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Innovation, Entrepreneurship, and Technological Change$
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Albert N. Link and Donald S. Siegel

Print publication date: 2007

Print ISBN-13: 9780199268825

Published to Oxford Scholarship Online: October 2011

DOI: 10.1093/acprof:oso/9780199268825.001.0001

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Innovation in the service sector

Innovation in the service sector

(p.86) 6 Innovation in the service sector
Innovation, Entrepreneurship, and Technological Change

Albert N. Link

Donald S. Siegel

Oxford University Press

This chapter analyzes innovation in the service sector. Imitation appears to be much more prevalent in services, since process and systems-related patents are difficult to secure and protect. This suggests that intellectual property protection issues are somewhat less important in service firms than in manufacturing companies, since service firms are less likely to develop proprietary technologies. It also appears that formal R&D (e.g., patents, the employment of scientists and engineers) is less important in services than in manufacturing. Innovation and entrepreneurial activity in services tends to be focused on incremental improvements rather than radical innovation. Innovation also tends to be more customer-driven. In many instances, service-sector innovations must be tested on real consumers. The openness and democratic nature of innovation in the service industry implies that social returns to innovation may be high in this sector. A major challenge for scholars in this field is to estimate these returns.

Keywords:   innovation, service industry, empirical studies, intellectual property protection, service firms

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