Abstract
Advanced product development distinguishes itself by being surrounded by a “cloud of technology spillovers” available to external users in proportion to their competence to commercialize them. This “double product” is particularly important when it comes to public procurement of advanced products. Government then acts in the double customer role of being both concerned about the product and the additional social value created for society from the spillover cloud. Marketing the double product, therefore, involves the ability of the supplier to present a credible case also for the economic value to society of the spillovers, and to find a way of charging for them. This means designing a mutually beneficial contract that makes both parties to the deal winners. I use cases to illustrate, and demonstrate the existence of the social value of the cloud, organizing the presentation around the competence bloc categories of the companion paper Eliasson (2011). The cases are downstream industrial business formation around Swedish military aircraft industry. The case studies show this cloud to have been a great commercial opportunity for the Swedish economy. They also suggest that the value of the cloud would have been much greater if the local commercial environment had been more entrepreneurial.
This paper draws directly on Eliasson (1995), the industrial policy discussion in Eliasson (2000) and later complementary interviews and case analyses.
Earlier versions of parts of this paper have been discussed at a Ratio Institute seminar in Stockholm, at SNF in Bergen, in my seminar at the Rio Conference of the Joseph A. Schumpeter Society 2008 and in a seminar at Case Western Reserve University, Cleveland in 2009. Very useful comments from Carl- Henrik Arvidsson, Ole Bjerrefjord, Pontus Braunerhjelm, Bo Carlsson, Richard Day, Billy Fredriksson, Per Heum, Dan Johansson, Nils Karlson and Lennart Källqvist are acknowledged.
This is a revised and shortened version of paper presented at the 12th International conference of the Joseph A. Schumpeter Society in
Rio de Janerio, 2–5 July 2008. The theoretical part of that paper has already been published as Eliasson (2011).
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Notes
- 1.
To avoid confusion I mention already here the terminology used. Production covers all value added creation in a firm, including product development. Manufacturing is the term used for factory production. Technology, furthermore, is used in the original Greek meaning of knowledge about techniques.
- 2.
In Eliasson (2006) I mention such an advanced work environment as one of the few remaining competitive advantages of the industrial economies over the emerging low wage industrial economies.
- 3.
As argued by Day (1986) this latter interdependence of demand and supply poses difficult methodological problems in economic theory.
- 4.
- 5.
They are France, the UK, the US, China and Russia and Sweden. Brazil, Canada, Germany and Italy have to be added if we include small civilian aircraft.
- 6.
An additional reason was that regional jets were becoming competitive. However, this would have been no reason for Saab to shut down its civilian aircraft activity had it had an opportunity to sell its turbo prop aircraft ( when turbo prop machines were competitive) for a profit to finance the further development of a regional jet. Jet propulsion was not a new technology to Saab.
- 7.
Celsius was formed by the Swedish government in 1977 on the ruins of the collapsed Swedish shipyard indsutry. In 1986 the government took the opportunity to have some problem companies merged with Bofors. Celsius acquired a troubled Bofors in 1982.
- 8.
I am currently involved in a separate study on the spillover multiplier around that particular competence bloc.
- 9.
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Eliasson, G. (2011). The Commercializing of Spillovers: A Case Study of Swedish Aircraft Industry. In: Pyka, A., Derengowski Fonseca, M. (eds) Catching Up, Spillovers and Innovation Networks in a Schumpeterian Perspective. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-15886-5_7
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