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This paper addresses the methodological problems of empirical validation in agent-based (AB) models in economics and how these are currently being tackled. We first identify a set of issues that are common to all modelers engaged in empirical validation. We then propose a novel taxonomy, which captures the relevant dimensions along which AB economics models differ. We argue that these dimensions affect the way in which empirical validation is carried out by AB modelers and we critically discuss the main alternative approaches to empirical validation being developed in AB economics. We conclude by focusing on a set of (as yet) unresolved issues for empirical validation that require future research. [PUBLICATION ABSTRACT]

Purpose – The purpose of this paper is to examine the roles played by third sector organizations in forming and managing health innovation networks, and their contribution to the co-production of new health services. Design/methodology/approach – Using data collected in four case studies, the findings highlight the central role of third sector organizations in forming and organizing public-private health networks. Findings – They are trusted organizations, commonly patient advocates, with perceived neutrality. Members of these organizations take leading roles in innovations networks, using their excellent network connections and their prominent positions within their organizations to leverage competences and funding. A key asset of key third sector individuals is their prior experience of public and private sector organizations and, hence, the ability to move across public-private boundaries. Practical implications – The research findings have important implications for practitioners. The author identifies a set of key drivers and barriers for the successful organization of innovation networks and the innovative services they develop. Prior knowledge and experience of partners, often linked to personal ties, in initial partner selection but are also important for trust and the effective organization of complementary competences during innovation projects. The absence of direct competitors – whether public, private or third sector organizations – is also highlighted. Non-rivalry and different partners’ interests in the outcomes of the innovation reduces moral hazard and the associated costs of setting up and monitoring formal contracts. Heterogeneity requires flexibility by actors; to understand partners’ different values, cultures, and organizational drivers. Finally, the research findings identify policy and practitioner enrolment as critical for the successful roll out and diffusion of service innovations. Originality/value – The paper examines an important, but under researched issue – the role of third-sector organizations in collaborative innovation projects.

Purpose - The research fields of service innovation and social innovation have, until now, been largely disconnected. At the most basic level, a great many social innovations are services, often public sector services with social entrepreneurs organizing and delivering service innovations. As well as this overlap in the focus of research, scholars in both research fields address socio-economic concerns using multidisciplinary perspectives. The purpose of this paper is to provide a framework that can bridge the two research fields. Design/methodology/approach - Inter-linkages between service and social innovation are shown by identifying research areas in which both find a joint heuristic field. This approach has been illustrated in a set of case studies in the health sector in Europe. Findings - The bridge between social innovation and service innovation research can be built when social innovation is examined through a multi-agent framework. The authors focus on social innovations where the co-creation of novel services is guided by the prominent position taken by citizens, social entrepreneurs or third sector organizations (NGOs or charities) in the innovation process. Of particular interest are the ways in which the interests of individual users and citizens are \"represented\" by third sector organizations. Practical implications - The case study of the Austrian nationwide public access defibrillation programme provides an exemplar of the process of co-creation by which this social innovation was developed, implemented and sustained. Here the Austrian Red Cross acted on behalf of citizens, organizing an innovation network capable of creating both the demand and the supply side of a sustainable market for the production and safe application of portable automated external defibrillators (AEDs) in Austria. This process involved, first, raising public awareness of the need for portable defibrillators and acting as a user representative when inducing changes in the design of portable AEDs. Later, there was the institutionalization of AED training in every first aid training in Austria, work with local manufacturers to produce this device, and with large user organizations to install AEDs on their premises. Originality/value - The paper develops multi-agent model of innovation that enables one to synthesize key concepts in social and service innovation literatures and, thereby, examine the dynamics of invention and diffusion of social innovations.

We have witnessed a dramatic transformation of the US and western European economies in just twenty years. Built on manufacturing, today these are indubitably services-based economies. The transformation raises a number of important issues for economists, and for evolutionary economists in particular for they have long highlighted the importance of innovation and structural change in their treatment of industrial organisation, employment creation, welfare, economic growth, and international trade. Our understanding of the innovation process, and its economic implications, were built on studies of manufacturing sectors. What needs to be changed? Are some theories and models no longer applicable? Do we need to develop new explanations, theories and models? Is innovation in service sectors fundamentally different to innovation in manufacturing sectors, or is there a set of common features? These are key questions that are now being asked. We suggest that, by studying services innovation, scholars of innovation have an opportunity to develop an integrated account of innovation that is applicable to both services and manufacturing, and which covers all aspects of the innovative process. This requires a reassessment of established theories and models, and the development and testing of new theories and models. In other words, it requires a through review of what (we think) we know about innovation. This, at any rate, is our contention, our belief. We do not yet know the answer to the above questions. A tremendous amount of research is needed before a set of clear answers can be proffered. One of the goals of this special issue is to raise the interest of economist not yet working in this area, and to hopefully engage them in it. As the collection of papers contained herein address important, leading edge research topics in services, they will stimulate the interest of economists who are not yet actively researching the area as well as those who are already engaged in services and services innovation research.

A growing number of empirical studies find a relationship between the outsourcing of activities and a long term loss of firm productivity growth. The paper addresses this outsourcing productivity paradox by examining the connection between total outsourcing and organisational innovation. We present a model of organisational innovation in which managers raise productive efficiency by identifying organisational architectures that more effectively integrate value-adding activities and administrative routines. As part of this process, managers can internally or externally source an activity. Simulations of the model show that large scale outsourcing restricts the scope for future organisational innovation, leading to lower productivity growth. The findings accord with the empirical data and provide a salutary warning for managers and policy-makers about the long term implications of total outsourcing.

The paper uses a two-stage, multi-agent simulation model to examine the conditions under which technological successions can occur in the presence of network externalities. Data is used to identify a robust econometric model of the probability of succession. Four key factors are identified. First, the trade-off between higher direct utility from new technology goods and the network utility of old technology goods. Second, the relative innovative performance of new and old technology firms. Third, cost (price) differentials due to increasing returns in production. Fourth, the time old (new) firms have to develop their product designs prior to entry. [PUBLICATION ABSTRACT]

Purpose – The research fields of service innovation and social innovation have, until now, been largely disconnected. At the most basic level, a great many social innovations are services, often public sector services with social entrepreneurs organizing and delivering service innovations. As well as this overlap in the focus of research, scholars in both research fields address socio-economic concerns using multidisciplinary perspectives. The purpose of this paper is to provide a framework that can bridge the two research fields. Design/methodology/approach – Inter-linkages between service and social innovation are shown by identifying research areas in which both find a joint heuristic field. This approach has been illustrated in a set of case studies in the health sector in Europe. Findings – The bridge between social innovation and service innovation research can be built when social innovation is examined through a multi-agent framework. The authors focus on social innovations where the co-creation of novel services is guided by the prominent position taken by citizens, social entrepreneurs or third sector organizations (NGOs or charities) in the innovation process. Of particular interest are the ways in which the interests of individual users and citizens are “represented” by third sector organizations. Practical implications – The case study of the Austrian nationwide public access defibrillation programme provides an exemplar of the process of co-creation by which this social innovation was developed, implemented and sustained. Here the Austrian Red Cross acted on behalf of citizens, organizing an innovation network capable of creating both the demand and the supply side of a sustainable market for the production and safe application of portable automated external defibrillators (AEDs) in Austria. This process involved, first, raising public awareness of the need for portable defibrillators and acting as a user representative when inducing changes in the design of portable AEDs. Later, there was the institutionalization of AED training in every first aid training in Austria, work with local manufacturers to produce this device, and with large user organizations to install AEDs on their premises. Originality/value – The paper develops multi-agent model of innovation that enables one to synthesize key concepts in social and service innovation literatures and, thereby, examine the dynamics of invention and diffusion of social innovations.

Against the backdrop of critique on the German model of capitalism in general, and German public policy in particular as to the ability to successfully adjust to rapid change and exogenous shocks in wake of economic globalisation, this paper investigates the degree of shock persistence in foreign direct investment (FDI) of ten German manufacturing industries for the period 1976 to 2003. Theory on exports and non-FDI investment suggests that FDI should exhibit a considerable degree of shock persistence because they are subject to high sunk costs because of high entry and exit costs associated with the high level of asset specificity that is normally connected to FDI. Persistence in foreign direct investment time series data is established by applying various unit root tests. The results are robust to the potential presence of structural breaks in the data. The empirical analysis shows that German outward FDI in mature manufacturing industries, with one exception, exhibits a high degree of shock persistence. The results suggest, at least for mature German industries, that the sunk costs view on shock persistency is confirmed for outward FDI. The results furnish evidence for a tentative assessment of the relationship between German public policy and FDI strategies of multinational firms.

The nature and consequences of services innovation remains a woefully under-researched topic. The paper calls into question two statements that are frequently repeated in the political-economic discourse on services. The first concerns the suggestion that Germany is a 'services laggard' that needs to restructure its domestic economy if it is to remain internationally competitive. By contrast, the UK is frequently held up as an example of a successfully restructured 'services economy'. The paper draws an important distinction between the quantity of services in a domestic economy and the degree of connectivity between services and other economic activities. The latter, it is argued, is far more important in determining the size of spill-overs from services innovation enjoyed within a domestic economy and, hence, to international competitiveness. Particular attention is paid to the role and impact of knowledge-intensive service sectors in this regard. In addition to the UK and Germany, data is drawn from the Netherlands and Japan. Using these four comparative cases we explore the distinction between a high representation of services in the domestic economy, and the innovation spill-overs facilitated by a high degree of connectivity between services and other economic sectors within a domestic economy.

This paper presents a holistic, dynamic understanding of consumer journeys as evolving entities in complex service ecosystems with many touchpoints. It highlights the significance of loosely connected events and practices in shaping user experiences over time, across different digital-socialphysical contexts. The Korean wave provides an exemplar of this. It is a global cultural phenomenon in entertainment and culture that has evolved through three phases between 1997 and the present (Jin 2023). Using case study material collected from real user journeys, the paper reveals the Wave to be a meso level phenomena, created by the joining of a diverse service offerings and (C2C and B2C) touchpoints in social, digital, and physical spaces that enable value co-creation within continuously evolving experiences that are very different to one-off events and purchases.