Are knowledge-intensive service activities enablers of innovation processes? : a study of Australian software firms

The rising interest in innovation studies as indicators of industry growth has resulted in the proliferation of research unpacking the elements that enable companies to learn and to innovate (Arthur De Little, 2001; Smith, 2000). In recent years the attention has been focused on knowledge-intensive business services (KlBS) as the providers of knowledge-intensive services to both producers and suppliers of both manufacturing products or other services. Although this extensive literature, largely dominated by European countries, has been very prolific in informing the role of KlBS as organisations critical to the modern economy (Hauknes, 2000; Hales, 2000; Miles, 1999), there is limited literature on how 'the firm' engages in a process of learning that facilitates continuous product, service or process innovations. The paper hypothesises that knowledge-intensive service activities (KlSA) are critical elements of building the learning capacity in firms, and that the innovation process of the firm is linked to its capacity to engage in such activities. The paper examines knowledge-intensive service activities using Australian software firms as an example of how KlSA contributes to the innovation capacity of small firms. Surveys and in-depth interviews were conducted on fifty-four software firms in Australia and the findings discussed.