Title: Innovation behaviour in financial services: an empirical analysis

Authors: Soumodip Sarkar, Cesaltina Pires, Luisa Carvalho

Addresses: Department of Management and CEFAGE-UE, Universidade de Evora, Portugal. ' Department of Management and CEFAGE-UE, Universidade de Evora, Portugal. ' Department of Economics and Management and CICE, Setubal Polytechnic Institute, Portugal

Abstract: In this paper, using standardised data for over 7000 service sector firms, we test different hypotheses to understand to what extent innovation output and activity in financial sector firms is different from other service firms. An intriguing result for the service sector as a whole is that the effect of a firm being part of a multinational group is negative for product innovation but positive for process innovation. Comparing the innovation behaviour of financial and non-financial services firms, we obtain four very interesting and significant differences. Firstly, we find that financial services have a lower probability of introducing product innovations, but a higher probability of introducing process innovations. Secondly, we find that financial services firms are not particularly good pioneer innovators, but they are quite good as innovation imitators. Thirdly, for the financial services firms, being part of a multinational group increases the probability of the firm being both a pioneer innovator and a product innovator. Finally, we find differences in innovation behaviour due to firm size.

Keywords: CIS; Community Innovation Survey; financial innovation; financial services; product innovation; process innovation; service sector; firm size.

DOI: 10.1504/IJFSM.2008.022549

International Journal of Financial Services Management, 2008 Vol.3 No.3/4, pp.223 - 242

Published online: 14 Jan 2009 *

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