How might the innovation strategy of a service sector firm differ from Essay

How might the innovation strategy of a service sector firm differ from that a manufacturing company And what particular issues - Essay Example However, today, both sectors are increasingly borrowing from each other in order to offer consumers tailor-made services and products. Manufacturing companies are coming up with â€Å"servicisation† strategies for their goods, while service firms are engaging in the â€Å"productisation† of services (Cunningham, 2007, pp. 31). It is my opinion that despite this growing interrelationship between the manufacturing industry and the service sector, the use of R&D in the latter is not clearly defined and most R&D-related activities are not assessed. In my opinion, most studies have always placed the service sector second to the manufacturing industry in as far as innovation is concerned. However, this is an old-fashioned way of looking at the service sector. Today, the service sector employees more people around the globe, in comparison to those people in the manufacturing industry. Most of these employees are very educated people with the capacity to innovate new and redesi gn existing ones to ensure consumer satisfaction. Accordingly, this paper aims at analyzing how a service firm might use R&D as an innovation strategy, in order to cater for the needs of the consumer and ensure business growth. Secondly, the paper aims at evaluating how differently a manufacturing company might use the same R&D innovation strategy in the production of goods. The third aim in this paper concerns an examination of the particular issues that a service firm may be required to address when coming up with R&D as a key innovation strategy. Accordingly, the main objective is to demonstrate that the service sector can be as innovative as the manufacturing industry in the use of R&D. The other objective is to elucidate the positive correlation that exists between the consumer and the service provider in the service sector in consideration of R&D activities. 2.0 Innovation approach- service sector versus manufacturing company Innovation is a key driver in the growth of economi c structures in both technologically advanced and third world countries. The service sector is becoming increasingly more crucial to economic development, and as such requires more innovation strategies to ensure the sustainability of global economic growth. According to Gallouj & Djellal (2010, pp. 301) most service innovation strategies involve redesigning existing services in response to new market needs and trends, while some strategies aim at coming up with entirely new services. One of the innovation strategies adopted by the service sector is the use of research and development (R&D) activities to identify and meet consumer needs. In the service sector, there are various sources of knowledge, with R&D being one of them. Baldwin & Gellatly (2003, pp. 130) state that research in previous decades revealed that the manufacturing industry was more likely than the service sector to use R&D as an innovation strategy. However, within the last two decades, the service sector has also begun to invest more in conducting R&D in order to meet consumer demands. According to the OECD (2005, pp. 143) between 1990 and 2001, R&D in the service sector increased at a 12 per cent rate in most developed countries. Service firms and manufacturing companies differ in their use of R&D as an innovation strategy, just as their products differ. In the manufacturing