The competent demand pull hypothesis: which sectors do play a role?

The paper investigates intersectoral linkages between manufacturing and services under the competent demand pull hypothesis. This hypothesis postulates that the demand pulls the innovative capacities of the suppliers only when and if they are accompanied by qualified knowledge interactions with creative customers. We empirically investigate this hypothesis based on the sector-level data of nineteen (manufacturing and service) sectors in fifteen EU countries over the period 1995-2007. We adopt the input-output framework to assess the strength of the inter-sectoral intermediate goods transactions. Our main findings confirm that demand actually pulls technological change only when it comes from competent customers able to implement effective user-producer knowledge interactions. The results stress the relevance of the transactions-cum-knowledge interactions between the knowledge intensive business service sectors and the manufacturing industries.