Innovative Entrepreneurship and Development of Service Industry: A Macroeconomic Perspective

Abstract

This article examines the link between innovative entrepreneurship and increasing trend on development of service industry. Market failure theories justify the existence of different forms of organization of services especially in digital exchange networks. Alternative approaches to service innovation allow us to further our research to analyze theoretical aspects of innovations in the development of services. The contemporary classification of service innovation concepts supplies us sufficient tools to construct the service development model. For this end, in our study we define service innovation function which is a special version of entrepreneurship augmented production function. Together with service development system, parametrization of factors of change rather than factors of production gives clearer understanding of the dynamics of service industry. The service development model founded on the axioms of organizational economics paradigm indicated the integration methods of new service innovations to the markets