EXPLAINING INNOVATIVE ACTIVITY IN SERVICE INDUSTRIES: MICRO DATA EVIDENCE FOR SWITZERLAND

Abstract

In this paper, we analysed empirically the innovative behaviour of firms in the Swiss service sector building on the wide consent in economic literature that demand prospects, type and intensity of competition, market structure, factors governing the production of knowledge (appropriability, technological opportunities), financing conditions as well as firm size are the main determinants of a firm's innovative activity. For the empirical work, we used firm data from nine service industries collected by the Swiss Innovation Survey 1999. We obtained a pattern of explanation of the innovative activity which looked quite plausible across the different types of innovation measures used (input-oriented and output-oriented innovation variables); it was also consistent to that found earlier for manufacturing. In general, the empirical model captured rather the characteristics of the basic decision to innovate rather than those of the decision to choose some level of innovative activity.

Keywords:

• Innovation
• Services

Acknowledgements

This research was supported by the Swiss Federal Ministry of Economic Affairs. The author has much benefited from comments of the participants of the 25th CIRET Conference, Paris, 10th–14th October 2000 and the 28th Annual Conference of the European Association for Research in Industrial Economics (EARIE), Dublin, 30th August–2nd September 2001, where an earlier version of this paper was presented. The author also gratefully acknowledges useful comments and suggestions from two anonymous referees and the managing editor.

Notes

¹The expansion of the innovation surveys of the European Union (CIS) to cover also the service industries of the economy will help to close this information gap at least for the European countries.

²For new developments see e.g. Barras (1986), Gallouh (2002) and Thether et al. (2001). For a general overview of the state of the art of research on innovation in the service economy, see Metcalfe and Miles (2000) and Miles (2005).

³For recent empirical studies analyzing, some of them descriptively, the innovative activity at the firm level based on survey data for the service sector, see Gellatly (1999), Gellatly and Peters (1999) for Canada, Licht et al. (1997), Janz and Licht (1999) and Hempell (2003) for Germany, Brouwer and Kleinknecht (1996, 1997) for Holland, Sirilli and Evangelista (1998) and Evangelista (2000) for Italy, Tether et al. (2002) and Tether (2003) for the countries of the European Union. For some earlier exploratory work for Switzerland, see Donzé and Lenz (1999).

⁴A recent review of the European service literature on innovation concludes that most existing studies are based on the technologist approach, some on the service-oriented approach but only very few fall into Gallouj's integrative approach (Bryson and Monnoyer, 2004).

⁵The share of services in business R&D in Switzerland is higher than that in Germany (5.1%), France (12.3%), Italy (16.2%), Japan (5.5%) and the United Kingdom (19.6%), but lower than the corresponding share for Canada (36.7%) and the United States (28.8%) (Pilat, 2001, p. 26; the figures refer to the period 1995–1997).

⁶There is a German, a French and an Italian version of the questionnaire, which is available at request (see also www.kof.ethz.ch).

⁷We also asked the non-innovators to answer the question on the ‘relevance of property rights protection for innovative activity yes/no’; 14.6% of all firms have responded with ‘no’, 34.8% of them have been non-innovators. This means that this variable contains non-trivial information.

⁸These results are available from the author at request.

⁹We checked if there is any close correlation between the variables FIN and D, which could be the source for disturbing multicollinearity, but it was not the case (r=0.060).

¹⁰The coefficients of the variables INPC and KS4 in the tobit equation in column 6 are positive but not statistically significant.

Additional information

Notes on contributors

Spyros Arvanitis

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