Alfred Spielkamp

Business services in Germany: bridges for innovation

During the last 20 years, R&D and innovation activities in the service sector have clearly increased. In particular, business services are believed to be one of the main drivers of technical changes and economic progress. Looking at the labour indices calculated over the period from 1982 to 1996 one notices a remarkable increase of over 70 per cent for business services. About 8 per cent of total employment in West Germany is in business services. In particular, by taking advantage of information and communication technologies, knowledgeintensive business service firms increasingly play the role of ‘converters’ of technological information within the economy. They are providers, purchasers or partners in the context of innovation. A sound innovation capacity, especially knowledge, creativity, market and management skills, lets them become bridges for innovation.

Chance FuE: Erfolgskritische Faktoren im Innovationsmanagement von KMU

Innovationen stehen fur neue, technologische, wirtschaftliche, organisatorische und soziale Problemlosungen, womit in der Regel neue Produkte, Prozesse sowie Neuerungen im Marketing oder in der Organisation gemeint sind (vgl. OECD 2005, 47). Neue oder wesentlich verbesserte Produkte und Serviceleistungen sind dabei das Resultat von Innovationsaktivitaten, wahrend neue oder wesentlich verbesserte Verfahren, Marketingmasnahmen und organisatorische Anderungen fur den Weg bzw. Prozess stehen, der fur die Erstellung eines Leistungsangebots verantwortlich ist. Das Ergebnis der Innovationsanstrengungen soll den Unternehmen wirtschaftliche Chancen eroffnen, zu Wettbewerbsvorteilen und Vorsprungsgewinnen fuhren (vgl. Schumpeter 2005, 74–94). Dabei ist das Ausmas des Wettbewerbsvorteils von den konkreten Auspragungen einer Innovation, vor allem vom Neuigkeitswert abhangig, und insbesondere davon, wie das Neue am Markt wahr- und angenommen wird.

Are Research Spin-offs a Local Phenomenon? Empirical Findings from Germany

New business ventures stemming from universities or public research organizations have attracted increasing amounts of interest in innovation policy over the last years. Significant contributions to knowledge and technology transfer are expected from such public research spin-offs. They are regarded as hubs that transfer research results into new products, new processes or new services (OECD 2001; Callan 2001). Regions that are sites for public research facilities are hoping that spin-offs will strengthen the local economy and increase innovation activities in the region. Spin-offs that stay in the region may benefit from linkages to and cooperation with their incubator. At the same time, they may build up links to other regional firms and thus contribute to spillovers of new knowledge into the regional economy.

Industrial Specialization in Germany

Taking a longer-term view, the questions arise: What is the composition of Germany’s industrial “portfolio” of goods and know-how? And: How do the focal areas pursued by German research and industry measure up internationally in terms of ensuring that Germany will continue to be capable of a high level of technological performance in the future as well? An economy’s endowment with production factors determines its particular specialization patterns. As do the means which the respective country’s institutional framework (regulations, organizations, division of labor, legal framework, system of public finance, system of government, resources, etc.) and societal traditions (in the form of its “national innovation system”) offer. This is why economies that are similarly endowed with, for example, innovation capabilities may take different routes and differ substantially in their innovation behavior and still have comparable macroeconomic track records.

Obsevations Regarding Special Topics

Industrialized countries still account for two thirds of global trade today. Despite this fact, centers of global economic growth spread not only within North America in the 1990s, some of them also shifted to Southern Asia during the decade. At the same time, newly industrialized countries were able to substantially improve their positions on international markets for high-tech goods. This group’s integration into the global economy has not only increased the pressure on the “simple jobs” factor. The field of players in the global contest over innovation has broadened as well. In particular, competition has gotten tougher in markets with medium innovation potential and larger margins for imitation, where newly industrialized countries can bid from a more favorable income and cost position. On the other hand, highly developed countries not only have to compete on price in these markets but on technology and quality to an ever-growing degree as well. Asia’s newly industrialized countries have scored significant success in individual product groups — such as the entire information technology and electrical engineering fields, and photographical and optical products.91 Expanding beyond their standardized product categories of the past, these countries’ export success is due more and more to winning market shares in quality market segments as well.

Challenges to and Precepts for Effective Education, Research and Innovation Policies

Germany’s future will be built on education, science, research and technology. These fields comprise Germany’s “traditional” strengths and a critical foundation for providing for the future. German companies are often a step ahead in the race to win the customer’s favor. However, the frontrunners’ edge is dwindling, know-how leads have increasingly shorter half-lives, and the pressure to be more productive is growing, concomitantly increasing the necessity of making know-how marketable within ever-shorter cycles.

Innovation in the Service Sector and Competitive Strength

Apart from the incentive provided by scientific progress, the incentive for innovation essentially comes from customers and suppliers. In other words, incentive is mediated through markets, their momentum and their intermeshment — in short, through the economic structure. The greatest difference in the German system when compared to the USA and other highly developed countries such as Great Britain is to be found in the service sector which is considerably less developed in Germany (see Section 1.2.2). This also has considerable consequences for the development paths and types of specialization which German industry has chosen. The German service sector is catching up only gradually. In particular, specialized business services and activities related to the banking industry and insurance business have developed greater growth momentum — albeit along what would be considered a comparatively low baseline by international standards. However, growth has been modest even in these fields in recent years.27

Indicators for Germany’s Technological Performance

Another reason why increasing attention is being focused on the service sector’s importance for innovation activity (Section 3) and, in the process, on its importance for an economy’s technological performance is the fact that structural change throughout the world is presently geared to “tertiarization.” Further, another global megatrend exists alongside the trend toward tertiarization — namely, the trend toward increasing know-how or “knowledge intensification.” This trend waned somewhat in Germany — particularly in industry — during the first half of the 1990s. However, since coming out of its recession, Germany has fallen in line with it once again.36