Taking services seriously: how policy can stimulate the 'hidden innovation' in the UK’s services economy

Abstract

Policy could have an important role in stimulating innovation in services. However, policymakers have lacked robust evidence showing how these sectors innovate. Drawing on a survey of more than 16,000 firms, this research reveals the high levels of ‘hidden innovation’ in some services sectors, especially in how they develop new business models and exploit technology. But the research also reveals that innovation is confined to a minority of service firms, and that many lack the skilled personnel or intelligence on markets and technology that would enable them to become more innovative. Because of their dominance in the economy, improved performance by the UK’s services sectors is necessary if we are to significantly close the productivity gap between the UK and other leading nations. However, if we are to take innovation in services seriously, we must recognise that they innovate differently from advanced manufacturing. We need policies to support increased training and development, and the effective dissemination and exploitation of technology.

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ORCID for Vadim Grinevich: orcid.org/0000-0002-3207-3680

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