Purpose – The purpose of this paper is to explain importance of innovation in service companies. Service companies comprise a significant part of the overall economic activity and give a crucial contribution to the economic growth and employment. Despite their economic importance, their innovativeness has not been taken into account for a long time nor has it been considered that innovation in services exists. Design – It can be said that it is insufficiently researched in relation to the innovation in production companies. Increasing environmental pressure causes the need for innovative behaviour of companies. Methodology – The aim of this paper is to examine the innovativeness of the service companies which operate in Bosnia and Herzegovina by applying Croatian Innovativeness Quotient methodology for the assessment of the condition and activities which are undertaken with the purpose of building the innovative capacities, and the assessment of perception of innovativeness on the company level. Approach – It could be said that only the change is constant and that increasing demand for speed, flexibility, product and services quality require the companies to be innovative and proactive. Findings – Although innovation in production companies is easily recognizable since there is a material product, it cannot be said that innovation in service companies is any less important. Originality – The originality of this model is that if a company is unable to innovate, it risks a standstill state in relation to its competitors, who may take over the leadership by changing their offer.
