Today most of the economies around the world are mainly driven by the service sector. This sector accounts for the higher employment of labor force and also is the one that provides a higher value added. In the case of Panama’s economy the situation doesn’t vary. The service sector accounted for the 77% of Panama’s GDP in 2006, being the Panama Canal an essential contributor to it.
The major purposes of this research are: 1).To know and explain how innovation is done within a service company, by using Gallouj’s Characteristics-Based Approach model, 2). To know how is the technology adoption in the Panama Canal Authority and 3). To examines the benefits of service innovation to customers by identifying some determinants relevant to service quality.

This research used the case study to implement and collect the data. It contains both explanatory and exploratory intention. The explanatory includes an overview of the whole situation in the Panama Canal, while the exploratory was based on structural interviews applied to 7 employees of the Panama Canal Authority and 3 customers of the Canal.
The results can be summarized under three main conclusions:
- Service Innovation in the Panama Canal is highly technology enabling service. Supported by information system, technologies and modernized equipment
- The characteristics based model provides a good framework to analyze the diversities of service innovations according to this study. These innovations has improved direct or indirectly the service quality and has involved different degree of business process innovation.
- Radical and ad hoc innovation events implemented business process innovation, while the other service innovations implemented process improvement.

Arminstead, C. and Kiely, J. (2003), “Creating Strategies for managing evolving customer service”, Managing Service Quality, Vol. 13, No. 2, pp. 164-170. Retrived in December 2007 from: http://www.emeraldinsight.com/Insight/viewPDF.jsp?Filename=html/Output/Published/EmeraldFullTextArticle/Pdf/1080130208.pdf
Arthur Andersen (1996) “Panama Canal Commission: A Strategy for Growth” June 30, 1996. Retrived December, 2007 from the Panama Canal Authority web site: http://www.pancanal.com/esp/plan/estudios/ep-0012.html
Barras, R. (1986), “Towards a theory of innovation in services”, Research Policy, Vol. 15, pp. 161-173
Barras, R. (1990), “Interactive innovation of innovation in financial and business services: the vanguard of the service revolution”, Research Policy, Vol. 19, pp. 215-37
Bovet, D. (1991), “Logistics strategies for Europe in the nineties”, Planning Review, July/August, pp. 12-15, 46-48.
Chapman, R., Soosay, C. and Kandampully J. (2002) “Innovation in logistic services and the new business model: a conceptual framework”, Managing Service Quality, Vol. 12, No. 9, pp. 358-371.
Davenport, T (1993) “Process Innovation: Reengineering Work Through Information Technology”, Harvard Business School Press (ISBN 0-87584-366-2)
Davidson, W.H. (1993) “Beyond re-engineering: the three phases of business transformation.” IBM Systems Journal, Vol. 32,1, pp. 65-79
DMReview Magazine Glossary. Data Management Review and SourceMedia, Inc. 2008
Dosi, G. (1982) “Technological Paradigms and technological trajectories: A suggested interpretation of the determinants and directions of technical change”, Research Policy 11, pp. 147-162
Ducatel, K. (2000) “Information Technologies in Non-Knowledge Services: Innovations on the Margin?” In Metcalfe J. and Miles, I. (Eds.), Innovations systems in the service economy (pp. 221-245). Kluwer Academic Publisher.
Fawcett, S.E., Birou, L. and Taylor, B.C. (1993), “Supporting global operations through logistics and purchasing”, International Journal of Physical Distribution & Logistics Management, Vol. 23, No. 4, pp. 3-11
Gale, B. T. (1994), “Managing Customer Value: creating quality and service that customers can see”, The Free Press, pp. 119-122
Gallouj, F. (1998), “Innovation in reverse: services and the reverse product cycle”, European Journal of Innovation Management, Vol. 1, pp. 123-138
Gallouj, F. (2002), “Innovation in the Service Economy: The New Wealth of Nations” pp. 28 – 104
Gallouj, F. and Weisntein, O. (1997) “Innovation in Services”, Research Policy; Vol. 26, pp. 537-556
Gattiker, U. (1990), “Technology Management in Organizations” Sage Publications, pp. 19-20
Gibson, C.F. and Jackson, B.B. (1987) “The Information Imperative.” Lexington MA: Lexington Books.
Gronroos, C. (2000), “Service Management and Marketing: A customer Relationship Management Approach” 2nd ed., John Wiley & Sons, London.
Gronroos, C. (1982), “Strategic Management and Marketing in the Service Sector,” Swedish School of Economics and Business Administration. Helsingfors, Finland
Hammer, M. and Champy, J.(1993) “Reengineering the Corporation.” New York: Harper Collins.
Haner, U.E. (2002), “Innovation Quality – a conceptual framework.” International Journal of Production Economics; Vol. 30, pp. 31-37
Heskett, J.L., Jones, T.O., Loveman, G.W., Sasser, E.W. and Schlesinger, L.A. (1994), “Putting the service profit chain to work”, Harvard Business Review, March-April, pp. 164-174.
Heskett, J.L. (2002), “Beyond customer loyalty” Managing Service Quality, Vol. 12, No. 2, pp. 355-357.
International Standard Organizations: News and Media. Retrieved October, 2007, form the website: http://www.iso.org/iso/pressrelease.htm?refid=Ref967
ISO 2006 Survey. Retrieved on December, 2007 from: http://engineers.ihs.com/news/iso-2006-survey.htm
Kandampully, J. and Duddy, R. (1999), “Relationship marketing: a concept beyond the primary relationship”, Marketing Intelligence &Planning, Special Issue on Relationship Marketing, Vol. 17, No. 7, pp. 315-323.
Lewis, R and Booms, B. (1983), “The Marketing Aspects of Service Quality,” in Emerging Perspectives on Service Marketing, L. Berry, G. Shostack and G. Upah, eds., Chicago: American Marketing, 99-107
Maucci, G and Lugo, E. (2002), “The Maritime Clusters – The Panamanian Case, IMAE Panama 2002 Conference.
Miller, W and Morris, L. (1999), “4th Generation R&D: Managing Knowledge, Technology and Innovation”, John Wiley & Sons, Inc. pp 1-25.
Ministerio de Economia y Finanzas de Panama (Ministry of Economy and Finance of Panama). Retrieved from the website: www.mef.gob.pa
Miozzo, M. and Soete, L. (2001) “Internationalization of Services: A Technological Perspective” Technological Forecasting and Social Change, Vol. 67, pp. 159-185.
Orlinkowski, W.J (1993) “CASE tools as organizational change: investigating incremental and radical changes is systems development.” MIS Quarterly, 17, 3, pp. 309-340
Panama Canal Authority (April 24, 2006) “Proposal for the Expansion of the Panama Canal, Third Set of Locks Project” Retrieved: August, 2007. Web page: http://www.pancanal.com/eng/index.html
Panama Canal Authority. Projects and Programs. Retrieved: September, 2007 from: http://www.pancanal.com/eng/projects/index.html
Panama Canal Authority. Marine Tariff. Retrieved: March, 2008 from: http://www.pancanal.com/eng/maritime/tariff/index.html
Panama Canal Authority. Customer Ranking. Retrieved: May, 2008 from: http://www.pancanal.com/evtms-rpts/agents/VI5350RP.pdf
Panama Canal Authority. Auction System. Retrieved: April, 2008 from: http://www.pancanal.com/eng/maritime/auction/user-guide.pdf
Parasuraman, A., Zeithmal, V.A. and Berry, L.L. (1985) “A Conceptual Model of Service Quality and Its Implications for Future Research,” Journal of Marketing, Vol. 49, pp. 41-50.

Parasuraman, A., Zeithmal, V.A. and Berry, L.L. (1988) “SERVQUAL: A Multiple-item Scale for Measuring Consumer Perceptions of Service Quality,” Journal of Retailing, Vol. 67, No. 4, pp. 420-450.
Proposal for the Expansion of the Panama Canal: Third Set of Locks Project (April 2th, 2006) Retrieved August, 2007 from the Panama Canal Authority Web Site: http://www.pancanal.com/eng/plan/documentos/propuesta/acp-expansion-proposal.pdf
Pitt, L.F, Watson, R.T and Kavan, C.B (1995), “Service Quality: A Measure of Information Systems Effectiveness” MIS Quarterly, Vol. 19, No. 2, pp. 173-187.
Sasser, W. E., Olsen, R.P and Wychoff, D.D. (1978) “Management of Service Operations: Text and Cases,” Allyn and Bacon, Boston.
Saviotti, P.P and Metcalfe, J.S. (1984), “A Theoretical Approach to the Construction of Technological Output Indicators”, Research Policy, 13, pp. 141-151
Sirilli, G. and Evangelista, R. (1998), “Technological innovation in services and manufacturing: results from Italian surveys” Research Policy, Vol. 27, pp. 881-899
Sundbo, J. and Gallouj, F. (2000), “Innovation as a loosely coupled system in services.” In Metcalfe J. and Miles, I. (Eds.), Innovations systems in the service economy (pp. 43-68). Kluwer Academic Publisher.
Sundbo, J. (1996), “Balancing empowerment”, Technovation Vol. 16, No. 8, pp. 397-409
Stoddard, D. and Jarvenpaa S. (1995) “Business Process Redesign: Tactics for Managing Radical Change” Journal of Management Information System. Vol 12., 1, pp. 81-107
Tether, B. and Metcalfe, J. (2000), “Horndal at Heathrow? Incremental Innovation through Procedural Change at a congested airport.” In Metcalfe J. and Miles, I. (Eds.), Innovations systems in the service economy (pp. 43-68). Kluwer Academic Publisher.
Yin, R. (2003), “Case Study Research” Third Edition, Vol. 5, Sage Publications
World Shipping Council. Industry Information. Liner Shipping in the U.S. Retrived: December, 2007 from: http://www.worldshipping.org/ind.html
World Shipping Council. Industry Information. Top 30 Carriers Retrieved: December, 2007 from: http://www.axsmarine.com/public/top100/index.php