Innovation in services – how different from manufacturing?

Using standardised firm data a comparative analysis of the determinants of product and process innovation in manufacturing and services is performed. Results show that in services there are significant differences in innovation behaviour, in terms of intramural and extramural R&D. It is also found that size matters less in services than in manufacturing. Although youth has a positive effect in both cases, young service firms are more likely than young manufacturing of being pioneer innovators. The results reveal the importance of learning by doing in service process innovations, as young service firms are less likely to introduce process innovations.