Demand, Users and Innovation
Edited by Rod Coombs, Ken Green, Albert Richards and Vivien Walsh
Chapter 13: Services and innovation: demand-led changes in business organizations
13. Services and innovation: demand-led changes in business organizations 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...
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