Innovation in services

The purpose of this article is to lay the foundations of a theory that can be used to interpret innovation processes in the service sector. The hypothesis underpinning this article is based on Lancaster's definition of the product (in both manufacturing and services) as a set of service characteristics [Lancaster, K.J., 1966. A New Approach to Consumer Theory. J. Political Economy 14, 133-156.]. The article follows the example of those who have sought to apply Lancaster's work to technological phenomena. Various modes of innovation in the service sectors are highlighted and illustrated. (C) 1997 Elsevier Science B.V.