Innovation and economic performance of the firms in the service sector: relevant issues and open problems

This thesis is a collection of essays related to the topic of innovation in the service sector. The choice of this structure is functional to the purpose of single out some of the relevant issues and try to tackle them, revising first the state of the literature and then proposing a way forward. Three relevant issues has been therefore selected: (i) the definition of innovation in the service sector and the connected question of measurement of innovation; (ii) the issue of productivity in services; (iii) the classification of innovative firms in the service sector. Facing the first issue, chapter II shows how the initial width of the original Schumpeterian definition of innovation has been narrowed and then passed to the service sector form the manufacturing one in a reduce technological form. Chapter III tackle the issue of productivity in services, discussing the difficulties for measuring productivity in a context where the output is often immaterial. We reconstruct the dispute on the Baumol’s cost disease argument and propose two different ways to go forward in the research on productivity in services: redefining the output along the line of a characteristic approach; and redefining the inputs, particularly analysing which kind of input it’s worth saving. Chapter IV derives an integrated taxonomy of innovative service and manufacturing firms, using data coming from the 2008 CIS survey for Italy. This taxonomy is based on the enlarged definition of “innovative firm” deriving from the Schumpeterian definition of innovation and classify firms using a cluster analysis techniques. The result is the emergence of a four cluster solution, where firms are differentiated by the breadth of the innovation activities in which they are involved. Chapter 5 reports some of the main conclusions of each singular previous chapter and the points worth of further research in the future.