Innovating in Reverse: Services and the Reverse Product Cycle

As they account for the largest share of employment and value added, services do not (or cannot) lie outside a Schumpeterian view of innovation phenomena. Of the various attempts at shedding more light on the mechanisms of innovation in service industries and firms, we consider the “reverse product cycle” to warrant special attention because of its highly thought-provoking nature and its theoretical ambition. This article has two objectives: firstly, to present this interesting and still neglected theoretical study, and secondly, to evaluate on a theoretical and empirical level the extent to which Barras’ model meets the objective of a “theory of innovation in services”.