Fostering innovation in the service sector
The service sector plays an increasingly important role in the economy. It accounts for about two thirds of employment and GDP and it is the only sector of the European economy that has generated jobs in the last two decades. The growing significance of services is also reflected in its increasing innovative activity, with services accounting for a greater share of overall R&D activity, patenting and trademark activity. However, the share of service firms that innovate is still lower when compared with the level of innovation in the manufacturing sector, with the notable exception of knowledge intensive services, where R&D expenditures is as important as in manufacturing. Empirical evidence suggests, furthermore, that non-technological innovation plays a very important role in the service sector.
In the Council conclusions on the Communication "Putting knowledge into practice: A broad based innovation strategy for the EU" of 4 December 2006, the Commission was invited to "prepare by April 2007 an overall assessment on innovation in services evaluating e.g. the related need for policy adjustments where appropriate. The Commission is also invited to take into account the various forms of non-technological innovation".
As a first step to follow this request the Commission published in July 2007 a Staff Working Document "Towards a European strategy in support of innovation in services: Challenges and key issues for future actions" which analyses the specific patterns of service innovation and identifies the main challenges to the support of innovation in services with the view to fully exploiting their innovative potential and fostering the growth of the service economy in Europe.
A public consultation on the Staff Working Document on innovation in services was held from October until end December 2007. The objective of the consultation was to get feedback from stakeholders on the challenges and key issues of a policy framework to support service innovation, as identified in the SWD. In general the analysis presented by the Commission's SWD is strongly supported by the large majority of the respondents.
To further validate the results of the open consultation a workshop entitled "Towards a European Strategy in Support of Innovation in Services" was held in Brussels with academic and industrial stakeholders on 4 February 2008. This workshop mainly confirmed the results summarised below and offered further insights into existing market failures and the scope and motivation of Member States to support innovation in services.
In September 2009 the Commission published again a Staff Working Document: "Challenges for EU support to innovation in services - Fostering new markets and jobs through innovation", which will prepare a Communication by September 2008 setting out a European Strategy in support of service innovation. Specific emphasis will be given to the challenges of supporting young innovative service companies with high growth potential.
The Commission published on 9 September 2009 a Staff Working Document on “Challenges for EU support to innovation in services – Fostering new markets and jobs through innovation”. This document summarises what we know about services innovation and identifies a number of key challenges to be addressed in order to better exploit its potential. The document also emphasises that it is not enough to support services innovations only at activity or firm level. A holistic approach is needed that ensures that new ideas can be brought successfully to market. Such strategic approaches may either be built upon specific sector strengths, for example through clusters, or aimed at creating new market opportunities through services innovation.
In the Communication "Putting knowledge into practice: a broad-based innovation strategy for the EU", adopted on 13 September 2006, the Commission also announced the creation of a pan-European platform to better link universities, entrepreneurship and finance in order to foster innovative start-ups in the service sector. This action - the European Innovation Platform for Knowledge Intensive Services (KIS-IP) has been implemented under the Europe INNOVA initiative, following two calls for proposals published in 2007 and 2009. During 2009-2011 the platform has consisted of 7 sectoral networks in the fields of ICT, renewable energy, space-based services, mobile services, creative industries, digital content and construction as well as one horizontal action.