Technology, Knowledge and the Firm
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Technology, Knowledge and the Firm

Implications for Strategy and Industrial Change

Edited by Ken Green, Marcela Miozzo and Paul Dewick

There is a long-standing tradition of research that highlights the importance of differences in the organizational and technological capabilities of firms and their effect on economic performance. This book expands on this theme by exploring the role of knowledge and innovation in firm strategy and industrial change. Underlying the volume is the belief that firms have distinctive methods of operation and that these processes have a strong element of continuity.
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Chapter 3: Innovation, Consumption and Knowledge: Services and Encapsulation

Jeremy Howells


Jeremy Howells1 1. INTRODUCTION The role that consumption plays in the innovation process within the firm and in the formation remains a neglected aspect of a firm’s capabilities. Thus consumption and the way firms consume intermediate goods and services form an important, but neglected, part of a firm’s capability set. The role of services is highlighted in this review and discussion. This is because by introducing a service dimension to the discussion about innovation, a new perspective is shed on the process of consumption and its relationship within innovation within the firm. This is for three interrelated reasons. Firstly, it is suggested that services are important in the consumption of new goods (and services). Secondly, the way (i.e. the routines that they can potentially develop) firms consume (intermediate) goods yields service-like attributes and these form important and distinctive capabilities for the firm. Lastly, related to this, the process of consumption and the development of routines associated with this process are forms of disembodied, service innovations. The analysis seeks to focus on the role of consumption in influencing innovation in intermediate goods and services. It is presented here that this is a neglected field of research for a number of reasons. Firstly, despite a number of studies, the role of consumption and demand in the innovation process still remains largely neglected. Secondly, and in particular, the role of consumption in service innovation has only been briefly commented upon. This is particularly true in connection with the consumption by firms...

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