A model for analysing the innovation dynamic in services: the case of 'assembled' services

This paper examines the question of innovation in a particular group of services, namely 'assembled' services, such as hotels, retailing and distribution, hospitals, theme parks, etc. These are complex services produced by combining a variable number of other constituent services. Drawing on findings from the economics of services and the economics of innovation, we begin by developing a simple framework for analysing the output of services that are 'assembled' in nature, in which the main service provided is integrated into a complex system of other constituent services that call on various types of technologies and competences. This framework is then used to highlight the various principles driving innovation in this type of service.