The Effect of Innovation on Productivity in Services: Evidence from Germany

Abstract

Innovation has already been in the past an important driver
for change, performance and competitive advantage. Due
to the constantly changing and more complex environment
through instant flow of information, it gets increasingly
more important nowadays. While the manufacturing
sectors applied innovation in various ways, the structural
transformation entails innovation to services. However, the
corresponding amount of research is scarce and its
implications for organizational change and company’s
productivity. Hence, this research study aims to investigate
the effect of innovation on productivity in service firms in
Germany. The results suggest that innovation and
productivity are negatively related.