Innovation in Services - Department for Business, Innovation and Skills

1 Introduction
The 2003 DTI Innovation Review noted that innovation policy has been
traditionally focussed on the manufacturing sector and that service sectors had
received less attention. Until recently the academic study of services innovation
was an area of neglect. Miles (2000) 2 described services innovation as having
‘Cinderella status ... being neglected and marginal’.
Services innovation has seen a surge of interest in recent years. The December
2006 EU Competitiveness Council adopted conclusions on Innovation Policy that
identified services and non-technological innovation as a strategic priority. 3
The UK Council for Science and Technology has stressed the need to better
connect services to both to the science base and Government. 4 In late 2006,
Ireland released a consultation paper calling for development of specific policies
for services innovation and it was a key theme of the Finnish EU presidency. 5
Challenges in measuring innovation, particularly the dimensions stressed in
services innovation, make it hard to assess adequately UK innovation
performance. The National Endowment for Science, Technology and the Arts
(NESTA, 2006) 6 claim that past policy work has focused on the ‘supposed’
innovation gap between the UK and other countries such as the US, but they
argue that this may miss forms of innovation not captured in traditional
measures – so-called ‘hidden innovation’. Similarly, the Organisation for
Economic Co-operation and Development (OECD, 2005) 7 noted that conventional
indicators often poorly reflect innovation in sectors such as knowledge intensive
services, where the UK shows considerable strengths. 8
To help inform the evidence base in this area the DTI commissioned new
analysis from leading authors in the field, which make up the remaining chapters
of the paper:
● Chapter 2: Changing understanding of innovation in services: from
technological adoption to complex complementary changes to technologies,
skills and organisation
Bruce Tether and Jeremy Howells, Manchester Business School
● Chapter 3: Managing service innovation
John Bessant and Andrew Davies, Imperial College, Tanaka Business School
2 Miles, I. (2000) ‘Services innovation: coming of age in the knowledge-based economy’, International Journal of
Innovation Management, Vol 4. No. 4, pp 371-389.
3 See http://www.consilium.europa.eu/uedocs/cms_Data/docs/pressdata/en/intm/91989.pdf
4 See www.cst.gov.uk
5 See http://www.forfas.ie/publications/show/pub242.html
6 See http://www.nesta.org.uk/informing/policy_and_research/highlights/innovation_gap_report.aspx
7 OECD (2005) ‘Economic Survey of the United Kingdom 2005’.
8 A recent study also suggests that UK intangible investment is similar to investment in tangible assets, see Marrano,
M. and Haskel, J. (2006) ‘How Much Does the UK Invest in Intangible Assets?’, Queen Mary University of London,
Working Paper No.578.
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