Research on Services: From Exploring the “Residual” to Services Science

Research on services has traveled a long way, starting from a category of non-productive spending introduced by A. Smith over the bumpy road of three centuries of economic thought1 toward new concepts such as services science. From being treated as a residual in national accounts, services became the dominant category in most economies. Important lessons have been learned in the evolutionary process of the research of services and some stereotypes about services have been dismantled, which improved the apprehension of services on a conceptual, methodological and analytical level. The sectoral approach toward explaining development has enabled services (tertiary sector) to be disentangled from industry (secondary sector) and agriculture (primary sector) and introduced some distinguishing features of services such as intangibility, non-storability, non-tradability and low productivity of services. Gradually, with more diversified study of services coupled with technological advancement, the heterogeneity of services was acknowledged, allowing some services to be treated as storable, tradable and not necessarily consumed simultaneously with production. Furthermore, the analyses pointed to increased linkage between services and other sectors, which broadened the understanding of services beyond sectoral boundaries and revealed the intermediary role of services and service functions in the economy, in companies or in public institutions. This is best manifested by the fact that some of the largest manufacturing companies have seen their businesses shift from products to services, the latter generating the bulk of their turnover.