RESER 2002

1. Abstract
2. Defining innovation
3. Theroretical approaches
4. Technologist approaches
5. The integrative approach
6. Innovation, space and policy
7. Conclusion
8. References

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Abstract

This paper reviews the European literature on innovation by drawing upon specially commissioned reports written by academics located in six countries. The innovation literature is classified into four types: technologist, service-orientated, integrative and theoretical. Each of these types is explored. One of the major findings is that different countries and researchers are at different stages of this life cycle approach to the literature. It is also suggested that the integrative approach is an exciting opportunity for developing the research agenda in this field.

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- In 1996 the Council of the European Research Network on Services and Space (RESER) agreed to conduct an annual review or synthesis of developments in services research and policy across Europe. RESER was founded in 1988 on the understanding that service occupations and industries were under-researched especially in relation to their importance in the employment structures of developed market economies. Over the last fourteen years, service research has been transformed from being considered to be novel research undertaken by academics who were misguided in no longer accepting the dominance of manufacturing industry to the situation today in which, in the United Kingdom, very little manufacturing research, with the exception of the discipline of economics, is undertaken. For many social science disciplines services have become the new manufacturing sector. There is a danger here in that many social scientists do not consider themselves to be service researchers but rather to be academics working on finance, retailing, and knowledge. Service approaches have become mainstream in the social science literature whilst at the same time many service specialists no longer identify with the term services.

- Innovation is central to understanding the creation and recreation of the capitalist economic system. In the service literature innovation has taken two forms. First, as general and frequently unsupported statements claiming that the focus or driver of all types of innovation has switched from manufacturing to services activities. In this vein is found Lash and Urry's Economies of Signs and Space (1994) that stresses the importance of signs and forms of symbolic capital in both the production and consumption process. Second, is a developing service literature that is attempting to address the relationship between service activities and innovation at a theoretical as well as empirical level. It is this latter and relatively unknown literature, relative to Lash and Urry's popular account, that is the subject matter of this review. Levitt and March (1988) suggest that the neglect by social scientists of service innovation is partly explained by the focus in the research literature on industrial innovation. The dominance of this focus may have produced a 'competency trap' that has, until recently, restricted the development of a service innovation research agenda.

- Innovation has been an important undercurrent in nearly all of the RESER reviews, but this is the first time that RESER has addressed this issue in any detail. There was a time when the innovation literature was dominated by studies of manufacturing, but today the accumulation of empirical and theoretical studies has at last persuaded academics and policy makers that service activities innovate in ways that are neither identical to manufacturing firms nor completely different. The explosion of literature on innovation and services over the last ten years has left little time for reflection or the development of a comprehensive review of this developing literature and debate. It is thus timely to undertake this European review of the literature as one contribution to the on-going attempt to understand the relationship between services and innovation.

- Service researchers in ten European countries were invited to identify key publications and research in progress that had or was currently addressing aspects of the relationship between services and innovation [1] . Only six countries (France, Germany, Italy, Norway, Slovenia, Spain) responded to the call; this number is partly explained by the apparent concentration of service research and innovation in a few countries [2] . Given the scope of the topic and its reflection in the various disciplines and countries represented in RESER it is hardly surprising that each of the country reports reflects a strongly selective and individual approach to the topic. There are two commonalities between the reports that must be highlighted. First, they reflect the academic discipline, perspective and knowledge of the subject of the author (Economics, Geography or Management). This means that the European regional disparity in innovation research that is visible in the country reports may be overstated.

- Second, some authors noted that there was limited literature in their country on innovation. The Spanish, Norwegian and Slovenian reports note that research on services and innovation is 'not of much concern in current research' (Slovenia), 'limited compared to research on manufacturing and other industrial systems - rather fragmentary, and as such, lacks coherence' (Norway) and 'still at its very infancy' (Spain). There thus appears to be a simple division between countries whose research agenda has embraced the study of services and innovation (France, Denmark, Germany, United Kingdom, Italy) and those that have yet to explore this issue. This disparity reflects the development of different research agendas and in some countries their recent economic history. Slovenia is a good case in point as Starr (2002), paraphrasing Mulej et al (2002), notes that the 'Slovenian perception of innovation is still largely based on the definition from 1965 (as defined by the law) that innovation is a tiny technical novelty made in an amateur way'. The case of Norway deserves some further attention. Whilst Norwegian geographers have largely ignored innovation it must be noted that there is a growing management literature in Norway on innovation (Isaksen, 1999, 2000).

- Service innovation is a very new research topic. The linguistic barriers that exist accross Europe implies that it takes time for publications and ideas to be translated and understood accross Europe. This linguistic constraint partly explains differences that appear to exist in innovation research agendas between European countries. A related explanation is the importance of economic differences between member states of the European Union. It is not surprising that academics from the United Kingdom and France have made important contributions to the understanding of service innovations; both countries are major service exporters and hence maybe major service innovators.


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- The problem with the concept of innovation is that the term embraces a wide range of different types of activities. The term's imprecision is evident in the six country reports that explore innovations that range from the activities of knowledge intensive businesses (KIBs) to the role of information technology in service innovation. It must be accepted that the term 'innovation' has a wide range of explicit and implicit definitions. It could be argued that 'innovation' is a chaotic concept or even fuzzy term - it is difficult to define and also to identify. The country reports do not explore this question of definition explicitly, but the definitions used are implied by the types of studies included in the analysis. It is also worth noting that different disciplines may be using the term in different ways, but this is not something that can be explored here.

- Obviously innovation is about creating something new, but it does not necessarily have to involve creativity; a change may be an innovation, but not a creative innovation. The ambiguity and wide variation in the use and interpretation of this term is reflected in the different approaches taken by the country reports. These differences should be understood and appreciated rather than any attempt to apply a unifying framework to the study of innovation; diversity in this case is strength. A unifying framework would stifle debate amongst innovation researchers and would inhibit the continued development of the research agenda on innovation. Nevertheless, it is useful to identify the different types of innovations covered in each of the country reports.

- The Spanish reports implied definition of innovation includes 'services as innovative' especially by identifying studies that highlight service innovations, for example in the tourist industry. This is very much a case study driven approach structured around the analysis of specific service sectors. Technology plays an important role in these accounts especially in relation to information systems (Internet) and other forms of information technology. The German report also includes case studies of individual sectors, but there is an important addition. For German researchers one part of the innovation debate includes an attempt to measure innovative activity. The Italian report is concerned with the relationship between new technology and service innovation. The Italian's, however, are not just concerned with services and innovation, but with the relationship between service innovations and innovations in other parts of the economy. Here the conceptualisation is one of an interrelated economy in which service innovations, the development of new services and modifications to existing services may improve the competitiveness or productivity of other parts of the economy. The Norwegian report highlights technical innovation and more importantly stresses research on small and medium-sized enterprises (SMEs) and entrepreneurship. An important difference in this report is the emphasis placed on regional innovation systems and industrial districts as well as a developing literature on policies designed to encourage innovation especially in other sectors of the economy apart from oil related activities.

- The Slovenian report identifies approximately 60 articles, reports or books that explore aspects of services and innovation. The definition used in this report includes management innovations and innovations in management as well as a discussion of barriers to innovation and policy responses required to enhance innovation at a variety of different levels. It is worth highlighting Slovenia's different political and economic context. Mekta Stare highlights the problems that result from the transition to a market economy in the early 1990s. This transition was associated with short-term measures, one could even term them innovations in this context, that were designed to improve Slovenia's economy. During this period downsizing and restructuring were seen to be more important for increasing or even retaining some of the economy's competitiveness than introducing innovations. Innovation has only become a recent possibility.

- The French report identifies papers that explore the nature of service innovation. These papers define innovation and analyse the associations between the introduction of new technologies and the process of service innovation and sometimes-radical innovations. It should be noted that service innovations can occur without the introduction of new technology. Many studies of specific sectors (postal services, hospital, consultancy firms) support this conclusion (Barreau, 2002 ; Caccomo and Solonandrasana, 2001). Another new research field in the French literature is the measurement of the degree of innovation (Djellal and Gallouj, 2002). This is an important area as it contributes to the definitional debate and may eventually lead to the development of measures of innovation that may stimulate some interesting and useful comparative research.



This brief overview of the country reports structured around definitions of innovation has identified five important points that need to inform the future innovation research agenda:

1) There are as many problems associated with the definition of 'innovation' as there are with the definitions of 'service' and 'knowledge'. There is something that we need to be aware of, but not overtly concerned with; diversity can mean vitality.

2) There are different forms of innovation that can be conceptualised at a variety of different organisational levels and/or spatial scales. Service innovation occurs at the level of the individual firm in terms of new product/service development or in alterations to existing practices. It can also include social and educational innovations that occur nationally or even regionally and these institutional environments may produce innovations elsewhere in the economy. Innovation also includes new ways of organising production, new ways of work and new types of work. Geographically, innovation can be explored in terms of the literatures on regional innovation systems and learning regions in the same way that the management literature can identify learning companies and methods of organisation than are more conducive to innovation.

3) The term innovation can be used in both a narrow and broad sense - from case study approaches to studies of innovative countries and regions.

4) The recent economic history of a country should be taken into consideration when exploring the relationship between services and innovation. Here the emphasis has been on problems experienced by transition economies, but there are other issues involving the relationship between spaces of innovation and spaces of production and consumption that need to be taken into consideration. The question involves identifying the factors and institutions that are required to produce an environment which is conducive to encouraging innovation at a range of scales - from the individual, the region to the whole of Europe.

5) There are at least three types of innovation: product, process and organisational.

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Theoretical approaches

- There is a developing theoretical literature into the relationship between services and innovation. Gallouj (2002b: 1) classifies the literature on innovation in services into three basic types: technologist, service-orientated and integrative. Technologist approaches reduce or equate innovation with the introduction of new technologies into service firms and organisations. Service-orientated approaches try to identify differences between manufacturing innovation and service innovation whilst an integrative approach explores the blurring of the boundaries between goods and services. Gallouj argues that these three approaches can be considered to represent a 'natural life cycle of theoretical concerns'. The first technologist phase is the obvious starting point for research into the relationship between services and innovation. This phase has its origins in Barras' (1986) attempt to construct a theory of innovation in services drawing upon the tradition established by Schumpter. Barras' work is based on a large-scale empirical study of banking, insurance and accountancy that identifies a service innovation product cycle that is the reverse of the traditional industrial cycle. Barras' cycle begins with the introduction into a service firm of a data processing system that forces the firm to engage in new forms of learning that may eventually stimulate innovation.

- Overtime the technologist phase declines and is gradually replaced by attempts to identify the characteristics of service innovation. This phase may even overstate the differences. This second stage represents a mature approach to studying services and innovation, but this is gradually being replaced by a theoretical perspective or integrative approach that is currently attempting to combine goods and service production innovative systems. If we accept this classification of the innovation literature it is possible to argue that different countries and even researchers are at different stages of this life cycle approach to understanding the development of innovation research. There are obvious dangers in this analysis in that the shift towards an integrative approach should not undermine the importance of studies that still take technologist or service-orientated approaches.

- The six country reports all contain elements of Gallouj's first two stages but make little if any reference to the third stage. The obvious exceptions are the French and English reports. The English language literature contains a number of studies that take an integrative approach to the relationship between goods and services (Howells, 2000; Daniels and Bryson, 2002). A fourth theory building stage should be added to Gallouj's classification. It is at this level that the six country reports identify significant omissions and gaps. The French literature addresses this problem especially with the work of Gallouj in his recent exploration of evolutionary and convention theory (2002) as has the recent work of the ESRC Centre for Research on Innovation and Competition (CRIC) at the University of Manchester (UK). The latter have developed an economic-sociological approach to innovation that highlights the relationship or even interdependency between innovation and legal, cultural and regulatory structures. The focus of much of this work has been on furthering understanding of innovation as a distributed innovation process or in other words innovation as being the result of co-ordinated actions between several firms and other agencies and institutions (Andersen et al, 2000). There are similarities between the CRIC approach and that of Barcet and Bonamy (2002) who explore macroeconomic influences on innovation in services. Warrant's (2001) analysis of the influence of legislation on innovations in the service sector is also important in this context.

- The service innovation literature has thus reached the stage at which theoretically informed research is possible and in some countries is actively pursued. This is not to say that research has been undertaken that is not theoretically informed, but rather to distinguish between attempts to develop a theory of service innovation and studies that are drawing upon existing innovation theories or the technical literature. One can usefully apply the CRIC approach to innovation to the European service literature by suggesting that each countries literature is the product of a unique combination of economic, political and cultural factors. For some countries engaging in theoretical development is possible given the current condition of their economies whilst others face significant problems that need to be explored, for example the problems facing the transition economies of Eastern Europe and countries that have a history of limited innovation. In these situations the development and evaluation of policies to encourage innovation is of more immediate concern that theoretical development and debate.

- Both the Slovenian and Spanish report note that their countries theoretical literature on services and innovation is scarce or non-existent. These reports only identify two pieces of theoretical work. First, in Slovenia, Mulej et al (1997) has explored the reasons why economists have ignored innovation and why it has been traditionally considered to be a limited technical issue. It is interesting to note that Mulej has played an important role in pioneering innovation in Slovenia by encouraging its introduction into the educational system. Mulej et al (1997) main contribution to the debate has been the identification of eleven factors that encourage innovation. Effectively, they produce a type of equation that suggests that all factors must be present for innovation to occur. The equation is largely descriptive:

Innovation = invention * entrepreneurship * integrity *management * collaborators *

culture * competitors * customers * external conditions * environment *

coincidence

Each of these factors can operate as a barrier to innovation and each needs to be addressed by policy interventions.

- Second, the Spanish report identifies the work of Escauriaza et al (2001) as the only rigorous theoretical study of innovation and services in Spain. This is a review of the literature designed to stimulate future research. The argument is that innovation occurs in all sectors, but that there are some important features of service innovations that need to be considered: innovation patterns, types of innovation, life cycle and obstacles to innovation. Once these are explored Escauriaza et al consider different measures that economists can use to capture innovation in services, and conclude that the traditional indicators used for manufacturings (R & D activity and patents) fail to capture the diversity of service innovation. Of course, the same can be said of these indicators as measures of manufacturing innovation. A good example of this measurement problem is the failure of these measures to capture innovations or alterations to the way in which goods are produced; changes in the production process may be as important for economic competitiveness as the development of a patented innovation or more technical innovation. This is an issue concerning the visibility or invisibility of innovation and the defintion of innovation used by the policy community in the design of statistics used as indicators or surogate indicators of innovative activity. For example, to Gadrey (2000) the impact of the internet may have a dramatic impact on improving the productivity of services, but at the moment there is no means of measuring this impact.



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Technologist Approaches

- Detailed case studies of the relationship between innovation and services in specific sectors are identified in all of the country reports. The French report identifies a series of studies which explore the ways in which service processes are renewed by the introduction of new technology as well as the way technology is transforming back and front offices. The emphasis in many of these studies is on the role of technology in enhancing the relational nature of the service delivery process (Cases and Rouquette 2000 ; Kerlau and Pelletier-Fleury, 2001 ; Lapassousse-Madrid and Monnoyer, 2002).


- The Italian report distinguishes between innovation in services and services for innovation. By this they distinguish between research that identifies new services or new ways of providing existing services and studies of the relationship between new forms of technology and service innovation. Two types of innovation in services are identified. First, new ways of supplying and consuming services for example via the internet are identified, but it is noted that this is not a new process of production, but just another way of supplying an existing service. The Italian literature draws attention to the relationship between innovation and what can be termed invisible innovations; innovation often implies a rethinking of the traditional division of labour and the way in which an organisation is managed both internally and externally (Bonaccorsi, 2000). These are process rather than product innovations and are hence relatively invisible and difficult to identify using official statistics. Second, the Italian report also draws attention to the relationship between innovation in services and globalisation. The development of a global economy and the international spread of service enterprises provide opportunities for global innovation systems to develop that transfer innovations between countries and companies. The Internet provides one technology to enable this form of innovation diffusion, and these developing processes overcome both geographical and physical barriers that may constrain innovation in particular localities (Daveri, 2002; Gatti, 2001).

- An important German study (Czarnitzki and Spielkamp, 2000) identifies the characteristics of the German business service sector by using micro data to explore knowledge-intensive and non-knowledge-intensive services. The main findings are that a high proportion of German KIBS are innovators and that much of this innovation is formed through co-operating with other companies. Computer companies innovate by co-operating with their competitors whilst technical consultancy companies co-operate with manufacturing companies. In many respects these findings highlight the importance of the developing integrative approach to understanding the economy. Service innovations cannot be and should not be understood in isolation from other parts of the economy. The work of Djellal and Gallouj (2001) is important here in that they identify the importance of an external relationship model of innovation in which innovation comes from the relationships a firm has with other parties (customers, suppliers and competitors).

- The Spanish literature highlights the importance of non-technological innovation. This is important as such innovations are difficult to capture using available statistics. A study of 20 tourist companies (hotel, real estate, travel agents) identified that all these firms had innovated in the last five years (Jacob and Bravo, 2001). Six types of innovation were identified - product, process, internal and external to the organisation, market and delivery innovations. Whilst this study lays considerable emphasis on non-technological innovation (see Gallouj, 2002a for a similar argument) it also highlights the importance of information and communication technologies in the innovation process. For these 20 companies innovation was identified in this study as a defensive strategy associated with survival rather than with a desire to enhance profitability. Innovation was also identified with the company's image and reputation and as one way of ensuring consumers considered that the firms provided a range of valuable or desirable modern services.

- Management innovations form an important part of this section of the literature on service innovations. Both the Slovenian and Norwegian reports highlight the importance of research into alterations in management practices that are designed to stimulate innovation. Research in Slovenia suggests that the internal environment of the firm has an important impact on levels of innovation. This research suggests that the on-going development of human and material resources in Slovenia is not conducive to the development of innovative orientated management (Cernetic, 1997).

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The Integrative Approach

- Very few of the country reports identify studies that fall into Gallouj's (2002b) integrative approach. Maybe this is because this particular approach is largely found in the French and English language literature. Conversely, there are clear signs that the integrative approach is beginning to play an important role in influencing the way in which European social scientists conceptualise the relationship between service activities and the wider economy. It must be noted that the integrative approach is not completely new as it is found in the work of Barcet et.al (1987) who adopt a functional approach to innovation. They identify three types of innovation that apply to both goods and services - functional, specification and production innovations as well as four characteristics of products or services - technology, process, service and knowledge. These four characteristics can be combined in different ways so that it becomes difficult or no longer desirable to distinguish between services and products.

- Central to the integrative approach is the understanding that there is another way of conceptualising the increasing importance of knowledge and service innovations in the production process; manufacturing companies are becoming difficult to distinguish from service companies (Galouj, 2002). This is an important point in that the social science literature has concentrated on understanding manufacturing as a production activity and service functions as either contributing to the production process or as only servicing local needs. This is a too simple conceptualisation of the production process that suffers from dividing an holistic process into its component parts. Manufacturing needs to be conceptualised as the creation, manufacture, after-care and redesign or recreation of the product. The increasing knowledge content driving the design of physical products is shifting the emphasis away from production to the knowledge aspects of the product. Production can be performed in locations with relatively cheap labour and lax environmental and labour controls, whilst the most important parts of the process - the knowledge elements - are located in developed market economies. Manufacturing is a process peopled by knowledge workers - engineers, designers, marketing experts, production managers - and a group shrinking in size, of people who actually produce the goods - the manufacturing workers (Daniels and Bryson, 2002: 983-4).

- Howells (2000: 15) identifies two different methods by which manufactured products are not offered to consumers in their own right, but rather as part of a package that includes service components:

1) Manufactured products provided with closely aligned services, for example finance, insurance maintenance warranties, repurchase clauses and service agreements.

2) The manufactured product is supplied to consumers as a vehicle for accessing services. In this case the product is not the end point of the transaction, but only the beginning of the relationship between the consumer and producer.

- These types of service/product relationship represent forms of what is termed service encapsulation of goods and materials (Howells, 2000). Encapsulation is an interesting concept as it highlights the interdependencies that exist between different industrial sectors. There are a number of ways of conceptualising this concept. Howells conceives it as the ways in which manufactured products are not offered to consumers in their own right, but rather as part of a service package. The concept can also be considered as the ways in which services encapsulate manufacturing products and vice versa and in some case this process leads to innovation. At least four types of encapsulation can be identified with each type representing a different way in which innovation occurs in the production process (Figure 1).

- First, new products, existing products or alterations to existing products can create service innovations. A new type of computer system can introduce new ways of service delivery. Second, the interaction between the service and manufacturing sectors of the economy leads to innovations in the manufacturing process and in the development of new physical products. In this case, a market research company may identify a product alteration that feeds into the production process. A good example of this process is the design of Jaguar sports cars. Market research identified that up to 25% of the firm's sports cars would be purchased by women, and that in the important American market this figure rose to 33%. The design team for new cars was altered to include both male and female designers and the car's ergonomics altered to produce a comfortable drive for males and females. Thus, door clearances were designed so that a woman wearing a skirt or dress could get in and out without difficulty, and door pulls, release catches and switches designed so that they could be used without breaking nails (Bryson, 1997: 380). Rather than engineers being fully responsible for the design of cars, designers, market researchers and marketing experts are instructing engineers in what they should design. Third, the development of new physical products stimulates the alteration or development of new physical products. Encapsulation should not be considered as being just about service informed innovations. Fourth, new services can inspire the development of new services. All of these forms of encapsulation include intermediaries, producer service firms, who operate as bridges to new forms of thinking and new knowledge and information. It is important to note that producer service firms have a major advantage over in-house staff. They work for many different clients and are able to identify client innovations that they than transfer to other clients. They can be conceptualised as a form of knowledge transfer agent with clients gaining knowledge, but at the same time maybe losing knowledge.

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Innovation, Space and Policy

- The relationship between innovation, services, and policy is partly determined by geography and especially the scale of a national economy. Work from Norway suggests that the Norwegian economy may be too small to develop regional innovation systems. Instead national concentrations of expertise will continue to develop. One of the best examples of this process is found in the work on Isaksen (2002) into the role of cities in the new economy. In this paper the argument is that software producers and consultants will continue to concentrate in the Oslo region while routine and mobile activities (programming and support functions) may be decentralised away from the large cities. Innovation and complex production activities will continue to concentrate in the main urban area. On the same topic, however, Aslesen (2002) argues that the concentration of KIBS in the Oslo region is explained by the existence of a client base in this area. The French literature insists that services are 'invasive' or in other words that are found in all economic activities. This implies that services play an important role in the innovative strategies of client companies and ultimately this is one of the reasons why KIBS are concentrated in the Oslo region. Gallouj defines this type of innovation as 'interactional' as innovation is co-produced by the client and service provider (Gallouj, 2002b).

- There has only been one attempt to explore the relationship between innovation and space in the Spanish literature. Rubalcaba and Gago (2002) explore the role of international and national effects on the regional concentration of innovative services. They begin with the assumption that the location of innovative service activities that are subject to the forces of globalisation is influenced by national, regional or urban forces. The paper tests whether global processes have influenced the locational behaviour of these companies. They conclude that both national and international factors need to be taken into consideration in any explanation of the geography of knowledge intensive service firms and that GDP per inhabitant must also be taken into consideration.

- Another variant of the relationship between space and innovation are studies that explore policy and institutional support for enhancing innovation. Research in Slovenia suggests that mechanisms to foster innovation should also be targeted at altering the educational system, especially universities and in encouraging or introducing management practices that foster innovation. Universities should be encouraged to become more flexible, interdisciplinary and innovative aware (Bucar and Stare, 2001). There are three problems identified in the report from Slovenia that should also be of concern to other European economies. First, the development of a national innovation system in transition economies that needs to develop a new techno-economic paradigm to adapt to the institutional framework and the demands placed on their economy by their future accession to the EU. Second, the role of venture capital in providing an instrument to finance innovation needs to be considered. Like all European countries important gaps in financial provision exist in Slovenia that exclude individuals as well as companies from parts of the mainstream financial system (Kos, 1997). Third, SMEs comprise a significant share of the total population of firms in Slovenia and government policy must be targeted to enhance the innovative capabilities of this sector of the economy. Of especial important here is the availability of financial services, marketing expertise and management issues related to the organisation of the innovation process (Stare and Bucar, 1998).

- Italian research has also explored institutional environments that encourage innovation. Three studies have explored the relationship between universities and local or city development (Bonaccorsi, 2000; Giacometti, 1997; Paganetto et al, 2001). This theme embraces a number of different aspects of innovation - the role of education in the innovation process as well as the role of institutions in promoting education and innovative capability.

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Conclusion

- Questions concerning 'services and innovation' constitute an enormously wide field of investigation and there can be no doubt that this issue will form a major part of the services research agenda over the next decade. This issue also has important policy implications and will be an important area for the development of policy interventions by the European Commission as well as member States of the European Union. It is also important to note the importance of policy development in this area in the accession states of Eastern Europe and in other transition economies.

- Readers of this review of the literature on innovation may consider that everything and anything can be explored using the term innovation. This is precisely one of the opportunities as well as problems of the research agenda in this area. An opportunity as there are so many different types and forms of innovation that the research field is wide open for further development and a problem in that some types of innovation are more visible than others. The issue of visibility is an important one in that researchers may fall into the trap of only dealing with highly visible innovations whilst failing to appreciate the importance of other forms of innovation and especially process rather than technical innovations. There is an important statistical problem to be addressed here concerning the ways in which innovation is measured. Maybe, current statistics underestimate the quantity of innovation in a region; quantitative approaches tend to concentrate on the more technical rather than softer aspects of innovation.

- One of the most exciting opportunities for developing the research agenda on innovation lies in developing Gallouj's integrative approach. Such an approach should not just explore the interaction between goods and services, but could also explore the interface between innovation in goods and services and the everyday lives of people. Innovation, both process and technical, alters the individual's experience of work, but it also impacts on the private lives of workers. Social science must begin to challenge the artificially imposed division that exists in much of the literature between the world of work and the everyday lives of people. Encapsulation is not thus solely about innovations driven by manufacturing or services, but should also include the relationships between innovation, services, manufacturing and individual behaviour in a variety of different settings: work, home, consumption and leisure spaces.

- Service innovation has been for many years a controversial concept in the social sciences. This is no longer the case; service innovation has become an established research area with a developing theoretical and empirical literature. It is interesting to note that some of the most important academics working in this field are Europeans and that over the last couple of years a European research agenda and scientific corpus have developed.

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References

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[1] The country report are available for consultation on the RESER website: RESER.NET

[2] Faridah Djellal, Faïz Gallouj, Camal Gallouj

Clersé, Ifrési, Université de Lille1, France; Michael Rothgang and Markus Scheuer (RWI-Essen), Germany; Metka Stare, Faculty of Social Sciences, University of Ljubljana, Slovenia; Peter Sjøholt, University of Bergen, Norway; Francesca Canti
Gruppo CLAS srl - Milano, Italy; David Gago. SERVILAB, Spain