Understanding the Role of Technology in Service Innovation: A theoretical Overview

Innovation is not exclusive to manufacturing, services firms are also innovative. Moreover, services firms are responsible for a large portion of the GDP worldwide and the trend shows how this indicator has been increasing the last years in developed countries. Technology has played an important role in this rise of the service sector in developed countries, contributing to improve productivity. However, there is a new role for technology in services, which has origin in technological change. The new main role for technology is as a source for innovation, since technology is enabling and facilitating innovation in services firms. Understanding this new role contribute to service firms to respond properly to the challenges of modern economy, gain sustainable competitive advantage for the firm, improve performance in service innovation and generate more variety in response to the customers’ needs. This thesis is submitted in partial fulfillment of the requirements for the degree of Masters of Entrepreneurship & Innovation Management at KTH, and it compiles the most important aspects to establishing the role of technology in service innovation, contributing at the same time to a better understanding of this phenomenon. To do so, the first chapter exposes the introduction and the methodological explanation. In the second chapter, the importance and characteristics of the services sector in developed countries is explained. Next, in the third chapter, the relationship between services and innovation is analyzed. In the fourth chapter, describes the most relevant aspects of the relation between technology and service innovation from three dimensions: services as users of Information technology, agents of technology diffusion and producers of technology. Finally, in the last chapter, conclusions are presented