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Issue Report

Collection of full-length papers and in-depth analysis of economic and management issues.

Service Sector Science Emerges

Service Sector Science Emerges

JOO Young-Min

June 18, 2013

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Though the service sector has taken up an increasing share of the global economy, labor productivity has persistently trailed the manufacturing sector. In the last ten years the gap has widened to between 60-80% in developed economies. In response, a new field of study called "service science" is attracting attention. It melds IT, the sciences, mathematics, business management, economics and marketing to spur innovation and productivity improvements in services.

Many companies in industrialized nations have already incorporated this inter-disciplinary approach. IBM, one of the early adopters, started the study of services in 2002 and opened its Services Innovation Lab in 2011. IBM also sponsors conferences and workshops on service science and teams up with universities to develop related curricula and programs.

Governments around the world also have recognized the significance of the service industry. Advanced industrialized economies, particularly the US, Britain, Germany and Finland, have begun reinforcing policies, expanding funding, setting up specialized research institutes, and strengthening talent cultivation, all with the overarching objective of stimulating service sector innovation.

In Korea, the share of the service industry in GDP remains relatively low compared to developed countries. Labor productivity in the nation's service sector has been hovering around 40% of the level of its manufacturing sector, and 50-60% of the level of developed countries.

To realize innovation, an open ecosystem must first be established. This would include universities, research institutes, companies and consumers participating as contributors and creators in developing innovative processes. Secondly, the government, in collaboration with both universities and companies, should cultivate a pool of experts in service science research. And in order to promote employment of service science-related talent the government must support companies that hire them. Finally, the benefits of service science should be widely publicized and best-practice awards given to innovative companies.

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