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Internationalisation, Innovation and Productivity in Services:Evidence from Germany, Ireland and the United Kingdom
AbstractThis paper examines the links between internationalisation, innovation and productivity in service enterprises. For this purpose, we use micro data from the Community Innovation Survey 2008 in Germany, Ireland and the United Kingdom, and estimate an augmented structural model. Our empirical evidence highlights the importance of internationalisation in the context of innovation outputs in all three countries. Our results indicate that innovation in service enterprises is linked to higher productivity. Among the innovation types that we consider, the largest productivity returns were found for marketing innovations.Key Words:Internationalisation of services; innovation; productivity. is increasingly important for a firm's survival and also a pathway for sustainable economic growth.Despite this growing importance of services in modern economies, existing empirical evidence on the links between internationalisation, innovation and productivity in services is still limited.Previous analyses of innovation in services have highlighted a number of specific characteristics of services, such as their intangibility, simultaneity of production and consumption, and perishability (Johne and Storey 1998;Hipp and Grupp 2005;Miles 2005; Savona 2009, 2010;Savona and Steinmueller 2013). Following on from these specific characteristics, relative to manufacturing, it has been pointed out that innovation in services is predominantly non-technological, less related to R&D, and it is closer to consumer demand (Licht and Moch 1999;Tether 2005;Tether and Tajar 2008).Notwithstanding these specificities, the boundaries between manufacturing and services are less clear as they are becoming increasingly integrated (Howells 2001 1997, 2005), an internationally recognised set of guidelines on collecting and interpreting data on innovation published jointly by the OECD and the European Commission.
4The novelty of our contribution consists in improving, on the basis of theoretical foundations, previous conceptual frameworks and empirical methodologies in several ways. First, we account in the empirical analysis for the role of internationalisation of service activities on the links between innovation inputs, innovation outputs and productivity. Second, while most of previous analyses of the link between innovation and productivity have focused on technological innovatio...