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The purpose of this paper is to introduce cybernetic systems in defence management applications, to meet new challenges of the information society and use of system modelling for decision making.

The paper defines basic terms for understanding the complexity of the defence management applications, which is simplified using input‐output modelling.

The paper illustrates the interdisciplinary nature of cybernetics, systems and management sciences. The defence system is analysed and a general input‐output model for defence system development recommended.

New data technology and data availability provide perspective for applied research using scientific approach.

Cybernetic systems for defence provide analytical modelling for management applications.

The paper presents a concept and empirical evidence for defence system analysis and a new way of thinking that affects defence planning and defence management. A cybernetic, systemic and input‐output methodology provides solutions for defence management applications.

The British Government is driven by the concept of value for money and is seeking ways in which to fund projects in the public sector. In the defence sector, this is resulting in the formation of public‐private partnerships and a close working relationship between the Government and defence companies. As well as placing the UK’s defence capability within the context of national security, it also needs to be placed within the context of the Government’s foreign policy which is focused on international conflict prevention. The UK Government remains committed to encouraging international collaboration as this should witness technology transfer from the defence sector to the civil sector. Makes reference to nine factors which underlie collaboration in the defence sector and draws on the expertise of defence sector experts who provide insights into the defence industry. Refers to a postal survey which was undertaken in 1999 in order to establish which areas of defence management would receive increased attention in both the short term and the long term. Finally, highlights the Executive Intelligence Alliance Policy and Strategy (EIAPS) Charter which can be used by defence company personnel as a framework to develop long‐term working relationships with other defence companies, government departments and universities.

Estimates a three‐equation model to test various economic hypotheses regarding the relationship between unemployment rate and defence spending in 18 OECD countries during the period 1962‐1988. Reveals that the relationship which exists between unemployment rate and defence spending is not uniform across countries. Defence spending has a favourable impact on unemployment rate in Germany and Australia, whereas in Denmark it worsens the employment situation. In Australia, Germany and Belgium, non‐defence spending and the unemployment rate are causally independent. Defence spending appears to act as a stablization tool in response to changes in the unemployment rate only in the UK. No significant causal relationship between unemployment rate and either type of spending is revealed in Japan, The Netherlands, Italy, Spain, Austria, New Zealand, Sweden, Canada and the USA. Observes a few cases of bi‐directional causality between unemployment rate and defence/non‐defence spending. Gives possible explanations for the observed cross‐country variability in causal relation.

Alpha Design Technologies Private Limited (ADTL) was started in 2004 by Colonel H.S. Shankar after his retirement from services in the Indian Army and Bharat Electronics Limited (BEL). Aggressively growing the company from US$0.04m in 2004 to US$100m in 2022, he proved that age was not a barrier to success in entrepreneurship. His aspirations were to gain a greater presence in foreign markets through higher exports. After reading this case study, the students will be able to understand how the defence sector evolved in India and the role of private-sector enterprises; recognise the risks and opportunities in the changing dynamics of defence sector in India; believe that the ideas and capabilities of an entrepreneur increase with relevant previous experiences; appreciate the ambition and managerial capabilities of an entrepreneur even at the age of 60; apply Ajzen’s theory of planned behaviour on the entrepreneurial journey of Shankar and formulate strategies for growth.

Started in the year 2004, ADTL specialises in manufacturing defence-related products. ADTL was cofounded by Shankar, at the age of 60. His experience of working with the Indian Army and BEL in various capacities gave him the proficiency to start a venture on his own after his retirement. The ecosystem in India was favourable for ADTL as the Government opened up the defence sector for private players. Nevertheless, age was not a barrier for this senior citizen to tap the opportunity and work aggressively to grow his venture from US$0.04m in 2004 to US$100m in 2022. By 2023, ADTL had an employee strength of 1,200 including 650 engineers, and they emerged as a market leader in Software Defined Radio space. They manufactured around 200 different products for defence and space. ADTL exported 60% of the defence products to countries such as Israel, the USA and Germany. Moving forward, the dream for Shankar was to make a mark in the defence geography of the world through ADTL, by improving its export volumes and also through strategic alliances.

This case study can be taught to Master of Business Administration/postgraduate degree in management students as a part of the introductory course on entrepreneurship and strategy. This case study can be used specifically to make the students understand the role of private sector in the manufacturing of defence products after the liberalisation policy of the Government of India. The intention was not only to protect the nation from the threat posed by neighbouring countries but also to promote exports of defence products to other countries to improve foreign exchange earnings.

Teaching notes are available for educators only.

CSS 3: Entrepreneurship.

The European defence industry has changed considerably since the late 1980s. The end of the Cold War required the industry to undertake major restructuring, especially when governments, expecting to reap a “peace dividend,” drastically cut procurement spending. In the early 2000s this restructuring was also influenced by the new context of international security, even though defence budgets have started to increase again since 1998. The European defence industry could not expect to escape from a radical transformation, beyond the specific crisis engendered by the end of the Cold War.

Launched in the early 1990s in the United Kingdom, Public-Private Partnerships (PPPs) induced radical changes in both the public-private boundaries and the production of state-provided services. Such ‘budgetary revolution’ impacted the biggest state spender in capital expenditures, that is, the Ministry of Defence. Today many MoDs are expected to leverage on the British experience and develop their own approach of PPPs to overcome both the ineffectiveness of their defence spending and today’s stalemate in public budgets. This chapter leverages on British experiences over the past two decades to analyse the benefits and limits of PPPs in the realm of defence. Does such contractual arrangement fit defence-related investment? This chapter explores the on-going redefinition of public and private realms in military matters and it puts into relief the key dimensions of PPPs in terms of contractual arrangement.

This chapter discusses the ongoing transformations of the French defence support. Considering the importance of economic activities related to defence support, this contribution aims at discussing the evolution of defence support and its costs for the State. The literature in defence economics presents very little analysis of defence support in its different forms. Neither space nor base locations have been deeply analysed in such a literature. We try to bridge this gap in an original research framework. We focus on the Maintenance, Repair and Overhaul (MRO) of defence platforms. More particularly, we focus on the array of measures that surround French defence support in MRO since the end of the 1990s. Considering both economic and spatial leverages, how can the organisation of MRO be optimised? With concepts from spatial economics, we propose a new look on the defence support system. We examine new economic interconnections (e.g. Public Private Partnerships and outsourcing) between military and civilian activities. More broadly speaking, this path of research could help us to better understand the new type of economic interrelations between defence organisation and ‘territory’ as a social fabric.

The EU harmonisation has created changes in the military's formal and informal influence in the directions of decreased formal and informal military influence in civilian politics. The EU reforms have created changes in the mindset of the citizens, by creating changes in the security culture of the citizens and in the civil-military related political culture. The desired level of alignment has not been reached. Therefore, the study examines the areas where further alignment is required. Moving from Rebecca L. Schiff's concordance theory, the article examines the relationship between the Turkish military, the civilian politics and the society before and after the EU harmonisation process. It examines the effects of the EU harmonisation process on the changes in the civil-military balance of power, and on the related security culture and political values. The analysis focuses on: (i) increased civilian control and consequent changes in the policy of accountability; (ii) transparency building in the defence sector; (iii) parliamentary oversight; and (iv) the change in the political culture related to the civil-military issues. It also investigates the extent the EU harmonisation has achieved in building democratic civil-military relations in order to align with the EU standards.

The use of offsets is one of the main characteristics of international defence trade. The rising costs of defence equipment and the significant contraction of defence spending have resulted in an environment that favoured the use of offset policies, the latter becoming increasingly demanding in both quantitative and qualitative terms. The chapter analyses the role of offsets on the process of integration of defence equipment markets, with a specific focus on the EU. Particular attention is given to the offset-relevant regulation and practice and to their recent evolution in the EU following the adoption of European Directive on defence and security procurement (81/81/EC). Offsets play a dual role with regard to the integration of defence industries: on one hand they can be trade-distorting and contribute to the survival of inefficient suppliers in arms importing countries; on the other hand, they can contribute in overcoming barriers that may otherwise prevent some potentially efficient suppliers from accessing the supply chains of the big system integrators. The chapter draws the attention on the need to complement the regulatory evolution by further initiatives aiming at improving the access of non-incumbent suppliers to the supply chains of the large defence system integrators.