Creative restruction – how business services drive economic evolution

Abstract

PurposeThe purpose of this paper is to express the widely underestimated role of business services in driving the growth of the service sector, and the increasing specialization and productivity of the economies.Design/methodology/approachThe authors draw on statistical data and industry reports and link them to the non‐ownership‐concept in service research and the theory of the firm.FindingsBusiness services are the major driver of the service economy. Organizations focus on core competencies and outsource commoditized and non‐core activities in order to free managerial capacity for the entrepreneurial pursuit of opportunities. This in turn drives the specialization and enhanced productivity of economies.Research limitations/implicationsThis paper advances the non‐ownership discussion in service research and integrates it with economic theories of the firm, including the property rights theory, the resource‐based view and the entrepreneurial theory of the firm. This paper makes a conceptual contribution without empirical testing.Practical implicationsImplications for individual businesses include recommendation to focus on core activities and outsourcing of non‐core competencies to competitive business service providers. Here three fundamental value propositions business service providers can offer their clients are identified: reduction of the costs of asset‐ownership (property rights theory); freeing scarce management capacity to focus on high value‐creation opportunities (resource‐based view); and the enhancement of their entrepreneurial agility and leverage (entrepreneurial theory of the firm). Policy implications include a better understanding of the role of business services in wealth creation and the recommendation to create and ensure competitive business services markets that are open to global competition.Originality/valueThe authors provide an explanation for the role of business services as a driving force of economic development and business productivity.