PRODUCTION INNOVATION AND COMMERCIALISATION IN DEFENCE INDUSTRY Professor

PRODUCTION INNOVATION AND COMMERCIALISATION IN DEFENCE INDUSTRY Professor STEFAN HRISTOV, Ph. D Department “National and Regional Security” University of National and World Economy Sofia , Bulgaria

INTRODUCTION “THE PURPOSE OF BUSINESS IS TO CREATE AND TO KEEP A CUSTOMER; THE BUSINESS ENTERPRISE HAS TWO – AND ONLY TWO – BASIC FUNCTIONS: MARKETING AND INNOVATION. THEY PRODUCE RESULTS (MAKE MONEY); ALL THE REST (EVERYTHING ELSE) ARE COSTS” PROF. PETER DRUCKER

CONCEPTUAL FRAMEWORK INNOVATION = THEORETICAL CONCEPTION + TECHNICAL INVENTION + COMMERCIAL EXPLOITATION PROF. PAUL TROTT

CONCEPTUAL FRAMEWORK BUSINESS GOAL: FROM “IDEA GENERATION” TO ”INCOME GENERATION” FROM INNOVATION TO COMMERCIALISATION

CONCEPTUAL FRAMEWORK INNOVATION STRATEGIES INNOVATION “PULL STRATEGY” “MARKETING – R&D – MANUFACTURING – CUSTOMERS” INNOVATION “PUSH STRATEGY” “R&D – MANUFACTURING – MARKETING – CUSTOMERS” INNOVATION “INTERACTIVE STRATEGY” COMBINATION: “PULL STRATEGY” + “PUSH STRATEGY”

CONCEPTUAL FRAMEWORK CORPORATE STRATEGIES “PRODUCTS-MARKETS” MATRIX (PROF. IGOR ANSOFF) Products / Markets Products Present Products New Products Present Markets Market Penetration Strategy Product Development Strategy New Markets Market Development Strategy Diversification Strategy Markets

EMPIRICAL SURVEY MAIN QUESTIONS WHAT ARE IMPORTANT EXTERNAL FACTORS? n WHAT ARE IMPORTANT COMPANY INNOVATIONS? n HOW DO EXTERNAL FACTORS AFFECT THE PROCESS OF INNOVATION? n

EMPIRICAL SURVEY Q 1: WHAT ARE IMPORTANT EXTERNAL FACTORS? ENVIRONMENTAL FACTORS EF 1. POLITICAL FACTORS PF 2. ECONOMIC FACTORS EF 3. SOCIAL FACTORS SF 4. NATURAL FACTORS NF 5. LEGAL FACTORS LF 6. MARKET FACTORS MF 7. FINANCIAL FACTORS FF 8. RESOURCE FACTORS RF 9. TECHNOLOGICAL FACTORS TF 10. CULTURAL FACTORS CF

EMPIRICAL SURVEY Factors Descriptive statistics Mean Trmean Stdev Semean Median Q 1 Q 3 Rk PF 8, 857 9, 105 1, 621 0, 354 9, 0 8, 0 10, 0 1 EF 7, 524 7, 579 1, 692 0, 369 8, 0 6, 5 9, 0 6 SF 5, 381 5, 316 2, 202 0, 480 5, 0 3, 5 6, 5 9 NF 5, 095 5, 053 2, 827 0, 617 5, 0 3, 0 6, 5 10 LF 7, 286 7, 474 2, 411 0, 526 8, 0 5, 0 9, 0 7 MF 8, 095 8, 368 1, 972 0, 430 8, 0 7, 5 9, 0 3 FF 8, 143 8, 158 1, 062 0, 232 8, 0 9, 0 4 RF 7, 952 8, 108 1, 936 0, 422 8, 0 7, 0 10, 0 5 TF 8, 762 8, 895 1, 221 0, 266 9, 0 8, 0 10, 0 2 CF 5, 810 5, 895 2, 421 0, 528 6, 0 3, 5 7, 5 8

EMPIRICAL SURVEY

EMPIRICAL SURVEY Q 2: WHAT ARE IMPORTANT COMPANY INNOVATIONS? COMPANY INNOVATIONS CONSENSUS RANK 1. PRODUCT INNOVATIONS (PRI) 72, 6 2 2. MARKET INNOVATIONS (MRI) 66, 1 4 3. MANUFACTURING INNOVATIONS (MNI) 69, 6 3 4. TECHNOLOGICAL INNOVATIONS (TCI) 81, 6 1 5. ECONOMIC INNOVATIONS (ECI) 40, 5 7 6. FINANCIAL INNOVATIONS (FNI) 41, 7 6 7. MARKETING INNOVATIONS (MKI) 45, 8 5 8. COMMERCIAL INNOVATIONS (CMI) 32, 1 8

EMPIRICAL SURVEY

EMPIRICAL SURVEY Q 3: HOW DO EXTERNAL FACTORS AFFECT THE PROCESS OF INNOVATION? Multiple Regression Models R R 2 S PRI = 13, 90 + 0, 06 PF – 0, 21 EF + 0, 04 SF + 0, 01 NF – 0, 25 LF + 0, 20 MF – 1, 52 FF – 0, 01 RF + 0, 64 TF – 0, 05 CF 0, 787 62, 0 1, 88 MRI = 9, 05 – 0, 30 PF – 0, 26 EF + 0, 30 SF + 0, 12 NF + 0, 01 LF + 0, 08 MF – 0, 85 FF – 0, 01 RF + 0, 91 TF – 0, 53 CF 0, 752 57, 2 1, 78 MNI = – 3, 33 + 0, 18 PF – 0, 36 EF + 0, 19 SF – 0, 64 NF + 0, 45 LF – 0, 44 MF – 0, 23 FF + 0, 73 RF + 1, 16 TF – 0, 25 CF 0, 632 39, 9 2, 26 TCI = 3, 74 – 0, 03 PF + 0, 21 EF + 0, 16 SF – 0, 28 NF + 0, 22 LF – 0, 65 MF + 0, 16 FF + 0, 20 RF + 0, 49 TF – 0, 26 CF 0, 716 51, 2 1, 38 ECI = – 8, 33 + 0, 28 PF + 0, 62 EF – 0, 20 SF – 0, 21 NF + 0, 08 LF – 0, 12 MF + 0, 80 FF + 0, 03 RF – 0, 34 TF + 0, 18 CF 0, 754 56, 8 1, 74 FNI = – 1, 95 – 0, 32 PF + 0, 35 EF – 0, 31 SF + 0, 48 NF – 0, 36 LF – 0, 04 MF + 0, 59 FF + 0, 40 RF – 0, 10 TF + 0, 08 CF 0, 874 76, 4 1, 29 MKI = 12, 0 + 0, 29 PF – 0, 11 EF – 0, 44 SF + 0, 34 NF – 0, 07 LF + 0, 60 MF + 0, 23 FF – 0, 82 RF – 1, 38 TF + 0, 51 CF 0, 873 76, 2 1, 33 CMI = 10, 90 – 0, 16 PF – 0, 23 EF + 0, 27 SF + 0, 17 NF – 0, 06 LF + 0, 37 MF + 0, 53 FF – 0, 52 RF – 1, 38 TF + 0, 32 CF 0, 781 61, 0 1, 52

EMPIRICAL SURVEY Stepwise procedure Multiple Regression Models R R 2 S PRI = 14, 34 – 1, 49 FF + 0, 64 TF – 0, 28 LF 0, 765 58, 5 1, 51 MRI = 3, 58 – 0, 26 PF + 0, 65 TF – 0, 30 CF 0, 553 30, 5 1, 74 MNI = – 0, 64 + 0, 54 TF + 0, 39 RF – 0, 30 CF 0, 456 20, 8 1, 99 TCI = 4, 53 – 0, 43 MF + 0, 32 EF + 0, 38 FF 0, 627 39, 4 1, 18 ECI = – 4, 79 + 0, 80 FF + 0, 48 EF – 0, 26 MF 0, 629 39, 5 1, 58 FNI = – 4, 96 + 0, 83 FF + 0, 45 RF – 0, 23 PF 0, 799 63, 9 1, 22 MKI = 10, 80 – 0, 55 RF – 0, 69 TF + 0, 38 PF 0, 735 54, 0 1, 42 CMI = 10, 50 – 0, 85 TF + 0, 35 CF – 0, 30 RF 0, 680 46, 2 1, 37

CONCLUSION INNOVATIVE PERFORMANCE IN DEFENCE INDUSTRY DEPENDS ON THE INTELLECTUAL ABILITY TO CREATE NEW PRODUCTS AND PRACTICAL EXPERIENCE TO EXPLOIT COMMERCIAL OPPORTUNITIES ON THE MARKETPLACE.