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

Abstract: 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.