Research Policy 41 (2012) 602613

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Research Policy
journal homepage: www.elsevier.com/locate/respol

Scope and patterns of innovation cooperation in Spanish service enterprises

Alexandre Trigo , Xavier Vence 1
ICEDE Research Group and Department of Applied Economics, Facultade de Ciencias Econmicas e Empresariais, University of Santiago de Compostela, Av. Burgo das Nacins, s/n, 15782 Santiago de Compostela, Spain2

a r t i c l e

i n f o

a b s t r a c t
Examining 2148 innovating service rms from the Spanish Technological Innovation Panel 2004, this paper utilizes Latent Class Analysis to appraise the scope of innovation cooperation in services in the Spanish economy, in accordance with the growing weight of external information ows throughout innovation processes. The empirical evidence indicates that the nature of the service activity affects both the partner chosen and the cooperation intensity. The results lead to the creation of a typology of cooperation composed of three broad proles: service rms intensive in techno-scientic cooperation, intensive in interactions with clients and a prole with low intensity in cooperation, called lonely innovators. The probability that a rm belongs to the latter prole is 59%, which makes it reasonable to afrm that innovation cooperation is not a common practice in Spanish innovating service enterprises. Innovation output variables have been included in order to examine the relationship between patterns of cooperation and innovation performance. The ndings also underline the co-existence of different cooperation patterns within the same industry. 2011 Elsevier B.V. All rights reserved.

Article history: Received 22 September 2010 Received in revised form 9 June 2011 Accepted 20 October 2011 Available online 21 November 2011 JEL classication: O39 L80 Keywords: Cooperation Innovation Patterns of innovation Service sector Source of information

1. Introduction Literature on innovation management and economics has highlighted the increasing importance of external mechanisms of knowledge creation such as external contacts and collaborations with other companies or entities (Rothwell, 1992, 1994; Lundvall, 1992; Gibbons et al., 1994; Oerlemans et al., 1998; Chesbrough, 2003; Chesbrough et al., 2006; Vega-Jurado et al., 2009). Indeed, empirical studies have shown that enterprises rarely innovate in isolation of the economic system (Christensen and Lundvall, 2004). Lately, many authors have emphasized the weight of networks and partnerships as a way to incorporate external knowledge for innovation, leading to the development of new products or processes in companies (Lundvall, 1985, 1988, 2007; Gerlach, 1992; Freeman, 1994; Gulati, 1998; Tether, 2002; Johnson and Lundvall, 2003; Gomes-Casseres, 2003; Powell and Grodal, 2005). Among all these types of collaboration, formal cooperation is considered a key mechanism to fortify the innovative capacity of many rms through a synergistic atmosphere of production and value creation (Child

Corresponding author. Tel.: +34 881811653/981 56 31 00x11653. E-mail addresses: alexandretrigo@gmail.com (A. Trigo), xavier.vence@usc.es (X. Vence). 1 Tel.: +34 881811567/981 56 31 00x11567. 2 www.usc.es/icede. 0048-7333/$ see front matter 2011 Elsevier B.V. All rights reserved. doi:10.1016/j.respol.2011.10.006

and Faulkner, 1998; Tidd et al., 2001; Gomes-Casseres, 2003; Tether and Tajar, 2008; Hipp, 2010). These agreements are strategically important in open innovation processes since they enable organisations to access knowledge, technology and know-how dissipated among other economic actors (see Chesbrough, 2003; Chesbrough et al., 2006). This evidence leads to the assumption that the connection and interaction between individuals with heterogeneous skills and different but complementary experiences represent a collective and distributed process of knowledge creation and innovation (Hayek, 1945; Andersen et al., 2000; Coombs et al., 2003). As far as industrial analyses are concerned, the literature on innovation economics has historically ignored the service sector until recent years, so that the existing vision of innovation has been built based on the study of R&D and innovation in manufacturing branches. However, nowadays, economic literature acknowledges the existence of innovative and cooperative performance in services (see, e.g., Miles, 2001; Gallouj, 2002a,b; European Commission, 2004; Tether, 2002, 2005; Hipp, 2010). After two decades, studies on innovation have proved cooperation practices to be a cross-cutting feature in this industry; so much so that the well-known formal representation of service innovation designed by Gallouj and Weinstein (1997) has been revised and expanded in accordance with contemporary networked society (Vries, 2006). In addition to this acknowledgment, many authors have recognized the existence of a plurality of innovation patterns within the service industry (Soete and Miozzo, 1989; Gallouj and Weinstein,

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1997; Den Hertog and Bilderbeek, 1999; Evangelista, 2000; Tether and Hipp, 2000; Miozzo and Soete, 2001; Sundbo and Gallouj, 2000; Hollenstein, 2003; Hipp and Grupp, 2005; De Jong and Marsili, 2006; Miles, 2008; Tether and Tajar, 2008; Vence and Trigo, 2009; Trigo, 2009a,b; Hipp, 2010). In effect, recent studies have laid emphasis on the diversity of innovation patterns within certain service sub-industry such as KIBS (Knowledge Intensive Business Services) or the tourism sector for instance (see, e.g., Hjalager, 1997; Baark, 2005; Leiponen, 2005; Freel, 2006; Sundbo et al., 2007). To illustrate such diversity, most of the studies on innovation in services have pointed to KIBS as the leading sub-sector with regards to innovation and cooperation. This prominent performance is not only a result of the high proportion of innovating rms, but also, by and large, a consequence of the high number of innovating rms engaged in the majority of innovation activities and innovation cooperation. In contrast, other services such as distributive services (transport, wholesale, retail, etc.) and HORECA (hotels, restaurants and catering) present a very low innovative and cooperative performance. Therefore, due to the increasing relevance of external information ows to the rms innovative competence, in addition to the growing role of services in all modern economies, this paper has two principal purposes: to appraise the real scope of innovation cooperation in Spanish service enterprises, and to examine the relationship between cooperation and innovation performance. The range of indicators investigated includes three sets of variables: (1) formal cooperation, (2) the signicance of external information sources (3) as well as the types of innovation outputs. The rst two sets aim to measure the level of openness of innovation processes and the importance of external knowledge. While formal cooperation represents a specic mode of collaboration, sources of information permit us to estimate the value of extramural ows of knowledge including informal collaboration. Variables of innovation outputs have been included in order to study the correlation between the cooperative behaviour and innovation performance. The empirical analysis is derived from the Spanish Technological Innovation Panel (PITEC) carried out in 2004. PITEC, which is part of the Spanish CIS data, is a statistical panel whose sample is composed of data from the Central Business Directory (DIRCE) and the Research Business Directory (DIRID). This paper is structured as follows: A literature review on the scope of cooperation-oriented patterns in services is tackled in Section 2. A descriptive analysis of cooperation in services is the core of Section 3. In Section 4, the multivariate technique known as Latent Class Analysis (LCA) is used in order to create patterns of innovation cooperation in services. The main conclusion and implication are discussed in Section 5.

2. Cooperation-oriented patterns in existing typologies of innovation in services The literature on innovation in services has increased significantly since the late 1980s. Within this emerging eld, the study on patterns at the intra-sectoral level has received special attention in recent years. Soete and Miozzo (1989) created a typology, based on Pavitts taxonomy (Pavitt, 1984), to improve the understanding of the diversity of innovation in services. Their typology permits the identication of different patterns of innovation, beyond the supplier-dominated character stressed by Pavitt in his original categorization (Pavitt, 1984, see also Bell and Pavitt, 1993). The classication created by these scholars has undoubtedly become an imperative contribution toward an enhanced perception of innovation, incorporating more deeply the service sector in the mainstream economic research of the discipline. This categorization of innovation in services has inspired many other studies and has become the earliest reference in this eld (see, e.g., Den

Hertog and Bilderbeek, 1999; Evangelista, 2000; Tether and Hipp, 2000; Sundbo and Gallouj, 2000; Hollenstein, 2003; Hipp and Grupp, 2005; Hipp and Herstatt, 2006; De Jong and Marsili, 2006; Hortelano and Gonzlez-Moreno, 2007; Miles, 2008). Soete and Miozzo (1989) could be considered as pioneers in describing networking patterns of innovation in service companies. The network-based innovation pattern underlined by these authors was not included in Pavitts popular typology (1984). As Hipp and Grupp (2005) emphasize, this gap could be due to the absence of a distributive nature in most manufacturing activities, the source of reference for the earliest typologies. Things change when we are dealing with service activities. The network-based innovation pattern is composed of, on the one hand, scaleintensive and physical network intensive sectors (transport and wholesale trade), and on the other hand, information-intensive networks sectors (communication, nance and insurance services). Gallouj and Gallouj (2000, 30), however, note that the interactive nature via networks should be considered not so much one of the types within the taxonomy but rather a characteristic that is transversal, a trait of several if not all, types. They further note that even those services classied as dominated by suppliers could hold this feature. Another criticism of the contribution of Soete and Miozzo concerns the analytical perspective of technological trajectories used by them, and the absence of non-technological innovations (Gallouj and Gallouj, 2000). A similar taxonomy laid out by Evangelista (2000) based on 19,000 service companies with more than twenty employees, which were included in the 19931995 Italian Innovation Survey. Factor analysis was applied to an array of aspects related to the innovation process, including the importance of science and technology based interactions and other information sources, in order to identify innovation proles in services. However, two critical weaknesses in the study can be pointed out. First, a specic variable to measure formal innovation cooperation is missing; and, second, the industrial classication is too broad, making use of highly aggregate data and preventing the identication of specic innovation patterns within each sub-sector. Hollenstein (2003) presents a ve-prole innovation typology through cluster analysis using 2731 service rms from the Swiss Innovation Survey 1999. With regard to the identication of cooperation-oriented proles, Hollenstein includes a large range of indicators, among them knowledge sources and R&D network variables. Unlike the aforementioned authors, this set of indicators embraces also non-technological aspects of innovation. It allows for the creation of an effective and useful innovation taxonomy for services as far as networks and others types of external links are concerned. In contrast to the preceding typologies, the cooperation aspect has been explored as a transversal feature of innovation instead of a specic attribute found in just one or few service branches, as suggested by Gallouj and Gallouj (2000). Compared to Evangelistas taxonomy, Hollenstein (2003) adds a new dimension to innovation labeled market-oriented incremental innovators with weak external links, which is composed of service activities such as business services and wholesale trade. Hipp and Grupp (2005) carry out an interesting empirical analysis of innovation patterns in services. The results of this remarkable study suggest that the patterns of innovation in services depend to a lesser degree on the sectoral classication, since each pattern can be found in each service branch studied. This evidence strengthens the conclusions stated by the aforementioned Sundbo and Gallouj (2000) and Hollenstein (2003). Concerning cooperation-related patterns, Hipp and Grupp (2005) identify a prole of network-based services (information networks) composed mainly of banks and insurance companies. Technical services and R&D as well as software services are classied as knowledge intensive. The authors also claim that most of the innovation typologies are suitable to

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services showing a classical innovation structure. Innovation patterns displayed in earlier studies do not embrace the whole range of innovative services, thus new patterns must be identied by using alternative concepts and measuring instruments. The authors suggest that further theoretical and empirical studies on innovation need to analyse manufacturing and services together, taking into consideration their products instead of the sector they belong to. Following Hipp and Grupps proposal, Tether and Tajar (2008) elaborate a typology of innovation for all manufacturing and services sectors, using data from 2500 European rms included in the Innobarometer 2002. This analysis enforces the synthesis approach built by several scholars combining different innovation trajectories and a large set of economic activities (Gallouj and Weinstein, 1997; Coombs and Miles, 2000; Hollenstein, 2003; Drejer, 2004; Hipp and Grupp, 2005; Tiri et al., 2006; Leiponen and Drejer, 2007; Castellacci, 2008; Peneder, 2010). In order to classify enterprises in terms of their innovative features, Tether and Tajar (2008) select three specic issues from the survey: the rms orientation to innovation; the main sources of advanced technologies; and the rms perceived strengths in innovation. Applying different statistical methods, these authors suggest three proles of innovation: a product-research (PR) mode; a process technologies (PT) mode; and an organisationalcooperation (OC) mode. While the rst prole is composed mainly of mediumhigh-technology manufacturing and high-technology activities, the second one is dominated by low and medium-low tech manufacturing. Services, especially distribution and trade activities, are conned to the latter one. The PR mode tends to cooperate with universities or R&D specialists, while the OC mode is more likely to engage in cooperative practices with suppliers, customers and trade associations (supply-chain-cooperation rather than research-based cooperative practices). Furthermore, the innovation activities carried out by these rms are basically oriented at organisational changes. However, although Tether and Tajars taxonomy covers an extensive range of economic branches and European-wide countries, the aggregated classication at the industrial level used to display the results, particularly for services, may conceal internal innovation and cooperation diversity. All these contributions have provided substantial progress toward a better understanding of innovation in services. However, we observe two critical constraints: First, some of these studies have not given sufcient emphasis on the interactive dimension through cooperation activities. Modern innovation practices bring to light the importance of interaction and communication among economic agents, accentuating the increasing signicance of external information ows in the enhancement of internal innovation capacity, especially in some service activities. For this reason, we consider cooperation not only an important aspect but also a key determinant to characterize innovation patterns at the industrial level, and specically in certain service branches. The second critical constraint refers to the industrial classication. The high degree of aggregation of service activities predominant in most of these studies might hamper an in-depth typology for innovation. The micro-data used in our empirical analysis, however, permits to classify services in 20 sub-sectors, allowing us to delimit more accurately the real scope of diversity of innovation cooperation patterns in services. Thus, the analysis of innovation and the typology proposed in this paper will focus essentially on the cooperation performance. As mentioned in the previous section, we have also deemed it relevant to include two sets of variables apart from cooperation indicators. Since the cooperation indicators refer only to the type of partner, we have added a set of Likert scale variables on sources of information in order to measure the signicance of each partnership. Furthermore, innovation output variables are incorporated in

order to better understand the relationship between patterns of cooperation and performance in innovation. 3. Empirical evidence: innovation cooperation in services in Spain 3.1. Data and sample The data used in the empirical analysis is derived from the Technological Innovation Panel (PITEC) carried out in Spain in 2004, which is a database developed by the INE (National Institute for Statistics), FECYT (Spanish Foundation for Science and Technology) and COTEC (Foundation for Technological Innovation). This panel, which is available since 2003, is an important statistical tool to analyse the innovative performance of Spanish enterprises. The data provided by PITEC derives from the Central Business Directory (DIRCE) and the Research Business Directory (DIRID). The panel survey follows the Oslo Manual methodology applied in the Community Innovation Survey as reference to the selection of variables and indicators (see OECD, 2005). The sample of the 2003 panel was composed of two different groups of enterprises: a sample of rms with 200 or more employees and a sample of rms with intramural R&D expenditures. The second edition of the panel, referring to 2004, sought to cover a major limitation found in the rst edition, incorporating rms with fewer than 200 employees without innovation activities, as well as rms with fewer than 200 employees whose research activities and development are outsourced. The number of service enterprises presented in PITEC 2004 is 3546, among them 2148 are innovating ones. We consider an innovating rm as a rm which has implemented any type of innovation during the last two years, as recommended in the Oslo Manual (OECD, 2005). This concept includes, apart from technological innovation, organisational and marketing changes. Table 1 shows the
Table 1 Distribution of service rms and innovating service rms, Spain. Total rms Repair of motor vehicles, motorcycles Wholesale Retail trade Hotels and restaurants Transport, storage and communication Supporting transport activities; travel agencies Post and courier activities Telecommunications Financial intermediation Real estate activities Renting of machinery and equipment Software consultancy and supply Computer and related activities Research and development Architectural and engineering activities Technical testing and analysis Other business activities Motion picture and video activities Radio and television activities Health and social work, sanitation and similar activities Total 80 391 216 207 130 114 17 67 217 61 32 382 124 166 260 90 602 28 36 326 Innovating rms 33 224 92 74 65 57 10 55 177 27 15 324 105 147 210 65 256 10 27 175 % 41% 57% 43% 36% 50% 50% 59% 82% 82% 44% 47% 85% 85% 89% 81% 72% 43% 36% 75% 54%

3.546

2.148

61%

Source: Trigo (2009a). Data from the Technological Innovation Panel (PITEC), 2004.

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Fig. 1. Proportion of innovating rms and proportion of innovating rms with cooperation, services, Spain (%).

distribution of service rms in PITEC 2004 database, where the different innovation performances in services are displayed. While KIBS, telecommunication and nancial intermediation are in the forefront of innovation in services, HORECA (hotels, restaurants and catering) and distributive services are not leading innovators. This heterogeneous context reinforces the relevance of intra-industrial analysis of innovation patterns, given the existence of different innovation drivers in each service branch. 3.2. Descriptive analysis of innovation cooperation in services from PITEC Among the different types of collaborations,3 this analysis focuses on the specic form of partnership commonly known as formal cooperation in joint innovation projects between the rm and other actors such as customers, suppliers, competitors, universities, technology institutes, public research institutions or government. This mode of linkage must involve active cooperation on the partners part including purchases of knowledge and technology as described by the Oslo Manual (OECD, 2005). Therefore, the notion of cooperation adopted here implies formal relationships such as strategic marketing alliances and joint development of new technologies, products or processes. 3.2.1. The scope of cooperation and innovation in services As the rst attempt to analyse the cooperative behaviour in services, the frequencies of cooperative rms by service branch are calculated and the result is shown in Fig. 1 the horizontal axis measures the proportion of innovating rms with cooperation

to the total of innovating rms. The number of cooperative rms among the sample of innovating ones is only 36%. This chart also tackles the innovation performance the vertical axis quanties the proportion of innovating rms to the total of rms. The comparison between these two proportions brings to light the existence of two different groups of services with different propensities to cooperate and innovate. The diagonal display of these two groups supports the notion that the correlation between innovation and cooperation is directly linked. Almost all highly innovative industries show a high propensity to cooperate. On the other hand, most branches with a low proportion of innovating rms exhibit a low propensity to cooperate. This evidence enforces the hypothesis that the higher the capacity of interaction with other economic actors, the higher the innovation capacity of an enterprise will be. This result leads us to classify service activities into two groups: one composed of those branches with a high proportion of innovating rms with a high propensity to cooperate (Group 1). This group is constituted essentially by knowledge-intensive business services, software and telecommunications. Another group is composed of activities with a low tendency to innovate and cooperate (Group 2). The branches of retail trade, hotels and restaurants, motion picture and video activities are some of the branches that comprise this class. The number of innovating rms in these service branches is relatively low, and few of them cooperate. This evidence is also supported by OECD reports, where the low propensity to cooperate of distributive services is highlighted (OECD, 2001). 3.2.2. Patterns of partnerships The cooperation diversity in services is also manifested in the choice of partners. Taking into consideration the service sector as a whole, clients and universities are the most frequent partners to services. In some branches, suppliers and consulting services are

3 E.g., subcontract/supplier relations, licensing, consortia, strategic alliance, joint venture, network (Tidd et al., 2001).

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Table 2 Proportion of rms with cooperation, by partners, services, Spain (%). COOP Repair of motor vehicles, motorcycles Wholesale Retail trade Hotels and restaurants Transport, storage and communication Supporting transport activities; travel agencies Post and courier activities Telecommunications Financial intermediation Real estate activities Renting of machinery and equipment Software consultancy and supply Computer and related activities Research and development Architectural and engineering activities Technical testing and analysis Other business activities Motion picture and video activities Radio and television activities Health and social work, sanitation and similar activities Total 21 27 13 4 32 39 10 51 41 15 7 40 30 72 52 42 25 10 37 33 36 COOP1 15 7 7 0 5 11 0 13 14 4 0 6 7 13 11 3 6 0 19 7 8 COOP2 9 10 2 3 23 26 10 27 24 4 7 9 8 26 14 14 13 0 33 13 14 COOP3 3 3 0 0 0 9 0 22 5 4 0 16 10 44 21 22 7 0 4 9 12 COOP4 3 2 1 0 3 9 0 5 15 4 0 10 6 23 12 8 4 10 0 6 8 COOP5 12 4 5 3 2 2 10 5 12 4 7 6 4 34 10 14 7 0 7 9 9 COOP6 3 8 3 0 8 5 0 33 4 4 0 17 12 59 27 28 6 0 11 14 15 COOP7 0 4 0 1 0 4 10 4 2 0 0 7 5 37 12 11 3 0 0 7 7 COOP8 3 6 1 1 5 0 0 9 3 7 0 13 8 49 22 15 5 0 4 6 11

Source: Trigo (2009a). Data from the Technological Innovation Panel (PITEC), 2004. COOP = any kind of cooperation; COOP1 = other enterprise within the group; COOP2 = clients; COOP3 = suppliers; COOP4 = competitors or other rms; COOP5 = consultants, commercial laboratories/R&D; COOP6 = universities; COOP7 = government or public research institutes; COOP8 = technology institutes.

clearly signicant too. More specically, rms whose productive and innovative activities are related to technological progress tend to cooperate with suppliers, universities and technology institutes to a greater extent than those in any other enterprises (see also Tether and Hipp, 2000; Miles, 2002; Hollenstein, 2003; Hipp and Grupp, 2005; Salter and Tether, 2006; Tether and Tajar, 2008; Vence and Trigo, 2009, 2010; Trigo, 2009a). Moreover, their innovations (product innovations) tend to be breakthroughs, not only new to the rm but also to the market. In this sense, the types of interactions along the innovation process would affect the scope of the novelty of the innovations in some way. In fact, universities play a special role for highly innovative industries with a high propensity to engage in R&D such as KIBS and telecommunications. Cooperation with suppliers seems to have great weight for the KIBS and telecommunications sectors, meanwhile suppliers seems to be less signicant to the others. It is worth pointing out that the sectors with signicant relationships with science and technology-related actors are fundamentally activities with a high propensity to engage in internal R&D and have high skilled human capital (see Vence and Trigo, 2009; Trigo, 2009a). This nding highlights the importance of a strong absorptive capacity of external information and knowledge ows, suggested by Cohen and Levinthal (1990), and its relationship with the rms innovative potential. This underlines the importance of highly skilled human capital as the main connection between the company and these institutions of science and technology. The notion of the abovementioned absorption capacity induces us to assume that innovation and cooperation embrace a positive feedback loop. In this sense, it is not only cooperation that fosters the rms innovative capability, but also the internal innovative effort spent by enterprises confers the necessary and fundamental knowledge and capacity to interact with others. This second statement is even more apparent in medium and high-tech sub-sectors. Cooperation with customers is an important part of the total weight of the partnerships, mainly to activities such as supporting transport activities, travel agencies, nancial intermediation, other business activities as well as radio and television activities. In reality, these companies, plus telecommunications and research and development rms, are the ones with the highest

tendency to cooperate with clients. However, the results suggest that rms that cooperate with actors closer to the productive system such as customers, consultants, etc., tend to develop new-to-the-market innovation to a lesser extent (Kaufmann and Tdtling, 2001; Tdtling et al., 2009). The type of services, which present high propensity to cooperate with consultants, commercial labs, or private R&D institutes (labeled as coop 5 in Table 2) compared to the propensity to cooperate with other agents, belong to a set of activities with low innovative capacity, and at the same time with reduced inclination to cooperate. 4. Patterns of innovation cooperation in services 4.1. Methodology and data analysis Although the study of the interaction dimension in service innovation is not an original trend, the analysis proposed here is unique in two aspects: the variables chosen and the method of analysis applied. As previously explained, the indicators selected are classied into three sets. The rst one refers to the partners for cooperation while the second one includes Likert scale variables on sources of information. Whereas the former permits the identication of the nature of cooperative linkages, the latter allows for the measurement of their signicance. These variables are essential to achieve our objective of identifying different patterns of innovation cooperation in services. Furthermore, a set of output-related variables formed by the types of innovation developed by the rm was taken into account. These indicators are keys to describe the innovative performance of cooperative rms as well as to verify whether different types of innovation rely on specic sorts of cooperation arrangements. The variable selection is therefore consistent with this articles aims of analysing the real scope of cooperation on innovation in services in the Spanish economy, as well as that of examining the relationship between patterns of cooperation and innovation performance. As far as methodology is concerned, we use Latent Class Analysis (LCA) as an alternative to traditional Cluster Analysis since the former provides more accurate results for binary-type variables. LCA

A. Trigo, X. Vence / Research Policy 41 (2012) 602613 Table 3 Variables used in the Latent Class Analysis. Type Indicators innobien innoserv innfabri innlogis innapoyo inorg1 inorg2 inorg3 incom1 incom2 coopera coop11 copp21 coop31 coop41 coop51 coop61 coop71 coop81 infonew1 infonew2 infonew3 infonew4 infonew5 infonew6 infonew7 infonew8 infonew9 infonew10 infonew11 Covariant Service branches Source: Trigo (2009a). New or signicantly improved goods New or signicantly improved services Implementation of new methods of production Implementation of new logistic system Implementation of new supporting activities Implementation of advanced management techniques within your enterprise Implementation of major changes to your organisational structure Changes in the relationship with other enterprises or public institutions Changes in the good/service design Implementation of new sales methods or delivery Cooperation: all types Cooperation: other enterprise within the group Cooperation: clients Cooperation: suppliers Cooperation: competitors Cooperation: consultants, commercial laboratories/R&D Cooperation: universities Cooperation: government or public research institutes Cooperation: technology institutes Signicance of the information source: within the group Signicance of the information source: suppliers Signicance of the information source: clients Signicance of the information source: competitors Signicance of the information source: consultants, commercial laboratories/R&D Signicance of the information source: universities Signicance of the information source: public research institutes Signicance of the information source: technology institutes Signicance of the information source: conferences and fairs Signicance of the information source: scientic journals and other publication Signicance of the information source: professional associations Binary Binary Binary Binary Binary Binary Binary Binary Binary Binary Binary Binary Binary Binary Binary Binary Binary Binary Binary Likert 03 Likert 03 Likert 03 Likert 03 Likert 03 Likert 03 Likert 03 Likert 03 Likert 03 Likert 03 Likert 03

607

Table 4 Statistic results of Latent Class Analysis using variables related to cooperation, sources of information and innovation outputs, services, Spain. LL 4-Cluster 5-Cluster 6-Cluster 7-Cluster 8-Cluster 36202.97 35811.38 35450.65 35236.52 35009.88 BIC (LL) 74405.4 74159.3 73975.0 74083.9 74167.8 Npar 268 340 412 484 556 L2 59625.728 58842.5487 58121.0887 57692.8251 57239.5433 df 1470 1398 1326 1254 1182 p-Value 1.5e11450 8.8e11343 1.5e11248 4.0e11217 4.8e11181 Class.Err. 0.0501 0.0525 0.0605 0.0816 0.0671

Source: Trigo (2009a). Data from the Technological Innovation Panel (PITEC), 2004.

is a multivariate technique based on conditional probabilistic analysis. The objective of this statistical method is to verify whether the association between a set of observed categorical variables could be explained through a latent typology that is composed of different classes.4 The variables used in each analysis are summarized in Table 3. This statistical technique has many advantages compared with other tools. We can aver that one important advantage is the probability distribution of the clusters identied. The service branches present different probabilities of belonging to each cluster identied. One of the outputs brought about by this statistical technique, therefore, is a classication by groups based on probabilities. Another signicant advantage is in determining the number of clusters. This is due to the existence of rigorous statistical tests that support the choice of the dimension of the model (choice of the dimension regarding the best solution to data which means the number of clusters in the model). Another important attribute is the possibility of using categorical variables.

The results of Latent Class Analysis display different solutions, each one with different numbers of classes (clusters). The criterion for selecting the most accurate model that t with the data set was the Bayesian Information Criterion (BIC) due to its consistency in comparison with other criteria, such as the Akaike Information Criterion (AIC). Most of the empirical analysis carried out through Latent Class Analysis has chosen such statistical criterion for model selection. According to this criterion, the accurate model is the one with the lowest value for BIC (see Kashyap, 1977; Schwartz, 1978). Therefore, following this principle, the precise model of cooperation arrangements, sources of information and innovation output consist of six clusters each latent class (cluster) representing a different pattern of responses (see Table 4).

4.2. Service typology of cooperation behaviour based on partnerships, sources of information and innovation outputs Table 5 summarizes the results provided by the Latent Class Analysis, which can be grouped into three set of variables: innovation outputs, cooperation and source of information. While the two former are expressed in percentage terms, the latter is the

4 Further technical information of Latent Class Analysis is provided in Appendix A. See also Heinen (1996) and Hagenaars and McCutcheon (2003).

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Table 5 Cooperative and innovative performances by cluster, services, Spain. Cluster 1 Cooperation (%) Cooperation: all types Other enterprise within the group Clients Suppliers Competitors Consultants, commercial laboratories/R&D Universities Government or public research institutes Technology institutes Source of information (Likert-scale 03)b Within the group Suppliers Clients Competitors Consultants, commercial laboratories/R&D Universities Public research institutes Technology institutes Conferences and fairs Scientic journals and other publication Professional associations Innovation outputs (%)a Goods Services New methods of production New logistic system New supporting activities Advanced management techniques Major changes to the organisational structure Relationship with other enterprises or public institutions Changes in the good/service design Implementation of new sales methods or delivery
a

Cluster 2 19% 6% 6% 2% 1% 3% 0% 0% 0% 2.00 1.11 0.64 0.30 0.18 0.06 0.04 0.03 0.03 0.03 0.00 27% 33% 17% 10% 47% 44% 37% 15% 7% 10%

Cluster 3 0% 0% 0% 0% 0% 0% 0% 0% 0% 2.41 1.79 1.79 1.51 1.39 1.32 1.23 1.23 1.72 1.61 1.37 43% 48% 33% 15% 48% 60% 52% 28% 23% 17%

Cluster 4 100% 21% 43% 54% 34% 40% 68% 39% 58% 2.72 1.91 2.31 1.79 1.88 2.06 1.71 1.96 2.16 2.18 1.87 60% 79% 60% 21% 62% 84% 78% 59% 26% 26%

Cluster 5 100% 11% 17% 30% 15% 12% 55% 21% 34% 2.41 1.17 1.59 1.05 1.02 1.43 0.98 1.10 1.08 1.16 0.62 53% 52% 38% 10% 32% 39% 33% 28% 8% 13%

Cluster 6 100% 35% 58% 18% 20% 22% 14% 2% 5% 2.44 1.99 1.43 1.27 1.08 0.45 0.22 0.23 1.31 1.27 0.91 48% 67% 45% 37% 81% 76% 66% 41% 36% 39%

1% 0% 0% 0% 0% 0% 0% 0% 0% 2.43 1.47 1.50 1.06 0.51 0.12 0.00 0.02 1.18 1.24 0.64 46% 48% 35% 23% 54% 61% 52% 21% 25% 29%

Source: Adapted from Trigo (2009a). Data from the Technological Innovation Panel (PITEC), 2004. a Each percentage shown can be understood as the probability of engagement on the selected item. b This is a Likert type scale from 0 to 3, where 0 = not at all relevant, 3 = highly relevant.

average of answers (Likert scale 03). Each percentage showed, in the case of the rst two set of variables, can be understood as the probability of answering yes to the given item by a rm from cluster 1, cluster 2, cluster 3 and so forth. Although the LCA estimation suggested the 6-clusters solution as the most accurate one in accordance to the BIC criterion of selection, we consider that a typology of innovation cooperation in Spanish services should be represented by 3 broad proles, some of them composed of more than one clusters. Such aggregation has as the main decisive factor the nature of the partnerships (i.e., those with whom partnerships the cooperation are developed) because of the relevance and the objective proposed in this article. It is also worth mentioning that the partnership composition presents a higher level of heterogeneity of answers than any other set of indicators applied in the sample. The outcomes from this empirical analysis shows that the proles identied are to a greater or lesser extent present in all service sub-industry analysed. This evidence, also ensured by other authors in recent publications (e.g., Tiri et al., 2006; Hortelano and Gonzlez-Moreno, 2007; Leiponen and Drejer, 2007) denotes a criticism on the original premise supported by the technological paradigms and technological trajectories, where different rms with the same technological regime holds similar innovation path. 4.2.1. Intensive in techno-scientic ows of information According to the results, two of the six clusters (4 and 5) have an analogous prole, based on techno-scientic cooperation

(similarity in the nature), but with some discrepancy in intensity (difference in the scope). The probability of cooperating with universities, technology centres or with their suppliers is higher than any other partner. This disparity in relation to the intensity is also reected in the signicance of information sources and in the innovative intensity. It is interesting to note that the cluster with the lower cooperative and innovative performance among them (with a lower probability of positive responses), cluster 5, presents a higher propensity to product innovations than any other type (53% for innovative goods and services 52%). Hence, the service rms belonging to cluster 5 are essentially techno-scientic product innovators. Indeed, the probability of organisational innovations is the lowest among the others groups (innovations related to knowledge management systems: 39%, and related to the work organisation: 33%). On the other hand, the more cooperative and innovative cluster (with a higher probability of positive responses), cluster 4, presents a very high probability of organisational innovations, especially those related to knowledge management systems (84%), although they have a high propensity also for service innovations (79%). Thus, slightly different from the cluster 5, service rms belonging to cluster 4 might be categorized as techno-scientic service/organisational innovators. With regard to the signicance of information sources, the principal difference is in the magnitude of signicances, not so much in nature (differences in the choice of partners to cooperate). However, we should mention that only the most cooperative and innovative cluster (cluster 4) presents positive rates (above 1.5 Likert scale of 03).

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Fig. 2. The triplot representation of probability distribution regarding the three-prole typology of cooperation in service innovation, services, Spain (%).

The probability that an innovating service rm from the Spanish sample belongs to this broad prole of rms intensive in techno-scientic ows of information (composed of cluster 4 and 5) is 28%. Although almost all branches have a certain probability of belonging to these two clusters, the service activities with a higher tendency to be intensive with regards to techno-scientic ows of information are, architectural and engineering activities, telecommunications, research and development and technical testing and analysis. Many other taxonomies on services identify this prole, for instance in Hollenstein (2003) who names it as Science-based high-tech rms with full network integration, and product-research mode of innovation in Tether and Tajar (2008). 4.2.2. Intensive in interactions with clients Another prole of interactions identied from LCA makes known the role of the client as the main partner (cluster 6). Therefore, this cooperation behaviour is highly linked to the needs of consumers and users of the service. The probability of an innovating rm with this prole cooperating with clients is approximately 60% (highest of the entire set of clusters identied). In this sense, it is logical that the customer receives the highest rating among all possible external sources (see Table 5). Client-led rms are very innovative, especially for process and organisational innovation (e.g., probability of 81% to be support processes innovators and 76% knowledge systems innovators). It is also worth noting the high probability of developing service innovations (67%). Among all analysed branches, nancial intermediation is the service activities that best ts to this prole. According to knowledge generation, innovating rms with client cooperation are intensive both in internal R&D activities and training, as well as in acquisition of machinery and software (Trigo, 2009a,b). The probability of an innovating Spanish rm belonging to this prole is only 13%. Other taxonomies based on innovation and networks highlight the high propensity of cooperating with customers in some service activities. Those typologies stress the high tendency of those rms to be also R&Dintensive. Client-led innovation (Den Hertog and Bilderbeek, 1999), information network (Soete and Miozzo, 1989; Miozzo and Soete, 2001), network pattern (Sundbo and Gallouj, 2000), network basis (Hipp and Grupp, 2005) and cost-oriented process innovators with strong external links along the value chair (Hollenstein, 2003) are some of the labels used by other authors to describe such a prole. Some of the typologies found in the recent literature reveal the proportion of rms in each proled identied. In the Swiss case,

approximately 48% of service rms belong to a prole similar to that one (Hollenstein, 2003).5 This proportion is very high if we take into account the probability of just 13% found in our analysis. 4.2.3. Lonely innovators The third identied prole is composed of three of the six LCA clusters (clusters 1, 2 and 3). The innovating rms that t in this prole show a very low probability of cooperating. This result leads us to assume that those innovating rms are lonely innovators due to the minor involvement with other economics actors, through formal cooperation, along their innovation processes. However, although those three clusters display very few tendencies to cooperate in innovation, the signicance of information sources used is quite dissimilar. Two of the three lonely innovator clusters (cluster 1 and 3), consider relatively important the information that comes from customers and suppliers. These rms have low propensity to cooperate formally but simultaneously they place high value on their relationships with actors along the value chain. However, that interaction seems to be a result of business relationships instead of common efforts to achieve innovation. Indeed, the signicance of information sources is higher in cluster 3 than any other cluster, except cluster 4 and 5. With reference to innovation outputs, all lonely innovators present similar tendencies: in general, these clusters are more likely to innovate in organisational aspects. However, there is a considerable difference in the propensity to innovate. Taking into account the three lonely innovators clusters, cluster 2 is the least cooperative and innovative. Its probability of innovating in product is the lowest in the whole model (27% for product innovation and 33% for service innovation). On the other hand, clusters 1 and 3 are as inclined to be product innovators as cluster 5 (intensive in techno-scientic ow of information), and even more prone in terms of organisational innovation. This is unquestionably the least advantageous of the three proles identied given its weak cooperative and innovative performance. However, the probability that a Spanish rm belongs to

5 An important difference from the statistical method applied by Hollenstein (2003) should be stressed. While LCA is a multivariate technique based on conditional probabilistic analysis, the percentages of rms displayed in the Cluster Analysis estimated by Hollenstein (2003) refer to the numbers of enterprises with each prole.

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Table 6 Service typology of cooperation patterns based on partnerships, sources of information and innovation outputs. Highly interactive Intensive in techno-scientic ows of information Intensive in interactions with clients (cluster 6) Lowly interactive Lonely innovators

With high cooperative and innovative performance (cluster 4) Principal partner in formal cooperation Innovative intensitya Most common innovation Similar typologies Universities, technology centres and suppliers Highly intensive Service and organisational Science-based high-tech rms with full network integration (Hollenstein, 2003) Product-Research mode of innovation (Tether and Tajar, 2008)

With moderate cooperative and innovative performance (cluster 5) Universities, technology centres and suppliers Relatively intensive Product (goods and services) Product-research mode of innovation (Tether and Tajar, 2008) Clients, other enterprise within the group Highly intensive Process and organisational Client-led innovation (Den Hertog and Bilderbeek, 1999) Information network (Soete and Miozzo, 1989; Miozzo and Soete, 2001) Network patten (Sundbo and Gallouj, 2000) Cost-oriented process innovators with strong external links along the value chair (Hollenstein, 2003) Network basis (Hipp and Grupp, 2005) Financial intermediation; Supporting transport activities; travel agencies; Radio and television activities.

With relatively high signicance of information sources (cluster 1 and 3)

With low signicance of information sources (cluster 2)

Relatively intensive Organisational and product (goods and services) Market-oriented incremental innovators with weak external links (Hollenstein, 2003)

Poorly intensive Organisational

Low prole innovators with hardly any external link (Hollenstein, 2003)

Typical core sectors

Research and development; Technical testing and analysis.

Telecommunications; Architectural and engineering activities.

Wholesale; Retail trade; Post and courier activities; Real estate activities; Software consultancy and supply; Computer and related activities; Motion picture and video activities; Other business activities; Renting of machinery and equipment; Hotels and restaurants.

Repair of motor vehicles, motorcycles; Transport, storage and communication; Health and social work, sanitation and similar.

Source: Trigo (2009a). a Innovative intensity refers to the probability that a rm innovates (by type of innovation).

this prole is approximately 59%. This evidence is even worse when we take into account the employment of economic activities in Spain. Almost 65% of the employment in Spain is assigned to activities with high probability of having this prole. As noted by Molero (2006), the growth of technology-intensive sectors has been signicantly lower in Spain compared to other European economies (see also Arancegui, 2002). In other words, the specialization of the Spanish economy has been concentrated mainly in areas with low or medium technological intensity. The branches that have a higher probability of this prole are retail trade, post and courier activities, repair of motor vehicles, hotels and restaurants among others. Indeed, most of those activities have a considerable participation in the Spanish economic structure because, among other reasons, the existence of important weather and natural advantages (Gordo et al., 2006). Other authors have also highlighted the existence of this prole in services. For example, in Hollenstein taxonomy for Swiss services (2003), two of ve groups have no leaning toward establishing external linkages: market-oriented incremental innovators with weak external links and low prole innovators with

hardly any external link. In the Swiss case, the proportion of innovating service rms with both proles is fairly lower than the Spanish sample (approximately 43%). This contrast makes evident the insufciency of a cooperative mind-set in Spanish rms compared to the international context. The Fig. 2 shows a Triplot6 representation of this typology.7 The closer an element is to an apex of the triangle, the greater the probability, of this element having a specic prole. The Spanish service sector presents a general trend toward the lonely innovator pro-

6 We used the software for Microsoft Excel Triplot developed by David Graham (Loughborough University) and Nicholas Midgley (Liverpool John Moores University), and distributed free of charge. See Graham and Midgley (2000) and additional documentation in http://www.lboro.ac.uk/research/phys-geog/tri-plot/index.html. 7 The probability distribution has been recalculated taking into consideration the three broad proles of the typology proposed here, based on the 6-cluster LCA model: it has been estimated the average of clusters 1, 2 and 3 for the prole lonely innovator and clusters 4 and 5 for the prole Intensive techno-scientic ows of information and recalculated of the weight of each prole in base 100.

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le for the Spanish service sector. Table 6 summarizes the main aspects and characteristics of the taxonomy created here. The three proles acknowledged in the analysis of innovation cooperation in Spanish services are described regarding innovation intensity, the most common innovation developed as well as the nuances about the intensity of linkages. Moreover, similar proles found in the related literature and typical core sectors are provided.

5. Conclusions This article aimed to appraise the scope of innovation cooperation in Spanish services, in accordance with the growing weight of external knowledge exchange throughout innovation processes. We believe that cooperation is crucial for the differentiation of innovation patterns, especially to certain service branches. Innovation output variables have been included in order to examine the relationship between cooperation behaviour and innovation performance. Firm-level analysis carried out in this article has permitted the in-depth scrutiny of cooperation patterns, beyond the boundary of the traditional standard industry classication largely applied so far. The multivariate statistical method applied, Latent Class Analysis, can be considered an original and innovative technique in identifying patterns of innovation in services. The analysis developed in this article lead to the conclusion that cooperation on innovation is still not a very common practice in Spanish services. Furthermore, the assumption of plurality has been conrmed, as far as the nature and the dynamics of cooperation are concerned, as demonstrated by other authors. This evidence shows the growingly untenable hypothesis of a unique pattern of cooperation on innovation in services. The ndings of the empirical analysis led to the creation of a cooperation-oriented typology for service innovation composed of three broad proles: intensive in techno-scientic ows of information, intensive in interactions with clients and, nally, a prole of low intensity in interactions, called lonely innovators. The innovating rms intensive in techno-scientic ows of information are characterized by the high probability of cooperating with agents such as technology institutes, universities and suppliers. Lonely innovators, on the other hand, show low probabilities of carrying out any type of innovation project with other partners. The probability that a service rm innovates in isolation is 59%. Therefore, it seems to be reasonable to afrm that innovation cooperation is scarcely performed by Spanish innovating service enterprises. The result is more understandable if one takes into account the composition of the Spanish business sector and its passive prole as far as innovation initiatives are concerned. This evidence supports the assumption that formal cooperation in Spain is not as present in the innovative dynamics of the companies compared to other countries, as indicated by the European Commission on many occasions. The empirical evidence also conrms that the relationship between cooperation behaviour and innovation performance is directly linked. In this sense, the higher the innovative level, the higher cooperative level and vice versa. Indeed, innovation and cooperation embrace a positive feedback loop, which means that it is not only cooperation that fosters the rms innovative capability. Empirical ndings in literature have also proven that the internal innovative effort spent by enterprises confers the necessary and fundamental knowledge and capacity to interact with others. With regard to the innovation performance of the three-prole typology, rms intensive in techno-scientic ows of information tend to innovate mainly in product and, to a certain extent in organisational aspects. Client-led innovators, on the other hand, seem to be more process innovators than any other prole. Finally, lonely innovators are basically organisational innovators.

The results lead to the conclusion that the nature of the activities affects both the nature and the intensity of the cooperation partnership in innovation. The nature of the activities referred to here can be expressed by the technological capacity, in other words, the intensity of the use of technologies, the technological opportunities, the growth in demand, the life cycle of the services, which describe the evolution of the subsector, as well as the degree of standardization or customization of the service activity. While knowledge and technologically intensive business services demonstrate a very active behaviour as far as the linkages analysed are concerned, innovating distributive services (transport, wholesale, retail, etc.) and innovating HORECA (hotels, restaurants and catering) present a very low innovative performance. However, the results underline the co-existence of different cooperation pattern within the same industry. Although the existence of an increasing debate on which one between the sectoral-determinism and strategic-choice is the most signicant factor to shape cooperation and innovation patterns, the results lead to the conclusion that there exist clear association between the information ows used throughout the innovation processes and the nature of the activity. However, it is important to stress that, in the same way that the decision that leads one rm to innovate is a strategic-choice, the inclination to use certain information channel is also a choice in terms of managerial and innovation strategy.

Acknowledgements We are grateful to Prof. Stan Metcalfe, Prof. Ian Miles, Prof. Roonie Ramlogan, Dr. Davide Consoli, Dr. Shu-Li Cheng, Prof. Marcela Miozzo and Dr. Yanuar Nugroho from the Manchester Institute of Innovation Research (University of Manchester, UK), for motivating and helpful discussions on the original version of this work, and also for providing the specic computer statistical software for Latent Class Analysis. We acknowledge Prof. nxela and other members of the ICEDE Research Group from the Troitino University of Santiago de Compostela for interesting suggestions on previous drafts of this work. We also appreciate the useful comments made by Dr. Michele Mastroeni from INNOGEN (School of Social and Political Science, University of Edinburgh, UK). A preliminary version of this article has strongly beneted from the valuable remarks provided by the participants in the DRUID Summer Conference 2009 and the XIXth International RESER 2009 Conference. The authors acknowledge the nancial support from the European Regional Development Fund (ERDF) and from Xunta de Galicia (Competitive Reference Group 2008/041 and Project 08SEC008201PR). Finally, we would also like to express thanks to the editor and two anonymous referees for the constructive feedback. The usual disclaimer applies.

Appendix A. Latent Class Analysis Latent Class Analysis (LCA) is a statistical method that can be applied to cluster, factor or regression analysis. Given the purpose of this article, we will focus on the specic module of clustering. In this sense, LCA is a multivariate technique used to identify clusters of related cases (latent classes or clusters) based on the analysis of the probability distribution of observed categorical variables. Its aim is to examine whether the association between categorical variables observed can be explained from a structure or unobserved latent variable . The LCA cluster model for categorical variables is constructed from probabilistic modeling of the observed variables {V1 , V2 , . . ., Vj , . . ., VJ } which is conditioned by a structure of latent classes. Under the assumption of local independence

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(independence between the variables Vj within the latent classes), the conditional probability function turns out to be: P

=
t =1

P( t )
j =1

vj
t

where v identies any values {v1 , v2 , . . . , vj , . . . , vJ } of the vector of observed variables V = {V1 , V2 , . . ., Vj , . . ., VJ }. It is the result of observing all the variables Vj , j = 1, 2, . . ., J, in any individual in the population. It indicates a pattern of behaviour of each individual according to the vector of observed variables V. P( t ) is the a priori probability that the latent variable takes a specic pattern t . That is, it identies the a priori probability that any individual belongs to latent class t . P (vj / t ) is the probability that the categorical variable Vj take any value vj when the latent variable takes the modality t . References
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