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

Industry and Innovation, Aug 2001 by Serfati, Claude

In relation to the organizational framework of the FMSA, a strong institutional feature of French governmental policy is the core role held by military and civilian Major Technological Programs (MTPs). Although they aim at delivering products and systems for different markets, civilian and military MTPs have a series of singular features: they are very high in terms of costs, their lead time spans over years, sometimes decades, procurement markets are critical for companies, etc.3 Finally, by some standards, such programs as civilian and military MTPs could be labeled as "strategic" in the triple meaning put forward by Freeman and Soete (1997: 341): technological (with learning and dynamic increasing returns), trade (with support policies dictated by comparative or potential comparative advantage), and industrial, with active industrial policies "best described with reference to the French notion of fili&es". Indeed, civilian MTPs launched in France are in nuclear, aerospace and telecommunications industries, which confirm their proximity with military MTPs.

It is this kind of institutional set-up which makes French technology policy belong, together with the US and the UK ones, to what was once called "mission-oriented" policies, as opposed to "diffusion-oriented" policies exemplified by Japan, Germany and Sweden (Ergas 1987). While it is true that the three former countries spend much more than the three latter in military R&D and procurement, the problem with that taxonomy is that it falls short of doing justice to the institutional variety of capitalism. Differences between countries cannot be encapsulated by the loose distinction between mission and diffusion, and as it will be shown in the next sections, one has to make an in-depth analysis of the institutional set-up to examine how globalization is transforming the French defense industry.

"Major technological programs" and defense contractors at the nexus of the French R&D public funding system

In our research agenda, we have adopted an approach at an "industrial groups" level rather than at the "firm" level. It should be made clear that "business firms and other formal organizations large enough to possess and exercise discretionary power are misperceived when viewed as if a `single entrepreneur' or simply a `production function"' (Bartlett 1994: 172). What we call industrial groups are often designated in Anglo-Saxon literature as "firms"-even when they comprise tens and indeed over a hundred affiliates and are owned and managed by holding corporations, which are the heart of the contemporary Transnational Corporations (TNCs) (UNCTAD 2000). The industrial group-based approach is a strong departure from the neoclassical way of thinking in economics. It has been suggested that, even though Keynes carried out a strong attack against neoclassical tenets, he did not depart from the neoclassical view that competition is driven by market forces and thus fell short of giving due account of the market power conferred upon the corporation by virtue of its size and organization (Peterson 1989). This is, obviously, not the case in the "Institutionalist" tradition, which, following Veblen's analysis, has a long record in studying how power matters and how big corporations shape the economy. This stream has been particularly useful as far as the role of military institutions is concerned (Melman 1997).