ABSTRACT Although advanced economies are increasingly dominated at services.

ABSTRACT Although advanced economies are increasingly dominated at services, relatively little is known about whether and for what cause services innovate. Instead, our understanding of innovation and innovation processe has been self-same largely derived from studies of manufacturing, and the production of technologically advanced artefacts. As services do not generally breed technologically advanced artefacts, they are many times considered to be non-innovative, or "supplier-dominated" recipients of technologies rather than "true innovators". An alternative perspective is that services guard to innovate differently from manufacturers, or at least that innovation in services brings to the fore "softer" aspects of innovation based in skills and interorganisational cooperation practices which are pervasive across the economy if it were not that which do not tend to be prominent amongst manufacturers, and are therefore inattentioned We examine these issues between the sides of an empirical analysis of a review of European firms which was carried abroad in 2002.

KEY WORDS: Services, advanced economies, innovation, European innobarometer survey

1 Introduction and Contextualisation1

Despite the fact that the advanced economies of the world are increasingly dominated, in expressions of employment and value added, according to service activities, within economics and innovation studies services have lengthy had a "Cinderella status, being neglected and marginal" (Miles, 2000: 371) Innovation, the ultimate source of all economic product is still largely associated with manufacturing,2 and the production of technologically advanced artefacts. Despite the increasing attention paid to innovation in services in latter years (e.g. Evangelista, 2000; Gallouj, 2002; Drejer 2004; Howells and Tether, 2004; Miles, 2005) almost all of our understanding of innovation and of innovation processe at the micro on a level has been derived from studies of manufacturing (Gallouj and Weinstein, 1997) Thus the development of services raises questions about whether services innovate at all and, if they do, whether the understandings of innovation derived from studies of manufacturing are appropriate to service-dominated economies.

Until freshly efforts to explore innovation in services have been undertaken in pair contrasting traditions. The first tradition is the "assimilation approach" (Coomb and Miles, 2000) which considers that services, and innovation in services, is fundamentally similar to manufacturing and innovation in manufacturing. Thus, services and innovation in services can be studied through using or adapting the universals and tools developed for studying innovation in manufacturing. For example, the assimilation approach was used to include services in the inferior round of the European Community Innovation scrutinizes (CIS-2). Whilst this marked an important advance for the research of services and their innovation activities (Tether et al., 2001; Tether, 2003) it involved using a tool designed with manufacturing and "technological produce and process (TPP) innovation" in mind (OECD etal., 1996) and making small changes, as it is as replacing the word performance by the word service, where necessary. The CIS-2 revealed that a substantial proportion of service firms (claim to) engage in (technological) innovation activities, still also that service firms were les likely to claim to have innovated than their manufacturing counterparts (Tether et al., 2001)3

Although services recorded more innovation in the CIS-2 (and CIS-3) than had previously been anticipated, the assimilation approach is associated with the still widely held "traditional view" of services, which is that they are relatively unprogressive, with restricted capacities to change, especially from within. Instead, innovation in services is largely hanging upon adopting externally developed technologies that facilitate of recent origin service provision and/or enhance service productivity (Pavitt, 1984) Manufacturers and a not many "peculiar services" such as computer services and telecommunications are the source of these modern technologies. Significantly, the vast majority of the technologies adopted are standard, "off-the-shelf" technologies, which are widely available and are used from services only in the manner intended at their producers. Thus there is little creativity onward the part of services as users of technologies. Consequently as the technologies make use ofed are widely available, there is little to differentiate service providers at quality, and competition is based in succession price. The rate of progres in bounds of quality and the price quality ratio is also essentially at the disposal of on the rate of technological progres in the contribute industries. As den Hertog (2000: 499) sets it: "The dominant view of innovation in services portrays the proces as supplier-dominated, with service firms being conditioned on their suppliers for innovative inputs." From this perspective, services are rather uninteresting with refer to to innovation and technological change, and given the prevalence of this view it is perhaps unsurprising that they have attracted relatively little attention from scholars of innovation.