- Industrial Dynamics, Entrepreneurship and Innovation series
Edited by Hartmut Hirsch-Kreinsen and David Jacobson
Chapter 9: Industrial Innovations in Relation to Service Sectors
9. Industrial innovations in relation to service sectors Marja Toivonen INTRODUCTION Services play a dominant role in the present-day economic landscape. They are also pivotal sources of growth for production, and particularly for employment, within ‘post-industrial economies’. Besides the growth taking place in service sectors, services play a critical role in the advancing development of the manufacturing sector. The underlying reason is that the share of intangible assets – relationships, information and knowledge – as sources of value for ﬁrms is increasing in relation to tangible assets – physical materials and goods (Tomlinson, 1997; Hipp and Grupp, 2005; OECD, 2006). Linking services to manufacturing is not a new phenomenon if we mean services that support products and production. Many industrial ﬁrms have for decades produced or purchased marketing and sales services as well as services linked to research and development or human resources management (Martinelli, 1991; Mathieu, 2001a). What is new is the idea that services can be an important source of competitive advantage in manufacturing. Industrial ﬁrms are today increasingly adopting strategies in which services do not fulﬁl a supporting function but are seen as a key growth area for future businesses. Services are sold either separately or, more commonly today, combined with physical products into integrated solutions (Davies, 2003a; Howells, 2000). In addition to the increasing importance of intangible assets, manufacturers have several other reasons to favour service-oriented strategies. First, the markets for many manufactured products are maturing. Second, the production of services provides steadier revenue, as many service sectors...
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