ABSTRACT
The concept of innovation systems (IS) is clearly interwoven with industrial dynamics, and intimately linked to the relations between innovating firms and their environment, how they are affected by initiatives beyond the commercial objectives of firms. This chapter discusses some of the basic ideas underlying this concept, to enable us to understand IS in a dynamic context, and to identify some broad issues relating to the roles of service sectors in IS. Innovation is an act undertaken to accomplish commercial objectives. Innovations are initiatives at the level of the individual firms, exploiting opportunities and meeting challenges in the business environment. The chapter outlines some dimensions of services’ roles in economic systems. The role of distribution services in economic development is elaborated in literature dealing with the industrial revolution. Whereas the economic origins and effects of distribution services are fairly easily visualized, the case of financial services is far more obscure.
