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Towards a theory of innovation in services Faïz Gallouj University of Science and Technology of Lille.

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Presentation on theme: "Towards a theory of innovation in services Faïz Gallouj University of Science and Technology of Lille."— Presentation transcript:

1 Towards a theory of innovation in services Faïz Gallouj University of Science and Technology of Lille

2 Towards a theory of innovation in services Two major characteristics : 1)They are service economies 2)They are innovation economies Several problems : 1)The service economy is still perceived suspiciously. 2)Service economies and economies of innovation... but not economies of innovation in services. 3)Whatever field of economic theory is considered, services raise interesting issues.

3 Towards a theory of innovation in services Raymond Barre, former prime minister, former economics minister (1991) : « Manufacturing industry is the basis of competitiveness. The service society is based on manufacturing activity : the creation of jobs in services depends on a large extent on it, ( … ) manufacturing is the sole determinant of competitiveness in global markets ( … ) ». Dominique Strauss-Kahn, also minister of economics (1998) : « Our efforts must be focused primarily on production and particularly on industrial production, on the creation of real jobs, jobs that are directly productive... ». (Le Monde, 1998). Nicolas Sarkozy, when he was minister of economics (2004) : « We need a strong French manufacturing industry … ( … ). France cannot be only an economy of banks, insurances and services …». (France Info, 16 april 2004).

4 Towards a theory of innovation in services Two major characteristics : 1)They are service economies 2)They are innovation economies Several problems : 1)The service economy is still perceived suspiciously. 2)Service economies and economies of innovation... but not economies of innovation in services. 3)Whatever field of economic theory …, services raise interesting issues.

5 Towards a theory of innovation in services For example, problems as regards : - productivity measurement - international trade - spatial localisation - employment systems and skills - Etc. Focus on problems in the field of innovation.

6 Towards a theory of innovation in services 1) Answer the question : what s the trouble with services ? 2) Provide a state of the art 3) Focus on an integrative theoretical framework

7 I. Whats the trouble with services ? The trouble with services is twofold : 1.The survival of myths 2.The existence of specificities

8 1. First trouble : The myths about services and innovation in services 3 myths : - « Unproductive services » and « third sector » - Low productivity and low capital intensity - A « society of servants » Negative judgements about services Rooted in the history of economic thought Still vivid in present-day discourses First myth : (negative) judgement on the nature of an activity or a sector The other two : negative assessements of the production factors

9 1. First trouble : The myths about services and innovation in services 1 st myth : the myth of unproductive services and of the « third sector » –Origins in the history of economic thought. –A. Smith (1776) : productive work of manufacturing vs unproductive work of services, which vanish at the very moment they are provided. –Services = work of domestic servants, servants of the state and artists. –But it continues to influence many present-day approaches.

10 1. First trouble : The myths about services and innovation in services 1 st myth : the myth of unproductive services and of the « third sector » Fisher (1935) and Clark (1940) : a residual definition But not a value judgement on the economic worth Fo other analyses: service sector is peripheral, pathological : - Manufacturing matters, Cohen and Zysman (1987) - Too few producers, Bacon and Eltis (1978)

11 1. First trouble : The myths about services and innovation in services 2 nd myth : the myth of low capital intensity and low productivity Linked to the absence of factories and large-scale production lines. Capital intensity in services is high (see Kutscher and Mark, 1983). Energy distribution and transport Banking and insurance A new syndrome : Solow s paradox. Industrialist definition of productivity (see Gadrey, 1996)

12 1. First trouble : The myths about services and innovation in services 3 rd myth : the myth of the service society as a « society of servants » Concerns the quality of labour. An attack on the strength of services : job creation. Service society = a society of servants, a hamburger society, a bad jobs society. The service society creates deskilled jobs. But also highly skilled jobs.

13 2. Second trouble : Service specificities

14 II. Towards a theory of innovation in services 3 different approaches (Gallouj, 1992) : 1.A technologist or industrialist (or assimilation) approach : innovation = introduction of techical systems 2.A service-oriented (or demarcation) approach : focus on specificities 3.An integrative (or synthesis) approach : similar analysis for both manufacturing and services

15 II. Towards a theory of innovation in services Integrative approaches Service-oriented Technologist approaches Time Quantity

16 1. Technologist (assimilation) approaches Focused on the introduction of technical equipments. Innovation is a manufacturing industry matter. Services are dominated by manufacturing industry. They adopt, but create not so much. Judgement confirmed by statistical surveys based on OECD manuals

17 1. Technologist (assimilation) approaches How to explain this technological bias ? : 1) Services : the main users of ICTs 2) Technologies have consequences on economic variables 3) Standard neoclassical theory

18 1. Technologist (assimilation) approaches 3 categories : a)Approaches in terms of impact of technologies b)Taxonomic approaches in terms of sectoral technological trajectories c)The Barras' reverse cycle model

19 1. Technologist (assimilation) approaches a) Approaches in terms of impact Model 1 : Mainframe Model 2 : Decentralised computerization and network Employment Skills, task organisation Productivity Exchange Quality

20 1. Technologist (assimilation) approaches b) Approaches in terms of sectoral technological trajectories

21 A statistical analysis of sectoral taxonomies: 3 sectoral models of innovation (Evangelista, Savona, 2003) : –Technology users: Ex : retail trade, hostelry, catering, cleaning –ICT users: Ex : Banking, insurance, wholesale trade, advertising –S&T-based sectors : Ex : R-D, engineering services, consultancy

22 1. Technologist (assimilation) approaches c) Barras model

23 1. Technologist (assimilation) approaches c) Barras model : limits The problem of transposition to other service sectors The problem of transposition to other forms of technologies than ICTs Fundamentally technologistic : – Product innovations are necessarily supported by technical equipment. –New functions (relatively) independent of technologies are not recognized. For ex new financial products, new insurance contracts are not taken into account.

24 2. Service-oriented (demarcation) approaches Technology a core element of innovation in services. Highlighting the specificities of innovation in services : - through case studies - through local theories or analyses. Innovation can exist where the "technologistic" gaze perceives nothing. Focus on non-technological forms of innovation. « Pure services » for empirical investigation. Ex : consultancy activities.

25 2. Service-oriented (demarcation) approaches Ad hoc innovation –Original solutions (for organizational, strategic, fiscal... problems) in cooperation with clients. –Examples : original ad hoc legal solutions, new strategic or organisational solutions. –Non-programmed » innovation –Appropriation and reproducibility issues Expertise-field innovation –Knowledge accumulation related to emerging fields of knowledge –Service provision related to these fields –Examples : in legal consultancy investments in new potential fields of law (upper space, information technologies, environmental protection...).

26 2. Service-oriented (demarcation, particularism) approaches Formalization innovation –Heterogeneous type of innovation seeking for tangibility –Different forms : Methodologies Incorporation of technical tools in the process Organizational innovations Use of tool kits

27 3. Integrative (synthesis) approaches a) The representation of the product (Saviotti and Metcalfe, 1984) Y1Y2.Yi..YmY1Y2.Yi..Ym Z1Z2.Zk..ZoZ1Z2.Zk..Zo Process characteristics X1X2.Xj..XnX1X2.Xj..Xn (Internal) Technical characteristics Service characteristics

28 3. Integrative (synthesis) approaches a) The representation of the product (Gallouj and Weinstein, 1997)

29 3. Integrative (synthesis) approaches a) The representation of the product (Gallouj and Weinstein, 1997): the case of a pure service

30 3. Integrative (synthesis) approaches a) The representation of the product (Gallouj and Weinstein, 1997): the case of a pure service (with coproduction relationship)

31 3. Integrative (synthesis) approaches a) The representation of the product (Gallouj and Weinstein, 1997): self-service Y1Y2.Yi..YmY1Y2.Yi..Ym C 1 C 2. Ck.. CqT 1 T 2. T j..T n Technical characteristics Service characteristics Clients competences

32 3. Integrative (synthesis) approaches b) Corresponding innovation models

33 3. Integrative (synthesis) approaches c) Improvements of the framework Adding the customer s own technology Adding other providers technologies and competencies (Erik De Vries, RP, 2006) Including the policy maker Highlighting each agent competences and preferences and the way the different agents preferences interact. (Paul Windrum and Manuel Garcia-Goni, 2006)

34 3. Integrative (synthesis) approaches d) The car as a good-service hybrid


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