Innovation and Productivity in Services (original) (raw)

Slow labour productivity growth has been a salient feature of the Dutch economy for a while, especially in (business) services. Using firm-level data from the Dutch business services sector, the article aims to explain this feature by analysing whether the slow growth is due to a lack of innovation. Innovation expenditures in the period 1994-1996 were, in fact, rather low from an international perspective. The article shows that innovating firms in Dutch business services realised higher productivity growth rates than non-innovating firms. Remarkably, innovation did not go along with superior growth rates in turnover, but was instead accompanied by lower growth rates of employment.