Services

Service industries and firms, unlike manufacturing,

construction, and extractive (e.g., agriculture, fisheries,

forestry, mining, petroleum, quarrying, and

the like) sectors and firms, have as their main

function the provision of service products. The

North American Industry Classification System

(NAICS)

2

and the Statistical Classification of Economic

Activities in the European Community

(NACE)

3

provide more detail on service industries

than did earlier frameworks, such as the United

Nations International System of Industrial Classification,

though the level of detail is still coarser than

for manufacturing industries. The high-level NACE

categorization involves nine sections (Table 1).

The industrial categories presented in Table 1 are

rather broad for undertaking a serious analysis of

innovation processes. For example, transport and

communication are combined, and within the latter,

postal and telecommunication services are combined.

More disaggregated data are increasingly

available, but many lines of analysis, including

international comparisons, are limited by a lack of

statistical detail.

Services represent a huge range of industries. The

service industries category carries a legacy of being

the residual sector into which are put the leftovers,

that is, all the industries that do not produce raw

materials and tangible artifacts, as do the primary

and secondary sectors. (The primary sector is

composed of extractive industries, and the secondary

sector consists of such industries as manufacturing,

construction, and utilities. The tertiary sector

is services, which was once known as the residual

sector.)

However, the service products in which these

industries specialize share two fairly common

features: intangibility and interactivity. By intangibility,

we mean that rather than being material

products, service products typically involve transformations

in such entities as the state of material

products, of people (and other organisms), and in

data. Some are delivered through physical artifacts

(e.g., CD-ROMs and consultancy reports) and some

are associated with them (e.g., dental fillings and

credit cards). Such physical elements