Technology in services: Past myths and future challenges

Abstract

Common misperceptions about services are that they are low-value-added, small-scale, low-capital-intensity, and technologically unsophisticated industries. The paper offers evidence that services such as communications, finance, transportation, and health care are large, capital-intensive industries responsible for commercial application of some of the most sophisticated technologies available. The paper explores the ways in which technologies applied in services activities are changing the structure of domestic and global competition in both goods and services industries. An analysis of competitive structures—the way production and distribution are organized in different industries—suggests strongly that services and manufacturing activities are inextricably interdependent and that many of the emerging strategic opportunities and threats in world trade—and particularly in global manufacturing operations—arise from the services technologies created for the communication, transportation, distribution, and financial management (services) industries.