ntil recently, the study’s authors report, governments had been slow to provide direct support for service R&D and innovation. Given that the principal perceived barriers relate to market forces, and that the sector currently views regulation as a major obstacle, what are the areas in which policy measures in support of innovation could be most fruitfully developed?
The study is unequivocal. Current support is neither sufficiently relevant to the needs of the service sector, nor sufficiently accessible. Both new innovation schemes and the adaptation of existing schemes are necessary, while greater involvement of service businesses in the shaping of innovation policy would also be useful. It calls on the EU and Member States to do more to promote innovation management best practice among service sector firms, and to encourage them to engage with existing national and European innovation networks, to which they are poorly linked at present. It recommends enhanced support for in-house training and skills development tailored to the needs of specific types of service.
But it also focuses on what governments can do to encourage the purchasers of services – consumers, businesses and government itself – to become “more intelligent” customers. Paradoxically, regulation may be the most potent lever available to public policy in this area. “Regulation and standard-setting are too often seen entirely negatively,” says Bruce Tether. “European standards have already provided a platform for innovation in the markets for mobile telecommunication and environmental services.”
In the context of the Commission’s January 2004 proposals for a directive to facilitate cross-border competition in services(1), the EU is encouraging the development of voluntary standards. Ronald Mackay believes these can play a key role in developing the market for services and making them more readily tradeable. “Service sector outputs are intrinsically less transparent than those of manufacturing,” he explains. “Some businesses already buy in huge volumes of services. Standards would encourage this market by helping them to know what they are buying, and to make price comparisons between competing suppliers. There is an increasing level of activity, particularly in certain Member States.” The Commission has given the European standards bodies CEN, CENELEC and ETSI a mandate to conduct an enquiry into standards for services – whose results are expected by the end of 2004.
In the meantime, as the report itself concludes, funding will be necessary for the development of a conceptual and methodological framework for the collection of data that reveals the processes of service-sector innovation more clearly.
The forthcoming Action Plan for Innovation(2), whose consultation period ended on 31 May, emphasised that: “If innovation is the commercial application of existing knowledge in a new context, technologically-driven innovation is only one form of this.” And Talacchi is confident that the Commission will continue to support academic efforts to design new indicators for nontechnological innovation.
Cheer up, Cinderella, your carriage awaits you!
(1) COM(2004) 2 final, Proposal for a directive on services in the internal market, which can be downloaded at http://www.europa.eu.int/comm/internal_market/en/
(2) See ‘Call for stakeholders’ input’, edition 2/04.