Creative restruction – how business services drive economic evolution Jochen Wirtz National University of Singapore, Singapore, Singapore, and Michael Ehret Nottingham Business School, Nottingham Trent University, Nottingham, UK Abstract Purpose – The purpose of this paper is to express the widely underestimated role of business services in driving the growth of the service sector, and the increasing specialization and productivity of the economies. Design/methodology/approach – The authors draw on statistical data and industry reports and link them to the non-ownership-concept in service research and the theory of the firm. Findings – Business services are the major driver of the service economy. Organizations focus on core competencies and outsource commoditized and non-core activities in order to free managerial capacity for the entrepreneurial pursuit of opportunities. This in turn drives the specialization and enhanced productivity of economies. Research limitations/implications – This paper advances the non-ownership discussion in service research and integrates it with economic theories of the firm, including the property rights theory, the resource-based view and the entrepreneurial theory of the firm. This paper makes a conceptual contribution without empirical testing. Practical implications – Implications for individual businesses include recommendation to focus on core activities and outsourcing of non-core competencies to competitive business service providers. Here three fundamental value propositions business service providers can offer their clients are identified: reduction of the costs of asset-ownership (property rights theory); freeing scarce management capacity to focus on high value-creation opportunities (resource-based view); and the enhancement of their entrepreneurial agility and leverage (entrepreneurial theory of the firm). Policy implications include a better understanding of the role of business services in wealth creation and the recommendation to create and ensure competitive business services markets that are open to global competition. Originality/value – The authors provide an explanation for the role of business services as a driving force of economic development and business productivity. Keywords Service industries, Property rights, Entrepreneurialism Paper type General review 1. The hidden roles of business services 1.1 The rise of the service economy For the first time since the industrial revolution are there fewer than 10 per cent of working Americans employed in the manufacturing sector. Is this cause for concern? People who think so point to a presumed lower productivity potential of services. However, in terms of output, manufacturing has not vanished at all. What is oftentimes coined as the decline of manufacturing is showing itself in the form of lower of The current issue and full text archive of this journal is available at www.emeraldinsight.com/0955-534X.htm EBR 21,4 380 Received April 2009 Revised April 2009 Accepted April 2009 European Business Review Vol. 21 No. 4, 2009 pp. 380-394 q Emerald Group Publishing Limited 0955-534X DOI 10.1108/09555340910970463