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

Industry and Innovation, Aug 2001 by Serfati, Claude

INSTiTUTIoNAL FRAmEwoRK AND TECHNOLOGICAL PERFORMANCE

In the 1980s, the concepts of "fili&es" and "meso-systemes" were developed by French economists. In this approach, the economic structure is made up of "chains of production" (filieres) which cut across the traditional boundaries of industrial activities.2 With the notion of meso-system, emphasis is put on forward and backward technological linkages between companies through their contribution to the final products, as well as on the high level of cohesion of the system. The filieres or mesosystem approach is rather close to that of complexes (Ruigrok and van Tinder 1995). Drawing on a reading and an extension of this approach, we have proposed the term of "mesosysteme de l'armement" (French Meso-system of Armaments, FMSA) to describe the set of defense governmental organizations and industrial companies, which are bound up with each other through market, and still more important in the committed industry, through non-market relationships (Serfati 1992, 1995). Various factors account for the cohesion of the FMSA. Because of its unique role and the legitimacy it is based on, arms production is reserved for a small set of "happy few" companies protected from competitors by high economic and political barriers to entry. Also, the arms industry is one where complex products are assembled, hence interactive relations between the firms responsible for the integration of weapon systems and those producing sub-systems, equipment and components are quite critical. Since committed production is one which delivers Complex Products and Systems (COPs), how firms collaborate to master products and technologies is at the heart of innovation and management (Hobday et al. 2000).

The cohesion of the FMSA is reinforced by the key role played by the Directorate General of Armaments (DGA). The role of this body is more than simply one of a procurement agency. It combines in a unique way three missions: a customer mission, a policy mission (general orientations, elaboration of concepts, followed by specification and oversight of armaments programs, etc.), a technological and industrial mission, in the sense that a significant part of committed research, technological feasibility, and to a lesser extent, production and maintenance are conducted within its own establishments. Given these multiple roles, Engineers of Armaments (one of the "grands corps" of Polytechnique school) wield a pervasive influence, since they are present at top jobs in the defense contractors. As Kolodziej (1987) put it, arms engineers are the glue which holds the system together.

For our purposes, the qualification of meso-system, drawing upon findings from industrial economics, offers a more accurate depiction of the institutional and organizational set-up of the French arms industry than that of "Military-industrial Complex", a term introduced by President Eisenhower in his 1962 farewell to the Nation. Similar departures from this imprecise term were made by American scholars, when they described the American system of arms production as a "State-Management" in an institutionalist tradition (Melman 1970: 2) or as an "Aerospace-communications-electronics' complex" when emphasis is placed on technology (Markusen and Yudken 1992: 5).