This paper presents a new theoretical explanation of how the management of control systems’ innovation can be used to improve the economic performance of firms in certain service sectors. In particular it focuses on service sectors where control systems can be used to co-ordinate the flow of goods, traffic, materials, funds, or information through complex supply, production or distribution systems. The paper examines how they increase productivity by improving the utilisation of installed capacity, creating economies of system that are distinct from the traditional manufacturing economies of scale, speed and scope. A framework is developed that explains what sectors they are important in, and how innovation in component technologies relates to organisational changes. It is illustrated by case studies of three sectors: elevators, telecommunications and investment banking
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