Innovation in the service sector and the role of patents and trade secrets: Evidence from Japanese firms

This study, using Japanese firm-level data, presents empirical findings on innovation in the service sector and the role of patents and trade secrets. Service firms have fewer product innovations than manufacturing firms do, but the productivity of innovative service firms is very high. Service firms have a low propensity to hold patents, but their holding of trade secrets is comparable to that of manufacturing firms. Product/service innovations have positive relationships with holding patents and trade secrets in both industries, but a positive association of process innovations is found only with holding trade secrets in the manufacturing industry.