The Impact of Business-Services Use on Client Industries: Evidence from Input-Output Data

Abstract

Business services are among the fastest-growing and most dynamic sectors of the European economy. Their increasing integration into production processes means that their strategic importance is considerable, not least for the role they can play in improving the performance of client enterprises throughout the economy. At the same time, the business-services sector is a diverse one and the types of services they provide support many different business processes in many types of organizations. On the one hand they can be instrumental in helping companies to lower costs by providing services more cheaply, via economies of scale and specialization; this, after all, has been the basis for much outsourcing. On the other hand, many business services are not only innovative in their own right, but can also serve as important intermediaries and nodes in innovation systems by which they facilitate the transfer of knowledge and technology to clients and support them in their own innovation functions.

This chapter is based on the findings of a study of the ‘Contribution of Business Services to Growth and Productivity in the European Union’ funded by the European Commission under the contract FIF 20020652 (ref: ENTR/02.03). The analysis was undertaken by a team of researchers from ECORYS-NEI (Netherlands); the ESRC Centre for Research on Innovation and Competition (CRIC), Manchester University (United Kingdom); and WIFO — Austrian Institute of Economic Research (Austria). The individual authors of the Final Report of this study are Paul Baker, Vincent de Boer, Ian Miles and Michael Peneder.