This paper addresses the innovation process in services, discussing whether it is endogenous or exogenous. Innovation theory in its main contribution privileges manufacturing and regards service innovation as an outcome from the diffusion of innovations in manufacturing. The paper argues that innovation in services is endogenous and cannot be identified by the technology source used to offer innovative services, but in its capability to implement strategies previously set. Based upon a case study carried out in six hospitals in Porto Alegre, it has been found out that innovations introduced in these hospitals resulted from a strategy formerly designed. The analysis considered the motivations which led to these innovations, their presence in the hospitals strategic planning and the way the implementation process was managed. Results show innovation process in services is endogenous and differences akin to distinct paths associated to company’s strategies adopted according to particular governance structures rather than to the impact of innovations in manufacturing.