By Thomas Alslev ChristensenHead of Department for Innovation Policy

Danish Ministry of Science, Innovation and Higher Education

Service Innovation – Impact and Policies– evidence from Denmark

Impacts of innovation in services are not the same as impact of innovation in manufacturing

• Service innovation inputs measured by R&D expenditure are often underestimated

• Service innovation inputs should be measured by expenditure in R&D and innovation investment, human capital, ICT investment and physicalinvestment that are the main input factors

Development of common indicators (EPISIS-project) for assessment of service innovation and policies

PRO-INNO EUROPE: EPISIS-Project

The main objective of the EPISIS project is to facilitate transnational cooperation between policy-makers and innovation agencies in the field of services innovation through parallel policy, strategic and operational level activities. The project shall offer an open platform for discussion on policy recommendations, test new policy approaches in support of services innovation and organise three policy-oriented international conferences.

Input indicatorsResearch driven• How much money has your company invested in research and development, incl. market research, during the 

last year/last 3 years?Technology driven• How much money has your company invested in ICT and software during last year/last 3 years?Management driven• Do you work with specific management strategies or business practices in developing new or improved service 

offerings?Employee driven• Do you have routinized processes for capturing and using new ideas that your employees may have for 

developing new or improved service offerings?• How much money did you invest per year on average per employee on training, during the last year/last 3 

years?• How many days in a year are reserved for training purposes per employee?• How many employees hold a university degree on BA, Masters, MBA or doctoral level?• Please specify the academic disciplines they represent: (Social Sciences, Natural Sciences, Engineering, etc.)Network/collaboration driven• In developing or delivering new or improved service offerings; does your company cooperate with other 

public/private organisations, such as with: (companies within the sector, companies from other sectors, academia, other research institutions, public institutions)

• In developing or delivering new  or improved service offerings; does your company get inspiration from: (online‐discussion forums, networks, seminars)

Customer and user driven• Do you have routinized processes for capturing customers' or users' views on improving a service offering? 

• Are customers involved in co‐development of new or improved service offerings?

Throughput indicatorsNew service • Has your company introduced a new or significantly improved service offering during the last 3 

years/the last year? Is it new to the market? Is it new to your company?• Has your company made step changes in your service offerings during the last 3 years/the last 

year?New business model• Has your company introduced new or significantly improved methods of producing services  

(techniques, equipment, software), during the last 3 years/the last year?

• Has your company implemented major changes in the organizational structure during the last 3 years/the last year?

• Has your company implemented major changes in marketing concepts or strategies during the last 3 years/the last year?

• Has your company obtained or sought exclusive rights protection (e.g. patents, Intellectual Property Rights, copyrights, trademarks, design rights, licenses, etc.) for any of your service offerings, during the last 3 years/the last year?

• Has your company associated a formal standard to any of your service offerings, processes or organization, during the last 3 years/the last year? 

New customer interface• Has your company coupled any of your service offerings to a physical product during the last 3 

years/the last year?• Has your company digitalized any of your services, during the last 3 years/the last year?

Output indicators• Did you develop a new or significantly improved service offering, which, during the last 3 years/the 

last year, reach a new:o Domestic market (new city, region etc.)?o International market (another country)?

• Did your company introduce a new or significantly improved service offering that reduced actual delivery time,  during the last  3 years/the last year?

• Did your company introduce a new or significantly improved service offering that increased your company’s productivity, during the last 3 years/the last year?

• Did your company introduce a new or significantly improved service offering that reduced your company’s costs (materials, energy, time etc.), during the last 3 years/the last year,?

• Did your company introduce a new or significantly improved service offering that increased customer satisfaction, during the last 3 years/the last year? 

• How large a share of your company’s sales (turnover) comes from the service offerings that you have introduced or significantly improved, during the last 3 years/the last year?

• What is the profit‐margin of your new or significantly improved service offerings, introduced during the last 3 years/the last year?

• What is the profit‐margin of your new or significantly improved service offerings, compared to your other products/services?

Descriptive statisticsin manufacturing versus service business

(From the Report: Productivity Effects of R&D and Innovation Investments in Denmark, DASTI 01/2010)

Return on private R&D investments in average companies in manufacturing versus service business

(From the Report: Productivity Effects of R&D and Innovation Investments in Denmark, DASTI 01/2010)

Value added per employee:R&D-active versus non-R&D active enterprises in

manufacturing versus service business(From the Report: Productivity Effects of R&D and Innovation Investments in Denmark, DASTI 01/2010)

Effect on labour productivity - average enterprises collaborating with public research

(EUR)(From the Report: Productivity Effects of Business-Research R&D Collaboration in Denmark, DASTI 02/2011)

Clusters and networks create 4 times as many new innovators among 1200 participating enterprises as in

a similar non-participating control group: => same impact in manufacturing and service clusters

(From the Report: The impact of Innovation Networks Denmark (Cluster Policies in Denmark), DASTI 18/2011)

Service innovation and human capital

• Human capital is a cornerstone of service innovation:

⇒ Investments in human capital can be thought of as playing as crucial a role in services as R&D investments do in manufacturing

The impact of human capital on GNP: one percentage point more with long-cycle

higher education - Humanities

• 0.6 % in manufacturing• 0.7 % in service

(measured by TFP)

The impact of human capital on GNP: one percentage point more with long-cycle higher

education – Social sciences

• 1.5 % in manufacturing• 1.0 % in service

(measured by TFP)

The impact of human capital on GNP: one percentage point more with long-cycle higher

education – Technical

• 1.5 % in manufacturing• 0.5 % in service

(measured by TFP)

GNP impact of human capital – increase by one percentage point more with long-cycle higher

education in the service sector(measured by TFP)

0.7 % for humanities1.0 % for social sciences0.5 % for technical sciences

Effect (per cent) on GDP by one percentage point more with longer higher education

LABOR PRODUCTIVITY GROWTHJunge, Martin, Battista Severgnini, and Anders Sørensen (2011): ”Product-Marketing Innovation and Firm Productivity”, work in porgress.

(PM – product-marketing innoative firms, PNM – product-non-marketing innovative firms, ONP – organisational-non-product innovative firms,NI – non-innovative firms)

19‐2,00%

‐1,00%

,00%

1,00%

2,00%

3,00%

4,00%

5,00%

PM‐firms PNM‐firms ONP‐firms NI‐firmsLabo

r prrod

uctiv

ity growth, 200

5‐20

07

Education share, 2001

E > avg E

E <= avg E

PM VERSUS PNM VERSUS ONPJunge, Martin, Battista Severgnini, and Anders Sørensen (2011): ”Product-Marketing Innovation and Firm Productivity”, work in porgress.

(PM – product-marketing innoative firms, PNM – product-non-marketing innovative firms, ONP – organisational-non-product innovative firms)

20-2,00%

,00%

2,00%

4,00%

6,00%

8,00%

0 0,1 0,2 0,3 0,4 0,5 0,6

PM+PM*E

ONP+ONP*E and PNM+PNM*E

1. Increase research-business collaboration

Focus area 1 – public private partnerships

• Triple helix research alliances between research, business and public sector• 2 national partnerships for innovative solutions to welfare and

demografic problems

• Strategic Research and Innovation Platforms• 1 national research-innovation platform for welfare

technology

• Innovation Networks Denmark • 4 national service innovation networks & clusters

• R&D and innovationsprojects (annually) • 35 per cent out of 600 R&D and innovation projects

Innovation Consortia Scheme

‐20000

‐10000

0

10000

20000

30000

40000

50000

‐4 ‐2 0 2 4 6 8 10År før/efter år 0 

Udvikling i bruttofortjenesten (i 1000Kr).  Differencer ift. år 0, som er året før programdeltagelsen (eller udvælgelsen til kontrolvirksomhed). Glidende tre‐års gennemsnit for virksomheder med mindre end 150 millioner Kr. bruttofortjeneste i år 0.

Virksomheder, som deltager i et Innovationskonsortium

Kontrolvirksomheder

Kilde: CEBRs beregninger på basis af data fra Forsknings‐og Innovationsstyrelsen og Experian A/S.

2. Academics in entreprises: Innovation assistent programme & Industrial PhD programmes

Focus area 2 – skills to SMEs

• Innovation Assistants (”Knowledge worker”)• 200 academics in SMEs (40 per cent in service projects)

• Industrial PhD-scheme (”Research worker”)• 150 PhD-projects (25 per cent in service projects)

• E-Business Innovation Center – a small army of ICT experts will visit cities all over Denmark to supervise small Business in ICT and eBusiness (10,000-15,000 enterprises)

Development in employment

Focus area 3 – technological service to SMEs• Enterprise driven Approved Technological

Institutes (GTS-net) • www.bedreinnovation.dk• New service innovation centres and

activities in the GTS-net• Approximately 24,000 enterprise

customers annually, 55 per cent in service

Approved technological system (GTS-system):9 GTS institutes

Used by 20.000 Danish enterprises annually (90 % SMEs), more than 4000 enterprises in other countries and more than 4000 public costumers.

Impact of GTS-institutes –technological services (TNOs)

Incubators & Proof-of-concept and tech-transfer units at all universities

• INNOVATIONDANMARK FORSIDE