Though business services have been the fastest growing branch in most developed countries and newly developing countries during the last thirty years, and more and more knowledge is functioned in increasing productivity of business services, it has only been since the mid of the 1990s that research has focused specifically on knowledge-intensive business services. In 1995 these services were separated into their own group more precisely than previously and the definition of knowledge-intensive business services (KIBS) was adopted (Miles et al. 1995). Since then there has been a constant growth in research interest into the nature of KIBS and into their role in society. Closely connected with the awareness of the importance of KIBS have been the new insights concerning innovation activity. The following three research trends and approaches are particularly important in this respect: 1) the broadening of the traditional innovation concept focused on science and radical inventions, 2) appreciation of the significance of service innovations and research into their special nature, and 3) the adoption of innovation systems thinking. Services have until recently been considered of secondary importance in innovation. Research into KIBS has occupied a pivotal role in the change of this way of thinking. Firstly, in technology-based KIBS (T-KIBS), innovation activity is largely perceived as resembling high-technology industrial sectors (Howells 2000; Miles 2001). Secondly, in the measurement of innovativeness the traditional indicators connected with technological innovation such as research and development (R&D) activity, patents, etc. have been shown insufficient. Especially the role of human resources in underpinning innovations have been emphasised and, connected with this, investments in human resources as an important indicator of innovativeness have been brought up (Miles 2001; Preissl 2000). Research into innovation activity in the KIBS sector has been conducted side by side with more general research concerning service innovations. They both have also brought out factors that contribute to the understanding of innovation activity more broadly, that is to say not only in service sectors, but in manufacturing sectors as well. Such factors include the significance of incremental innovations and innovation combinations, interaction between product and process innovations and co-production of products and services together with the clients (Gallouj and Weinstein 1997; Sundbo & Gallouj 2000).
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