The Applicability of Schumpeter's Innovation 'Cases' in the Classification of Service Innovations

In his pioneering writings, Schumpeter identified five different types (cases) of innovation, which in modern terms are product, process, market, input and organisational innovations. This paper discusses the applicability of these innovation types in services a sector which was not yet topical in Schumpeter's time. We use two kinds of empirical material for our analysis. Firstly, we examine a number of service product innovations identified in business journals. Secondly, we analyse six individual service innovations created by knowledge intensive business service (KIBS) companies in Finland. On the basis of these two studies, we conclude that the main part of the Schumpeterian categorisation is well applicable also in services. Yet, our analysis confirms the perception of other researchers that product and process innovations are hard to separate in services. In addition, the Schumpeterian descriptions of the nature of the innovation cases should be modified and supplemented, taking into account new phenomena. In input innovations, knowledge sources are today more important than the sources of raw materials mentioned by Schumpeter. In market innovations, an interesting new phenomenon is the transfer of the value offering point