Technological innovation in services and manufacturing: results from Italian surveys

Overall, service and manufacturing sectors show more similarities than differences with respect to some basic dimensions of innovation processes.

Abstract

This paper provides fresh empirical evidence on technological innovation in the service sector, and highlights major similarities and differences with manufacturing. The main findings are the following. Technological innovation is quite a diffused and variegated phenomenon in market services. Engineering, technical consultancy, computing and software emerge as the most innovative sectors. Innovation expenditure per employee in these industries is rather close to the manufacturing average. Service firms as well as the manufacturing ones rely on a wide range of innovation sources. The acquisition and development of software and investment in machinery are the most cited. Investment, R&D and software are the major components of firms' innovation expenditure. Both in services and manufacturing the most important objective of firms' innovation strategies consist of improving service/product quality, increasing market shares and reducing production costs. Major obstacles for introducing technological innovation in services, as well as in manufacturing, are of an economic nature—i.e. lack of appropriate sources of finance and cost of innovation too high. Technological information is drawn mainly from in-house production departments as well as from outside suppliers of equipment, clients and customers. Again this is a pattern which is quite similar to the one found in the manufacturing sector. Finally, in the near future the importance of technology for firms' performance is expected to increase in all service industries. Overall, service and manufacturing sectors show more similarities than differences with respect to some basic dimensions of innovation processes.