Toward an evolutionary theory of innovation and growth in the service economy

Prometheus: Critical Studies in Innovation

Volumn 25, Issue 2, 2007, Pages 147-159

  Potts, Jason ^a   Mandeville, Tom ^a  

^a NONE

Author keywords

Complex systems; ICT; Industrial dynamics; Innovation; Knowledge economy; Services

Indexed keywords

ECONOMIC ACTIVITY; ECONOMIC INTEGRATION; EVOLUTIONARY THEORY; INDUSTRIAL DEVELOPMENT; INFORMATION AND COMMUNICATION TECHNOLOGY; INNOVATION; METHODOLOGY; SERVICE SECTOR; SPECIALIZATION;

EID: 34249298699     PISSN: 08109028     EISSN: 14701030     Source Type: Journal    
DOI: 10.1080/08109020701342231     Document Type: Article

References (77)

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2. See J. S. Metcalfe and I. Miles, Innovation Systems in the Services Sector: Measurement and Case Study Analysis, Kluwer, London, 2000;
3. J. Jankowski, 'Measurement and growth of R&D within the service economy', Journal of Technology Transfer, 26, 2, 2001, pp. 323-36.
4. The textbook definition of commodities as 'goods and services' is somewhat disingenuous, as the theoretical constructions of this representation in producer and consumer theory make it plain that what is really meant is goods, both in terms of the production function as a substitutable mix of capital and labour, and in consumption being viewed inherently as about substitution and not the creation of consumption systems. See P. Earl and J. Potts, 'The market for preferences', Cambridge Journal of Economics, 28, 3, 2004, pp. 619-30.
5. H. Anderssen, 'ICT and Australia's productivity growth: Understanding the relationship', Prometheus, 24, 2, 2006, pp. 189-212.
6. See Kurt Dopfer and Jason Potts, The General Theory of Economic Evolution, Routledge, London, 2007, on the generic theory of rules.
7. Dorothy Riddle, Service Led Growth, Praeger, New York, 1986.
8. Greg Hearn, Tom Mandeville and David Anthony, The Communication Superhighway: Social and Economic Change in the Digital Age, Allen and Unwin, St Leonards, 1998.
9. OECD, The Knowledge-Based Economy, OECD, Paris, 1996
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11. E. Brynjolfsson and B. Kahlin (eds), Understanding the Digital Economy Data, Tools, and Research, MIT Press, Cambridge, MA, 2000.
12. Hearn et al., 1998, op. cit.
13. All economies are knowledge based economies, but by KBE we wish to corral those in which it is the primary source of growth. See D. Rooney, G. Hearn, T. Mandeville and R. Joseph, Public Policy in Knowledge-based Economies: Foundations and Frameworks, Edward Elgar, Cheltenham, 2003;
14. Dopfer and Potts, op. cit.
15. OECD, Information Activities, Electronics and Telecommunications Technologies, OECD, Paris, 1981.
16. Jason Potts, The New Evolutionary Microeconomics: Complexity, Competence and Adaptive Behaviour, Edward Elgar, Cheltenham, 2000.
17. Ibid;
18. Jeremy Rifkin, The Age of Access, Penguin, London, 2001.
19. G. Hearn, D. Rooney and T. Mandeville, 'Phenomenological turbulence and innovation in knowledge systems', Prometheus, 20, 3, 2003, pp. 323-36.
20. Dopfer and Potts, op. cit.
21. M. Jackson, T. Mandeville and J. Potts, 'Innovation as competition: The evolution of the digital computation industry', Prometheus, 20, 4, 2002, pp. 323-36.
22. For example in the writings of Kevin Kelly, Jeremy Rifkin, Charles Leadbeater, Lawrence Lessig et al.
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29. Charles Leadbeater, Living on Thin Air: The New Economy, Penguin, London, 2000;
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31. Mark Dodsgon, David Gann and Ammon Salter, Think, Play, Do: Technology, Innovation and Organization, Oxford University Press, Oxford, 2005.
32. On the definition of meso (cf. micro and macro) see K. Dopfer, J. Foster and J. Potts, 'Micro meso macro', Journal of Evolutionary Economics 14, 3, 2004, pp. 263-79;
33. Dopfer and Potts, op. cit.
34. See foe example, Riddle, op. cit.;
35. C. Easingwood, 'New product development for service companies', Journal of Product Innovation Management, 3, 3, 1986, pp. 264-75;
36. I. Miles, 'Innovation in services', in J. Fargerberg, D. Mowrey and R. Nelson (eds), Understanding Innovation, Oxford University Press, Oxford, 2004;
37. B. Tether, 'The sources and aims of innovation in services: Variety within and between sectors', Economics of Innovation and New Technology, 12, 4, 2003, pp. 481-505;
38. B. Tether, 'Do services innovate differently', Industry and Innovation, 12, 1, 2005, pp. 153-84;
39. Metcalfe and Miles, op. cit.;
40. B. Tether and J. S. Metcalfe, 'Horndal at Heathrow?: Capacity expansion through co-operation and system evolution', Industrial and Corporate Change, 12, 4, 2003, pp. 437-76;
41. B. Tether and J. S. Metcalfe, 'Services and systems of innovation', CRIC discussion paper #58, 2003
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43. Manuel Castells, The Rise of the Network Society, Blackwell Publishers, Malden, 1996;
44. Potts, op. cit.;
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46. Alonzo Barabasi, Linked: The New Science of Networks, Perseus, New York, 2002.
47. This is a definition adapted from Leonard-Barton and Rogers, with some sprinklings of Kenichi Imai (I. Kaneko and K. Imai, 'A network view of the firm', 1st Hitotsubashi-Stanford Conference, Tokyo, 29 March 1987).
48. George Richardson, 'The organization of industry', Economic Journal 82, 4, 1972, pp. 883-96.
49. Kaneko and Imai, op. cit.
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51. Potts, op. cit.
52. Thomas Mandeville, 'Collaboration and the network form of organization in the new knowledge-based economy', in D. Rooney, G. Hearn and A. Ninan (eds), Handbook on the Knowledge Economy, Edward Elgar, Cheltenham, 2005, pp. 165-77.
53. Richardson, op. cit.
54. Eric von Hippel, 'Appropriability of innovation benefit as a predictor of the source of innovation', Research Policy, 11, 2, 1982, pp. 95-115;
55. Stuart McDonald, 'Information networks and the exchange of information' in C. Antonelli (ed.), The Economics of Information Networks, North Holland, Amsterdam, 1992, pp. 51-69;
56. Everett Rogers, 'Information exchange and technological innovation', in D. Sahal (ed.), The Transfer and Utilization of Technological Knowledge, Lexington Books, Lexington, MA, 1982, pp. 105-23.
57. OECD, Innovation and Productivity in Services, OECD, Paris, 2001.
58. Neil Kay (Pattern in Corporate Evolution, Oxford University Press, Oxford, 1997) points to a distinction between individual and multiple relationships between firms, the latter including strategic alliances and other network-like relationships involving multiple firms in multiple relationships. While there has been considerable interest in the economic literature in terms of modelling individual business level cooperative behaviour, such as between two firms, multiple relationships have been neglected. Kay notes that the latter is not something that the neoclassical perspective is well disposed to recognize, let alone analyse. Thus the need for new economic perspectives in the new on-line economy, such as those utilized here.
59. Kaneko and Imai, op. cit.
60. Human resource development is especially important to service firms, given their high reliance on highly skilled and highly educated workers, as well as indications that a lack of highly skilled personnel is a major impediment to service innovation in most OECD economies (see OECD, 2001, op. cit.).
61. Service-sector innovation derives less from investments in formal R&D and draws more extensively on acquisition of knowledge from outside sources acquired through purchases of equipment and intellectual property, as well as via collaboration (Ibid.).
62. The role of newly established firms in innovative activity is greater in services than in manufacturing, so that entrepreneurship is also a key driver of service innovation. Nonetheless, small firms tend to be less innovative than larger firms (Ibid; Tether, 2003, op. cit.).
63. A. Blinder, 'Offshoring: The next industrial revolution', Foreign Affairs, 85, 2, 2006, pp. 113-28.
64. John Ziman (ed.), Technological Innovation as an Evolutionary Process Cambridge University Press, Cambridge, 2000;
65. R. Nelson, 'Technology, institutions and innovation systems', Research Policy, 31, 2002, pp. 265-72;
66. Dodgson, op. cit.
67. R. Nelson, 'Production sets, technological knowledge and R&D: Fragile and overworked constructs for analysis of productivity growth', American Economic Review, 70, 1, 1980, pp. 62-7.
68. T. Mandeville, Understanding Novelty, Ablex, Norwood, 1996;
69. T. Mandeville, 'An information economics perspective on innovation', International Journal of Social Economics, 25, 3, 1998, pp. 357-64.
70. Michael Polanyi, The Tacit Dimension, Doubleday, Garden City, 1967.
71. S. Macdonald, 'Technology beyond machines', in S. Macdonald, D. Lamberton and T. Mandeville (eds), The Trouble with Technology, Pinter, London, 1983, pp. 26-36.
72. Johann Peter Murmann, Knowledge and Competitive Advantage: The Co-evolution of Firms, Technology and National Innovation Systems, Cambridge University Press, Cambridge, 2004.
73. Nathan Rosenberg, Perspectives on Technology, Cambridge University Press, Cambridge, 1976.
74. John Stanley Metcalfe, Evolutionary Economics and Creative Destruction, Routedge, London, 1998.
75. Tether, 2005, op. cit.
76. Correspondingly, the service sector engages with the public sector (government and universities) for innovation much less so than the manufacturing sector. Participation of service firms in sector-neutral innovation programmes is systematically low irrespective of whether these are academically or policy led. The service sector has a low capture of public funding for innovation.
77. Services singularly fail to command even approximate policy weight in proportion to their economic significance (OECD, 2001, op. cit.): tax, trade, employment and regulatory policy is typically designed with manufacturing in mind, even though it accounts for less than a fifth of economic activity; university and other public research is heavily concentrated on primary and secondary sector research.