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The Information Society - MSc Module

Federal School of Business and Management PREST

The Information Society and the Service Economy

Ian Miles

PREST and CRIC

University of Manchester



The Service Economy

• What are services?

• What’s special about them?

• The Rise of Services

• Services and Information Technology

• Services Innovation and IT

• Knowledge Intensive Business Services in the Information Society



Insights• Service Economy is not just service sectors

(Giarini): service functions pervasive and many grow in significance

• Gershuny (New Service Economy) focus on service functions and informal economy - goods versus services.

Service laggards Role of IT Self-services: role of service clients Business Services



Service SectorsISIC

Trade, restaurants and hotels

Transport, storage and communications

Finance, insurance, real estate and business services

Community, social and personal services

NACE Wholesale and Retail Trade; Repair of Motor Vehicles, Motorcycles and Personal and Household GoodsHotels and Restaurants Transport, Storage Financial Intermediation Real estate, Renting and Business Activities Public Administration and Defence; Compulsory Social Security Education Health and Social Work Other Community, Social and Personal Service Activities



Hill, Riddle, and beyond:Primary sector: extracting raw materials from the environment.Secondary sector: transforming these raw materials into material artefacts (goods, buildings, etc).Tertiary sector: effecting changes in states of:

environments - waste management, pollution clean-up, park-keeping;

artefacts produced by the secondary sector - repair and maintenance, goods transport, building services, wholesale and retail trade;

people - health and education services, hospitality and consumer services such as hairdressing, public transport;

symbols - entertainment; communication; consultancy; professional services; finance



Services Characteristics Features

•LESS ABOUT MATERIAL PRODUCTION OF TANGIBLE ARTEFACT•MORE PRODUCTION OF “SERVICE”: SUPPLIER - CLIENT INTERACTION

Diversity

•OPERATIONS ON PHYSICAL, HUMAN

AND SYMBOLIC PROCESSES TO

CHANGE STATES•VARIETY OF

TYPES OF, AND PARTIES TO,

INTERACTIONS



The Rise of ServicesThree Sector and Continuous Models

Multi Sector and Discontinuous Models

Post-Industrial Theory(Services as Advanced)

Service Economy Theory(Services as Backward)

Deindustrialisation Theory(Services as Parasitic)

Information Society Theory(Some Services as Vanguard)

Demandchange

Centrality ofKnowledge

New sectors

IT revolution

debate

Productivity Differences

Price Changes

Unproductive Services

Externalisation & outsourcing



Services across the Economy

Sectors Sectors

Occ

upat

ions

Occ

upat

ions

Service sectors grow as a share of the whole economy; Service occupations grow as a share of most sectors



OECD Service EmploymentProducer ServicesDistributive ServicesPersonal ServicesSocial Services

1960 3 19 8 121973 6 20 8 201987 10 21 8 24

0

5

10

15

20

25

1960 1973 1987

Producer Services

Distributive Services

Personal Services

Social Services



“Producer Service” Sector Growth

Fra

nce

Germ

any

Japan

Neth

erlands

Sw

eden

UK

US

AV

ER

AG

E

1960

19870

2

4

6

8

10

12

14P

erc

en

tag

e S

hare

of

Em

plo

ym

en

t

source: T Elfring, "An International Comparison of Service Sector Employment Growth" UNECE Discussion Papers, vol. 2 (1992) no 1 Personal and Collective Services: an International Perspective (UN Economic Commission for Europe)



Services and IT

• Services are major investors in IT equipment - c 80% - major users of IT labour (c 50% of software staff)

• This is uneven - financial services very IT intensive, consumer services not.

• IT as “industrial revolution” in services.• New IT services - software, computer

services, telematics services, new media...



Services as Innovative Laggards

• Discounted in Innovation Analysis

• Passive latecomers

• IT use forces rethink

• R&D and innovation surveys: services as active innovators, as agents of innovation across economy

• Attempts to explain, classify



Theories of Service Innovation

• Contingencies differ

• Richard Barras - reverse product cycle

• servuction

• Soete & Miozzo



Service Firms in an Innovation Taxonomy

Science-based firms; Scale-intensive firms;

Specialised equipment producers;

Supplier-dominated firms

Supplier dominated sectors

(a) Production-intensive scale-intensive sectors (b) network sectors

Specialised technology suppliers and science-based sectors

Pavitt

Soete & Miozzo



“Peculiarities” of Services• SERVICE PRODUCTION

Technology and Plant; Labour; Organisation of Labour Process; Features of Production; Organisation of Industry

• SERVICE PRODUCT Nature of Product; Features of Product; Intellectual Property

• SERVICE CONSUMPTION Delivery of Product; Role of Consumer; Organisation of Consumption

• SERVICE MARKETS Organisation of Markets; Regulation; Marketing

Influences on Services

Innovation?

Shape strategies of

Services Innovation?

Convergence in Manufacturing and Services?



Manufacturing Sectors Service Sectors

Services Services



Perspectiveson technology transfer (t/t)

Policiesfor technology transfer

Five generations The growth of producer services1 Passive, linear models - t/thappens automatically

No intermediaries required

2 Interactive model - t/t involvesdialogues and exchange betweenplayers

'Consenting adults' - assumption is still that relationships form andcommunication happens without external mediation

3 Expert consulting to help transferparticular technologies

Policy interventions explicitly recognise the need for help with this process ,but main source is seen as 'technical expertise plus a little bit of front endpush…'. Example of MAPCON - here a consultant not only bringstechnological knowledge to bear but also helps at the front end with userawareness, exploration etc.

4 Expert and process consulting Policy emphasis shifts to recognise the need for help with the process oftechnology transfer - helping users articulate and recognise their problems andneeds, helping them make connections to resources, helping them plan andimplement, etc. Examples here include the current Business Links programmewith their Innovation and Technology Counsellors.

5 Learning facilitation Recognition that a key role is not only to help with the process but to enablefirms to learn to do these things by themselves. Emphasis shifts tomechanisms for facilitating learning within organisations, and usesmechanisms including process consultants and counsellors, learning networks,Teaching Companies and other options.Timescales and nature of interventions extended, based more around long-term learning and development. Producer services evolve to provide suchprocess consulting/learning facilitation.

Rush and Bessant



Services and Information Society• Intangibles• Varieties of Knowledge• New Technology Based services• Rise of KIBS• Beyond KIBS? KICS??• Modes of Governance• Services Trade• Roles of IT



Services as Users, as Sources, and as AGENTS of Innovation...Knowledge-Intensive Business Services (KIBS)

• Rely heavily upon professional knowledge. Employment structures heavily weighted towards scientists, engineers, experts of all types. Tend to be leading users of Information Technology to support their activities. • Either supply products which are themselves primarily

information and knowledge resources; Or use their knowledge to produce intermediate inputs to their clients' knowledge generating and information processing activities.• Have as their main clients other businesses (including public

services and the self-employed).



KIBS include: Accounting and bookkeeping Management consultancy Specific building services (e.g. architecture, surveying, construction engineering, etc.)

Facility management services Technical engineering services Research and development services; R&D consultancy services Design (not only concerning new technologies) Environmental services (e.g. env. law, elementary waste disposal services, remediation, env. monitoring, scientific / laboratory services, etc.)

Computer and information-technology-related services (inc. software) Legal services Marketing & advertising Exploitation and trade in real estate Training Specific financial services (e.g. securities and stock-market-related activities) Temporary labour recruitment services Press and news agencies



KIBS’ roles:

• Translation

• Transfer

• Transposition

• Transformation

Of Knowledge Resources

Fusions of Generic, Sectoral and Local Knowledge to solve client problems



Standardised and Specialised Services in the German Survey

Standardised

Intermediate

Specialised

Tra

nsp. &

Com

m.

Banki

ng / In

s.

Tra

de

Oth

er

Bus. S

’s.

Oth

er

Fin

. S

’s.

Soft

ware

Sci.

& T

ech. S

’s.

0

20

40

60

80



Crucial Element of IS - Information Society and Innovation Systems

• Intermediaries between “Ultimate” suppliers and users

• Fusing various types of knowledge resource

• Coproducing knowledge and sometimes innovations with clients

• “New knowledge infrastructure - problems of public goods and quality control

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