Evaluation R&D needs of BR services enterprises

In 2005 the European Commission launched a study on the quantitative and qualitative analysis of the research and development activities of service providers in Europe. It also aimed to assess the work undertaken by them in national and EU research and innovation programmes, and to identify promising areas for future research activities.

The RENESER study presented here deals with the REsearch and development NEeds for business-related SERvices. It focused on two key issues:

  • the apparent underinvestment of individual European Business-Related (BR) service firms in R&D and
  • the degree to what public R&D expenditure is satisfactorily addressing the real R&D needs of service firms.

The authors' main conclusions are the following:

Some service firms do perform classic (i.e. technological) R&D and use classic R&D performed by others. However, across the board, services - including most Business Related Services - are still poor performers of classical R&D. Given the sheer size of the service industries, and the ambitious Barcelona target, boosting service-related "classical" R&D conducted both within firms and across' systems of innovation´ will be crucial for meeting the Lisbon goal and enhance competitiveness of Europe.

Services R&D is widely underestimated. This is due to at least five factors:
1.the process of managing innovation in most services firms is different from the more "standardised" approach in industrial sectors which rely heavily on technological R&D;
2.a large amount of services' "classic" R&D activity is hidden behind labels such as business development, service improvement, etc. without being explicitly recognised as services R&D;
3.many service firms engage in R&D-like activities that fall outside, or at the boundary of the classic understandings of R&D
4.the de facto exclusion of social science research from R&D statistics;
5.in manufacturing firms, R&D which is aimed at development of product related services seems to be a forgotten category.
These definition and measurement problems are persistent, and obscure the contribution of services to innovation, productivity and economic growth.

Increasingly, leading-edge service firms show some form of structured attention to management of services' R&D and service innovation activities. Although formalized service R&D strategies, budgets and processes are still lacking in most cases, there is a trend in quite a few of the larger BR service firms analysed in this study towards some formalisation of planning, management and resourcing of services R&D&I. However, formalised, service-only R&D is the exception rather than the rule.
Most service firms are poorly linked to the science base and innovation and R&D programmes. This partly results from an (often implicit) manufacturing bias in existing R&D and innovation policies. Apart from some BR services, innovative service firms are less likely to receive public innovation support than are their manufacturing counterparts. There is considerable room to improve R&D collaboration between service firms and research organisations, not least in BR service industries.
There is clearly room to improve the way in which we facilitate and support services R&D and innovation as part of wider innovation systems. As well as directly shaping R&D and innovation policies, this also requires examining and designing policies with other primary objectives (e.g. education and training, environment, intellectual property, public services and procurement, as well as other areas). Furthering R&D and innovation in (business-related) services requires a systemic perspective. This also implies going beyond the market failure argumentation that is commonly used to justify policy interventions.

  • Publication number
    2004.046-0614
  • Publication date
    1 August 2006
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  • Project ID
    2004.046
  • Commissioned by
    Europese Commissie
interested in this topic? Get in touch with Pim den Hertog
Senior partner / senior adviseur