Does Europe need a special innovation policy for services?

INNO-Grips policy brief recommends focusing on improving the framework conditions

The service sector plays an important role in the European and other advanced economies. Services typically account for 70-80% of GDP and have been a major source of growth in recent decades. An INNO-Grips policy brief has explored whether and in what ways innovation policy can contribute to the beneficial development of an innovative service industry in Europe, thereby contributing to growth and, ultimately, well-being.

The value of service innovation is not fully reflected in traditional innovation policy, where technological innovations enjoy a funding bias. Against this general backdrop, the policy brief is rooted in the belief that greater innovation in services can make important contributions to achieving the objectives of the Europe 2020 strategy to achieve “smart, sustainable and inclusive growth”, i.e. enable economic growth without compromising environmental and social objectives.

Unfortunately, as innovation policies that support services still represent a relatively new field, not much evidence of what works and what does not has thus far become available from programme evaluations. Study author Oliver Kovács from ICEG European Center therefore suggested that the European Commission and the Member States should undertake efforts to conduct evaluations of existing policy initiatives. This would facilitate making policy design “more reflexive and calibrated” in the future.

The brief recommends that the most expedient way to encourage innovation in services is to remove (or at least reduce) identified barriers to service innovation, as well as to the related policy design, and to create optimal framework conditions for innovation, rather than to introduce direct support measures for companies or other specific programmes for innovation in services. Innovation policy at the European level should concentrate in particular on optimising the framework conditions for service innovation. This cannot be achieved by innovation policy (in the narrow sense) on its own, but will require a coordinated approach across different policy domains such as economic, competition, education, labour and social policy.


The policy brief has been prepared by ICEG European Center in the context of INNO-Grips - "Global Review of Innovation Policy Studies", a component of the "PRO INNO Europe" innovation web portal ( of the European Commission. The services of INNO Grips are provided by empirica, based on a contract with the European Commission's DG Enterprise and Industry, in cooperation with ICEG and other research partners. The contract is running until the end of 2012.

The full policy brief can be downloaded from the INNO-Grips website: