Disruptive Technology and Defence Innovation Ecosystems

Pierre Barbaroux, Pierre Barbaroux

• Publisher: Wiley-ISTE
• Year: 2019
• ISBN:
  9781119644590
• Edition: 1
• Topic: Biological Sciences
• Subtopic: System Theory
• Index: Biological Sciences

Recent advances in the disciplines of computer science (e.g., quantum theory, artificial intelligence), biotechnology and nanotechnology have deeply modified the structures of knowledge from which military capabilities are likely to develop. This book discusses the implications of disruptive technologies for the defence innovation ecosystem. Two complementary dimensions of the defence innovation ecosystem are highlighted: the industrial and intra-organizational. On the industrial scale, there is a shift in the ecology of knowledge underpinning the defence industrial and technological base (DITB). At the intra-organizational level, it is the actors' practices that change and, through them, their skills and the processes by which they are acquired and transferred. In this context, the sources and legitimacy of innovation are being transformed, in turn requiring sometimes radical adaptations on the part of the various actors, including companies, military services, research communities and governmental agencies, which make up the defence innovation ecosystem.

PART 1
Transformation of the Innovation Organization Model in the Defence Sector

1
Innovation Dynamics in Defence Industries

ABSTRACT. This chapter aims to analyze the dynamics of innovation specific to defence industries to understand the changes in the behavior of the different actors involved since the late 1980s. The structural changes inside national systems of innovation have particularly affected the innovation environment of defence firms. In addition to the intensification of research and development (R&D), of civil innovation, role of private enterprises, competition, acceleration of process innovation and increasing complexity of knowledge, a major reform of public R&D funding has occurred in France, which has strongly reduced direct and defence funding. Defence firms have adapted to these major changes by developing a dynamic of openness, accompanied by the Ministry of the Armed Forces, to the civil sector and other regions of the world: increase of dual technologies, of R&D outsourcing, European cooperation or relationship with universities.

1.1. Introduction

The purpose of this chapter is to analyze the dynamics affecting innovation in the defence sector in order to understand the changes in the behavior of the various stakeholders involved (public or private companies, universities and government agencies).

The defence innovation system has undergone profound changes to which the various stakeholders have had to adapt. These changes mainly reflect the structural changes that have affected national innovation systems (NISs)¹ since the late 1980s (Mowery 2012) and have particularly affected the innovation environment of defence companies in France and in other arms-producing countries.

Research and development (R&D) and civil innovation have increased significantly, the role of private companies has increased and patenting has accelerated. The mobilized knowledge has become more complex and competition has intensified. In addition to these structural changes, which have affected all OECD countries to varying degrees, France has undergone a major reform of its public R&D financing system. The gradual decline in direct public funding from the early 1990s, particularly defence funding, was followed by a sharp increase in indirect funding in the form of tax incentives, as in other European countries, but to a greater extent.

To adapt, the stakeholders involved in defence innovation have accelerated the development of dual technologies. The defence innovation system has opened up to civil and foreign markets. Outsourcing of R&D is more prevalent and cooperation, especially at the European level, is becoming more important. The French Ministry of Defence, which became the Ministry of the Armed Forces in 2017, has also reformed its innovation management and financing system by creating an agency (Innovation Agency), funds (DefInvest) or by developing its links with universities.

We analyze these developments by first focusing on the changing innovation environment of defence industries, before highlighting in a second section, the dynamics of opening up the defence sector.

1.2. Transformation of the defence industry’s innovation environment

The changing innovation environment of defence industries can be characterized by three main elements since the early 1980s. Indeed, defence companies have had to adapt, on the one hand, to changes in the science and technology system and, on the other hand, to increased competition and to the increasing complexity of knowledge. Finally, they have been particularly affected by the evolution of the R&D financial system, which has resulted in a reduction in their dependence on defence financing.

1.2.1. Changes in the science and technology system

The science and technology system in developed countries has undergone major changes since the early 1980s. These changes accelerated from the 1990s onwards with the gradual shift of the industrial world towards a knowledge-based economy, with the knowledge-intensive activities historically developed within the sectors specializing in information processing, and identified in particular by Machlup (1962), gradually being shared with the rest of the economy. Among these changes, the development of civil R&D, the increased role of private stakeholders, partly replacing the State, and the acceleration of patenting have particularly affected defence companies.

1.2.1.1. Development of civil R&D

The development of R&D is one of the drivers responsible for the shift towards the knowledge economy, which also results from sustained investment in education, training and new information and communication technologies. Indeed, the growth of knowledge-intensive activities or knowledge industries is measured by combining indicators relating to knowledge production and management, such as R&D expenditure, the employment rate of graduate workers or the intensity of the use of new information technologies. Estimated at 29% of GDP in the USA in 1958 by Machlup (1962), the knowledge industry, which according to the OECD, includes high- and medium–high technology manufacturing industries, community, social and personal services and banking, insurance and other business services, already accounted for more than 50% of GDP in the OECD area at the end of the 1990s, compared with 45% in 1985, and is growing faster than GDP in most countries.

This strong growth was driven in particular by total R&D investment, which has risen sharply in most developed countries since the early 1980s (OECD data)². This is particularly the case in the USA and the European Union, with the exception of the UK (Figure 1.1). We have thus gone from an overall investment, measured by the gross domestic expenditures on R&D (GERD), of 1.87% of GDP in 1981 to 2.25% in 2016 for Franc...