This document discusses the concepts of service economies and knowledge economies. It examines how notions of service economies overlap with information societies and knowledge-based economies. It explores how information technology has acted as an "industrial revolution" for services by transforming processes, products and delivery. It also looks at how knowledge-intensive business services are a major driver of growth in services and are seen as core to knowledge economies.

1. Ian Miles MIoIR University of Manchester [email_address] Service Economy = Knowledge Economy, Information Society??

5. Services Workforce Growth – a global phenomenon James Spohrer,. Michael Radnor, “ Service Innovations for the 21st C” IBM Research Service Innovations Workshop, November 2004, http://www.almaden.ibm.com/asr/events/ serviceinnovation/contacts. Top Ten countries in terms of Labour Force – these constitute more than 50% of world employment! A=agriculture, G= goods/manufacturing, S=services

6. Growth in Employment - only slightly less pronounced for output (GDP share)

7. Percentage Shares of Employment The EU service economy sector ^ Service sectors are reported here: there are also growing shares of service activities within firms in other sectors

8. Gender Structure and Employment Trends Male dominated (except Japan) - Decline in all categories Male dominated - Decline in all categories Female dominated –growth 1980 ? 1998? 1980  1998  1980  1998  Agriculture “Industry” Services Proportion of workforce

9. “ The” Service Sector dominates employment…

10. Different Services – Different Trends 1960 1973 1984 1997 1960 1973 1984 1997 Distributive Services Personal Services Producer Services Social Services

15. Reading Triangular Plots Element A Element B Element C High A, low B and C A, B, C roughly equal Moderate A, low B, moderate C Fairly high B, fairly low A and low C Can be used where three elements add up to 100% We can often capture features of services in terms of three dimensions: so we can use triangular plots to capture and explore diversity

16. Diversity in Workforce skills Agriculture Manufacturing HORECA Trade Transport Pub. Admin. Other Sers. FIRE Education Business Sers._ Health & Soc. Sers. HIGH SKILL LOW SKILL MEDIUM SKILL The highest skilled parts of the economy – also highest growth! EU, 2000

17. Diversity in inputs (transformations) PHYSICAL SOCIAL INFORMATIONAL Trade Recreational Other Sers. HORECA Public Sers. FIRE Comms. KIBS Other Bus. Sers. Transport Construction Manufacturing Agr. Fish. Forestry Utilities Services undertake a HUGE range of transformations – as previous graphic indicated, some are more knowledge-intensive than others

18. Diversity in Markets Businesses NON-MARKET Consumers Public Sers. HORECA Recreational KIBS Extractive Construction Other Bus. Sers. Other Sers. Trade FIRE Manufacturing Agr. Fish. Forestry Transport Comms. Utilities

27. RPC Model Process Innovation - efficiency Process Innovation – improved service Product Innovation – new service

29. The Productivity Paradox Resolved? Long-term convergence in labour productivity (GDP/hour worked) between EU and US seems to have reversed since 2000 40 38 36 32 30 1990 1992 1994 1996 1998 2000 2002 03 EU US

30. Innovation – services v manufacturing

31. A more detailed look Physical services – less innovation? Information services – more innovation?

32. Services Innovation Styles differ “ Which of these areas are your innovation efforts focussed on?” Max. choice = 2) INNOVA survey, Howells and Tether 2002)

33. CIS4 results Tobias Schmidt & Christian Rammer (2006) The determinants and effects of technological and nontechnological innovations – Evidence from the German CIS IV

35. Business services – recent growth Shares of value-added: manufacturing and BS

36. Business Services sectors  Renting of transport and construction equipment  Renting of office machinery incl. computers Leasing & renting 71.1, 71.21-23,  Secretarial and translation activities;  Packing activities;  Fairs and exhibitions Other 74.81-84  Security activities;  Industrial cleaning Operational 74.6, 74.7  Labour recruitment and provision of personnel Labour recruitment 74.5  Architectural activities;  Engineering activities;  Technical testing and analysis Technical 74.2, 74.3  Market research;  Advertising Marketing 74.13, 74.4  Legal activities;  Accounting and tax consultancy;  Management consulting Professional 74.11, 74.12, 74.14 Research and experimental development on:  natural sciences and engineering  … social sciences and humanities R&D 73.1, 73.2  Hardware consultancy;  Software consultancy;  Data processing;  Database activities Computer 72.1 - 6 Most important activities Services NACE Classn

37. An indicator of knowledge-intensity – graduate employment % Firms employing graduates % of graduate staff among employers Technical and IT services (except telecomms ) Professional services Manufacturing Financial services Trade and Transport 0% 40% 70% 100%

39. How is Knowledge Used? KIBS Role with clients Informative Diagnostic Advisory Facilitative Turnkey Managerial environmental intelligence for client’s planning identify and evaluate solutions for the client put the solutions in place (e.g. systems integration) implement solutions for the client explicate the nature of the client’s problem help the client effect the solutions

43. End of Presentation