Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • 2022
  • Chapter
  • The Role of Innovation and Entrepreneurship in Economic Growth

The Servicification of the U.S. Economy: The Role of Startups versus Incumbent Firms

By: Mercedes Delgado, J. Daniel Kim and Karen G. Mills
  • Format:Print
ShareBar

Abstract

Over the last few decades, the U.S. economy has exhibited a significant shift from manufacturing towards services. This transition has been particularly prominent in an important subcategory of services industries that drives innovation and employs many high-wage workers: Supply Chain Traded Services (Delgado and Mills, 2020). These industries provide specialized service inputs to organizations and are characterized by high upstreamness, which allow innovations to cascade down to other buyer industries. In this chapter, we explore the role of startups versus incumbent firms in driving the transition from manufacturing to Supply Chain Traded Services between 1998 and 2015. Using the Longitudinal Business Database of the U.S. Census Bureau, we find that startups experienced a large decline in Supply Chain Traded Services, both in terms of entry of new firms and growth of young firms. Instead, job growth in this sector has been led by established firms: the transformation of incumbent manufacturing firms towards services (e.g., Intel), and the growth of incumbent Supply Chain Traded Service firms (e.g., Microsoft). To complement our empirical findings, we discuss potential barriers for entrepreneurial firms, and illustrate the servicification efforts of several established firms. We conclude by offering broad policy implications.

Keywords

Servicification; Supply Chain Industries; STEM Labor; Innovation; Growth; Entrepreneurship; Innovation and Invention; Economic Growth; Policy; Service Industry; United States

Citation

Delgado, Mercedes, J. Daniel Kim, and Karen G. Mills. "The Servicification of the U.S. Economy: The Role of Startups versus Incumbent Firms." In The Role of Innovation and Entrepreneurship in Economic Growth, edited by Michael J. Andrews, Aaron Chatterji, Josh Lerner, and Scott Stern. Chicago: University of Chicago Press, 2022.
  • Read Now

More from the Authors

    • February 2025
    • Faculty Research

    Doing Business in Casablanca, Morocco

    By: Karen G. Mills, Ahmed Dahawy and Choetsow Tenzin
    • 2024
    • Faculty Research

    Fintech, Small Business & the American Dream: How Technology Is Transforming Lending and Shaping a New Era of Small Business Opportunity

    By: Karen G. Mills
    • February 2024 (Revised February 2025)
    • Faculty Research

    Doing Business in Ho Chi Minh City, Vietnam

    By: Karen G. Mills, Allison H. Mnookin, Leonard A. Schlesinger, Shu Lin, Julianne Bliss and Morgane Herculano
More from the Authors
  • Doing Business in Casablanca, Morocco By: Karen G. Mills, Ahmed Dahawy and Choetsow Tenzin
  • Fintech, Small Business & the American Dream: How Technology Is Transforming Lending and Shaping a New Era of Small Business Opportunity By: Karen G. Mills
  • Doing Business in Ho Chi Minh City, Vietnam By: Karen G. Mills, Allison H. Mnookin, Leonard A. Schlesinger, Shu Lin, Julianne Bliss and Morgane Herculano
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College.