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Norwegian report 1999

Norvegian report, RESER 1998 - Peter SJ�HOLT and Tor SELSTAD R � s e a u E u r o p � e n S e r v i c e s & E s p a c e

- SERVICES ET INTERNATIONALISATION -
Norvegian report

Peter SJ�HOLT and Tor SELSTAD

Index :

- Introduction

1) Services in innovation processes.
2) Knowledge intensive business services in innovation and creation of value.
3) Aspects of organisation of service activities, - in house production or outsourcing.
4) Services in regional development.
5) Internationalisation of services.
6) Other service research
7) Public policy innovation based on research findings.

References

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Introduction

Services research in Norway in 1998 represents as a general characteristic a continuation of the main themes and the problem orientation that were described in the 1997 report. From the sources at disposal we can conclude that there is a growing recognition in the part of the research community being dedicated to investigating industrial structure, processes and relations of the importance of studying service relations if we are to get a more fundamental understanding of the restructuring of the economic system.

Services are, apart from being separate industrial sectors, clearly part of the production system of other industries. Simultaneously, industrial methods and organisation are permeating traditional service sectors, nowhere more evident than in the growing IT activities. It can be safely claimed that a reorganisation is taking place in the division of labour between, say manufacturing and service provision and some of the research having been done in 1998 has been conscious of this trend. This has implications for what should be looked for when trying to uncover what is services research.

We can also this time give a short appraisal of some main categories of research, frequently overlapping each other, but still being meaningful as a taxonomy.

1) Services in innovation processes.
2) Knowledge intensive business services in innovation and creation of value.
3) Aspects of organisation of service activities, - in house production or outsourcing.
4) Services in regional development.
5) Internationalisation of services.

In addition to these broad themes there is research on specific sectors and miscellaneous themes. This research has been less conspicuous in 1998 than in the preceding year. Particularly less researched on has been tourism and shipping, while marketing and distribution in the widest sense of the terms have attracted some attention. This is a reflection of the existence of specific research foundations dedicated to this investigation and reporting. This justifies us in adding a sixth category :

6) Other service research

The Norwegian Research Council is strongly oriented toward applied research. Most of the research is financed through programmes with duration of 4-6 years, while university research normally is financed by the institutions' own budgets. As a consequence the Norwegian research system has a high proportion of applied institutes completely dedicated to a project market. This fact is clearly reflected in the publication list, which is dominated by applied projects. On the other hand this implies that there is a short way from research to policy formulation. The programmes are normally directed by a board of representatives from the relevant sector, public administration, organisations and industries and the research community. The aim of the research projects is to inspire and instigate a new practice, directly in the market or indirectly through public policy. Our final category summarises some trends in policy formulation relevant to our theme :

7) Public policy innovation based on research findings.

Short comments on the main themes

1) Services in innovation processes

Research on this theme has mainly taken place in Oslo, carried out by the STEP group, which is loosely affiliated with the University of Oslo: Some of this research has been funded by the EU Commission and is one of the very few examples of a certain comparative research in this socio-economic field in Norway. A final project report was submitted to the European Commission in the autumn of 1998.

Important knowledge harvested from the project is the gradual transformation of the economy into integrated knowledge intensive relations and the role of services in systemic innovation and the transformation process on the whole. The increasing role of services at the service-industry interface is due to the fact that innovation in its essence is more "soft" than conventionally technological, even in process and product innovation. A growing formalisation of innovation activities was likewise found, often in the form of organised strategic innovation.

Innovation processes have been studied also from another angle. At SNF ( The Research Foundation at the Norwegian School of Economics and Business Administration in Bergen) the role of designers external to firms as creative and innovative agents has been the theme of a research project terminated in 1998. A long term relationship between firms in different lines and external service providers was found to promote innovation, keep up creativity and strengthen the competitive edge of the firms.

Finally, some evaluation has been done, in this case by the Centre of Economic Analysis (ECON), of maritime innovation systems.

2) Knowledge intensive business services in innovation and creation of value

This field of research partly overlaps the theme described above. However, the main focus in the present context is on services as bridging institutions in innovation systems and as facilitators and carriers of sources of innovation in a learning process. That the learning process is becoming increasingly bilateral and that firms are becoming transformed into learning organisations are important foci in this research category. It has been an important part of the STEP project portfolio.

Knowledge intensive business services (KIBS) as catalysts in enhancing value creation by maximizing the access of firms to scarce resources, notably competence and customer relations, is an important area of research at the SNF. Success was found to be dependent on efficient organisation, but this is not easy to break down into units to be analysed separately.

3) Aspects of organisation of service activities - in house production and outsourcing

This was a new field of research by the mid1990s. An elaboration, particularly of reorganisation of public services followed in 1998. FAFO (The Trade Union Research Foundation) has contributed with two projects: on the results of compulsory competitive tendering of public services and on direct privatisation of municipal services. Results are somewhat inconclusive. Few negative consequenses have been recorded as to quality of outsourced services. Simultaneously the main raison d'etre of the change, saving of costs, has been insufficiently researched on to make strong inferences. The consequences for employees are still somewhat unclear and regional impacts have by and large been ignored in this research. At the SNF an analysis of bureaus letting out manpower, mainly short time employees, found the practice to be rather restricted, but growing, and with the fastest increase in the demand for highly qualified work force. In the same research environment some systematic investigations on outsourcing in a broad context led to the conclusion that, although being profitable in certain trades, it may have its price in other circumstances for both parties involved and should therefore be evaluated in context.

A small research project at the Department of Geography, the Norwegian School of Economics, discusses the state of the art of outsourcing more universally against a theoretical background with an analysis of consequences for marginal groups and communities. Impacts were found to be rather differentiated according to types of services and location of buyers.

4) Services in regional development

This was the theme which initiated Norwegian research on services and it used to be an important part of Norwegian research in this field for a long time, also comparatively, in a Nordic context. At present it seems to be caught in some deadlock. Partly this is due to the fact that the four year research program on regional issues sponsored by the Research Council of Norway was terminated in 1997 and a new program is just in the process of starting up. The final report from the former program was published in 1999 with focus on restructuring of local communities. Although not particularly service oriented, this research monograph analyses important elements of the role of services. A central conclusion is that although restructuring normally is originated by heavy job loss in manufacturing industries, the job creation must be based on different service sectors. Another finding is that in several cases restructuring is caused by sudden job loss in service sectors, especially public sectors as defence (due to the end of the cold war) and health institutions (due to decentralising of social care). The new regional research program, which starts at the end of 1999, will to a certain extent give more attention to the service sectors, particularly the interplay between traditional manufacturing industries and supporting service sectors.

5) Internationalisation of services

This field of research has expanded somewhat during 1998, mainly with emphasis on the role of organisation of information and tele services. ECON has worked out a report to the Nordic Council of Ministers on the political implications and challenges of the use of information technology in industry, arguing that we are now faced with our "time of visitation" in giving conditions and framing strategies. In a SNF research project attention has been focussed on international competition in delivery of tele services. The main approach has been analyses of organisational aspects, the most striking finding being that fully integrated corporations are more efficient than looser alliances, provided that global reach is secured.

International research infrastructure has been evaluated and a data base has been worked out at the SNF for long term trends in employment and value creation activities by Norwegian firms abroad. This reporting should be seen in conjunction with evaluation and construction of another data base for economic indicators in the service industries. Existing data were generally evaluated as deficient, but it was recognised that the Official Statistics of Norway is superior to the different data sets offered by private international statistics and data bureaus, as, for example, Dun & Bradstreet.

6) Other service research

This is a variegated portfolio of projects. Suffice it to mention that marketing has attracted some attention. One project analysed the development of strategies for serving international markets of SMEs. It was found that balanced strategies are most appropriate, i.e. taking into consideration both external competition and resources internal to the firm, its specific resources and competence. Another project emphasised learning relations between firms and their customers as particularly paramount. Another study stresses the need for environmental scanning and adequate information systems in seller-buyer relationships. "Theorizing" of learning is of prime importance in order to enhance firms' performance in complex and dynamic environments. In the field of shipping a project on the function of shipbrokers was finalised during 1998. This service function for the maritime industry is no panacea in enhancing efficiency and profitability, however. The main importance of the brokers lie in search and matching, notably in spot freight markets.

7) Public policy innovation based on research findings.

During the last decades Norway has became an oil dependant economy with a subsequent weakening of the traditional manufacturing industry. The general deindustrialisation and the beginning of the end of the oil epoch, has made industrial innovation "on shore" an important issue in Norwegian industrial policy. Until recently this innovation approach has been directed towards traditional industries, where most of the large enterprises are based on natural resources. In these industries competitiveness is achieved through rich and cheap resources, for instance fish, wood and hydroelectric power, while the innovative ability has been rather restricted. The Norwegian SME-sector is characterised by really small companies with no innovation potential at all. I both cases the aim of industrial policy has been to stimulate the building of knowledge and competence within the firms in order to increase their competitiveness.

The last years have witnessed a clear tendency to focus more on the service sector in job generating, especially "infrastructural" services with a high knowledge content, which eventually could form a basis for new growth industries in Norway. The government is preparing a national IT-centre in Oslo, located on the site of the closed main airport, which is expected to be a centre for research, business services and higher education, including new concepts for distance education. It is also expected that this centre will attract national and international firms, and thus make up a new agglomeration of information and communication related businesses. The regional policy is also inspired by a similar concept, trying to develop 20 local centres called "industrial gardens". The idea is that local information and communication firms together will establish a centre of competence which will be appropriate for the regional demand. The State agency SIVA, which originally was established to stimulate industrial estates to attract manufacturing industries, is now restructured to create innovative clusters and knowledge centres.

The basic idea, which obviously is inspired by ongoing research, is taken from the theory of learning organisations and regions. What is important is not only to stimulate the supply of research and advanced producer services, but also to establish a relationship between supply and demand. Knowledge and competence is best developed in interaction between traditional firms and knowledge intensive firms. The fundamental concept is innovation systems, of which we can identify national as well as regional cases. The Norwegian Research Council is responsible for a development program called REGINN, which will give support to a number of regional experiments. These experiments will also be followed by evaluation research, which hopefully will give us insight into new measures of how to develop the service sector.

R�f�rences

� Biong, H. 1998. L�ring i organisasjoner og betydning for relasjonsmarkedsf�ring (Learning in organisations and importance in relational marketing) Sandvika. NiM's Working Papers No 2. 98

� Bogen, H.& T, Nyen. 1998. Privatisering og konkurranseutsetting i norske kommuner. (Privatisation and competitive tendering in Norwegian municipalities) Oslo. FAFO Report 254.

� ECON, 1998. Industry and information technology: Nordic Policy Challenges. Oslo. Report to The Nordic Council of Ministers. No. 39-98

� ECON, 1998. Innovasjonssystem p� beddingen. Evaluering av Maritim IT- Drift (Innovation system on the "slip". Evaluation of Maritim IT ). Oslo. Report to The Research Council of Norway. No 30. 98

� Gr�nhaug, K. I., J. Henjesand & A. K�veland. 1998. Fading relationships in business markets. An exploratory study. Sandvika. NiM's Working Paper 3. 98

� Hansen, J.C. & T. Selstad 1999. Regional omstilling- Strukturbestemt eller styrbar? ( Regional restructuring- determined by structure or agency? Oslo. Scandinavian University Press.

� Hauknes, J. 1998. Dynamic Innovation Systems-Do services have a role to play? Oslo. STEP Report R-12 98

� Hauknes, J. 1998. Services in innovation- Innovation in services: SI4S Final report. Oslo. STEP Report R-13 98

� Hersvik, I-M & T. Nesheim.(1998) Vikarbyr�er og innleie av arbeidskraft (Substitute bureaus and hiring of work force) Bergen. SNF Report 47-98

� Heum, P. Kvitastein, O. 1998.Sysselsetting og verdiskaping innen tjenesteytende n�ringer- statistikk og databehov ( Employment and value creation in service industries- need for statistics and data). Bergen. SNF Report 24-98

� Holmefjord, K. O.S. Dalsl�en, P. Heum & F. Kristiansen. 1998 Multinasjonale forretninger fra Norge ( Multinational business operations from Norway) Bergen. SNF Report 56-98

� Jevnaker, B. H. & M. Bruce 1998. Design Alliances: The Hidden Assets in Management of Strategic Innovation. The Design Journal Vol 1 No 1 1997

� Lien, L.B. & T. Nesheim. 1998. Strategiske utfordringer for kunnskapsintensive tjenestebedrifter (Strategic challenges for knowledge intensive enterprises ) Bergen. SNF Report 8-98.

� Methlie, L. & H. Nysveen. 1998. Multimedia Banking. Kundeatferd ved bruk av internett og andre kanaler (Multimedia banking. Customer behaviour in use of internet and other channels) Bergen. SNF Report 29-98

� Nesheim, T. 1998. Outsourcing og bedriftens effektive grenser. (Outsourcing and the effective limits of the firm ) Praktisk �konomi og ledelse. No. 1 -98 pp. 71-77

� Samuelsen, R. 1998. Geographic Information Technology (GIT) services and their Role in Customer Innovation. Oslo. STEP W.P. 07-98

� Sj�holt, P. 1998. Outsourcing of services and socio-economic and regional impacts on employment. Paper to ERSA 38. Congress, Vienna, CD Rom ERSA. Wirtschaftuniv- ersit�t Wien.

� Skogli, E. 1998. Offshore Engineering Consulting and Innovation. Oslo. STEP W.P. 04-98

� Skogli, E. 1998. Knowledge Intensive Business Services. A second knowledge infrastructure Oslo. STEP W.P. 03-98

� Strandenes, S.P. 1998. The Shipbroking Function and Market Efficiency. Bergen. SNF. Report 38-98.

� Ulset, S. 1998. International Competition in Global Network Services. Technology, Organization and Performance. Bergen. SNF Report 28-98.

� �rstavik, F. Innovation regimes and trajectories in goods transport. Oslo. STEP Report 09-98.

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