The Evolution of Innovation Theory in the Service Economy

The development in ICT over the past century have accelerated spectacularly in the past few decades. This has opened a new way forward for innovation and productivity improvement in services via their impact on organization and coordination. Innovation in services has received a great boost recently from new ICT and accompanying market evolution. This is more than just an outward shift in the production function, but rather the evolution of economic coordination through increasing division of labor. In this paper, we propose a theory of this evolutionary process.