The Genesis of Innovation

The Genesis of Innovation

Systemic Linkages Between Knowledge and the Market

New Horizons in the Economics of Innovation series

Edited by Blandine Laperche, Dimitri Uzunidis and G. N. von Tunzelmann

The genesis and diffusion of innovation depends upon the density of the cognitive and market relationships among individuals, organisations and institutions at both the micro- and macro-economic level. By addressing the nature of these relationships, which include cooperation, competition and power, this book presents an important and progressive enquiry into the economic and social origins of innovation.

Chapter 7: Dual Technological Knowledge and the Firm’s Trade-Off between Civilian and Military Activities

Michel Callois

Subjects: economics and finance, economics of innovation, innovation and technology, economics of innovation


7. Dual technological knowledge and the firm’s trade-off between civilian and military activities Michel Callois 1. INTRODUCTION Since the seminal work of Lundvall (1992), knowledge has been considered as an asset that firms must be able to manage in order to gain competitive advantage. As an asset, knowledge is a central feature of a firm’s production in several ways: research and development, cooperation in innovation through networks, social relationship between members inside the organization, etc. Knowledge presents some characteristics of a public good. In other words, it cannot be easily transferred between two entities, nor can it be ‘fully’ appropriated by the firms that have produced it. In fact, this approach reveals the determinant that modifies its production, its significance and its mobility. In this perspective, knowledge can be observed as a system where forces like firms’ behaviours, institutions, and inter- and intra-industry relationships tend to shape its economic meaning. The starting point of this chapter is to analyse the case of the defence industry as a specific institutional environment. During the Cold War, the defence industry was based on a predominant single user environment, whose primary goal was to prevent threats in the short and long run. Thus, government-based demand shaped the technological opportunities of firms in order to achieve this critical goal. During the post Cold War era, this ‘programme-based’ role switched to a ‘client-based’ role. This had a deep impact on the behaviour of defence competitors: the reconfiguration of the aerospace industry in...

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