The New Service Economy: Challenges and Policy Implications for Europe

Citation

Reynoso, J. (2009), "The New Service Economy: Challenges and Policy Implications for Europe", Journal of Service Management, Vol. 20 No. 3, pp. 375-377. https://doi.org/10.1108/09564230910964435

This book makes a very good contribution to fulfill the need for more service publications from different academic fields other than marketing or management. This is a book written by a distinguished European economist, one of the academic leaders on service economic policies, Luis Rubalcaba, who has devoted a number of years of his career to understand, study and develop economic theory and policy on services in the European Union. For economists as well as for those academics without a background in this field, they both would find the contents of the book very informative, interesting and refreshing, as it explores new and different aspects of service activities and industries at different levels of analysis. The book is very well organized, clearly written and comprehensively documented with relevant data and references. Each of the chapters follows a well defined sequence to cover its content at different levels, linking it with relevant aspects and policies in the European context.

The book is structured as an integrated research project using questions and hypotheses which are answered throughout the different chapters. Using a methodologically rigorous approach, the overall rationale of the book presents a framework, challenges and their relationship with European policies. It combines analytical, empirical and economic policy perspectives. The objectives of the book include:

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  To provide a comprehensive picture of the role of services in an advanced economy, with particular emphasis on business to business and knowledge intensive activities.

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  To provide new critical elements for going beyond traditional views and arguments about services.

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  To link such elements to the exploration and discussion of European policies affecting services.

The book is formed in three parts including eleven chapters. A conceptual framework for services is set up in the first two chapters included in Part I. Chapter 1 presents an introduction providing arguments and the rationale for a better understanding of the new service economy, criticizing economists for being the last in studying and accepting the nature of the production of services. This lack of understanding of services is seen as the result of materialism. Chapter 2 provides a very interesting, rich, refreshing view of the historical and anthropological origin of the service economy. It presents the notion of services as the result not only of the economic but also human action in society. Service is seen as a dimension of all economic activities. The importance and value of free interaction are keys to this discussion. Also, it presents very interesting information about services as part of the history of economic thought. This type of discussion is not commonly found in service management books, making this section very revealing and informative for the reader. The chapter then turns into some concepts, definitions and characteristics of services, as well as some classifications and service statistics. Another attractive section of this chapter is that of posing the dilemma of post‐industrial vs servindustrial society. The transformation of manufacturing into services is presented here with an economic approach. This chapter continues with another very interesting view called economic anthropology of services in which the dual existence of services is discussed ranging between becoming goods on the one hand, and “pure” services, on the other, illustrating such condition with the use of different dualities which then become the basis of the features of a so‐called service ontology. This very interesting chapter ends addressing the value of freedom in services, as the basis for human action in society.

Following the conceptual framework presented in the first two chapters, Part II, which can be considered the core of the book, integrates an empirical framework. Chapter 3 is about growth and employment in services, with particular emphasis in Europe and its comparison with the USA. First, the importance and reasons of growth of services are discussed, using statistics and addressing different key factors at different levels of analysis. Then, differences and similarities among services in Europe and the USA are presented. Finally, the divergence of services in different European economies is analyzed. Chapter 4 is about productivity in services. It addresses the serious difficulty of analyzing the relationship between productivity and services, establishing some key considerations and criticism about the hypothesis of the low productivity in services. To do this, the chapter goes on to establish the main problems in traditional productivity measures in services and mistakes encountered. As in other chapters, this also includes some discussion about convergence and divergence of service productivity in Europe and the USA, comparing labor productivity of both regions. Overall, this chapter presents a very interesting debate on the definition and measurement of service productivity. Chapter 5 refers to service innovation as a key factor in the new service economy. It presents some basic issues related to service innovation, such as measurement and related difficulties. The five types of service innovation promoted by business‐to‐business services are particularly interesting and useful. Also, the distinction between innovation in services vs service innovation, as well as specific and non‐specific features of innovation in services are noteworthy issues in this part of the book. The chapter then explores statistical sources, their limitations and difficulties for studying innovation in services, including the over‐orientation towards manufacturing, the bias on supply not demand and the statistical ignorance regarding internal service innovation. These and other difficulties provide a valuable discussion on this topic. R&D data of Europe and the USA is provided to understand international profiles of service R&D and its relation with innovation. Some key challenges in the field of service innovation among European countries are discussed. To close this important part of the book, Chapter 6 addresses the globalization of services and offshoring. The relationships among services, competitiveness and globalization are explored here, including five stages of world integration and the contribution of services to globalization. Key dimensions of services globalization are presented. Trade competitiveness of European services in the world is then discussed. A particularly attractive topic is that of the migration of services. The off‐shoring dilemma establishing the difference among a variety of internationalization strategies is presented. To conclude this chapter, policy implications and challenges are included.

Part III of the book is directed towards policy implications and service related policies in the European Union. Chapter 7 refers to regulation of services, establishing an analytical framework, including facilitating forces for structural reforms, and emphasizing the effects of regulations and liberalization in services. The chapter provides information to understand the situation and evolution of regulation in service markets, and also presents policies to reform and improve regulation in services. Overall, this chapter is very informative and useful to understand those positive effects on service activities in the European Union. Then Chapter 8 goes on to discuss the competition policy in the European Union. After setting up the rationale for a competition policy and its role in the EU, the chapter indicates the limits of competition in services, emphasizing market power and the intervention of the public sector. Case studies are presented on different service activities under the European competition policy, establishing the challenges being faced in the service arena in the region. Chapter 9 covers the need and justification for the internal market for services, on the one hand, and the barriers and policies to eliminate them, on the other. It presents, for instance, the legal framework for the internal market for services, claiming is not enough for continental integration. Barriers and their costs are also presented. Chapter 10 illustrates and analyses a comprehensive collection of key complementing policies regarding services; recent non regulatory policies in Europe such as those about innovation and R&D, regions, quality and standardization, employment and qualification, entrepreneurship, improvement of statistics and sectorial policies. The book ends with a chapter providing overall conclusions and final remarks. Of particular relevance is the very last message about the operation of the new service economy in Europe, claiming the need and importance of social integration to bind services towards the construction of a new Europe in the twenty‐first century.

Overall this book, although mainly oriented to the implications and challenges of European policies, is an outstanding step forward to our understanding of service economics beyond the simplistic, traditional notion of employment and gross domestic product levels in modern societies. It really establishes a new level of analytical thinking and discourse about service activities which in turn would allow the creation of new ideas, frameworks and working hypotheses at different levels of analysis, to contribute to the further development and systemic integration of our scientific knowledge of services and its role in our society.