Do knowledge-intensive business services innovate differently?

This paper contributes to the debate on the differences across service and manufacturing firms focusing on two comparable sectors: knowledge-intensive business services (KIBS), and specialized suppliers within manufacturing (SSM). Using a large panel dataset of Spanish firms, we compare the two industries in terms of the impact on their innovation performance of three factors: investment in R&D, cooperation with customers, and cooperation with other firms. These are the factors that - following the paradigm of open innovation - work together in the process of firm innovation. Our findings show that the impact of R&D is comparable in the two sectors, whereas cooperation with customers is more important for SSM than for KIBS because the latter are rather more reliant on a larger network of partners (especially knowledge providers). For both sectors, the role of cooperation vanishes when performance is measured in terms of the proportion of sales generated by innovation rather than propensity for innovation.