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This article provides a comprehensive picture of the characteristics of innovation in services, using the results of the 1993-95 Italian innovation survey in services. Technological change does play a role in services: around one third of service firms have introduced a technological innovation in the period 1993-95. Process innovation, innovative investment and the acquisition and internal development of software represent the most important channels through which service firms innovate. R&D activities represent an important innovation source only for a small number of science and technology-based service industries. The sectoral analysis highlights the variety of innovative patterns, which should discourage any simple generalization about innovation in services. Accordingly, a sectoral taxonomy is proposed in which service industries are clustered according to the overall innovative performance of firms, the nature of the innovation activities carried out, the different knowledge bases underlying the innovation processes, and the different patterns of interaction through which service firms innovate.

This paper analyses the economic impact of digital technologies in Europe distinguishing between different stages/domains of the digitalization process. A set of composite ICT indicators is used capturing the access to ICTs, the ability to use them and the digital empowerment of individuals in key social and economic domains. We argue that the mere accessibility to ICT facilities is only a pre-condition for moving towards a digitalized society, while the “level” and the “quality” in the use of these technologies, as well as the conditions facilitating or hampering digital empowerment, play a much more important role. Several transmission mechanisms from ICT access, usage and digital empowerment to key macroeconomic variables (namely labor productivity, GDP per capita, employment growth and the employment rate) are identified. The econometric evidence supports our hypotheses showing that the usage of ICT, and mostly digital empowerment, exert the major economic effects, especially on employment also favoring the inclusion of “disadvantaged” groups in the labor market. We conclude that digitalization may drive productivity and employment growth and that inclusive policies may effectively contribute to bridge the gap between the most favoured and the disadvantaged parts of the population, thus helping achieving the 2020 Europe targets