Innovation in Services - Department for Business, Innovation and Skills

The description above also hints at the considerable heterogeneity of services
with respect to knowledge and capital intensity. Miles (2000) 10 argues that the
contrasts within the service sector are as significant as those differentiating the
sector from manufacturing: ‘... the sector includes the most concentrated,
knowledge-intensive, and IT-intensive sectors in modern industrial economies
(banking, professional services, etc.), as well at the least (retail, cleaning etc.)’.
From a statistical perspective, modern economies are comprised primarily of
services. According to the ONS national accounts the combined service sectors
account for around 75 per cent of output in the UK, covering the categories of:
● Distribution, hotels and catering;
● Transport storage and communications;
● Business services and finance; and
● Government and other services.
Introduction
The remaining share of output is made up of manufacturing, energy,
construction and agriculture.
While national accounts data and associated classifications are the basis for
much empirical analysis, the patterns of sub-aggregated sectors need to be
carefully constructed to consider the economic characteristics that are relevant
for innovation. Evidence from the Community Innovation Survey confirms that
firms across sectors innovate in both services and goods. Around a quarter of
innovators in manufacturing undertake a combination of goods and services
innovation, while around 40 per cent of the innovators in retail and distribution
describe themselves as primarily goods innovators (see Figure 1.1 below). 11
10 Miles, I. (2004) ‘Innovation in Services’, The Oxford Handbook of Innovation, Oxford University Press, Chapter 16.
11 The data are based only on those firms that answered the survey and that undertook innovation in services and/or
in goods during 2002–2004.
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