adaptability of the French armaments industry in an era of globalization, The

Industry and Innovation, Aug 2001 by Serfati, Claude

2 For example, a company producing critical electronic components for cars could he part of the automotive Mere or meso-system, as in a traditional classification, it would belong to the electronic sector. What matters in a filiere or meso-system approach are the strategic, technological, and commercial (companies delivering the same market, here the automotive) links.

3 A significant similarity between military and commercial programs based on large technology systems was evidenced in a recent paper. Both could be subject to "entrapment". Despite demonstrable inferiority, these projects could be maintained, due to the embedding of various institutional, political and economic commitments,

and due to a market structure and state-industry relationship that give advantage to suppliers over consumers (Walker 2000).

4 This section draws upon a 1997 research program, with C. Carpentier, for the Observatoire des Sciences et des Techniques (OST) (Carpentier and Serfati 1997).

5 This does not mean that only 1 percent of the R&D contracts from the MoD goes to small and medium-sized enterprises (SMEs). SMEs that are subsidiaries of major defense contractors are also recipients. The "independent" firms mentioned here are firms having military activity that are not owned by the main defense contractor groups, but by commercially-oriented industrial groups.

6 Three defense contractors rank among the top five French companies by their 1999 R&D expenditures as surveyed by Le Monde, October 17, 2000.

7 It seems that the self-funded R&D-to-sales ratio of US contractors is much lower than that of their French and European counterparts.

8 Drawbacks and benefits in using patents as a proxy for innovative activities are well known and will not be addressed. Here, the only remark to be made is that using patents to trace technological activities of arms producing firms does not raise more inconvenience than those discussed in general in the academic literature (Patel and Vega 1999). It is true that some patents are pre-empted by the DGA, the MoD's procurement agency (the issue is classified, yet some estimates are that preempted patents could account for about 1 percent of the total patenting). Since what we were interested with in this study was to explore how much military and commercial technological activities performed by companies are becoming closer, pre-empted patents are by definition out of the scope of our study, since by definition they are exclusively military dedicated.

9 Revealed technological advantage exists in a technological domain (TD) when the ratio of patenting by DPCGs-tototal patenting in this TD is higher than the ratio of total patenting by DPCGs-to-total patenting by French institutions (ratio > 1).

10 The naval sector is undergoing consolidation, with the announcement of the merger of Thomson-CSF's naval business with DCN in February 2000.

11 In 1999, the share of market capitalization controlled by foreign institutional investors was 10 percent in Germany, 9 percent in Britain, 11 percent in Japan.

12 On the role of institutional investors in innovation processes, see Chesnais and Serfati 2000.

13 Actually, since such a strategy based on close cross-relations is hardly possible to carry out in other industries any more, the arms meso-system of armament could stand up as one of the last "building blocks" of the French model of capitalism. This hypothesis may find support from remarks made by Ruigrock and van Tulder (1995) on how strong the position held by some "industrial complex" can be within their national economy.