Technology and the Market

Technology and the Market

Demand, Users and Innovation

Edited by Rod Coombs, Ken Green, Albert Richards and Vivien Walsh

The interplay between demand from the market, the role of users in shaping that demand, and the way in which these factors influence the innovation process has always been a complex one. This forward thinking book examines this interplay from a technological change perspective. The contributors explore the potential for rapprochement between economics, sociological and other social science disciplines in considering the allocation of resources and the making of decisions about technological change. The papers within this book represent a judicious blend of theory and empirical research and look at a broad range of innovations, markets and technologies in medicine, agricultural and food production, services and IT. Technology and the Market raises the question of the many ‘visible hands’ that are involved in linking technology and the market together.

Chapter 13: Services and innovation: demand-led changes in business organizations

Marcela Miozzo

Subjects: innovation and technology, innovation policy

Extract

Marcela Miozzo INTRODUCTION Since the 1970s, world-wide employment, output and international transactions in services have expanded at rates higher than employment, output and international transactions in the world economy as a whole. The growth of services is, to a large extent, demand-led, that is, largely determined by changes in the way that production is organized. In particular, profound qualitative changes in the technology-intensive components of services have created new uses for many services and contributed to their expansion, which has been strengthened by the tendency toward the ‘externalization’ of services. The growing importance of research and development, design, marketing, distribution and after-sales maintenance is another factor enhancing the growth of demand for services. Transnational corporations (TNCs) have been well positioned to take advantage of these developments. By the end of the 1980s, changes in information and communication technologies had transformed the determinants of competitive advantage in favour of a small number of powerful firms operating in technology-intensive services. These pressures also forced governments to liberalize domestic and international policies around trade in services. Despite the important and rapid pace of these developments, however, theoretical and policy-related assessments of the service sector continue to under-emphasize the impact of new technologies on the changing nature of the service sector, as well as the increasingly dominant role played by TNCs in the process of internationalization of services. The idea that services are labour intensive activities, with little scope for rapid productivity growth, is clearly a notion of the past. Attempts have been made...

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