Innovative Potential of the Knowledge-Intensive Services Sector in Russia

Abstract

Knowledge-intensive services (KIS), described in a large qualitative literature, are essential to high innovation performance and are thus one of the key segments of the knowledge economy. This paper addresses the innovative capacity of the KIS from data obtained from an annual monitoring survey of the KIS sector performed by the HSE ISSEK since 2006. It shows that the evolution of the KIS sector is dominated by two vectors, aimed respectively at standardizing and customizing services. The latter is especially gaining momentum – distinctiveness is a key competitive advantage for a service provider and is likely to remain so, as innovative and diversified production expand. Also, the recent financial and economic crisis significantly spurred service firms’ innovation activity.

A distinctive feature of the KIS sector is the ability to improve consumers’ innovative capacity by means of “smart” services. Accounting for a growing demand for product, organizational, governance and marketing innovations tailored to customers, customization will move forward into other sectors. This makes a significant contribution to the evolving economics of knowledge.

KIS will also serve as an effective tool to foster innovative behavior among managers. As customers’ innovate more and more across a range of services and demand more innovation, manufacturers will be motivated to develop more advanced services. The process is thus self-reinforcing.

Note: Downloadable document is in Russian.

Keywords: innovation performance, service innovation, knowledge-intensive business services, standard services, service industrialization, customization, co-production of services, full text

JEL Classification: L80