Service Innovation: What Makes it Different? Empirical Evidence from Germany

The increasing importance of services, both in terms of employment and in terms of contribution to Gross Domestic Product (GDP), has generated an interest in the innovation potential of the sector. Since the overall dynamics of growth of an economy is more and more determined by the development of service activities, innovation in services becomes a crucial factor for an economy’s innovativeness and competitiveness. It has long been accepted that services are not generally adverse to innovation. Furthermore, traditional concepts of services as low-tech, low-productivity industries with little impact on a country’s economic performance had to be given up. The importance of services for national innovation systems goes beyond their own innovative activities. Services play a major role in the economy as catalysts, carriers and facilitators of innovation in other sectors and in other industries of the sector itself1.