Reverse Product Cycle  Focused on IT-based innovation at industry level not the firm  Improved efficiency  improved quality  new services incremental process radical process product innovation innovation innovation  Impetus for innovation emanating largely from suppliers  Especially ICT and flexible production  mass customization  Soette and Miozzo (1989)  Recognized potential for innovation in services  Categories: supplier dominated, scale intensive or specialized technology or science based services  All somewhat techno-centric: innovation equated to technology?!  Services have innovated: time (24H), spatial mobility, customisation…  Increased service growth with emergence of “pampered society”

4. Emerging alternative perspectives  Uchupalanan (2000) study of innovation in Thai banks  IT based innovations e.g. ATM, Remote Banking, EFTPOS  Partial refutation of reverse product cycle model  Argues against implied “linear” model of innovation  Product and process innovations can emerge in parallel and/or interact  Questions homogeneity of service industry implied by Barras  Doubts reverse product cycle is valid for all service firms  SI4S Studies e.g. Bilderbeek, Den Hertog, Marklund, and Miles  More active role for services in the innovation process  Recognition of non-technological elements e.g.  Service management, co-definition of service  KIBS as “facilitators” of innovation?  Bottom line: services becoming less innovatively backward