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SERVICES INNOVATION: COMING OF AGE IN THE KNOWLEDGEBASED ECONOMY IAN MILES


International Journal of Innovation Management Vol. 4, No. 4 (December 2000) pp. 371–389 © Imperial College Press

SERVICES INNOVATION: COMING OF AGE IN THE KNOWLEDGE-BASED ECONOMY

IAN MILES CRIC and PREST, University of Manchester, Mathematics Building, Oxford Road, Manchester M13 9PL, UK e-mail: ian.miles@man.ac.uk

Received 10 January 2000 Revised 8 May 2000 Accepted 8 May 2000

This collection of essays demonstrates that research on services innovation is now a vibrant and mature field within innovation studies. Examining the development of this field, and the contributions of these essays in particular, we argue that the time is right for a “marriage” between the study of services innovation and mainstream innovation studies. While there is a great deal to be learned from the study of services innovation, treating this as a separate area of study runs the risk that important lessons for the study of innovation within manufacturing and other sectors may be lost. These essays point the way toward more integrated approaches, which are particularly suitable for studying innovation processes in the knowledge-based economy. Keywords: innovation, services, knowledge-based economy, knowledge-intensive business services

Services: Seen but not Heard? Innovation in services: the theme of this issue is a topic that has come of age, as the following articles demonstrate. Before introducing the individual essays, some context is required. The study of service firms and industries, and their innovation processes and location in innovation systems, form a set of topics that have been transformed in recent years. This set of topics has emerged from Cinderella status, from being neglected and marginal, to achieving wide recognition as being worthy of serious study. The field of research has succeeded in attracting 371


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the attention and research efforts of a large number of serious scholars. This is the case whether or not one believes that Cinderella will now slip docilely into the routines of palace life — that is, simply provide a new set of industries in which to carry on innovation studies as before — or that, drawing on her experiences as an outsider, she will challenge the rituals and roles expected by mainstream innovation studies. Cinderella has decidedly come to the ball. Consider how the literature on services has developed over the past 50 years. [An extensive compilation of research on services has been put together by Bryson and Daniels (1998); the discussion below focuses on innovation issues, which are rather neglected in these two volumes.] In the immediate post-war period, manufacturing industry was still considered the wellspring of economic growth; heavy manufacturing even more so. Application of Fordist principles to aircraft production had helped to win the war, and the task in Europe was industrial reconstruction and development. Services, including the social services instituted as part of the political consensus, were now classified as the tertiary or residual sector. They were important for improving the quality of life, efficiently delivering goods and reducing social inequalities. Some service industries supported the economy’s social and logistical infrastructure then. Others were producers of luxuries who would come into their own when economic growth had given us all enough time, material goods and money to relax from the task of producing ever more manufactures. But innovation was the task of manufacturing, and the scientists and engineers it mobilised. By the 1960s, the scale of service activities was such that the first systematic analyses of the “service economy”, “producer services” and “post-industrial society” were forthcoming.1 Accounts of service sector growth diverged widely — though there was hardly an intensive debate. On the one hand, services were seen as laggardly, unmodernised activities, unable to participate in general productivity growth because of their low quality labour and small-scale organisation. On the other hand, services were superior products, demand for which was increasing as society became richer and more sophisticated, and whose labour force was typically professional and/or socially skilled. What both accounts shared — and shared furthermore with the pioneering analysts of producer service growth — was the view that services tend not to be technologically innovative. The negative interpretation of this was that services were doomed to low productivity growth; the positive one was that they could absorb labour displaced from the manufacturing industry as it automated.

1Bell

(1973); Fuchs (1968; 1969); Greenfield (1966).


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Over the 1970s and 1980s, these views became enmeshed in wider political arguments. On the one hand, there were fears of de-industrialisation (Western economies losing their manufacturing industry to newly industrialising countries, and becoming vulnerable in consequence) and of the burden of services (too great a tax burden from public services as stifling enterprise, and perhaps some growth of consumer services reflecting excessive wage increases and a failure to invest sufficiently). On the other hand, prophets of post-industrial society argued that we should be preparing for a leisure society (with shorter working lifetimes and more investment in the arts and culture), or a caring society (with higher all-round educational attainment and better social and economic planning). These rhetorical stances were based on little new analysis but, in the background, a number of scholars questioned the conflicting received wisdoms. In the early 1980s, the European Community’s FAST Programme sponsored a series of empirical studies of European services, in what was probably the first large-scale programme of study into the field. Significantly, the FAST Programme (Forecasting and Assessment of Science and Technology) was simultaneously concerned with long-term socio-economic trends and with the transformations associated with new information technology and biotechnology. This programme allowed for several of the lines of analysis dealing with services and innovation to be developed conceptually and empirically, and to be brought together. Among the contributions here were: (i) Gershuny’s work on the “self-service economy” — essentially arguing that the consequence of lower levels of innovation in services than in manufacturing (which he saw as reflected in the relative increases in the cost of services as compared to similar manufactured goods) would be a shift from consumer purchase of services towards a purchase of goods with which consumers could produce their own final services. Arguing that new IT offered possibilities for radically changing the costs and quality of service products — and drawing on examples of service innovation such as the UK’s Open University — he helped launch a barrage of studies of IT in the service industries.2 (ii) Barras’ work in the reverse product cycle was one study of IT in services which found expression in FAST research, and which, by dint of proposing a general account of services innovation, achieved considerable currency. Though the approach comes under sustained critique in this issue, the fact remains that it sought to move beyond listing and describing cases of services

2Gershuny

and Miles (1983).


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innovation to providing a conceptual framework with which it could be related to innovation in manufacturing.3 (iii) Other lines of analysis were less influential but still constituted pioneering analyses of services innovation. For example, a study of R&D in services took a sample of service innovations and sought to examine their characteristics and their processes of gestation. This study brought into the services innovation literature a line of analysis that sees services as being typically characterised by high levels of “servuction” (roughly, processes involving supplier–client relations) alongside production (processes materially transforming objects). Innovation can be focused on either or both poles. 4 (iv) A large number of studies examined the role of producer services, typically taking an economic geography approach and/or documenting the experiences of specific regions. While much of this work was overdescriptive and short on analysis, a number of studies did address the question of what contributions such services make to advanced manufacturing in their local economies, and how necessary they are to economic development there. Related studies examined the role of new technology-based services (like advanced communications and computer services), and looked at the “spinning off” of such services from the internal service functions of large firms.5 Thus, the view of services as non-innovative was gradually being replaced by one which saw them as potentially and, in some cases, actually innovative, especially through the application of new IT. It suggested that there were specific features characterising services innovation. It drew attention to the emergence of services activities in new technology-based functions, and drew attention to the important roles these and other producer services play in the modernisation of their client firms. The themes that we can with hindsight see as represented in the FAST programme’s work are the ones that have continued to be developed and urged on more forcefully over the 1990s and into the new millennium. But we can also see the emergence of several new themes as topics receiving attention in the past five years or so. The first is the question of the heterogeneity of services. Researchers have begun to approach the question of building typologies and taxonomies of service firms and sectors, and understanding how these may relate to varieties of innovation process and trajectory in services. Once the “residual category” has been opened

3Barras

(1986; 1990) . et al. (1986). 5Howells (1988); Howells and Green (1999) . 4Belleflamme


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up and found to include a huge variety of interesting, complex and often highly innovative activities, then it can be seen to make very little sense to provide a general account of services innovation. Perhaps there can be general approaches to innovation, which can then result in more specified models of innovation activities in different classes of industry (including some combinations of manufacturing and service subsectors), different types of firm (differentiated in terms of scale, of market location, of national economy, etc.), and the like. In this issue, the studies by Tether and Upalachanan provide quite different approaches to such a task, the former working from survey data to study differences among different types of service firms, the latter seeking to apply a general approach to innovation to a highly specific set of service firms and innovations. The second is the move from studying individual firms and sectors in isolation to linking the study of services innovation to the problematique of innovation networks and systems.6 Such an approach reflects the growing recognition that innovations are typically produced in competitive environments in which individual actors are examining the strategies of others, and using a range of informational and other sources to inform and organise their innovative efforts. Associated with this is the perception that many innovations are actually the result of collaborative activity of various kinds — ranging from joint ventures through collaborative R&D projects to joint efforts in setting standards and mobilising the socio-technical constituency required to bring an interdependent complex of innovations to the market at the same time. And here, it does seem possible to make some very crude and broad generalisations about services as follows: (i) some producer services play extremely important roles as intermediaries in innovation systems — especially technology-based services; (ii) some services are well-networked into innovation systems, and may even play important roles as orchestrators of innovation across supply chains (e.g. large supermarket chains dictating the use of EDI or of particular environmentally-sensitive production methods on the part of their suppliers); (iii) however, many services are not well-linked into the standard technologyoriented innovation systems, and the main systemic impetus to innovation they receive may be a more or less weak one coming from professional associations and similar network structures. This sortie through the literature suggests that not only research on services, but also research on services innovation, has come of age. It is no longer on the defensive and is increasingly articulated into the broader trends in innovation

6A

recent collection that takes up this theme is Metcalfe and Miles (2000).


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studies. Indeed, its challenges to some of the standard approaches to innovation studies are being accepted widely. Any account of trends in the literature is necessarily selective, and it may be felt that some injustice has been done in the effort to summarise the successive perspectives that have characterised the field. However, the literature review is not the only basis for our argument about the coming of age of services innovation studies. The papers in this special issue singly and together also help to demonstrate the maturation of the field. They are, quite simply, papers that could not have been written in an earlier stage of the debate. Their authors are able to locate themselves in the context of serious debates as to the role of services, to draw upon a mass of empirical evidence, and to draw from and contribute to other lines of work in innovation studies. While they may note the bias of available literature away from services, no longer need they just define themselves in negative terms. They have something positive to offer, not just critique of the tendency to dismiss research on services and services innovation. They are able to draw on the results of many studies, engage with the arguments and claims put forward by other scholars, and draw distinctions between different types of services and roles of services in innovation processes, in ways that would not have been possible a few years ago. In drawing out some of the contributions which this set of papers makes to demonstrating the maturation of the field, we shall necessarily be taking up some of the key themes they address. In the next section, we shall consider the papers in turn. Subsequently, we shall step back and outline some of the agenda that confronts services innovation studies, now that this is no longer a field that feels impelled to continually justify its very existence.

The Coming of Age of Services Innovation Studies Wyatt examines innovation in information-technology-based networks for government services in the UK and US, arguing that there are significant continuities between experiences in the 1980s and those developing now. One hallmark of the coming of age of research in this field is that serious scholars can derive meaningful policy and management advice from their studies — even historical studies like this — and can expect to find an audience. In the case of Wyatt’s paper, she suggests that a failure to draw the lessons of past experience dooms us, as so often, to repeating past mistakes. Another interesting feature of the study is the way it brings together strands of thinking from the innovation studies field, and the more sociological Social Construction of Technology literature, in an effective set of concepts with which to appraise her case studies. By raising the questions of user involvement (and


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non-involvement) in innovation, the “black-boxing” of users and technologies, the construction of large and complex technical systems, and the influence of regulatory, procurement and other policy objectives on innovation in public services — and other topics — she shows that services innovation is a fertile topic for the development of perspectives in typically compartmentalised disciplines of political economy; policy studies, science and technology studies, and the like. Wyatt’s study also brings to the fore a number of features of services innovation that provoke some rethinking of the established wisdom. First, she examines cases of innovation in public services, and while such services are often discounted in innovation research, it does not take much effort to establish that these services were typically the pioneering users of computer technology (and many other new technologies as well). The question arises of what motivates innovation in these services, where the standard competitive environment of interfirm competition is lacking. Demands for efficiency and higher service quality are expressed through a variety of political channels, but how are these translated into demands for innovation? Who are the end-users, and how articulated are they into design and implementation processes? In fact, the case studies suggest that even those users who were government officials and civil servants were minimally involved in the process, which led in one case to a failure of the innovation, and in another to its pattern of use failing to display the innovative properties anticipated (data rather than voice communications). Apart from many services being run by public sector organisations, it is frequently noted that many services are more highly regulated than is typical for manufacturing industry — for a number of reasons, among which such matters as the difficulty of demonstrating intangible products in advance of purchase, and information asymmetries between suppliers and clients, are often cited. Regulation is sometimes seen as spurring the development of business services — e.g. auditing, environmental, legal, and lobbying services. But more often, regulation is seen as impeding services innovation — for example, in tying down the core products of the service to particular kinds of document or certification. (Similar arguments may be made about professional standards and the formal rules of specific sports, for example.) Wyatt’s analysis shows that broader policy considerations — including desires to reshape the regulatory system of telecommunications and the competitive situation of firms within it — influenced the decisions made about the services required. And they also influenced decisions about what would be the object of the transaction — a service agreement, rather than the purchase of hardware and software per se. Thus, her case studies reflect in microcosm, and on the clients’ side, one of the broad trends of the service economy. This is the increasingly common tendency [noted by Giarini (1987) among others] for managers in all


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sectors to frame their strategies in terms of services, whatever they are producing. Again and again, managers discussing their innovation trajectories report that they have to think of their products — be they molecules, machines or meals — in terms of the service which the customer is deriving from them, and from the other services (aftersales, design, marketing, etc.) which they need to manage alongside the physical production process. Wyatt shows the same process at work on the part of the clients. The case studies are of very complex innovations — large technical systems — and not surprisingly, there was considerable interaction between suppliers and the purchasers (if not the end-users) of the systems and services involved. Case studies can provide us with detailed analyses of such interactions and how they unfold over time. Survey studies provide an opportunity to examine a wider sample, but usually with less depth — and it is unusual to find innovationoriented surveys addressing the question of supplier–client interactions.7 Tether et al. provide a detailed examination of issues arising in the context of an industrial innovation survey that covers private services. These issues are not the simplistic question of whether services innovate, but move on to ask how innovative they are, what the characteristics of services innovation processes may be, and how they vary across different types of firm and industry. It is inevitable that there will be diminishing returns to efforts to generalise about the features of such a broad, heterogeneous and complicated group of activities as is encompassed by the sectoral definition of “services”. This study allows for a mapping of service firms and sectors in terms of their innovation dynamics, taking up the taxonomic task mentioned earlier. In particular, the study displays the remarkable variety of orientations towards what has often been claimed to be a defining characteristic of services. It is often said that services tend to be produced much more in a context of close interaction between service supplier and client, and that the service function itself is highly tailored to the specific client’s requirements in the course of this interaction. This may be more the norm for services than for manufacturing (though there are clearly firms and sectors in manufacturing who do create their products very much to detailed specification from clients, too). But some services do not require a great deal of interaction (consider TV broadcasting, for example), and the survey allows the different degrees to which service products are standardised and specialised to be addressed. Subsectors of services, it transpires, do vary

7Except

insofar as a standard question in innovation surveys concerns sources of knowledge, and there is scope for identifying knowledge provided by business partners here. But this tells us little about the form that interactions take.


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in their propensity to produce one or the other sort of product, but within all of those studied, there are some firms whose output is much more standardised, and others who are more specialised. The interesting question that the study then goes on to pose is the extent to which this orientation towards standardisation or specialisation is related to the innovation activities of the firms in question. The very availability of the survey data used by Tether et al. is also a sign of the coming of age of the field. At the time it was conducted, this survey was a pioneering effort at data collection, and as the paper demonstrates, there are many interesting questions that it can be used to address. But now, in Europe at least, it has become routine to include services in the coordinated set of inquiries that goes under the name of the Community Innovation Survey (CIS). While CIS-1 featured manufacturing exclusively, except for a few avant-garde countries that sought to include some services in their sample, CIS-2 was extended to cover large swathes of the private service sector as a matter of course, with only one of the 15 EU member states not taking this opportunity. First results from this set of surveys should appear in the course of 2000, while CIS-3 is already in preparation. As noted above, Tether et al. demonstrate, and later studies will no doubt build on this, that the core research agenda that such surveys can inform is now no longer one asking the question of whether services innovate. Instead, the focus has moved to questions of how innovative they are, what their innovation trajectories and organisation may be, how we can usefully classify different sorts of services and service firms and so on. Just as young people are often concerned about demonstrating that they are not like their parents, so emerging fields of study are often characterised by claims that they constitute a radical break from the past. Parents may assert that their children are “just like me at that age”, or alternatively adopt a puzzled expression and declaim that “I don’t understand young people these days”. Similarly, scholars in the established lines of enquiry, may regard the emergent field of study as not really having anything new or important to say, or dismiss it as hot air or poor science. Much of the literature on services innovation has stressed the distinctiveness of this process, and the challenges that it poses to received conceptions of innovation patterns and dynamics that have been established through the study of manufacturing sectors (indeed, mainly certain popular sectors for study). From this perspective, it can be argued that the innovation surveys we have seen to date have not adequately managed to capture the distinguishing features of services innovation. Instead, they may be shoehorning services together with manufacturing in a way that inadvertently stresses their similarities and fails to reflect their points of difference — simply because the indicators employed do not really address these points.


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This is not to say that innovation in manufacturing and in services has to be sharply demarcated. One sign of the coming of age of work on services innovation is that researchers are moving beyond assertions that there is either nothing new about services innovation or that its study requires a complete break from the established wisdom. Upachalanan’s paper makes several important contributions in this context. Most obviously, this paper marks a sustained critique of what has probably been the single most influential analysis of the distinctiveness of services innovation — the Reverse Product Cycle approach. This approach constituted an important effort to grapple with the ways in which service industries were applying new IT, and the transformative effect that this seems to be having on the innovation processes of many service firms. However, most scholars have been content to echo the original claims for the generalisability of the approach and little effort has been made to systematically test it in various empirical contexts. This lack of critical analysis of a pathbreaking approach is arguably a feature of an immature area of study. Accordingly, another sign of the coming of age of services innovation research is the ability of a researcher like Upachalanan to move beyond echoing the claim that services innovation processes can be described adequately in terms of a reverse product cycle. (This is not to say that the approach cannot provide useful heuristic, however. Thus, in this issue, Wyatt finds that a reverse-product-cycle-type pattern does appear to characterise the government IT innovations she has studied. But she also concludes that the expectation of simply installing an infrastructure will generate uses — the “Field of Dreams” phenomenon8 — can be sorely thwarted. Expecting that if you innovate for process improvements, product innovation will automatically follow is very unwise.) Equally striking is the point that the study charts a diverse range of innovation strategies and trajectories across different firms and innovations. This is most significant because it is grounded in detailed studies of only one subsector of services and one class of innovations. It did not set out to capture the full diversity of services innovation. Even in this narrower field of enquiry — IT innovations in banking services in Thailand — a wide variety of instances are noted. And this is with respect to a service subsector and type of innovation that was prominently identified as being captured in terms of the reverse product cycle approach! The fact that the case study work concerns cases from a developing

8In

the film Field of Dreams, the protagonist is mystically instructed to construct a games pitch in an unlikely location, with the injunction: “build it and they will come”. In the Hollywood version of reality, this works. But life does not always follow art.


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country should not lead people in industrial countries to undervalue the impact of the analysis, as if it were representing some sort of “catching up” exceptionalism. If anything, we would expect the reverse product cycle account, in which services process innovations are triggered by external inputs from manufacturing, to be even more pronounced in such a context.9 Upachalanan himself makes very modest claims for the generalisability of the specific innovation processes which he observes. His claims as to modelling innovation are limited to having achieved a rich description of those particular empirical circumstances that he has studied. He is quite open to other patterns of innovation characterising other circumstances. The achievement in his study is the result of applying an approach that, rather than positing one common set of causal structures, provides a framework for analysis — a framework that can address innovation in both services and manufacturing. This framework for studying the interrelations of innovation and competition is one that is equally applicable to all sectors of the economy, and to very different types of innovation and national contexts. It has suggested the applicability of specific sorts of innovation model to the specific circumstances he has studied, and while we may suspect that similar models are apparent elsewhere in services innovation, the example of the wide adoption of the reverse product cycle model, and the limited critical scrutiny that it received, suggests that we should be cautious about jumping too quickly into making such identifications. The other contributions to this issue also offer little support for the reverse product cycle model. To be sure, it is hard to adequately test the approach with the limited (i.e. cross-sectional rather than time-series) sort of survey data utilised by Tether and his colleagues. But even here, the tendency of product and process innovation to go hand-in-hand is pronounced, and — given the wide variety of subsectors and firm sizes considered — is unlikely to be explained away as a result of firms simultaneously being in some transitional phase of the reverse product cycle. Den Hertog represents a different case, however, since he examines a whole series of different innovation patterns with which service firms may be involved. Den Hertog’s analysis, however, shows how services innovation studies have come of age in other ways. This paper draws attention to the role that certain services — mainly the knowledge-intensive business services (KIBS) — can and do play in facilitating innovation across the economy. In other words, the issue is not just whether services are innovative, but also whether (certain) services are critical for innovation in manufacturing and other industries! From being

9In

any case, the banking sector in countries like Thailand is actually a highly modernised industry.


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portrayed as at best lagging elements of innovation systems, services are now recognised as being able to perform important roles as orchestrators and intermediaries in such systems. This paper goes on to consider some of the wider implications of this shift of focus, asking how far it makes sense to consider KIBS as constituting a second knowledge infrastructure, emerging alongside the traditional infrastructure of universities and government laboratories, and technology transfer institutes. The implication is, then, that the rise of the service economy is leading to changes in innovation processes more generally. In other words, innovation studies have to confront two phenomena that have been largely neglected until recently. First are the features of innovation that characterise service firms — and, indeed, that often characterise services functions in manufacturing industries. For example, it has often been noted that service firms are less likely to organise their innovative efforts through the institutions of R&D departments and research mangers which have been often described for (large and/or science-intensive) manufacturing firms. It has less often been pointed out that the organisation of innovation of “service” functions in manufacturing and extractive sectors — functions like distribution, management of transactions, marketing, design, etc. — has also typically not fallen within the ambit of conventional R&D departments, with their emphases on very narrowly defined product and process innovation. Indeed, often the firms in question do not think of innovation in such functions in terms of “R&D” and instead use terminology such as “project development”, quality management or “business re-engineering”. Yet it is likely that innovation in such activities is an increasingly prominent feature of innovative efforts more generally — it is only necessary to mention the term “e-commerce” to make the point. Furthermore, as more managers in all sectors repeat the litany that what they are really doing is providing customers with services, we can expect such an emphasis to grow. It is likely that innovation studies and the statistical instruments which innovation surveys use are both failing to capture much of the action in these important activities. Second is services’ role in facilitating innovation across the economy. The implication of this study is that this role has — or rather, these roles have — been neglected by innovation studies. For a particularly dramatic example, the role of contract R&D services has received very little attention even though such services now account for a considerable share of industrial R&D. But many other services — including the much-maligned management consultancies, alongside such obvious candidates as IT facilities management, training, engineering and design services — also play important roles in supporting the selection and implementation of new technologies by their clients. Den Hertog points out that often they are more than stores of knowledge about available technologies and


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their use, and actually go further in terms of coproducing technologies with their clients: this can range from helping achieve a fusion of industry — or firm — specific knowledge with more generic knowledge (about the characteristics of technological solutions to problems such as those confronted by the clients), to actually conducting research and development in areas such as environmental impacts of industrial wastes, properties of materials, software for virtual reality and other advanced IT applications, and so on. The e-commerce field is one in which KIBS play roles ranging from aesthetic design to creation of leadingedge software, from helping to configure in-house databases with standard frameworks of representation of trade data to managing and maintaining fileservers and interactive interfaces that are pushing at the limits of available technology. It should also be recognised in this context that it is not only KIBS that can make important contributions to innovation and diffusion across the economy. Other services are also playing roles that were supposedly reserved for manufacturing industry. Again e-commerce provides a ready example. It is not uncommon for a supply chain that is ultimately providing such consumer goods as foodstuffs or household consumables to be turned into a network governed by electronic data interchange or similar media of e-commerce. What has typically been the case here is that, just as motor car manufacturers have notoriously brought their component suppliers into an electronic supply chain, large retailers have prompted their suppliers of consumer goods into dealing with them through online networks. Whatever the limitations of the “hub-spoke” models of electronic trading that have resulted, this is a clear case of technological innovation being driven by a service industry, and extending across many other sectors. There are many similar cases, for example, the pressure that large service firms have exerted on their upstream suppliers to adopt more environmentally-sensitive practices — a railway company requiring that the manufacturers of carriages adopt environmental management procedures and find alternatives to oil-based paints, a supermarket forcing agricultural suppliers to move away from particular methods of pest control, and so on.

Growing Apart or Growing Together? Our title has been borrowed, of course, from the influential (and latter controversial) writings of Margaret Mead on Samoa.10 Innovation studies do in some ways resemble an archipelago; there are islands of excellence but cultures are fragmented and communication has been rather tortuous between them. But the locational

10Mead

(1928); for a critique, see Freeman (1997).


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and geographical aspects of the “coming of age” metaphor are not the main point here. Nor is even the interesting scope for analysis of rites of passage and role transitions. We have simply used it as a loose signifier of the growing self-confidence of the field, the acceptance of its status by its peers, its ability to enter alongside “mature” fields of study in providing policy advice indeed, sometimes even being given special attention as being closer to new developments, and so on. For those that have been active in studying services innovation for some time, this is all very gratifying. Indeed, to see official documents from the EU and OECD now arguing for the addressing of the role of services and services innovation, a position that was treated as somewhat deviant a few years ago, is a salutary experience. Salutary for several reasons. One is that these documents are often able to mobilise statistical evidence and inputs from business and policy leaders, which will turn most academics green with envy. Another is that these documents are often put together with a lucidity and breadth of vision that puts many scholarly monographs to shame. A third factor could have been the potentially embarrassing issue of what else we can find to say that it is original and interesting, now that the fundamental case has been accepted. Fortunately, the papers presented in this issue demonstrate that there are still plenty of new and interesting things to say, and many questions are continuing to arise that we need to find ways of asking as researchable problems. Each paper identifies several of such questions, but among those that are common to several of the papers are: (i) The need to establish and validate taxonomies of (service) innovators and innovations. Even the papers presented here tend to focus on IT-related innovations, and we would suggest that it is also important to examine non-IT technological innovations and the more organisational innovations. (ii) The need for better understanding of the processes of interaction between service supplier and client, how these differ not only across different classes of service but also how they evolve over the course of a service transaction and its aftermath. In terms of innovation, these interactions and their management are fertile sites of services innovation, and they arguably constitute an important type of innovation to set alongside the familiar product and process innovations. (iii) The ways in which the requirements and likely behaviour patterns of “endusers” are identified and/or imagined by service suppliers, and the ways in which these are used in shaping services innovation (or, in some cases, not used). The roles of intermediaries who stand as proxies to end-users in large technical systems and many public services, and the processing


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of knowledge and beliefs about end-users, can be studied in relation to their inputs into invention and design. (iv) The mobilisation and interaction of numerous service suppliers around major projects. The innovation process in such cases is likely to be a series of related innovation processes, undertaken in a while the system of innovating agents. This sort of “distributed innovation process”, to borrow Rod Coombs’ term, is common in many large and complex activities — such as the introduction of e-commerce systems (and the sorts of online financial services described by Upachalanan), in the environmental and engineering dimensions of major projects (e.g. in construction activities), and in many public service arenas such as health services. (v) The organisation of innovation in (different types of) services. It is apparent that — despite our reservations about generalising about services — the typical structures of service innovation do not follow those depicted for manufacturing innovators. Service firms tend not to have R&D departments or mangers, tend to invest larger shares of their innovation expenditure than other sectors in non-R&D activities like training and market preparation, and less often use patents as a means of protecting their innovations. Despite some recent studies examining these themes, we have very limited knowledge of the strategies being pursued, and the structural and other factors that are behind these.11 This list could be extended indefinitely. But the “coming of age” metaphor also suggests another set of issues that confronts services innovation studies. The anthropologist who studies the coming of age of adolescents in tribal societies is typically analysing the transitions and rites of passage that prepare the adolescent to become an adult member of society. In many cultures, this has meant preparation to be a married man or woman, or to be in a position to enter this state.12 Perhaps one model for the future of services innovation studies is marriage — marriage with the innovation studies literature more generally. At the risk of straining the metaphor, we could portray services innovation studies as a young bride, being courted by the older male suitor of mainstream innovation studies. While pursuing this metaphor runs the risk of simply recycling creaking sexist

11Exceptions

include Sundbo (1998), Miles et al. (2000). warning, against assuming that the typical forms of marriage prevalent in contemporary Western societies are in some way universal models, is in order. This is not the place to enter into a discussion of the historical specificity of different forms of marriage, the emergence of marriage contracts, and so on.

12A


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stereotypes, it does immediately bring another metaphor into play, suggesting that it may be worth pursuing with caution. After all, the study of services has frequently been described as being a “Cinderella” topic; and of course, in the fairy story, Cinderella did come to the ball and finally wed her prince. Coincidentally, many service industries are areas of high female employment. Three points arise: first, while none of the articles that follow takes up the theme, gender relations within service firms could be explored in relation to their innovation processes. Second, some sociologists of science might wish to consider whether the relative invisibility of services and services innovation can be related to the “female” nature of these industries — and how this connection can be demonstrated. Third, the Cinderella metaphor has ramifications here too: while in the fairy tale, Cinderella’s work (domestic service) is portrayed as oppression and her marriage as liberation, a more realistic story is one of entry into paid employment providing a route to greater freedom and self-expression for numerous women in contemporary societies (even if much service work does remain a drudgery). But, moving away from fairy tales, consider the feminist analysis of patriarchy’s knowledge claims. Feminists have drawn attention to the ways in which fields of study as diverse as medicine and economics, psychology and industrial relations, have typically taken male experience to be the norm.13 Similar assumptions as to the universality or normativity of male experiences are not only made in research, but also in popular culture, law, religion and other fields. (The prescription, then, has often been for women to “find their own voices”, to establish spaces for reflection and sites for study, so as to allow for a sharing of experience and development of analyses independent from the masculine norm.) Women’s character and experiences are then treated as exceptions to the rules established for men, and they are viewed through this prism. Marriage itself is thus usually seen from a feminist perspective as also framed within patriarchal assumptions and rules. The adoption of the husband’s surname and suppression of the wife’s maiden name is merely a highly visible manifestation of this in Western societies. The parallel for innovation studies is that the mainstream literature has its claims to generality and universality — though it is actually largely based on experiences of manufacturing industries (and, indeed, certain manufacturing sectors have been privileged within this). The marginalisation of services innovation studies has, however, meant that it has been possible for researchers on this topic to draw upon a variety of traditions (and not just starting from perspectives forged in mainstream innovation studies), and to “find their own voices”. But

13cf

a classic review, Spender (1981).


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these voices have not always been heard, or have remained on the margins — for example, revisions of R&D and innovation surveys have made minimal concessions to the (purported) specificities of services, the Handbook of Industrial Innovation has one short chapter (out of 35) dedicated to services.14 So should a marriage be expected between services and the mainstream, and if so, what sort of marriage can it be? Given the growth of services and their importance in the economy, and the maturation of services innovation studies, it is hard to believe that there will not be some sort of alliance with the mainstream literature. (Indeed, it is more likely that the study of services innovation will fragment into a number of distinct lines of work — e-commerce innovation studies, engineering services innovation studies, logistics innovation studies, and the like.) It would require services innovation to have numerous unique properties, and/or for the demands from users of innovation research to be highly distinctive, for the study of manufacturing and services innovation to remain segregated. Given the evidence of a “convergence” between manufacturing and service industries along many dimensions, and the increasing interdependence of these grand sectors, this is unlikely. The question then is, what sort of alliance are we talking about? Is it to be a patriarchal marriage, with the rules largely dictated by mainstream innovation studies, wielding a long-established if narrowly-based corpus of wisdom about how we expect the innovation process to work? In this case, the “voice” of services innovation studies may remain muted, with models and instruments developed for the analysis of manufacturing innovation dominating. (Such models and statistics might show services to deviate from expectations — in which cases, the services might be viewed as less innovative than they actually are — or might just lead to significant differences escaping the analysis.) Our prediction would be that, eventually, new features and trajectories of innovation would be recognised, if for no other reason than that awareness of the inadequacies of the established approaches — even for capturing innovation by manufacturing firms — would gradually accumulate. The other possibility would be for a more equal sort of synthesis. Here, it would be recognised that services innovation studies could benefit from more application of survey instruments and managerial models of the kind used in manufacturing innovation studies. But it would equally be recognised that the study of services innovation has brought to the fore various features of the innovation system which have been neglected — neglected when they occur in manufacturing sectors as well as when they occur in services. The focus 14Dodgson

and Rothwell (1995), there is also a chapter devoted to telecommunications as well, admittedly.


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on shop floor and material product innovation has led to under-attention to innovation in the service components of the manufacturing economy. There is considerable scope for examining such innovation, and it will be interesting to see how much services innovation in manufacturing industry is like services innovation in services industry, and how far is the scope for learning about good practices in innovation management and innovation research across the two areas. This possibility is far more attractive. It may have some threatening aspects — some of our established models and instruments may need to be re-thought if we are to grasp a fuller range of innovation processes. But this is a nettle that should be grasped if we are to understand the nature of innovation in the knowledge economy. The marriage metaphor, then, does not really suffice to describe the fusion between services and mainstream innovation studies that is implied here. It is not so much a matter of each party accommodating itself to the other; rather it implies that the distinct frameworks offered from each side be integrated into a view that is more truly universal. It is our hope that the articles in this journal can contribute to this synthesis. The coming of age of services innovation studies, then, will be seen as part of a wider phenomenon. This phenomenon could be thought of as the revitalisation of innovation studies in the face of the knowledge-based economy.

References Barras, R. (1986) Towards a theory of innovation in services. Research Policy, 15(4), 161–173 ________ (1990) Interactive innovation in financial and business services: the vanguard of the service revolution. Research Policy, 19, 215–237 Bell, D. (1973) The Coming of Post-Industrial Society. London: Heinemann Belleflamme, C., Houard, J. & Michaux, B. (1986) Innovation and Research and Development Process Analysis in Service Activities. Brussels, EC, FAST Occasional Papers No. 116, September Bryson, J.R. & Daniels, P.W. (eds.) (1998) Service Industries in the Global Economy. (2 vols.) Cheltenham: Elgar Dodgson, M. & Rothwell, R. (eds.) (1995) The Handbook of Industrial Innovation. Aldershot: Edward Elgar Freeman, D. (1997) Margaret Mead and the Heretic; The Making and Unmaking of an Anthropological Myth. Harmondsworth: Penguin Books Fuchs, V. (1968) The Service Economy. New York: National Bureau of Economic Research ________ (1969) Production and Productivity in the Service Industries. New York: National Bureau of Economic Research Gershuny, J.I. & Miles, I.D. (1983) The New Service Economy: The Transformation of Employment in Industrial Societies. New York: Praeger Publishers


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Giarini, O. (ed.) (1987) The Emerging Service Economy. Oxford: Pergamon Press Greenfield, H.C. (1966) Manpower and the Growth of Producer Services. New York: Columbia University Press Howells, J. (1988) Economic, Technological and Locational Trends in European Services. Avebury: Aldershot Howells, J. & Green, A. (1999) Technological Innovation, Structural Change and Location in UK Services. Avebury: Aldershot Mead, M. (1928) Coming of Age in Samoa: A Psychological Study of Primitive Youth for Western Civilization. New York: Morrow Quill Metcalfe, S. & Miles, I. (eds.) (2000) Innovation Systems in the Service Economy. Dordrecht: Kluwer Miles, I., Andersen, B., Boden, M. & Howells, J. (2000) Services processes and property. International Journal of Technology Management, 20(1–2), 95–115 Spender, D. (ed.) (1981) Men’s Studies Modified: The Impact of Feminism on the Academic Disciplines. Oxford: Pergamon Sundbo, J. (1998) The Organisation of Innovation in Services. Aldershot: Edward Elgar

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SERVICES INNOVATION: COMING OF AGE IN THE KNOWLEDGE- BASED ECONOMY IAN MILES Services: Seen but not Heard? Received 10 January 2000 Revised...

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