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This paper aims to provide a strategic analysis of firms at the lowest hierarchical levels of the defence industry.

This paper presents the main results of an exploratory, multiple-case study that analyses the current strategy drivers and their views about the future ones, and their impact at the lowest hierarchical levels of the defence industry in Spain.

This investigation develops and analyses a contingency model regarding the strategy impact and effects of firms’ drivers and clients, both mediated by the strategy players because of their huge impact on the defence industry. The research model focuses on the internal relations between technical and commercial activities due to the cause and effect of their capabilities. Simultaneously, pull and push mechanisms boost firms’ capabilities and requirements to provide strategic foresight.

Ministries of Defence (MoDs) and prime contractors will remain mediating players in the near future even with further implications for the competition of Defence Technological and Industrial Base (DTIB) firms. It implies that firms and MoDs must maintain a close relation and implement more flexible practices, such as open innovation, property rights or new commercialization schemes.

This study offers insights related to the specific applications and the necessity of commercial and technological areas alignment of these firms for the future.

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.

The paper seeks to address the European Union's emerging role in the management of international security challenges and its implications for collaboration in armaments procurement. While the former is about integrating member governments at policy level, the latter concerns organising states' defence industries into a cohesive and competitive supply base.

Theoretical frameworks include historic‐comparative analysis and the bureaucratic politics model. Independent variable comprises state actors and interest groups, while the dependent variable comprises the outcomes in terms of defence policy and armaments collaboration decisions. European armaments integration is considered, contrasting liberal inter‐governmentalism and neo‐functionalism theory. Case study data are derived from official EU document sources.

In general, national governments tend to protect important industrial actors irrespective of ownership. Bringing market and defence issues closer challenges the traditional separation between “low” and “high” politics. The collaboration in armaments acquisition is ad hoc and somewhat piecemeal in nature. Structures have evolved in an attempt to integrate the armaments process with spill‐over effect at policy level fostering armaments integration, helped by a more favourably structured and organised defence industry symptomatic of neo‐functionalism. Co‐ordination of European defence policy and armaments procurement through EDA should, in theory, lead to longer‐term co‐ordination, co‐operation and integration between the member states. The latter may see it in their interests to integrate as they come to recognize that EU institutions lack the capabilities to make policies realistic.

European armaments procurement and integration is not well researched; nor are the theoretical issues well understood. An explanation (model) of European armaments procurement integration is developed, along with an identification of key facilitators.

This paper aims to provide a meta-analysis of the main themes emerging from public domain foresight studies on the defence and security environment undertaken in the decade since the 9/11 attacks on the USA. The authors focus mainly on foresight studies undertaken in Europe.

The paper is based on a content analysis of public domain foresight studies.

Foresight studies on the defence and security environment reflect a shift in security thinking away from a focus on state-centric threats towards a much broader view of security risks that includes risks presented by the vulnerability of European society to the failure of critical infrastructure, to pandemics, environmental change and resource based conflicts. The authors place a particular emphasis on the treatment of technological change in these defence and security foresight studies and argue that the growing importance of dual-use technologies is likely to mean that defence will play a declining role as a sponsor and lead-user of advanced technologies in the future.

Foresight studies on the defence and security environment have grown in number since 9/11 not least in Europe. However, they have been the subject of little systematic analysis. This paper makes a contribution to such an analysis.