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Policies to enhance the ‘hidden innovation’ in services: evidence and lessons from the UK

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  • Maria Abreu
  • Vadim Grinevich
  • Michael Kitson
  • Maria Savona

Abstract

More than 75% of the UK economy is based on services. Knowledge-based services generate more than five times as much value added for the UK economy as advanced manufacturing. Yet, there are persistent gaps in understanding the innovative performance of services. Using Fourth UK Community Innovation Survey (CIS4) data and the results of a detailed case study analysis, this article helps to fill this gap by analysing what innovation in services means and how it can be measured. The traditional indicators of innovation inputs (such as levels of R&D expenditures) and innovation outputs (such as the number of patents) suggest that services are less innovative than other branches of the economy. We take into account a larger spectrum of innovation indicators, both in terms of innovation inputs and outputs, to analyse whether the intensity, nature and economic impact of innovation significantly varies between the manufacturing and service sectors in UK, and between different parts of the services sector such as knowledge-intensive business services and traditional services. The results of the empirical analysis identify the ‘hidden parts’ of innovation in services, that is, the innovative activities and successful innovative outputs that are traditionally underestimated by the use of metrics based on R&D and patents. We suggest a wide range of policy measures specifically targeted at enhancing innovation in services; the UK service economy needs more focus on learning and the training of personnel, and a new balance of policy to support both R&D and non-R&D innovation activities.

Suggested Citation

  • Maria Abreu & Vadim Grinevich & Michael Kitson & Maria Savona, 2008. "Policies to enhance the ‘hidden innovation’ in services: evidence and lessons from the UK," The Service Industries Journal, Taylor & Francis Journals, vol. 30(1), pages 99-118, May.
    • Handle: RePEc:taf:servic:v:30:y:2008:i:1:p:99-118
    DOI: 10.1080/02642060802236160
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    Cited by:

    1. Salge, Torsten Oliver, 2012. "The temporal trajectories of innovative search: Insights from public hospital services," Research Policy, Elsevier, vol. 41(4), pages 720-733.
    2. Evangelista, Rinaldo & Lucchese, Matteo & Meliciani, Valentina, 2013. "Business services, innovation and sectoral growth," Structural Change and Economic Dynamics, Elsevier, vol. 25(C), pages 119-132.
    3. Kluck, Christian, 2012. "Zur Beschäftigungsdynamik in der Wissensökonomie: Die Entwicklung von wissensintensiven-unternehmensorientierten Dienstleistungen in Deutschland," Beiträge zur Wirtschaftsgeographie und Regionalentwicklung 2-2012, Universität Bremen, Institut für Geographie.
    4. Fornoni, Mariel & Arribas, Iván & Vila, José E., 2012. "An entrepreneur's social capital and performance: the role of access to information in the Argentinean case," Nülan. Deposited Documents 1881, Universidad Nacional de Mar del Plata, Facultad de Ciencias Económicas y Sociales, Centro de Documentación.
    5. Valentina Meliciani & Maria Savona, 2015. "The determinants of regional specialisation in business services: agglomeration economies, vertical linkages and innovation," Journal of Economic Geography, Oxford University Press, vol. 15(2), pages 387-416.
    6. José Roberto Aguilar-Jiménez & José Nahed-Toral & Manuel Roberto Parra-Vázquez & Francisco Guevara-Hernández & Lucio Alberto Pat-Fernández, 2019. "Adaptability of Cattle-Raising to Multiple Stressors in the Dry Tropics of Chiapas, Mexico," Sustainability, MDPI, vol. 11(7), pages 1-21, April.
    7. Rinaldo Evangelista & Matteo Lucchese & Valentina Meliciani, 2013. "The contribution of Business services to the export performances of manufacturing industries. An empirical study on 5 European countries," Working Papers 14, Birkbeck Centre for Innovation Management Research, revised Nov 2013.

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