The Nature of Innovation in R&D- and Non-R&D-Intensive Service Firms: Evidence from Firm-Level Latent Class Analysis

Innovation in services has been largely characterised by the predominance of non-technological innovation and low intensity in research and development (R&D) activities. However, most cross-industry analyses still overlook the organisational character of innovation in services. In this article, we use latent class analysis to examine the nature of innovation in 2148 firms from 20 service industries in Spain. On the basis of the analysis of 10 innovation types and 5 kinds of innovation activities, a taxonomy composed of 2 R&D-intensive and 2 non-R&D-intensive clusters is proposed. The findings indicate that organisational innovation counts for three of the four profiles, the new management techniques being the most common organisational innovation in all clusters. Furthermore, micro- and small-sized firms from several subsectors are more likely to be R&D-oriented than medium and large companies. The results underline the coexistence of different innovation patterns within the same industry as well as the predominance of hidden innovators in several industries.