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Service Innovation and R&D
 

Service Innovation and R&D

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Why are services (usually) low R&D performers? How does R&D relate to services innovation?

Why are services (usually) low R&D performers? How does R&D relate to services innovation?

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    Service Innovation and R&D Service Innovation and R&D Presentation Transcript

    • Services, Innovation, and R&D Ian Miles, PREST/MBS Drawing on studies: “The Future of R&D in Services” and RENESER “Research Needs for Service Industries” conducted for the European Commission, DGs Research and Enterprise by PREST (UK) + Dialogic (Netherlands), + ARCS (Austria), IAS (Germany), SERVILAB (Spain), TNO (Netherlands)
    • The Issues
      • R&D and innovation
      • Why the concern (in the EU)?
      • The statistical picture
      • What should we say about the statistics?
      • How, when, and why do services do R&D?
      • The roles of R&D in innovation in services
      • Future prospects
    • R&D and Innovation – Linear Model (manufacturing) Science Base Industrial R&D Process Innovation Product Innovation Use in Markets Production Process
    • R&D and Innovation – modifying the Linear Model Production Engineering innovation User/client-led innovation Strategic Research, Applied R&D in HEIs Science Base Industrial R&D Process Innovation Product Innovation Use in Markets Production Process
    • EU vs US trends Services share of BERD EU US 0 5 10 15 20 25 30 35 Source: from OECD ANBERD database 2003 Growth slightly faster in EU, but base seems to be much lower: will take decades to catch up at this rate – if the data are to be believed 2000 2000 1991 1991
    • UK - Services vs Manufacturing R&D £m UK data slow increase in services’ share of total, since slopes are equal… but still services are well below their economic weight.
    • In general - services’ R&D is growing faster Real Growth Rates of Business Expenditure on R&D as a share of GDP, 1987-1999 But is this a statistical artefact - improved measurement? But is this a statistical artefact - improved measurement? US EU15
    • Which Services do R&D? R&D Survey data, c2000 Share of business R&D Jp 7 Ge 8 EU 7 Fr 4 SK 0 UK 4 It 0 Ca 2 US 3 Sectors where no data available: R&D IT COMMS TRADE
    • Schematically..
      • R&D and IT/technology-based KIBS are R&D-active everywhere
      • Professional services (non-technological) hidden in “other services” and rarely register (despite market research, etc!)
      • Wholesale and Retail Trade in North America (apparently)
      • Transport in France – different surveying approach, or industrial structure?
    • Services performing R&D – CIS data EU15 CIS2 data – Bruce Tether analysis Sectors Size
    • Schematically..
      • More than 50% of service firms report R&D! Even small firms.
      • R&D and IT/technology-based KIBS are more likely to be R&D-active and to engage in R&D continuously
      • Likewise larger firms
      • R&D activity is associated
      with internal development of innovations
    • Official Data
      • Services’ R&D
        • Sometimes data are misleadingly positive - thus US trade R&D is overstated
      office electronics pharma
    • Official Data office electronics pharma
    • Challenges to Official Statistics
      • Services’ R&D
        • Sometimes data are misleadingly positive - thus US trade R&D is overstated
        • (Other US/EU differences may be more matter of sectoral composition – US dominance in high-tech services)
        • Likely that more generally, services’ R&D understated;
          • formulation of survey questionnaires is very oriented to manufacturing practices and processes - US and Euro studies recommend change
          • sampling of service firms is problematic
          • exclusion of social science
    • Challenges to Official Statistics
      • Services’ R&D
        • Sometimes data are misleadingly positive - thus US trade R&D is overstated
        • (Other US/EU differences may be more matter of sectoral composition – US dominance in high-tech services)
        • Likely that more generally, services’ R&D understated;
          • formulation of survey questionnaires is very oriented to manufacturing practices and processes - US and Euro studies recommend change
          • sampling of service firms is problematic
      • Services’ R&D
        • Sometimes data are misleadingly positive - thus US trade R&D is overstated
        • (Other US/EU differences may be more matter of sectoral composition – US dominance in high-tech services)
        • Likely that more generally, services’ R&D understated;
          • formulation of survey questionnaires is very oriented to manufacturing practices and processes - US and Euro studies recommend change
          • sampling of service firms is problematic
      Defining and Measuring Organisation – few R&D departments and managers Employment – often not specialised task, part of wider activity Innovation – much design, much on-job development R&D
    • Challenges to Official Statistics
      • Services’ R&D
        • Sometimes data are misleadingly positive - thus US trade R&D is overstated
        • (Other US/EU differences may be more matter of sectoral composition – US dominance in high-tech services)
        • Likely that more generally, services’ R&D understated;
          • formulation of survey questionnaires is very oriented to manufacturing practices and processes - US and Euro studies recommend change
          • sampling of service firms is problematic
          • exclusion of social science
      • Services’ R&D
        • Sometimes data are misleadingly positive - thus US trade R&D is overstated
        • (Other US/EU differences may be more matter of sectoral composition – US dominance in high-tech services)
        • Likely that more generally, services’ R&D understated;
          • formulation of survey questionnaires is very oriented to manufacturing practices and processes - US and Euro studies recommend change
          • sampling of service firms is problematic
          • exclusion of social science
      Defining and Measuring Frascati Manual – include social science in definition of R&D R&D surveys – exclude social research explicitly or implicitly Tax`credits - exclude social research explicitly Organisation – few R&D departments and managers Employment – often not specialised task, part of wider activity Innovation – much design, much on-job development R&D
    • Services R&D may well be lower, even if it is underreported
      • “ INTRINSIC” REASONS:
      • Services core activities , products, processes (e.g. more human-oriented, more customised) less amenable to the sorts of technological innovation
      • Need to engage with clients might discourage radical technological change. Much innovation here may involve client involvement and one-off solutions, and/or some level of customization.
      • Organisation in SMEs
      • Non-R&D based innovation – e.g. quality improvement, professional networks and activities, etc.
      • “ HISTORICAL” REASONS:
      • “ Reverse product cycle” : services moving away from being supplier-led.
      • Worse linkage into national innovation systems .
      • The organization of innovation in services does not usually involve the classic model of R&D departments; it is project-based and less likely to be known as R&D; may be based in many locations
    • Case Studies
      • Examined such sectors as :
      • Broadcasting
      • Professional Team Sports
      • Tourism
      • Market research (social information)
      • Research services
      • Financial intermediation – venture capital
      • Transport/Logistics
      • Computer services
      • Telecommunications services
      • Architecture/Engineering services.
    • Case Studies 1
      • Not all sectors have R&D-type activity - but many do. ( Our particular subsectors may diverge from their wider sectors - e.g. financial services.)
      • Much unreported, much not conceptualised as R&D, much not organised as traditional R&D
      • Variation within sectors as well as across them (e.g. broadcasting)
      • General expectation for more innovation emphasis
      • In many cases leads to expectation of more R&D-like activity. But not in general, more reporting of R&D. (In one case, may be less reporting of R&D!)
    • Further Detail
      • Technology-related services - IT, R&D, broadcasting - are undergoing rapid technological change and much associated turbulence - and development is global…
      • Apparently public services more likely to use the term R&D and to link to public research (?)
      • R&D used to refer to more technological activities - but much innovation is in organisational, service, creative content, and related areas
      • Much “research” in contrast is scanning/watch (incl. Most market research)
      • Acquisition of technology is important source of innovation
    • Workshops
      • Confirm sectoral studies as to ambiguous natures of services R&D/innovation; possibility for both highly technical and more spontaneous innovation, not “captured” for subsequent reproduction
      • Much existing innovation policy not seen as relevant
      • Doubts about improving measurement, about effect of tax credits - though there was some support for tax credits and for accounting for intangibles
      • Benchmarking, learning and emulating best practice , etc. were often more important than R&D.
      • Training for innovation, esp. for SMEs, seen as vital.
      • Means of Support for collaboration and integration in innovation systems seen as useful.
    • Distribution of Services’ Expenditure on Innovation CIS2 data – Bruce Tether analysis RD - Internal R&D; ARD - Acquired R&D TR - Training; PR - Preparations; MI - Market Introduction; OET - Aquired Other External Technologies; ME - Acquired Machinery & Equipment Transport Wholesale Financial sers Technical sers Computer sers
    • R&D and Innovation – modifying the Linear Model Production Engineering innovation User/client-led innovation Strategic Research, Applied R&D in HEIs Science Base Industrial R&D Process Innovation Product Innovation Use in Markets Production Process
    • R&D and Innovation in Services Supplier-led innovation Client-led innovation Innovation management…. HR etc Practice-led innovation Professions-led innovation Science Base Industrial R&D Process Innovation Product Innovation Use in Markets Production Process
    • Interventions may promote change:
      • Generally services neglected in innovation and R&D policy - but there is now some R&D policy for services and R&D-relevant initiatives
      • Initiatives like IBM’s “service science”, NSF “service engineering”
    • R&D Policy Initiatives – e.g. BMBF
    • Futures
      • Services’ R&D is likely to grow
        • innovation pressure, learning from others
        • technological change, new platforms
        • organisational change (alliances, concentration, management thinking - incl service science?),
        • overcoming heritage in management and innovation systems,
        • R&D policy
        • recorded growth due to better measurement
      • Share of R&D from services is likely grow due to changes in sectoral composition (T-KIBS and other tech-based services e.g. new types of content service)
      • Will be long time before many (esp low-tech) services attain R&D levels comparable to manufacturing, but small increases could have big effects on innovation
    • Data, Indicators
      • Better measurement (sampling, surveys) - not to reach targets faster but to inform policy
        • e.g. policy for Services R&D, understanding of services’ innovation
        • may lead to wider concept of R&D - R&D+
        • better understanding of services innovation needed to position R&D in services innovation - should not assume that it is the route to innovation, could even be counterproductive
        • but often increased awareness and opportunities for R&D+ should yield benefits
    • Policy
      • Better measurement (sampling, surveys) - not to reach targets faster but to inform policy
      • Better targeting of “mainstream” R&D and innovation programmes to engage services
        • beyond the usual suspects
        • some re-engineering of innovation systems
        • awareness and promotion (incl. some benchmarking with service examples, etc.)
    • Policy
      • Better measurement - not to reach targets faster but to inform policy
      • Better targeting of “mainstream” R&D and innovation programmes to engage services
      • Services-oriented R&D and innovation programmes
        • from science and industrial policy angles (draw on examples of good practice)
        • relate to ongoing initiatives where useful
        • support for new generations of innovation management
        • ...
    • End of Presentation