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Innovation in Low-Tech Firms and Industries

Innovation in Low-Tech Firms and Industries

Industrial Dynamics, Entrepreneurship and Innovation series

Edited by Hartmut Hirsch-Kreinsen and David Jacobson

It is a general understanding that the advanced economies are currently undergoing a fundamental transformation into knowledge-based societies. There is a firm belief that this is based on the development of high-tech industries. Correspondingly, in this scenario low-tech sectors appear to be less important. A critique of this widely held belief is the starting point of this book. It is often overlooked that many of the current innovation activities are linked to developments inside the realm of low-tech. Thus the general objective of the book is to contribute to a discussion concerning the relevance of low-tech industries for industrial innovativeness in the emerging knowledge economy.

Chapter 10: The Relevance of Services for High-, Medium- and Low-tech Firms – An Empirical Analysis in German Industry

Eva Kirner, Gunter Lay and Steffen Kinkel

Subjects: economics and finance, economics of innovation, innovation and technology, economics of innovation


10. The relevance of services for high-, medium- and low-tech firms – an empirical analysis in German industry Eva Kirner, Gunter Lay and Steffen Kinkel INTRODUCTION High-, Medium- and Low-tech Classification of Industries In the past two decades the notions of ‘high-tech’ and ‘low-tech’ have become frequently-used categories which are generally applied to classify different industries. The distinction between high- and low-technology sectors has been given increased consideration, especially in relation to innovation and competitiveness. It is often assumed that high-tech sectors are superior to low-tech sectors as regards their innovativeness and competitive strength. The classification of high-, medium- and low-technology sectors was initially proposed by the OECD during the 1980s and has been widely adopted in different contexts today (Hirsch-Kreinsen et al., 2005). This classification is based on the share of sales spent on research and development (R&D) in different industry sectors. Considering the average expenditure on R&D in a certain sector, the sector is classified either as a high-, medium- or low-tech sector. The usefulness of this classification has been criticized by various scholars (Hirsch-Kreinsen et al., 2005; Von Tunzelmann and Acha, 2005). The arguments of these critical remarks can be summarized as follows: Traditionally, the concept low-tech and high-tech refers to industry sectors in general, not to single firms. However, depending on the degree of intrasectoral heterogeneity, a sectoral approach might be misleading because it reflects a sectoral average and ignores differences within the sector....

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