Abstract
Based on a historical case study, this contribution develops a framework for studying the industrial dynamics of complex products and systems (CoPS). The case study focuses on the spacecraft industry from 1957 to 2011. It is suggested that the main drivers of the dynamics of this typical CoPS industry are changes in long-term demand behavior. The main hypothesis formulated in this contribution states that customers' purchasing policies are underpinned by a set of heterogeneous motives (i.e., defense and security, political prestige, science and technology, macroeconomic benefits and profit-seeking) that evolve over time in response to changes in contextual variables. Within this framework, the paper examines the long-term relationships between customer motives on the one hand and the size (i.e., number of spacecraft launched) and segmentation (i.e., application domains of space technology) of the spacecraft market on the other hand. It shows that the dynamics of spacecraft industry resides on changes affecting customers’ motives, the latter behaving as lead users of a particular type. Indeed, customers are organizations and institutions which contribution to technological development goes far beyond bringing technical and non-technical, market-oriented, knowledge and competencies through collaboration with firms. In doing so, the paper proposes a conceptual framework based on the characterization of customer motives to study how demand behaviors affect the dynamics of CoPS industries.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Data availability
N/A.
Code availability
N/A.
Notes
Following Acha et al. (2004), we consider that CoPS “are a major sub-set of capital goods, namely the high technology artefacts which underpin manufacturing, services and distribution” (Acha et al. 2004, p. 505, footnote 1). We use the term complex products and systems (CoPS) to designate this subset of high-technology, high-value capital goods.
As an illustration, U.S. government-only customers (e.g., the Department of Defense and NASA) mainly purchase space technologies from domestic firms. This policy is observable in other countries such as Russia, China, India, and Japan (Barbaroux 2016).
Spacecraft can be classified into three main categories: satellites, space probes, and other spacecraft (e.g., space stations and cargo ships). Satellites are very diverse in terms of price, weight and size, and they represent the majority of all launched spacecraft.
However, some trends toward the commoditization and civilianization of the space economy have been documented (Barbaroux 2016). During the last two decades, for example, commercial firms have entered market segments that have been traditionally dominated by government-only customers, introducing commercial profit-oriented purchasing policies and rejuvenating traditional ones.
To some extent, miniaturization could place some segments of the spacecraft industry in lifecycles with similarities to the evolution of the computer industry between the 1950s and the 1980s (Langlois 1992). This industry started with the production of CoPS (i.e., supercomputers such as ENIAC in the fifties and the modern LINPACK) and then diversified into non-CoPS (i.e., mainframes, minicomputers and microcomputers).
The small-satellites revolution became visible at a macro level only from the early 2010s (Dos Santos Paulino 2014). At that time, we observed the simultaneous launch of dozens of microsatellites in clusters (e.g., Dove/Flock) and the entry of SpaceX, which decreased launch costs by a factor of 7 (Jones 2018).
United Nations Office for Outer Space Affairs.
The UNOSSA and NASA registers are available at https://nssdc.gsfc.nasa.gov/nmc/
For this study, we used the following registers: the Spacecraft Encyclopedia, Gunter’s Space Page and Jonathan’s Space Home Page. They are, respectively, available at: http://claudelafleur.qc.ca/Spacecrafts-index.html and http://www.planet4589.org/space/
The authors assumed that (i) defense and security (D&S) satellites are ordered by military customers, (ii) science satellites are ordered by institutional customers (e.g., space agencies), and (ii) communication satellites are ordered by commercial customers.
The macroeconomic benefits motive (ECO) was coded based on the same bibliometric search process, but we also investigated the particular mission attached to each spacecraft to determine whether or not the motive actually supported the launch. We added this step because civil institutional and mixed customers expressed this motive strongly when purchasing spacecraft during the period under study (McDougall 1985).
The second Cold War was characterized by the Soviet war in Afghanistan, the NATO Double-Track Decision, and the U.S. Strategic Defense Initiative nicknamed “Star Wars” (Hertzfeld 1998).
References
Acha V, Davies A, Hobday M, Salter A (2004) Exploring the capital goods economy: complex product systems in the UK. Ind Corp Change 13:505–529. https://doi.org/10.1093/icc/dth020
Adner R (2003) When are technologies disruptive? a demand-based view of the emergence of competition. Strateg Manag J 23:667–688. https://doi.org/10.1002/smj.246
Adner R, Levinthal D (2001) Demand heterogeneity and technology evolution: implications for product and process innovation. Manag Sci 47:611–628. https://doi.org/10.1287/mnsc.47.5.611.10482
Adner R, Snow D (2010) Old technology responses to new technology threats: demand heterogeneity and technology retreats. Ind Corp Change 19:1655–1675. https://doi.org/10.1093/icc/dtq046
Almudi I, Fatas-Villafranca F, Izquierdo LR (2013) Industry dynamics, technological regimes and the role of demand. J Evol Econ 23:1073–1098. https://doi.org/10.1007/s00191-013-0303-y
Aoki S (2017) Export control in space activities. In: Tamada D, Achilleas P (eds) Theory and practice of export control: balancing international security and international economic relations. Springer, Singapore, pp 139–151
ASD-Eurospace (2008) Facts & figures: the European space industry in 2007. http://www.eurospace.org/. Accessed 17 Sep 2020
Barbaroux P (2016) The metamorphosis of the world space economy: investigating global trends and national differences among major space nations’ market structure. J Innov Econ Manag 20:9–35. https://doi.org/10.3917/jie.020.0009
Beaudry C (2006) Enterprise in orbit: the supply of communication satellites. Econ Innov New Technol 15:679–700. https://doi.org/10.1080/10438590500475000
Cantner U, Guerzoni M (2009) Innovation driving industrial dynamics. Between Incentives and Knowledge Econ Politica 26:481–510
Chaikin A (2007) Live from the moon: the societal impact of apollo. In: Dick SJ, Launius RD (eds) Societal impact of spaceflight. National Aeronautics and Space Administration, Washington, DC, pp 53–66
Choi E, Niculescu S (2006) The impact of US export controls on the Canadian space industry. Space Policy 22:29–34. https://doi.org/10.1016/j.spacepol.2005.11.002
CNCCEF and GIFAS (2019) Les compensations industrielles: guide à l’attention des ETI et des PME. CNCCEF, Paris
Davies A, Brady T (2000) Organisational capabilities and learning in complex product systems: towards repeatable solutions. Res Policy 29:931–953. https://doi.org/10.1016/s0048-7333(00)00113-x
Davies A, Hobday M (2005) The business of projects: managing innovation in complex products and systems. Cambridge University Press, Cambridge
Day DA (1996) Invitation to struggle: the history of civilian-military relations in space. In: Logsdon JM, Day DA, Launius RD (eds) Exploring the unknown: selected documents in the history of the U.S. civil space program - volume II: external relationships. NASA, Washington, DC, pp 233–410
Di Stefano G, Gambardella A, Verona G (2012) Technology push and demand pull perspectives in innovation studies: current findings and future research directions. Res Policy 41:1283–1295. https://doi.org/10.1016/j.respol.2012.03.021
Dos Santos Paulino V (2014) Influence of risk on technology adoption: inertia strategy in the space industry. Eur J Innov Manag 17(1):41–60
Dos Santos Paulino V (2020) Innovation trends in the space industry. Wiley-ISTE, London
Dos Santos Paulino V, Gudmundsson SV (2021) Market diffusion of industrial products and regulatory barriers to adoption: the case of satellites. J Innov Econ Manag 36:117–138. https://doi.org/10.3917/jie.pr1.0097
Dos Santos Paulino V, Le Hir G (2016) Industry structure and disruptive innovations: the satellite industry. J Innov Econ Manag 20:37–60. https://doi.org/10.3917/jie.020.0037
Downing JDH (1985) The USSR and satellite communications. Space Policy 1:250–262. https://doi.org/10.1016/0265-9646(85)90022-0
Dupas A (1987) The USSR’s prudent space policy. Space Policy 3:239–243. https://doi.org/10.1016/0265-9646(87)90072-5
Earl PE, Wakeley T (2010) Economic perspectives on the development of complex products for increasingly demanding customers. Res Policy 39:1122–1132. https://doi.org/10.1016/j.respol.2010.05.006
Edler J, Georghiou L (2007) Public procurement and innovation—resurrecting the demand side. Res Policy 36:949–963. https://doi.org/10.1016/j.respol.2007.03.003
Fontana R, Guerzoni M (2008) Incentives and uncertainty: an empirical analysis of the impact of demand on innovation. Camb J Econ 32:927–946. https://doi.org/10.1093/cje/ben021
Galloway JF (1992) Commercializing outer space. Nurs Forum 72:34–45
Gann DM, Salter AJ (2000) Innovation in project-based, service-enhanced firms: the construction of complex products and systems. Res Policy 29:955–972. https://doi.org/10.1016/s0048-7333(00)00114-1
Garavaglia C, Malerba F, Orsenigo L, Pezzoni M (2012) Technological regimes and demand structure in the evolution of the pharmaceutical industry. J Evol Econ 22:677–709. https://doi.org/10.1007/s00191-012-0285-1
Geroski PA (1990) Procurement policy as a tool of industrial policy. Int Rev Appl Econ 4:182–198. https://doi.org/10.1080/758523673
Godin B, Lane JP (2013) Pushes and pulls: history of the demand pull model of innovation. Sci Technol Hum Values 38:621–654. https://doi.org/10.1177/0162243912473163
Harding R (2012) Space policy in developing countries: the search for security and development on the final frontier. Routledge, New York
Hertzfeld HR (1998) Space as an investment in economic growth. In: Logsdon JM, Snyder AP, Launius RD, Garber SJ, Newport RA (eds) Exploring the unknown: selected documents in the history of the U.S. civil space program - vol III: using space. NASA/US Government Printing Office, Washington, DC, pp 384–578
Hertzfeld HR (2007) Globalization, commercial space and spacepower in the USA. Space Policy 23:210–220. https://doi.org/10.1016/j.spacepol.2007.09.004
Hipp A, Binz C (2020) Firm survival in complex value chains and global innovation systems: evidence from solar photovoltaics. Res Policy 49:103876. https://doi.org/10.1016/j.respol.2019.103876
Hiriart T, Saleh JH (2010) Observations on the evolution of satellite launch volume and cyclicality in the space industry. Space Policy 26:53–60. https://doi.org/10.1016/j.spacepol.2009.11.001
Hobday M (1998) Product complexity, innovation and industrial organisation. Res Policy 26:689–710. https://doi.org/10.1016/s0048-7333(97)00044-9
Hobday M, Rush H, Tidd J (2000) Innovation in complex products and system. Res Policy 29:793–804. https://doi.org/10.1016/s0048-7333(00)00105-0
Hung H-M (2010) Reconciling the paradox of supply-side and demand-side strategies in industrial innovation. Ind Mark Manag 39:342–350. https://doi.org/10.1016/j.indmarman.2009.02.004
Jones HW (2018) The recent large reduction in space launch cost, 48th International Conference on Environmental Systems Albuquerque, New Mexico. ICES-2018-81. (10 pages).
Kay WD (1998) Space policy redefined: the reagan administration and the commercialization of space. Bus Econ Hist 27:237–247
Klepper S (1996) Entry, exit, growth, and innovation over product life-cycle. Am Econ Rev 86:562–583
Klepper S, Malerba F (2010) Demand, innovation and industrial dynamics: an introduction. Ind Corp Change 19:1515–1520. https://doi.org/10.1093/icc/dtq043
Krige J, Russo A (2000) A history of the European space agency 1958–1987 – vol I: the story of ESRO and ELDO, 1958–1973. European Space Agency Publications Division, Noordwijk
Langlois RN (1992) External economies and economic progress: the case of the microcomputer industry. Bus Hist Rev 66:1–50. https://doi.org/10.2307/3117052
Land Remote Sensing Commercialization Act of 1984 (1984) US House of Representatives, H.R.4836. https://www.congress.gov/bill/98th-congress/house-bill/4836
Launius RD (2006) Compelling rationales for spaceflight? History and the search for relevance. In: Dick SJ, Launius R (eds) Critical issues in the history of spaceflight. NASA, Washington, DC, pp 37–70
Lee JJ, Yoon H (2015) A comparative study of technological learning and organizational capability development in complex products systems: distinctive paths of three latecomers in military aircraft industry. Res Policy 44:1296–1313. https://doi.org/10.1016/j.respol.2015.03.007
Lipartito K, Butler O (2007) A history of the kennedy space center. University Press of Florida, Gainesville
Logsdon JM, Launius RDO, D H, Garber SJ (1998) Exploring the unknown: selected documents in the history of the U.S. civil space program - vol III: using space. NASA/US Government Printing Office, Washington, DC
Mack PE, Williamson RA (1998) Observing the earth from space. In: Logsdon JM, Launius RD (eds) Exploring the unknown: selected documents in the history of the U.S. civil space program - vol III: using space. NASA/US Government Printing Office, Washington, DC, pp 155–385
Malerba F (2006) Innovation and the evolution of industries. J Evol Econ 16:3–23. https://doi.org/10.1007/s00191-005-0005-1
Malerba F (2007) Innovation and the dynamics and evolution of industries: progress and challenges. Int J Ind Organ 25:675–699. https://doi.org/10.1016/j.ijindorg.2006.07.005
Malerba F, Nelson R, Orsenigo L, Winter S (1999) “History-friendly” models of industry evolution: the computer industry. Ind Corp Change 8:3–40. https://doi.org/10.1093/icc/8.1.3
Malerba F, Nelson R, Orsenigo L, Winter S (2007) Demand, innovation, and the dynamics of market structure: the role of experimental users and diverse preferences. J Evol Econ 17:371–399. https://doi.org/10.1007/s00191-007-0060-x
Malhotra A, Zhang H, Beuse M, Schmidt T (2021) How do new use environments influence a technology’s knowledge trajectory? A patent citation network analysis of lithium-ion battery technology. Res Policy 50:104318. https://doi.org/10.1016/j.respol.2021.104318
Matelly S, Lima M (2016) The influence of the state on the strategic choices of defence companies: the cases of Germany, France and the UK after the cold war. J Innov Econ Manag 20:61–88. https://doi.org/10.3917/jie.020.0061
Mazzucato M (2017) Mission-oriented Innovation Policy: challenges and opportunities, ucl institute for innovation and public purpose working paper. Available at: https://www.ucl.ac.uk/bartlett/public-purpose/wp2017-01
Mazzucato M (2018) Mission-oriented innovation policies: challenges and opportunities. Ind Corp Change 27:803–815. https://doi.org/10.1093/icc/dty034
Mazzucato M, Robinson DKR (2018) Co-creating and directing innovation ecosystems? NASA’s changing approach to public-private partnerships in low-earth orbit. Technol Forecast Soc Change 136:166–177. https://doi.org/10.1016/j.techfore.2017.03.034
McDougall WA (1982) Technocracy and statecraft in the space age–toward the history of a saltation. Am Hist Rev 87:1010–1040. https://doi.org/10.2307/1857903
McDougall WA (1985) Space-age Europe: Gaullism, Euro-Gaullism, and the American Dilemma. Technol Cult 26:179–203. https://doi.org/10.2307/3104340
McQuaid K (2006) Selling the space age: NASA and earth’s environment, 1958–1990. Environ Hist 12:127–163. https://doi.org/10.3197/096734006776680245
Miller R, Hobday M, Leroux-Demers T, Olleros X (1995) Innovation in complex systems industries: the case of flight simulation. Ind Corp Change 4:363–400. https://doi.org/10.1093/icc/4.2.363
Moody JB, Dodgson M (2006) Managing complex collaborative projects: lessons from the development of a new satellite. J Technol Transf 31:568–588. https://doi.org/10.1007/s10961-006-9059-y
NASA (2015) Small spacecraft technology state of the art. NASA/TP 2015, 216648/REV1, Mission Design Division, Ames Research Center, Moffet Field, California (173 pages). Available at: https://www.nasa.gov
Nemet GF (2009) Demand-pull, technology-push, and government-led incentives for non-incremental technical change. Res Policy 38:700–709. https://doi.org/10.1016/j.respol.2009.01.004
Neven D, Roller L-H, Waverman L, Meyer M, Winters A (1993) Sunk in space: the economics of the European satellite industry and prospects for liberalization. Econ Policy 8:402–432. https://doi.org/10.2307/1344533
O’Sullivan M (2020) Industrial life cycle: relevance of national markets in the development of new industries for energy technologies – the case of wind energy. J Evol Econ 30:1063–1107. https://doi.org/10.1007/s00191-020-00677-5
OECD (2005) Space 2030: tackling society’s challenges. OECD Publishing, Paris
OECD (2012) Handbook on measuring the space economy. OECD Publishing, Paris
OECD (2014) The space economy at a glance 2014. OECD Publishing, Paris
Prencipe A (2000) Breadth and depth of technological capabilities in CoPS: the case of the aircraft engine control system. Res Policy 29:895–911. https://doi.org/10.1016/s0048-7333(00)00111-6
Robinson DKR, Mazzucato M (2019) The evolution of mission-oriented policies: exploring changing market creating policies in the US and European space sector. Res Policy 48:936–948. https://doi.org/10.1016/j.respol.2018.10.005
Ruttan VW (2006) Is war necessary for economic growth? Military procurement and technology development. Oxford University Press, New York
Schwarz M (1979) European policies on space science and technology 1960–1978. Res Policy 8:204–243. https://doi.org/10.1016/0048-7333(79)90035-0
Shove C (2005) Emerging space commerce and state economic development strategies. Econ Dev Q 19:190–206. https://doi.org/10.1177/0891242405275007
Taylor M, Taylor A (2012) The technology life cycle: conceptualization and managerial implications. Int J Prod Econ 140:541–553. https://doi.org/10.1016/j.ijpe.2012.07.006
Tee R, Davies A, Whyte J (2019) Modular designs and integrating practices: managing collaboration through coordination and cooperation. Res Policy 48:51–61. https://doi.org/10.1016/j.respol.2018.07.017
The Tauri Group (2012) State of the satellite industry report. http://www.sia.org/wp-content/uploads/2014/09/SSIR-September-2014-Update.pdf. Accessed 3 Jul 2020
The Communications Satellite Act of 1962 (1962) Harvard Law Review 76(2):388–400.
Twigg JL (1999) Russia’s space program: continued turmoil. Space Policy 15:69–77. https://doi.org/10.1016/s0265-9646(99)00010-7
Uyarra E, Edler J, Garcia-Estevez J, Georghiou L, Yeow J (2014) Barriers to innovation through public procurement: a supplier perspective. Technovation 34:631–645. https://doi.org/10.1016/j.technovation.2014.04.003
Valente M (2012) Evolutionary demand: a model for boundedly rational consumers. J Evol Econ 22:1029–1080. https://doi.org/10.1007/s00191-012-0290-4
Van Dyke V (1964) Pride and power: the rationale of the space program. University of Illinois Press, Urbana
Von Hippel E (1986) Lead users: a source of novel product concepts. Manag Sci 32:791–805. https://doi.org/10.1287/mnsc.32.7.791
Von Hippel E, Kaulartz S (2021) Next-generation consumer innovation search: identifying early-stage need-solution pairs on the web. Res Policy 50:104056. https://doi.org/10.1016/j.respol.2020.104056
Von Hippel E, Ogawa S, de Jong JPJ (2011) The age of the consumer innovator. Sloan Manag Rev 53:27–35
Von Welck SF (1987) India’s space policy: a developing country in the ‘space club.’ Space Policy 3:326–334. https://doi.org/10.1016/0265-9646(87)90040-3
Weinzierl M (2018) Space, the final economic frontier. J Econ Perspect 32:173–192. https://doi.org/10.1257/jep.32.2.173
Whitney PL (2000) Tracing the evolutionary path for space technologies. Space Policy 16:171–183. https://doi.org/10.1016/s0265-9646(00)00021-7
Williamson RA (1985) International cooperation and competition in civilian space activities. Space Policy 1:409–414. https://doi.org/10.1016/0265-9646(85)90007-4
Zelnio RJ (2007) Whose jurisdiction over the US commercial satellite industry? Factors affecting international security and competition. Space Policy 23:221–233. https://doi.org/10.1016/j.spacepol.2007.09.011
Zervos V (2008) Whatever happened to competition in space agency procurement? The case of NASA. J Appl Econ 11:221–236. https://doi.org/10.1080/15140326.2008.12040505
Zervos V, Siegel DS (2008) Technology, security, and policy implications of future transatlantic partnerships in space: lessons from Galileo. Res Policy 37:1630–1642. https://doi.org/10.1016/j.respol.2008.06.008
Zinger KJ (2015) An overreaction that destroyed an industry: the past, present, and future and US satellite export controls. Univ Colo Law Rev 86:351–387
Author information
Authors and Affiliations
Corresponding author
Ethics declarations
Conflicts of interests
The authors declare no potential conflicts of interest.
Additional information
Publisher's note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Annex 1. Keywords
Annex 1. Keywords
Motive | Keywords |
|---|---|
Science and technology | efficiency, exploration, innovation, knowledge, physics, R&D, research, science, scientific, technological, technology |
Macroeconomic benefits | benefit of humanity, direct effects, economic benefits, economic development, economic growth, economic impact, economic output, employment, enhance the balance of payments, higher living standards, industrial development, jobs, national welfare, productivity gains, social benefits, socio-economic impacts, spillovers, transferring |
Defense and security | defense, dual technologies, intelligence, military, reconnaissance, security, surveillance, weapons |
Political prestige | diplomatic bargaining power, grandeur, national confidence, nationalism, patriotic issues, prestige, pride, propaganda, proud, self-confidence, soft power, triumph |
Profit-seeking | business, commerce, commercial, commercialization, commercialize, market opportunities, private, profit |
Rights and permissions
Springer Nature or its licensor holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.
About this article
Cite this article
Barbaroux, P., Dos Santos Paulino, V. Why do motives matter? A demand-based view of the dynamics of a complex products and systems (CoPS) industry. J Evol Econ 32, 1175–1204 (2022). https://doi.org/10.1007/s00191-022-00788-1
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s00191-022-00788-1
Keywords
- Industrial dynamics
- Technological change
- Complex products and systems
- Customers’ motives
- Spacecraft industry