Division of labor between firms: business services, non-ownership-value and the rise of the service economy

Ehret, M. ORCID: 0000-0002-2478-8889 and Wirtz, J., 2010. Division of labor between firms: business services, non-ownership-value and the rise of the service economy. Service Science, 2 (3), pp. 136-145. ISSN 2164-3962

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Why have services grown into the dominant sector of developed economies? Our analysis of macroeconomic data shows that business services make the strongest contribution to the rise of the service sector. We integrate three related economic theories of the firm to explain business services in shaping firms, industries and economies. Business service providers relieve their clients from the costs of asset ownership (Property Rights Theory), unlock management capacity (Resource-Based View) and support their clients in navigating their firm's boundaries towards their most valuable business opportunities (Entrepreneurial Theory of the Firm). We show how these theories build on the non-ownership value provided by business services that result from sound division of labor between organizations. We highlight three areas that call for research and provide opportunities for service science: (1) Systematic design of business-models for fostering service performance, (2) the transformation of high-tech-products into service-hubs, and (3) service-driven innovation and the transformation of R&D into a service industry.

Item Type: Journal article
Publication Title: Service Science
Creators: Ehret, M. and Wirtz, J.
Publisher: Services Science Global (SSG)
Date: 2010
Volume: 2
Number: 3
ISSN: 2164-3962
Divisions: Schools > Nottingham Business School
Record created by: Linda Sullivan
Date Added: 20 Jan 2017 09:27
Last Modified: 02 Oct 2017 13:21
URI: https://irep.ntu.ac.uk/id/eprint/29887

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