Enhancing public-private innovation networks in services

Innovation in services helps to improve both competitiveness and welfare in Europe, according to the transnational ServPPIN research project. While acknowledging that the heterogeneous nature of service economies presents European policy makers with some challenges, ServPPIN highlights the essential contribution that services, and public-private innovation networks in particular, are making to economic growth and social wellbeing throughout the European Union.

The European economy as a whole may not be growing as robustly as some might like, but the growth that has been recorded in recent years was driven largely by activities in the service sector. ServPPIN points out that in the twelve year period between 1995 and 2007, services accounted for 78.5% of economic growth in the enlarged Europe. The picture is similar with respect to employment growth during the same period: 74.6% of job growth in the EU25 (before accession of Bulgaria and Romania) came from services. In both cases – employment growth and economic growth - the increase was primarily generated by services in the private sector, while public services contributed little to the growth pattern. Mixed forms of public and private organisations, however, are expected to play an increasing role in moving Europe forward. This, the ServPPIN research suggests, is where significant opportunities lie.

Before examining the potential of cooperative organisational forms, though, it is useful to first consider European private sector services employment in an international context. Compared to other regions of the world, Europe’s private services sector accounts for a slightly smaller portion of overall employment. Whereas 43.2% of the US workforce is involved in private services, in Europe the figure is just 37.1%. Japan, meanwhile, employs just over 40% of its labour force in private services. ServPPIN observes a particularly large gap in private services employment in the EU’s new Member States, pointing out that there is “substantial scope for catch-up” in these states despite rapid expansion in recent years.

Europe’s public services sector employs a substantially smaller portion of the workforce than the private sector. A mere 6.5% of the working population in the EU25 was engaged in public services in 2007. Mixed services, on the other hand, accounted for 27% of employment in the EU. The largest segments of the mixed services sector were health and social work (9.2% of total employment), education (6.8%) and other community, social and personnel services (4.8%).

ServPPIN urges public administrators and professional associations to promote synergies between private and public services. To help policy makers weigh the potential risks and benefits of various service-related organisational arrangements, the ServPPIN consortium has constructed a useful eight-tiered table (Table 1). The table associates different types of individual services with particular organisational modes, allowing decision makers to gain an overview of existing options at a glance. While acknowledging a trend toward public-private partnerships (PPP) in recent years, the consortium uses the table to make the point that cooperation between public and private actors can take many forms.

 

Table 1 - Varieties of organisational arrangements for services provision


 


 

Source: Prof. Luis Rubalcaba et al (2011), Main outcomes of ServPPIN and the contribution of private and public services to growth and welfare1

 


 

With respect to service-related public-private innovation networks (ServPPINs), the researchers suggest that policy interventions can help to increase the contribution of these networks to growth and welfare, overcoming those systemic failures which prohibit more fruitful cooperation between the public and private sectors. With that in mind, the consortium outlines three broad areas of policy intervention:

  • Strengthening service-specific innovation and innovation capabilities.
  • Facilitating co-operation and networks involving service firms.
  • Empowering the public sector and the ‘third sector’ (voluntary or non-profit sector) with respect to co-operation.

More specifically, the researchers say, ServPPINs can be promoted by enhancing the following range of policies: research and development (R&D), innovation, public procurement, service standards and regional policies for innovation.

In connection with R&D policy the consortium highlights the need for further research into social innovation. Indeed, the project concludes that social innovation has a major role to play in a sustainable service society. Environmental and sustainability issues are also addressed by ServPPIN, with the researchers suggesting a service-based approach be adopted to help overcome various biases.

 

1 See: http://ec.europa.eu/research/social-sciences/pdf/events-146/02-luis-rubalcaba_en.pdf

ServPPIN - The contribution of public and private services to European growth and welfare, and the role of public-private innovation networks (duration: 1/2/2008 – 31/1/2011). FP7 Socio-economic Sciences and Humanities, Activity 1 “Growth, employment and competitiveness in a knowledge society”, Research area 1.2 “Structural changes in the European knowledge economy and society”. Collaborative project (small and medium scale focused research project).

See: http://www.servppin.com/

Contact: Prof. Luis Rubalcaba, luis.rubalcaba@uah.es