Although advanced economies are increasingly dominated by services, relatively little is known about whether and how services innovate. Instead, our understanding of innovation and innovation processes has been very largely derived from studies of manufacturing, and the production of technologically advanced artefacts. As services do not generally produce technologically advanced artefacts, they are often considered to be non‐innovative, or “supplier‐dominated” recipients of technologies rather than “true innovators”. An alternative perspective is that services tend to innovate differently from manufacturers, or at least that innovation in services brings to the fore “softer” aspects of innovation based in skills and inter‐organisational cooperation practices which are pervasive across the economy but which do not tend to be prominent amongst manufacturers, and are therefore neglected. We examine these issues through an empirical analysis of a survey of European firms which was carried out in 2002.
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