HD28
.M414
^/
MAR 20
ALFRED
P.
1991
WORKING PAPER
SLOAN SCHOOL OF MANAGEMENT
Technological
Strategic
Implications
Jong-Tsong
Fcbmary 1991
"Spin-off":
from
U.S.
Experience
Chiang
\VP 3242-9 1-BPS
MASSACHUSETTS
INSTITUTE OF TECHNOLOGY
50 MEMORIAL DRIVE
CAMBRIDGE, MASSACHUSETTS 02139
Technological
Strategic
Implications
Jong-Tsong
February 1991
"Spin-off":
from
U.S.
Experience
Chiang
\VP 3242-9 1-BPS
Technological
from
Implications
Strategic
"Spin-off":
Experience
U.S.
Abstract
This paper
is
to
from
seek strategic implications of "spin-off"
mission-oriented,
in
technology
defense-related,
particular
programs.
Because the U.S. has worldly unmatched military technological
capabilities
and "spin-off" achievements,
By comparing
U.S. experience.
a
semiconductors,
computers,
technology,
paper identifies
to
the
pitfalls.
to
the
this
number of
nuclear
power,
three
paper focuses on the
this
"big" cases, such as
aircraft
and
systems
common mechanisms
critical
success of "spin-off" as well as some unfavorable trends and
To
synthesize,
paper uses several perspectives relating
this
basic characteristics of technology
mission-oriented programs.
not so serendipitous.
from
The main conclusion
There are many rules
would not be pragmatic
contribution
and the unique features of
for
"spin-off."
to
is
that
follow.
most other countries
to
"spin-off"
However,
is
it
expect significant
Contents
1.
Introduction
2.
Institutional
3.
Achievements and Impacts of "Spin-Off"
4.
Mechanisms and Patterns of "Spin-Off"
4.1.
5.
6.
Background and Policy Principles
General Rules and "Big" Cases
4.2.
Semiconductors
4.3.
Computers
4.4.
Nuclear Power
4.5.
Aircraft
4.6.
C3I and Systems Technology
4.7.
Crucial Mechanisms
Skepticism about "Spin-Off" Rationale
5.1.
Diverging Military and Civilian Requirements
5.2.
Adverse Influence on Manufacturing Productivity
Incentive to Cost Containment
5.3.
Little
5.4.
Misguidance of Commercial Technological Efforts
5.5.
Diminishing Leverage of Mission-Oriented Programs
5.6.
Institutionally
Synthesis and
Rooted Obstacles
Implications
6.1.
Radical vs. Incremental Technological Change
6.2.
General Direction, Functional Technology and Generic
Technology
7.
6.3.
Systems Technology and Nationally Based Efforts
6.4.
Implications of U.S. Experience to Other Countries
6.5.
Contrast with Centrally Planned Economies
Concluding Remarks
Technological
from
Implications
Strategic
"Spin-off":
Introduction
1.
In
this
paper,
mission-oriented,
"spin-off"
refers
defense-related,
By
definition,
this
technology
"spin-off" falls
scope of these programs' main missions, and
unplanned explicitly beforehand.
serendipitous;
otherwise,
has
"Spin-off"
some
boost
more
purposes
civilian
or
directly
the
cultivate
this
paper,
and
assumed, however,
technological
There may
industry,
translated
still
into
many
be
its
benefit
things to be
civilian
main concern
the
"spin-off,"
commercial
if
products
done on the
It
any,
or
is
cannot be
will
be
processes.
part of the civilian
The process may be complex and
defined by the civilian market.
Therefore,
the civilian
to
for
meeting the criterion of economic viability
including
time-consuming.
and
patterns or models.
technological "spin-off"
it
manpower, enlarge
technical
technology development.
In
and
may provide employment,
It
infrastructure,
automatically
basically
is
through other mechanisms.
knowledge base, strengthen
that
beyond the
same resources available
many dimensions.
industries,
to
by and large
is
So "spin-off"
utilize
to
programs
term would not be appropriate,
this
would be more desirable
of government's
spill-over
the
to
mostly
the civilian sector.
off"
Experience
U.S.
or
the
contribution
of technological
commercial technological innovation
is
"spin-
mostly
incomplete or indirect.
Unlike
oriented
called
"ordinary"
fundamental or basic research, mission-
programs are guided by specific missions defined by so-
"mission agencies."
defense
countries'
These agencies, represented by many
ministries,
have
operational
responsibilities
that
mandate rather immediate operating goals and make the agencies
under constant pressure
to justify
category
relevant
their existence.
of
to
basic
their
to
produce results
in
a
rather
tangible
way
So, R&D--including a small fraction in the
research--endorsed
main missions.
by these agencies are normally
programs also differ from the so-called
Mission-oriented
users of the outcomes
responsible
principal end
users
contribute to a
to
network,
or
technical
R&D
The
of numerous potential users.
farmers
instance,
for
programs are not the
diffusion-oriented
for
of the outcomes of their programs.
programs are intended
to,
But the
of their mission-oriented programs.
organizations
diffused
Mission agencies are the primary end
programs."
"diffusion-oriented
thus have to be
results
extension
agricultural
and medium-sized enterprises througn many
small
World War
after
technology programs
many
in
when compared with
their
II,
many
countries
civilian
military
(and
The opportunity
resources.
expected
that,
mission-oriented
sector.
investment
These programs
counterparts.
was very
R&D
Therefore,
high.
often
is
it
accomplishing the designated missions,
to
programs can somehow also contribute
hoped
is
It
these
in
compensated
and
addition
in
cost
aerospace)
were highly sophisticated
might even account for a significant portion of the national
civilian
local
centers.
Particularly
these
their
community consisting
large
through
Instead,
that
the
to
by "spin-off" the government's costly
mission-oriented
programs can more or
be
less
though the original missions are primarily political
for,
military.
Because
the
U.S. has by far the greatest military technological
and an impressive "spin-off" history,
capabilities
provide important strategic
become
a conscious,
lessons,
implicit,
albeit
especially
its
when
"spin-off"
many expensive
goal in
may
experience
has
military
(and aerospace) technological endeavors in this country as well as
many
other countries.
institutional
context
"spin-off" will
number of
crucial
the
be
the
In
and
first
some fundamental
a
attempted
different
issues
mechanisms.
synthesis
using
Then
some
perspectives
contexts.
the
will
strategic
and
a
view
reasons which
about "spin-off"
leading to
several
national
about evaluating
discussed, followed by the examination of a
"conventional wisdom"
Finally,
following paragraphs, the U.S.
radical innovation or "big" cases with
"spin-off"
in
to
finding the
may shake
be elaborated.
implications will be
taking
into
account
Background
Institutional
2.
and
Principles
Policy
Without a tradition of explicit industrial policy, implementation
under the shield of "national security"
In
government
"legitimate" tool for the U.S.
only,
the most,
is
to
and sometimes the
execute similar jobs.
science and technology, the main purpose of government
involvement
and
appropriability
investment
supports
in
overcome market failures--especially low
to
is
market
capital
R&D.
So
government
the U.S.
cause
under-
traditionally only
academic engineering, mainly
and
research
scientific
imperfections--that
through the National Science Foundation (NSF), and well-defined
mission-oriented
programs,
procurement
direct
consumed
a lion's
interest.
In
the
the
in
latter
R&D
share of Federal
1960s to two thirds
the
which government ha s a strong and
in
1980s.'
category, the defense
budget, from four fifths
In
1989
and five times
spending $9,3
degree,
billion. 2
R&D
for defense
all
are the
OECD
the other
budget totaled
spending $134.2
Department of Defense (DOD) and,
in
Agency (NASA)
also assigned
their
is
in
field.
NASA
mentioned above, DOE,
off"
to a lesser
nuclear weapon-related
Despite the mainstream of political ideology and
as
R&D
countries' defense
research and the National Aeronautics and Space
aerospace
in
the U.S., the mission agencies responsible
In
Department of Energy (DOE)
the
this
R&D
$46.3 billion, equal to one third of U.S. national
^lillion,
R&D
the mission
irrelevant,
direct
to
support the civilian sector.
Examples include
the Center for
activities
and some other Federal agencies are
Here, "spin-
because civilian technology development
responsibilities.
Program of DOE,
R&D
the
falls
into
Applied Energy
Manufacturing Engineering of the
National Institute of Standards and Technology (NIST, the
institutional
substantial
NASA,
successor to the National Bureau of Standards), the
funding on generic aeronautical research and testing of
and the constant efforts of diffusing
health care industry of the
is
quite
technology
R&D
the
resources available for
purposes are small, though the contribution of
significant.
to
National Institutes of Health (NIH).
Nevertheless, in relative terms, the
civilian
its
NASA
and
NIH
R&D
Normally, the defense-related
the defense
to
technological
activities
Agency (ARPA)
DOD.
armed
of the
jurisdictions
and advanced
DARPA,
R&D,
DARPA
services.
modest
compared with
as
programs--excluding
of
DOD's
of
fifth
defense
R&D
civilian
technology and industry.
for
investment
applications
civilian
of the private
competitiveness,
civilian
DOD
the
the
to
transfer
the
Consortium
Industry
technology base
(SDI),^ and one
(Research, Development,
So, on the whole, the
or marginally
relevant to the
generally considered
to
R&D
be a matter
U.S.
industry's
declining
international
from defense-related programs
exemplified by the passage of several laws.^
has also got involved in
instance,
still
government has become more active
Federal
technology
sector,
for
The exploitation of defense
is
is
sector.
Nevertheless, due
promoting
indirectly
is
budget
its
Initiative
RDT&E
recent years.'*
in
But
technology
under the Services' control,
Defense
funding for
total
that
DOD's funding
Strategic
the
Testing and Evaluation)
results
long-term
underwrites
including basic research and generic
and was only about one
thirtieth
with prefix
This agency was an organizational
development, and thus functions more broadly.
relatively
with
Soviet Sputnik and cut across the traditional
the
to
DOD's
restrict
Advanced Research Projects
the
is
1958 and renamed
in
"Defense," in 1972 within
response
to
those areas directly concerned
to
up
set
1969
appropriation in
One exception
needs.
military
its
This practice was reinforced by the Mansfield
explicit focus.
Amendment
has military mission as
some
to
in
the
Besides,
explicitly civilian programs, for
Semiconductor Manufacturing and Materials Research
(SEMATECH)-an
initiative
Semiconductor
of the civilian
(HDTV)
and the high-definition television
Association,
research.
3.
Achievements and
Impacts
of
"Spin-Off"
During the three decades following World War
"spin-off"
achievements of
were very impressive.
high-performance
missile
and
the U.S.
number of mission-oriented programs
Well-known examples include
fighters
trajectories),
a
II,
bombers),
computers
semiconductors (for missile
jet
(for
guidance
engines (for
plotting
systems).
numerical control (for carving out aircraft structural parts),
nuclear
energy (for naval nuclear propulsion), lasers (for tank range finders
and beam weapons), and time sharing, digital communications and
computer graphics
However,
R&D
may reduce
R&D
performing civilian
large
many
learning experience
issues
fundamental difficulties
example,
the capability
in
is
R&D
in
not easy
to
determine.
involved are also concerned with the
assessing
incremental process innovation, but
industries.
some of which may be
In
this
technological
regard, U.S.
difficult
is
it
modern
military
it
may
to
product than to process innovation.
of "spin-off"
If
are
normally very difficult
jhe opportunity cost
is
becomes even insurmountable.
to
be easy
from
assess product
to
new
R&D
mostly puts
and tends
to
Therefore,
the
cost,
For
innovation.
so radical as to lead to
more emphasis on performance than on
more
by
civilian
to
take account of cost saving or price increase resulting
innovation,
like
through military
alone the "second order" of contribution,
let
for
research,
civilian
instrumentation
military
But the magnitude of influence
Additionally,
Generally speaking,
by sharing very expensive equipment,
sophisticated
highly
or by accelerating
projects.
to
the cost or increase
wind tunnels or supercomputers, with
introducing
labs,
system).
very difficult to measure rather accurately the
is
it
defense
air
impacts, even only in economic terms.
"spin-off"
military
(for
far
contribute
benefits
measure.
taken into account, the challenge
Except that there are resources
idle
and rather readily available, the possibility of diversion or "draining"
For example, the defense technology
of limited resources exists.
programs could be compared with
R&D
sponsored by NSF, by other
They could
Federal agencies, or by commercial companies.
And
assessed against a system differently managed.
there
also be
could
even be investments of different weights along the spectrum of basic
research,
validation.
applied
In
development,
research,
fact,
many
R&D
resources
opportunity cost must be very high.
that
the consideration
testing
and
standards and criteria could be used.^
Though without accurate measurement,
large share of national
engineering,
of "spin-off"
in
the
U.S.,
consumed by
Certainly,
cost
is
it
given the very
military
R&D,
the
could be argued
inappropriate
because the
cost should
"spin-off"
But when
be charged against the targeted missions.
advocated as one reason to justify part of the investment
is
or as an implicit strategy to bolster civilian technology
which has
to
emphasize cost/effectiveness, the concern about cost makes some
sense.
Regardless of the measurement difficulties as noted above,
it
is
apparent that the impacts of some U.S. "spin-off" cases, most notably
semiconductors and computers (or information
That
technological
basic
is,
artifacts
they have created a
paradigm.''
constellation of
Miniaturization,
CAD/CAM,
processing, digital communications,
new
new
and heuristics or intellectual principles
which dictate the working protocols.
with the
are
They have triggered "technological
extremely far-reaching.
paradigm" change.
technology),
They have
etc.
also induced
are
software, data
all
associated
"technology
system" change, and brought about a range of technological and
innovative activities clustering
"Mechatronics,"
around them.
office
and factory automation, and the integration of computing and
communications
What
obvious examples.
are
is
more, they have
affected
not merely one industry or group of industries,
over
the entire
to
That
styles.
shift,
economy, including working practices and
and led the way
to
By any measure,
U.S. "spin-off"
a
modern "information
is
by no means confined to
countries also benefit from U.S.
its
In
in
the early post-
fact,
territory.
its
Many
"spin-off"
other
pioneering progress.
Mechanisms and Patterns of "Spin-Off"
4.
General Rules and "Big" Cases
4.1.
In
more
or
society."'^
achievements
war era were unmatched by any other country.
contribution
life
have even caused "techno-economic paradigm"
they
is,
but spilled
general,
intense,
the
the
all
is
reasonable to assume that "spin-off" would be
more similar
more closely
communities,
may
it
interactive
the
military
and civilian technologies,
the
military
and civilian concerned
others being equal.
On
a regular basis,
"spin-off"
take place in the form of incremental transfer and diffusion
technology through such mechanisms as personal contact,
8
R&D
of
cooperation,
publications,
consultation,
technical
workshops,
conferences,
from mission-oriented programs
personnel
Additionally, even
the
to
industry.
civilian
weapon systems
military
the
if
and the movement of
data provision,
technical
demonstration,
highly
are
and distinctly different from civilian products, and the
specialized
defense prime contractors are restricted in the communication of
information, more "dual use"
classified
subsystems,
components,
parts,
relevant
technical
working
for
may
not be so subject to strict security
Technology sharing and transfer
common
have more
therefore
which the private industry
technological
the
activities
technology transfer
facilities,
difficult
involved
is
than
if
these
at
may
levels
grounds and less obstacles.
Moreover, "spin-off" may also have
military
in
equipment and
capital
materials,
exist
and the vast number of subcontractors
services,
these businesses
regulations.
may
properties
to
do with
to
in
military
are
undertaken
the
civilian
the extent to
programs.
most
government
the
in
If
would be more
industry
they are executed by private firms.
In
respect,
this
U.S. does not seem to have a considerable structural
War
After World
disadvantage.
II
private
the
industry in
this
country began to play an increasingly important role in military
For example,
programs.
However,
mechanisms
U.S.
is
in
"spin-off,"
Many
Therefore,
cases in
it
the
private
most technical
NASA
may
better
as
Some
industry.^
a
radical
do
in
the
regular and
military-
the
crucial
partner to
to
its
inception in
examine
a
number of
to
the
R&D
also
"spin-
1958.
such as electronics, aerospace and the
were historically crucial
may
other countries
organized programs to enhance
has been doing since
fields,
many
which consumed a large portion of U.S. defense
leadership.
private
the
similarly
industry
affairs.
seems highly desirable
some
in
and have close cooperation
adopt more active and
off," just as
exemplified by
other countries
"spin-off,"
military in
DOD's weapon R&D,
of
very doubtful that the general rules and
complex with
industrial
86%
mentioned above can rather satisfactorily explain the
uniqueness
incremental
the
it
as
innovations.
1982
maintenance work was done
and
production
in
"big"
like,
outlays^^ or
U.S. technological or industrial
Semiconductors
4.2.
DOD
semiconductors, though
In
research,
NASA
and
supported relevant
most radical technological progress,
the
Bell Labs and integrated circuits (ICs)
like
transistors
Texas Instruments and
in
R&D
Fairchild, did not take place under their direct sponsorship of
Instead,
contracts.
products
their
encouraged many firms
to
largest
NASA
and
DOD
purchased the
total
$165 million,
price
the
By
had been reduced
to
industry,
DOD
NASA
and
accelerating the following progress.
fund
the
research
diffusion
of the
new knowledge
industry
to
Western
Electric,
underwrote
GE, Raytheon,
years. ^3
digital
the
in
Bell,
RCA
facilities
and
in
and Sylvania, and orchestrated
standardization of operating characteristics
following
to
and research
manufacturing
RCA
in
began
also supported
community, '2 financed engineering development
Semiconductor,
role in
vital
DOD
1948,
DOD
the
to
of transistors, right
of transistor
computers, communications and missiles.
first
market
total
impetus
initial
the case
In
Bell Labs' demonstrated initial success in
application
When
1966, the last year
played a
after
military
the
$5.'
Besides their procurement as the critical
new semiconductor
became
IC output $4 million of the
accounted for slightly more than half of the
still
Pacific
NASA
and
dramatically by ICs.
illustrated
year 1962, the average unit price was $50.
they
some
resources, and
Their profound influence on the progress of
customers.
learning economies could be
DOD
R&D
own
Then
any prices
virtually
at
invest their
of them achieved breakthroughs.
early
procurement of high performance
assured
terms of miniaturization
in
in
on a national basis
because
i^ the case of ICs,
its
in
the
space programs
demanded extensive miniaturization and extremely high
reliability,
NASA
setting
instituted
Microelectronics
for acceptance
criteria
production
stringent
firms,
the
facilities.
of products
To help
specifications,
NASA
Reliability
Program
and guiding inspection of
suppliers
provided
comply with
technical
its
very
assistance
to
many
including major ones such as Motorola, Fairchild and Harris, to
improve
their
processing
technology,
10
i"*
worth noting, however,
is
It
new
diffusion of
technology,
DOD
and
addition
in
that,
NASA
to
promoting the
were willing
buy
to
products from small or "untried" firms in order to boost and maintain
competition
and
entrepreneurship
This practice encouraged
semiconductor industry.
the
in
and
"intrapreneurship,"
helped
rejuvenate
an
which might otherwise be dominated by "slower"
industry
As a
established firms.
result,
in
the
1950s the large incumbent
late
companies (which had produced electron tubes and other
such as Western Electric, GE, Sylvania, Westinghouse,
electronics),
RCA, Raytheon,
market.
The
entrants:
new
only held one third of the total semiconductor
etc.,
of the market
rest
firms
established
was shared by
to
groups of new
three
produce semiconductors
(e.g.,
and National Semiconductor), existing firms but
Transitron
small before entering
and
Instruments
General
from other industries
semiconductor market
the
and
Instrument),
(e.g..
(e.g.,
large
initially
Texas
firms
established
Motorola and Hughes). ^^
Certainly, this
"industrial
metabolism" was also facilitated by the fact that learning
economies
in
the
early
semiconductor production depended on very
deliberate
experimentation
impurities
contamination,
most stages.
with
preparation,
crystal
significant
from
products did not always
less
enjoy a
advantage over new entrants which had strong new
background and better learning
technical
4.3.
generation
strategy.
Computers
In
computers, before the military contracted
School of the University of Pennsylvania
in
R&D
to
the
Moore
loose cooperation with
Massachusetts Institute of Technology (MIT) for ballistics research
the
at
on their
Therefore, established firms merely based
earlier
of
and exploitation of precision equipment
large production scale or longer "learning by doing"
sophisticated,
control
mid-1930s, there had been
a
variety
machines for business and public service.
military's
electronic
huge
R&D
computer
Calculator) from the
computing
at
speeds
of commercial
computing
But the war triggered the
support, and led to the birth of the first fully
ENIAC
(Electronic
Moore School
several
in
Numerical Integrator and
1945.
ENIAC was
capable of
hundred times faster than the earlier
1 1
in
machines, such as Bell Labs' Relay Computers—using telephone relay
armed
devices--built for the
electromechanical
ENIAC
and IBM's Mark I--an
forces,
calculator--donated
to
Harvard University.
provided a great technological impetus
to
So
computer
the
and created a cadre of computer engineers and scientists,
industry
Neumann.
including John von
DOD
Then
sponsored conferences
to
new technology and financed the development of storedprogram computers, one type of which— EDVAC, a joint product by
von Neumann and Eck;ert-Mauchly--became the well-known UNIVAC
diffuse
in
the
Up
1947.
R&D of
DOD and,
1950, the
to
by
entirely underwritten
to
other agencies like the Atomic Energy
a
much
lesser degree,
Commission (AEC) and
needing computing capabilities
applications
ballistics
calculation,
government census,
purposes
for
etc.
and commercial versions--many of which were
It
the
and
scales
sophisticated
less
like
were recognized then.
mid-1950s did private investment begin
the
in
smaller
by some
Bureau of Standards, because no comparable commercial
National
Only
was almost
electronic computers
less
soar rapidly,
to
with
costly
functions--begin
prosper. ^^
to
important to also note that initially the civilian industry
is
lacked the technical knowledge to fully appreciate the potential of
But the demonstration of the computer applications
computers.
military
programs
space programs
computers
In
by
the
in
the
the
in
1950s and especially
1960s greatly accelerated
business
the
in
the
the
in
highly visible
acceptance of
world. ^^
following decades, despite the fast growing commercial
market, government agencies, in particular
DOD, NASA and AEC
(which was succeeded by the Energy Research and Development
Agency and then DOE), continued
key
DOD's
intelligence.
recent Strategic
Computing Program
highest-performance
of the art.*^
classic story.
computers
that
R&D
artificial
is
Moreover, these agencies usually were also the
purchaser of the
state
major supporter of
such as advanced computer architecture and
fields
example.
to be the
a
good
first
defined
the
x^g development of supercomputers presents
For nuclear research,
6600--the
machine
that
1960s--by
advance
payments,
AEC
dominated
12
underwrote Control Data's
supercomputing
software
a
support,
and
throughout
the
the
purchase
in
by the Livermore Lab of two of the
the
four computers built. ^^
first
1970s, Cray Research pioneered in this field
worked
also
It
In
DOE's Los Alamos Lab which needed massive computing
simulate the operation of nuclear weapons and nuclear
closely with
power
to
power
plants.
experts
The
lab paid incurred
R&D
study Cray's machines, developed
to
assigned
costs,
many
both an operating
system and applications software, and suggested design changes
When Cray was on
needs.
better suit
its
1976, Los
Alamos purchased Cray's
computer industry,
the
was
stimulating practice
less
RCA
IBM
as
the
and Sperry Rand.
particular Sperry
third
In
government's
though
1957 had nearly
in
competition-
pre-1960's
its
1965
in
computer manufacturer behind
largest
the
all
This company
from defense and space agencies.
displaced
By
out.
it
pronounced. Control Data established by
former Sperry Rand employees
sales
to bail
14 Cray machines. 20
1989, the lab had bought
In
the verge of bankruptcy in
machine
first
to
some computer
1960s,
Rand and Control Data,
also
firms, in
benefited from
the
purchase by these mission agencies which had a policy to improve
IBM--then by
companies' competitive position vis-a-vis
these
leader. 21
strongest
Nuclear
4.4.
Power
Beyond semiconductors and computers, another
the
"spin-off"
history
is
nuclear power.
Energy Commission (AEC) was formed
case
"big"
in
of reactor types were developed in
submarine propulsion the Navy
in
pressurized-water reactor (PWR),
1946 and charged with
Then
helped
transfer
the
national
by virtue of
nuclear technology
its
AEC
this
began
simplicity
all
funds
in
this
program.
arrangement, Westinghouse set up a lab, closely
PWR.
its
relative
from the military programs
controlled by the Navy's task force leader
develop
For
labs.
provided
and the national labs to the private firms involved
Under
a
1946 picked up the idea of the
and compact design, from the Clinton Lab.
and
in
After the war, the Atomic
developing both military and civilian nuclear technologies.
variety
the
far
In
successful
1955 the
first
operation,
Hyman
Rickover, to
nuclear-powered submarine Nautilus
with
13
a
Westinghouse-developed
PWR.
Before finishing
AEC
entrusted by
with the construction of a pilot nuclear power
Westinghouse again was contracted the task
plant.
60
Rickover had also been
military program,
this
MWe PWR
In
plant.
1953
in
1957 the pilot plant achieved
power and continued operating
in
build a
to
design
its
shut
various roles until finally
down in 1982. In the meantime, GE, while operating governmentowned plutonium-producing reactors, also set up a nuclear research
ABC's
lab under
auspices, and
full
worked with Rickover
build a
to
But GE's reactor proved
sodium-cooled submarine reactor.
be
to
PWR. Later on GE got the
reactor (BWR) from the Argonne Lab.
uncompetitive with Westinghouse's
concept of the boiling-water
went on
own expense
at its
the
two reactor
the
world's
types,
PWR
to
this
concept.
BWR,
that
have come
nuclear power industry.
France and the U.K., despite their
finally
turned
to
GE became
Analogous
to
the early
the
dominate
to
Several other countries
like
work on other reactor
initial
Westinghouse-designed
Westinghouse and
Thus were born
develop
and
PWR
in
types.
And
type.
major players
It
industry.
this
AEC
history of semiconductors and computers,
employed many measures, including subsidies and technology
The Power
transfer, to help private industry get into this new field.
Reactor Demonstration Program initiated
various forms until
4.5.
1962 was an example
in
1955 and continued
this
in
in
line.^^
Aircraft
Unlike semiconductors, computers and even nuclear power,
worldly revolutionary or radical innovations,
difficult to find in the U.S.
technological
in
the U.S.
leadership
in
Even the
aircraft industry.
many
critical
did
fields
But during the whole post-war era
making continuing technological progress
in
a
this
wide
dominating the world commercial aircraft market.
many. 23
Technologically, one
instance,
12,731
U.S.
established
is
speaking,
strictly
the legacy of
not
initial
always arise
country has been
front,
and
Reasons are
World War
II.
For
B-17 bombers were produced for the war.24
an
enormous
infrastructure
of aircraft
tooling, and production capabilities, as well as
development, production,
and project
14
skills
management.
are
in
So, the
technology,
design,
However,
the
role played by military
sources of
R&D
argument.
From 1945
programs
in
(all
and the non-military
billion
1972
DOD, NASA
Besides
main mission was
Though
its
claimed
94%
of
its
is
1983, after
to
National Advisory Committee for Aeronautics
response
to
such as large wind
facilities,
crucial
the Soviet Sputnik,
test
results
contribution
the
to
available
NASA
to
commercial
expensive
its
aircraft
test
industry. ^5
industry could
aircraft
1958 as a
in
aerodynamics research, and
for
civilian
the
succeeded the
it
(NACA)
made
still
tunnels
quite
space programs, which
to
budget from 1958
may have been
most important agency.
the second
shifted
Without such a
dollars).
support from the military, the outcome
different.
this
1984, the civilian industry spent $18
to
Federal agencies' $9 billion
strong
The
also pivotal.
is
investment could rather firmly support
dwarfed by the military's $81
billion,
war
the
after
Its
be
not
underestimated.
Aircraft
an
is
integration of
airframe, avionics, etc.
numerous
parts,
such as engine,
addition to the diverse combinations of
In
elements which are improved over time, aerodynamics
challenge to aircraft design.
In
the early
years,
many
were military derivatives, because they were similar
transports and bombers.
World War
II,
So "spin-off" could be quite
the
is
Boeing 707, the U.S.
military
the
to
first
In
commercial
the 707, and
it
jet,
deserves special attention,
Moreover,
supply commercial transports.
the
construction
British
its
into
respect, the case of
this
it
had previously failed four times
U.S. Federal government, unlike
finance
After
direct.
because Boeing had no commercial transport market when
efforts
aircraft
many new aerodynamic problems were brought
relevance by the emerging jet engine.
embarked on
critical
civilian
to
the
in
in
late
its
1940s,
counterpart, refused
of a commercial jetliner prototype,
so
Boeing, like other commercial aircraft manufacturers, had to use
own
new
its
funds.
To achieve
jet engine,
the full potential
Boeing's
was fundamentally
faster
new
for
aircraft
higher speed inherent in the
used swept wings
than the British
Comet with
sweep.
Many
solved.
This critical design in aerodynamics
related issues,
a
at
35°, and
20° wing
including stability control, were also
15
all
came
largely
from
to
Boeing's extensive utilization of the technologies generated by the
post-war jet bomber program.
In
and the B-29 bombers--was responsible
of the producers of the B-17
bomber B-47,
for the first jet
German
captured
Boeing went on
to
be
its
commercial
first
Both the swept wing design
1951.
in
the engine J-57
and,
jet
became
which was intended
hopefully, a military refueling
Eventually, the 367-80 was chosen by the Air Force
Concurrently the 707
mid-1950s and designated the KC-135.
the
in
used for the B-52 were
Boeing's prototype the 367-80,
into
tanker as well.
in
it
B-47 and the B-52 and
incorporated
Then
design the very large B-52 intercontinental
bomber and introduced
the
by digesting and applying the
partly
on swept wing aerodynamics.
research
to
Boeing--the designer and one
fact,
commercial version of the 367-80 with widened cabin
the
The 707 was
permit six-abreast coach seating.
main reason apparently
Another one
is
is
the military's purchase
One
from the bomber programs.
"spin-off"
the
a big success.
to
more than 800 KC-135s, of
of
which 450 were committed before any orders were booked.
This
huge procurement very significantly shared the development costs
and drove
down
orders, the
Douglas Aircraft Co. was also successful
the
Nevertheless,
learning curve.
without military
in
its
first
DC-8 which used 30° swept wings and the same
engine J-57, and entered service in the same year 1958 as the 707
Therefore, the influence of military procurement was not
did. 26
commercial
jet
absolute as the
decisively in
DC-8 shows.
their
aircraft
After the 707
But both Boeing and Douglas benefited
design from the jet bomber programs.
and the DC-8, the aircraft technological advances
were basically incremental.
Their four-engine configuration
followed by variants of tri-engine and twin-engine designs.
more powerful supersize
far
the
very heavy and long range aircraft, such as Boeing 747,
McDonnell Douglas DC-10 and Lockheed L-1011.
In fact,
another big commercial success, was an adaptation of
design in the 1960s, subsidized by
for a
DOD
heavy military transport which
interestingly,
the
Finally,
engine triggered the arrival of
the
fanjet
was
its
Boeing 747,
military
but failing in the competition
later
became
the
C-5A.
And,
KC-10--the model for the currently largest
purchase of military tankers,
is
a
direct derivative
16
of the DC-10. -^
possibilities
during and after World
of piston/propeller engine.
&
Pratt
explored
countries
several
engines,
In
War
because of the maturing
II,
the first big innovation
the U.S.
In
turbine
various
the
Whitney's J-57 two-spool engine introduced
1951
in
former single-spool engine by permitting higher pressure
was much more controllable and
the
than the piston
efficient
B-52 and the
&
was also used
Whitney had
turbine
lab of
the
three
spools)
all
in
707 (as well as the
the
commercial
new "dominant
jet
engines are
jet
design."
Rolls-Royce designs under license for the U.S.
built
was
this
its
own
its
operated a big
and the
funds,
program subsidizing most incurred
military
it
Therefore, technology transfer from abroad,
own.
its
Besides,
only jet experience.
company's strong commitment with
specific
in
sound
should be noted that prior to the J-57 program, Pratt
it
And
third
Consequently, after powering
engine.
So, the J-57 was truly a
Navy.
was also about one
Currently, with few exceptions (e.g., the Rolls-
Royce RB-211 which has
Nevertheless,
It
DC-8, thus launching the age of commercial
the
transports in the U.S.
twin-spool.
reliable.
and
ratios,
5 U.S. fighters to exceed the speed of
first
level flight, the J-57 engine
KC-135) and
the
for
This design had efficiency about twice that of the
B-52 bomber.
more
is
R&D
investment
are all critical to the success of this J-57 case.
The next important innovation
in
the jet engine
history
is
the
high by-pass ratio fanjet coupling a fan through a turbine to improve
the efficiency.
In
the U.S.
the
major impetus came from the Air Force
which asked for engines with 2 or
power plants
program,
Federal
by
GE
DOD
for
heavy transports
its
55%
covered
Aviation
was used
was incorporated
3
of the
times the thrust of existing
the
in
R&D
costs,
mid-1960s.
and
NASA
For
this
and the
(FAA) 13%.-^ The fanjet developed
And Pratt & Whitney's fanjet
C-5 transport.
Administration
in
the
into
Boeing 747.
727, 737, 757, 767, DC-9,
Currently, not only 747, but also
DC-10 and Lockheed L-1011
by a family of fanjets made by either
GE
or Pratt
&
are
powered
Whitney. 2
Therefore, the commercial engines in the U.S. in reality have been
heavily subsidized by
military
DOD,
because the power plants developed for
purposes could be used quite directly
aircraft. 30
17
in
the
commercial
also worth noting
is
It
during the war the military
that
GE
encouraged the entry of the steam turbine firms
succeeded
becoming one of the few
in
So
manufacturers in the world.
After the war
engine area.
aircraft piston
Westinghouse into the
GE
largest jet engine
strategy
the
and
stimulate industry
to
competition and to assure multiple sourcing was also used here,
though small firms were virtually excluded because of the high entry
rooted
barrier
and large-scale, complex
capital-intensive
this
in
technology.
military and
structures,
In
elements--wings,
control
closely related.
In
R&D
Therefore, military
some
despite
which need
leads
to a large extent
is
associated
with
etc.
"dual use,"
combat
aircraft
nearly
in
"dual use" character, the U.S. presently
to this
aspects of advanced composites. 3
all
Therefore, on the whole,
are
ratio,
and corrosion and exposure mostly on the
Mainly due
world
the
these fields
fatigue
deal with such issues as higher G-loading and
maneuverability,
ground. 31
in
resistance,
strength-to-weight
requirements
specific
to
corrosion
high
toughness,
material
resistance,
gear--remains
and civilian aircraft both
military
protection,
lightning
similar
require
the critical
in
landing
cabin,
surfaces,
materials,
R&D
commercial
many
critical
2
technologies for aircraft
highly "dual use," and the U.S. civilian industry has benefited
enormously from military (and aerospace) programs through large
procurement,
4.6.
R&D
C3I and
and technology sharing.
contracts,
Systems Technology
Across various
technological
areas,
programs demand tremendous systems
specific
expertise
contribute
to
some mission-oriented
and experience acquired
the civilian
little
Corporation of America
(RCA)
consolidating
radio
during World
War
importance of radio
"old,"
in
is
the
to
U.S.
1919.
Because of
at
A
Radio
for
its
the
1
8
economy.
national
experience
military
Navy deeply appreciated
national security and
systems integration experience
from these programs may
the birth of the
technology and industry
I,
or
with strong systemic character.
industry
dramatic case, though a
The general
efforts.
level,
in
purposes
the strategic
Using
after
the
its
war
a central role in promoting the establishment of an
Navy played
the
then
"all-American" coordinated radio industry to replace the
American Marconi Co. --which was controlled by
Marconi
British
the
largest
Co. set up by the inventor of the wireless telegraphy Guglielmo
Marconi.
In
fact,
without the Navy's enthusiastic advocacy and
arrangements-'including
buying
out
Marconi
the
resources in the U.S. and pooling patent rights from
Westinghouse
company
enable one
to
to
and
interests
AT&T, GE
and
have patents enough
to
RCA)
and Westinghouse (allied with the International Telegraph Company
to get into radio broadcasting business after the formation of RCA)
make
companies
a system, big
might have continued
great debt
From
case
(the
major investor of
manufacturing
adhere to their traditional
owed
So, the U.S. radio communications industry
business.
a
to
GE
like
for
far-sighted
not surprising
is
it
C3I--command,
the category of
Navy
and systemic vision and patronage. 3 3
systems perspective,
a
into
falls
its
the
the
that
above
control,
communications and intelligence, where systems design and
integration are pivotal to the ultimate success.
World War
II
the Air Force's
Environment) real-time
particularly
important.
air
SAGE
the
digital
SAGE
this
system
in
1950s
the
This huge system teamed MIT,
many
laid
field,
after
(Semi-Automatic Ground
defense
Burroughs and Bell Labs, and
sharing,
In
is
IBM,
of the foundations for time
communications and computer graphics. 34
Besides,
operating system had over one quarter of a million
instructions.
The following
SACCS
(Strategic Air
Command
Control
System) even ran over a million instructions as well as an associated
auxiliary
message system requiring another 300,000
lines
These unprecedented large command and control systems
large
pool of software
civilian
software
manpower and
though the impacts of the
was introduced
DOD
for the
procurement.
business
in
greatly
nurtured
to
a
the
industry. 35
COBOL, UNIX, ARPANET
Other relevant examples include
ADA,
contributed
of code.
the
late
last
1950s.
one remain
Its
to be seen.
and
COBOL
development was sponsored by
management of very complex defense logistics and
It turned out that COBOL became the most used
language. 36
UNIX
operating system was
19
first
developed by
Bell Labs in the early
University of California
was
make
to
hooked up
the
DARPA's purpose
Bell system.
ARPANET
network
its
system
communicate
to
with one another and run the same applications.
Berkeley versions of
UNIX
AT&T
of the commercial
Consequently, the
were incorporated into the
As
system. 37
ARPANET,
to
easily
versions
later
it
pioneered the
communications technology, and, along with another
packet-switched
DARPA's
at
add extensive networking and
to
the basic
to
financed the research
possible for the wide array of computer hardware
it
to
Berkeley
at
communications functions
DARPA
But
1970s.
ALOHA
project
Net, provided models and protocols for the
design of local area networks (LANs), including the most widely
ETHERNET. 38
supported
DOD's
ADA,
single multi-purpose,
ADA'S
DOD
So
was
it
exemplified by the myriad
began
support the development of
to
high-order language
ADA
in
certainly,
in
C3I.
arena,
the civilian
In
As
language.
mission-critical
military
all
In
its
use was
systems
software
and,
avionics systems have adopted
more generalized
a part of this
1983
1974.
specifications were frozen into a standard, and
mandated
a product of
and the increasingly high operation
use
in
and maintenance costs.
ADA
to
struggle with the "software crisis"
incompatible languages
a
With respect
initiative,
STARS
(Software Technology for Adaptable, Reliable Systems) program also
commenced
in
the
1980s
early
develop software production
to
technology, including software tools and methods.
the results of this
It
to
is
the civilian sector. 39
improvements
in
C3I also contribute
the
and space systems programs.
and Review Techniques)
is
Polaris
In
this
Navy
1958
in
system
to
It
that
the
for
military
(Project Evaluation
was due
to
the
develop the
(solid-fueled,
armed with nuclear warheads and
fulfillment of the Polaris Program,
range
intermediate
fired
from
management developed PERT
plan and control the whole program.
in
PERT
example.
missile
submerged submarines)
tool
field,
field
critical
a classic
urgent time pressure on the
missiles
expected that
in
systems engineering and management, a
ballistic
is
program could also be used
self-evident that
sophisticated
It
to
Aside from the successful
PERT
has become an indispensable
complex project management and systems engineering.'^^
20
Though without such
reason
to
believe
many
that
other
difficult
But the "spin-
might have been quite profound.
track,
to
to
systems design and integration,
of the enhanced capabilities in
albeit
good
because they had
use what were readily available for urgent purposes.
off"
is
These programs might
a narrower technical sense,
in
little
there
programs similarly had
military
very tight development timetables.
contribute
PERT,
a dramatic case as
Large space systems programs such as Apollo and Space
Because
also exemplary.
Shuttle are
accuracy and
conservative
technically
systems programs normally have to be
these
reliability,
unnecessary
avoid
to
missions mandate extreme
their
and
uncertainties
and mainly focus on exploiting the existing state-of-the-art
risks,
attempting
than
rather
to
significant
Nevertheless,
advances.
technological
generate
scientific
programs demand very
these
advanced systems design, engineering and management
very widely separated, specialized efforts.
despite
In
this
integrate
to
regard,
NASA--
accidents--employed a very wide variety of
occasional
the
and
methods, such as PERT, simulation analysis, data banks, management
systems,
information
etc.,
incomparable manner for
the
originated
elsewhere,
were further refined, augmented and integrated.
participation
people,
many
aerospace
NASA's programs and
in
other
Crucial
4.7.
Though
exhaustive
the
mechanisms seem
first
"spin-off"
is
these
collaboration
in
to
cases examined so far are neither
By
a simple
particularly
one
new and expensive
second
of experienced
Mechanisms
nor necessarily representative,
The
however,
Through
movement
the
of
industries.'**
variety of possibilities.
cases.
they,
systems technologies have been diffused
delicate
and
Though most
huge space programs.
its
NASA
techniques used by
almost unprecedented and
an
in
is
synthesis,
to
the
substantial
critical
do exhibit a great
however, three
of these "big"
"success"
mission agencies' assured procurement of
products, which creates
agencies'
the
the
crucial
they
R&D
the
initial
contracts,
markets.
The
subsidies and
technological areas of potentially
commercial relevance, without which these areas may be seriously
21
by the civilian industry because of the perceived
under-invested
The
unaffordably high risks or costs.
these agencies'
third is
promotion of technology diffusion and industry competition, which
expands the industrial base and enhances the "industrial
metabolism."
Through these three mechanisms,
(and
institutions)
research
Then
Exhibit
incremental
new
processes,
model could also be used
this
about
1)
"Spin-Off"
many impressive
Despite
Rationale
cases
"spin-off"
mentioned above, recently there has been
trend
to
reflect
the deep concern
competitiveness of
international
R&D
of Federal
some
growing skepticism
a
and technical
recent
skepticism are as follows.
5.1.
Diverging
Military
there
has
and
in
covertness,
new
most notably
accounts for the lion's share
Plausible reasons for the
talent.
Requirements
Civilian
"stealth
technology"
radiation-resistant
pursued by the military.
But
in
for
than
military
applications.
fighters
and
nuclear
for
In
geosynchronous
civilian
22
Apparent
efforts.
semiconductors
They have few commercial
random-orbit rather
where significant
fields
This will lead to diminishing
commercial returns of military technological
weapons.
industries,
its
many important
"spin-off" has taken place before.
and
This
been a tendency toward diverging military
and civilian requirements
examples include
in
over the declining
of
still
as
expenditures and attracts considerable portion of the
best scientific
Firstly,
many
R&D
semiconductors, while defense
bombers,
including
about the "conventional wisdom" toward "spin-off."
seems
national
to explain
"spin-off."
Skepticism
the U.S.
or
or reinforced
industries,
(Exhibit
5.
improved
For an overview of the whole process, see
thrive.
In fact,
1.
firms
upgrade their technical capabilities,
the civilian applications, in the form of
new products and
infrastructure,
industrial
and production experience, and drive down
acquire product design
the cost.
the
satellites,
satellites
for
are
communications, the reverse
is
the norm.
remote sensing, the improvements
In
in
resolution
pushed by the military has been beyond what the commercial
applications
could economically
aviation, civilian
In
justify.'*^
has to emphasize efficiency,
aircraft
environment impact, safety and comforts.
combat
modern
So
speed and maneuverability.
puts priority on
aircraft
contrast,
In
and civilian needs have become very different, which
military
reduces the commercial benefits of military work on
greatly
As
airframes in particular.
airframe companies which
a result,
design and assemble the final products nowadays fund most of their
R&D
commercial
is
In fact, the divergence in the aircraft speed
costs.'*^
Despite the
also striking.
operational combat jet (F-86
first
"Sabre") to break the sound barrier (though only
so far
aircraft
all
operated by the British and French national
jets
the
to
commercial supersonic transport are many.
many
Technologically,
The fundamental
mandate.
under their governments'
impediments
difficulties
such areas as supersonic
in
aerodynamics, power plants, and "fly-by-wire"
inherently
less
of fuel consumption,
the
But before the commercial supersonic
economy
the
of strengthened
addition
prospects--in
money
Congress
to
to
the opposition
to
1971
Program which was intended
program.'*'*
Given the
significant
conditions
still
these negative
In
fact,
to
allocating
large
sums of
fund commercial product development--led
terminate in
the
to
civilian
investment
exist.
and
structures
booms, the effects on ozone layer and
materials, the sonic
climate, etc. should also be alleviated.
make
control
could be widely accepted, the problems about the efficiency
aircraft
public
to
caused by more sharply swept wings are
stability
being overcome gradually.
lighter
1947,
in
used by civilian airlines are subsonic, except a
dozen plus Concorde
airlines
a dive)
in
By
the
in
the
U.S.
Supersonic Transports (SST)
counter the Anglo-French Concorde
industry's reluctance
this
field,
same token,
until
today to
many unfavorable
the recent
advocacy for
a
commercial "spin-off," the "Orient Express," from the hypersonic
(with
speeds higher than March 5) National Aerospace Plane
program
like
is
very premature
at
best.
Even
if
most technical challenges
those involved in the ramjet or scramjet engine can be coped
23
SST Program as well as the new
entirely new fuel system based on
with eventually, similar questions
by an
issues entailed
logistic
hydrogen or methane
either
come up
in
case of scramjet) will inevitably
the
(in
aircraft.'* ^
commercial version of hypersonic
for the
computer software, there also exist some disputable
In
DOD's tremendous
despite
contribution
networking, and some languages.
In
graphics,
in
time-sharing,
such as
small-scale applications,
computer-based programs and office automation,
personal
fields,
both
the
civilian
and military sectors use packaged commercial off-the-shelf
(COTS)
software.
In
however, defense
large-scale applications,
systems are overwhelmingly custom-built, and design-to-cost
a priority,
whereas commercial systems
possible for efficiency's
industries
at
much more
Furthermore,
level.
this
So there are two
sake.
than
their
approved and documented
they
are
development.
ADA
rigid
Therefore,
divergence,
initial
to
over
efficiency, complexity and
its
things for
the exception of civilian
software
Once
all
is
a
good
people,"
any,
case.
there
commercial
is
tends
to
software
persist.
Because of
its
considerable debate
viability.
ADA
avionics systems,
subsequent
the
if
as
software requirements
military
govern
will
purpose
all
distinct
commercial counterparts.
language, as noted previously,
"do
much COTS
use as
still
not
is
So
far,
with
has not been widely
used for commercial applications. "^^
5.2.
Adverse
Secondly, most military
systems contribute
little
to
productivity--now the U.S.
reason
is
that
Manufacturing
on
Influence
or
R&D
Productivity
and highly sophisticated weapon
even adversely affect manufacturing
industry's
serious
weakness.
The main
most military (and aerospace) programs incessantly
pursue performance improvements
at
This tends to result
R&D
in
very costly
the
expense of cost efficiency.
and expensive designs
produced, and make most purchases of high-tech weapon
to
be
systems
demand only small volumes.
In jet
units,
bombers, for example, the B-47 totaled more than 2,000
and the B-52 742
planned for only
100
units,
units."*^
whereas the successor B-1 was
In
fighters,
depending on the different
missions of specific models, the volumes ordered by the military
24
But the cost trend
varied.
weapon
within similar
missiles, etc.
that of tanks, ships,
fairly clear, just as
is
of designing and testing the
first
the
In
categories.
1950s, the cost
supersonic fighters, F-lOO, F-102
and F-104 ranged between $55-365 million.
the
In
1970s, the F-16
development program cost more than $730 million, and the
F-18 cost nearly $1
program
Advanced
the
In
1982
in
partly
from
The increasing
retard
the
5.3.
Little
down
progression
Incentive
commercial competition.
from the
cost-plus-incentive-fee
This
have been
for
many schemes
still
industry's
For example,
side,
partly
due
to
technical
development work and partly due
motives
get
approval, costs
are
proposal stage.
Usually, after so
momentum
been
difficult,
gained
many problems
may want
stages,
has
to
change
that
often
much
that
cost overruns.
On
in
serving
the
costs.
fixed-price contract type
transport program
is
is
future
the
opportunistic
underestimated
at
It
On
at
the
and psychological
the
the military's
also wants
may
to
prevent
jeopardize their
The C-5 heavy
Lockheed won
25
it
Therefore, the
defense needs.
competition over Boeing and received a $1.95
side,
development
later
often circumvented.
a good case.
the
to
important firms from suffering big loss which
competence
of the total
program cancelation becomes
requirements
which incurs additional
1987
is
political
begin to surface.
its
in
and other uncertainties
inherent in
to
14%
and
But the reality
accommodate
the
to
66%
and
by firm-
replaced
largely
procurement funds respectively.
there are
crucial in
is
cost-plus-fixed-fee
the
that
two contract types accounted
latter
which
however, could not be deduced
fact,
and fixed-price-incentive types.
fixed-price
result
above one, the present contracting
the
types
costs
Containment
records exhibiting
official
also a
is
quantities
practice does not encourage cost containment, which
military
(Ml
curve.
learning
the
Cost
to
relevant to
Thirdly,
unit
decreasing production
generally
the
Certainly, there
dollars.)
chicken-and-egg problem here.
the
terms of unit
F-lOO was $2.5 million, and the F-16 $20 million.^s
above values are
(ATF)
Tactical Fighter
expected to cost several billion dollars.
is
costs, the
the
Now
billion.
parallel
the paper design
billion
fixed-price-
incentive contract for a
work and
the
package," consisting of development
"total
requirements
initial
government renegotiated
Misguidance
may
technology,
the
Lockheed
lead
contract to
bail
programs, even
tools
had been pioneered
in
the early
So
Lockheed
out. 5
Efforts
manufacturing
for
Though
numerical control (NC).
is
the
bankruptcy.
to
A
"mislead" civilian technological efforts.
point
meeting
in
To continue
Commercial Technological
of
military
Fourthly,
failed
it
product development.'*^
in
work without extra support might
5.4.
But
the construction of 115 aircraft.
case in
tape control for machine
NC
modern
century, the
this
technology was established primarily by the Air Force's auspices
beginning
the
in
1940s
late
R&D,
in
software development, training
NC
of technicians and programmers, and purchase of
defense contractors.
War and
Program.
missiles
Cold War
the
present
the
These
Integrated
Initially,
NC
in
efforts
the
machines for
were further fueled by the Korean
1950s and 1960s, and
continued
still
in
Computer-Aided Manufacturing (ICAM)
was developed
for
making
and
aircraft
But
which required complex machining and uniformity.
because the Air Force guaranteed lucrative returns, most industrial
and technical efforts were geared
as
a
meet the Air Force
Other developments which might have proved more
specifications.
accessible,
to
practical
and economical
for
the
whole were overlooked or abandoned.
metal-working
In
striking
industry
contrast,
NC
Japanese companies imported the U.S. technology, standardized
machine
and made them easier
tools,
to
use,
more
As
costly for machining simpler shapes of products.
and
reliable,
a
On
world market.
machine
tools
in
the contrary, the U.S.
1978, the
first
became
time since
last
Therefore,
it
the U.S.
Air Force unpurposefully "misled"
efforts in
NC.51
There are some clues
field
of advanced materials.
that
a
may
century, and
the
adopted
many
NC
well be argued that
the civilian
similar history
may
technological
repeat in the
The U.S. present leadership
26
in
a net importer of
U.S. manufacturers outside the aerospace industry
technology via the Japanese.
less
many
result,
Japanese firms, like Fujitsu-Fanuc, have been very successful
the
in
especially
advanced composite technology of
types
all
a result of military
is
and, to a lesser degree, space programs which were aimed at such
goals
higher
as
operating
greater
temperatures,
toughness,
But so
weight, and even lower radar observability.
reduced
advanced
the
far
developed for these purposes are expensive, and the
materials
processes are poorly
fabrication
According
for
suited
mass production.
U.S. commercial end users, the major use of
to potential
these materials will not be profitable within the next five years.
many
10 to 20 years will be required to solve the remaining
cases,
problems and
technical
to
develop rapid, low cost manufacturing
Hence, with the exception of civilian aircraft whose
methods.
requirements
there
are
As
technology.
less
still
than
stringent
commercial "market
little
is
a consequence,
pull"
Nevertheless,
R&D
and space
on advanced materials
in
commercial
the
Many
carbon
large
applications
through
push"
experience.
consists
of
engineering plastics,
fibers,
their
existing
products,
long-term investment
One example
aluminum
in
They focus on
fine
and amorphous alloys.
companies create "market pull" through the
integrated
in
area.
and a "fledgling" aircraft industry, most efforts
advanced materials are explicitly commercial.
ceramics,
this
in
which has relatively small indigenous military
Japan
in
counterparts,
military
their
major military contractors
the
have not played a significant role
field
In
is
in
and maintain "technology
gaining
production
Toyota's diesel engine piston which
locally reinforced
with ceramic fibers.
In
the
European arena, many companies are also cooperating even
internationally
in
automobile
for
developing
structures. 52
advanced
This
polymer matrix composites
a harbinger of the strategy
is
similar to that of Japanese NC--using advanced technology in
cost,
high volume commercial applications.
counterparts
still
expense of lower
mainly emphasize
cost. ^
In contrast,
higher performance
to
U.S.
at
the
3
Another somewhat controversial case happened
history of transistors.
the
low
According
to
Bell Labs'
plan,
in
its
the
early
transistor
was
be used in telephone amplifier, radio receiver, circuit oscillator,
and other civilian electronic products.
request
(because
this
But under the military's
company had extensive experience with
27
complex military projects during World War
II),
AT&T
had
new field chiefly
This may partly explain
1950s.
large-scale application of transistors even
AT&T's
system
telephone
early
the
until
in
1960S.5'*
PWR
Navy's better understood
a
reactor
viable
in
types,
if
PWR
Some
momentum.
great
have
Besides, in contrast with the gas-cooled
power was
initially
are
by
fuelled
0.7% up
to
When
about 3%.
PWR
and
So,
technology was nurtured
moved down
in
the
U.S. and
than other alternatives.
faster
scaling-up went on from the
commercial
initial
60
many
plant,
BWR
the
learning
But as the ambitious
MWe
safety
As
a result,
recent years a
in
individuals-including the inventor of
power industry and
5.5.
nuclear
pilot
plant to the current
and reliability problems
and the treatment of radioactive wastes became an intractable
arose,
new
and
explored in the West, only the U.S. had enrichment
capacity principally for nuclear weapons.
MWe
PWRs
chosen by France and the U.K.,
natural level
its
first
much
natural
use uranium consisting of the fissile isotope U-235
to
enriched from
issue.
equally
least
at
they had been given similar support, hence did not take root
uranium and were
1000
use the
developed alternative
which might have otherwise proved
graphite-moderated reactors (GCRs) which
curve
to
type
plant created
pilot
also for the civilian
other concurrently
the nuclear energy field.
BWRs
But
well suited to submarine propulsion.
literally
of
the delay
own
its
dominant influence might not be without serious flaws.
be
its
by hindsight, the Navy's and AEC's early
In nuclear power,
may
use
for military
then limited technical resources in this
projects throughout the
to
path
and
try
different
Diminishing
Fifthly,
leverage in
former
a
AEC
Leverage
fields
PWR,
pioneers of the nuclear
chairman--have started
reactor concepts. ^
mission-oriented
many
of institutions and
number
seek a
5
Mission-Oriented
of
to
programs have
where procurement or
their
lost
R&D
Programs
potential
investment has
The history of semiconductors
become predominantly commercial.
The military bought nearly all the 90,000
reflects this trend.
transistors,
47%
mostly produced by Western Electric,
of transistors and
33%
of
all
in
1952,56
bm
semiconductor devices by value
28
only
in
1963.57
1952 the military and space agencies purchased the
In
$4 million of IC output, but
entire
1967 they were surpassed by
in
commercial market, and by the end of the 1960s the rapidly
the
growing computer industry had become the largest end user
market. 58
Finally in the mid-1980s,
10%
semiconductor sales and
of
all
the meantime,
the
DOD
3%
accounted for only less than
of the quantity of chips. ^9
unlike transistors and early
respectively,
R&D
form of
support
the
Mostek and
from the military—in the
improving production. 60
at
In
9-year Very High Speed Integrated Circuit
principally
more broadly
initial
But
purposes.
military
for
this
as also to strengthen the U.S.
or
launched
(VHSIC) Program
program was construed
With
IC industry.
technology into military systems,
the
DOD
1980,
budget, $200 million, expanded to nearly $1
incorporate
billion
to
like
gallium
DOD
arsenide (GaAs) chips (whose development was sponsored by
1960s).
main focus on
Its
semiconductors higher
silicon
and density was rather consistent with
speed
industry efforts,
and thus
commercial markets.
because
investment
its
R&D.
program, for
is
shared the development costs for
one reason why many firms took part
very
be seen,
to
is
program's
this
quite
questionable,
modest when compared with
VHSIC
Take 1985, about the middle year of
illustration.
firms
is
though yet
"spin-off,"
commercial
captive
This
effect
mainstream
the
But the relative importance of
enthusiastically. 61
potential
in
(with
the
program,
this
however, did not cover newly emerging technologies,
since the
and
Intel
contract, early purchase of expensive products,
aimed
assistance
lacked
entirely
of
(CMOS)
following complementary metal oxide semiconductor
microprocessor technologies, developed by
the
great success
the
ICs,
In
The U.S. semiconductor industry—excluding
semiconductor production
mainly
for
internal
uses and not for sale in the open markets like merchant firms) such
as
IBM
and
R&D. 62
AT&T-spent
barriers
likelihood
18%
of the total revenue in
Besides, in this program only the large established systems
companies were
entry
$1.8 billion or
in
virtually
the
qualified
to
participate,
given
present semiconductor industry.
of "industrial
metabolism"
29
the
huge^
So the
which might otherwise be
enhanced by DOD's support for new entrants
challenge the
to
incumbent firms has also diminished.
In computers,
Sperry Rand delivered the
in
1955,
annual
the
By
similar pattern exists.
a
military
UNIVAC
commercial
first
computer
GE
to
market had already reached $200
But ever since 1962, the year with
million.
when
time
the
hardware sales
total
$2,300 million, the commercial market has been ahead of the defense
gy
and space market with an increasingly wider discrepancy. ^3
1979 the computers for military use had shrunk
annual
though the defense build-up
production,
reversed
slightly
tide. 64
that
R&D
1950s government
With respect
military
the
60%
Burroughs, and
in
R&D
to
80%
IBM.
in
of U.S.
1980s
investment, in the
STRETCH
R&D
expenditures.
funded major computer firms
still
35%
%
early
the
in
of IBM's total
significant levels, for example, about
70%
only 3.6
contracts (including the large
computers) represented about
Around 1960
to
at
Sperry and Control Data,
in
IBM
But the highly successful
1401, 360 and 370 series were completely financed by the
company's own funds.
In the
1980s
less
investment came from the military
early
years,
nuclear steam
Later on
in
firms. ^
utilities,
industry
Navy's reactors)
began
military
in
In
of various reactor
architect engineers and
Westinghouse
(e.g.,
Rooted
and commercial
impede "spin-off."
even not new issues
R&D
surpass
AEC
many
incurred
expenditures, the
(including the
Obstacles
Nevertheless,
more
at
different
sectors
unfavorable trends or "pitfalls"
are
terms of
significantly
to
many fundamentally
obstacles
In
1958. ^^
Institutionally
Finally,
5
constructing pilot or small commercial plants, and
and environmental issues.
civilian
cited
R&D
developing larger-scale plants as well as tackling
safety
the
all
supply system (NSSS) suppliers
and GE) joined
then
R&D
most major computer
at
government sponsored
types in the national labs.
5.6.
of the
nuclear power, a similar trend could also be observed.
In
the
10%
than
as
rules
constitute
and practices
many
barriers
when compared with
discussed above,
institutionally
all.
30
rooted,
the
more
in
that
the
following
predictable,
and
the
First,
as
well
of communication of classified
restriction
information
government regulations and procurement practices makes
as
R&D
many defense
units
from commercial
administratively,
psychologically, physically and
isolated,
R&D
departments.
This inhibits
technology sharing and diffusion even within a firm's formal
boundary.
organizational
Second, DOD's principle
R&D
to separate
contracts and
production contracts in order to avoid "lock-in" effect extended from
R&D
to
production and encourage competition
incorporation
the
As
a
the
result,
manufacturability
of
DOD's
DOD
share
ensure
to
R&D
supply
multiple
development phase.
are
normally
markets.
another principle to force
sponsored
the
products, even after adaptation,
final
too expensive for the civilian
Third,
into
both areas hampers
in
DOD
results with
sources
its
R&D
contractors to
specified firms in order to
makes many high-tech firms decline
bid on defense projects for fear of losing their proprietary
information and advantage
of
possibility
may
be
further
Relevant to the
perceive
that
the
counter-productivity,
associated
6.
the
with
Synthesis
In
three
point,
in
fluctuation
are
commonly
Implications
consideration of the above negative prospects of "spin-off,"
mechanisms
crucial
perspectives
be used
will
phenomena, and
6.1.
by joining
technically
projects. ^^
as
pointed out previously are
ostensibly not straight "panacea."
discussed
competent companies--which
encumbrance, commercial
budgetary
government
and
the
many companies are also
many military programs, because
bureaucratic
and
Therefore,
decreases.
from taking part
discouraged
they
last
these
strengthened
programs--largely
military
markets.
civilian
through
"spin-off"
otherwise
in
the
to
In
this
synthesize
implications
section,
the
several
seemingly very divergent
other countries will
to
also
briefly.
Radical
vs.
Incremental
Technological
31
Change
be
By
a loose definition, a radical or revolutionary technology
not on the general trajectory of
paradigms
which the progress
in
evolutionary.
plan and manage.
a
predominantly incremental or
is
if
on the "right horse" through direct
new and promising
more effective
through
for
not impossible,
predict,
to
R&D
Only
endorsement.
technological paradigm emerges could
it
after
be
mission agencies to accelerate the progress
R&D
further
stage of radical or
the
thus not very likely for mission agencies to
is
It
at
very difficult,
is
technological
existing
Therefore, the progress
revolutionary change
bet
some
is
technology diffusion,
As
etc.
production
procurement,
investment,
becomes predominantly
"theater"
the
support,
commercial, the mission agencies' overall leverage will diminish.
to
may remain
influence
their
missions and
their
The
the
in
critical
being pursued vigorously.
still
history of semiconductors in the U.S. roughly
fits
this
from the outset (when the solid-state physics, on which
pattern
modern semiconductors
was then
based,
are
highly volatile field) to the recent
newly emerging and
a
VHSIC program
influence on the development of silicon
limited
commercial relevance).
computers was already
DOD's
high-end fields which are
But
strong
direct,
engines,
in
the
by-pass
did
not rely
the
2
its
very
semiconductors of
electronization
of
or less predictable trajectory.
As regards
endorsement was decisive.
the
they
more
a
in
R&D
particular
fanjet,
Nevertheless,
(with
innovations--the
two-shaft
turbojet
So
jet
and
were largely engineering development, and
on very unpredictable scientific discovery and progress
(though a wide array of scientific and technological disciplines as
well as learning experience were needed).
Hence
a
in
technical
sense
they were not too radical for
DOD
pattern
Because of the military origin of most
basic
is
slightly different.
technologies and
the
bet.
civilian
nuclear power.
environmental
changed into
nuclear power, the
high military sensitivity
work on various reactor concepts and
first
In
government involvement, exemplified by
technologies,
labs'
very
the
to
pilot
Later on,
impacts
a
plant,
the Navy's
was much deeper
when
soared,
the
the
national
influence in
the genesis of
public concern over safety and
government's
largely regulatory one.
32
in
of related
What
initial
is
promotional
more,
in
both jet
role
engine and nuclear power, only a small number of established firms
had the capabilities
DOD
is
worth noting, however,
On
that
the initial diffusion stage of
at
protection
proprietary
of
may slow down
to
economic rewards
appropriate
From this point of view, the
AT&T's own telephone system may have
the diffusion process.
in
been more than compensated
by
mandated by the
applications
military
earlier
the
industry-wide
sponsored
R&D
of
them
government's
is
6.2.
national
for
General
security's
costs.
because promoting
responsibility,
legitimate
may sometimes
be
sake.
Technology
Functional
Direction,
by
government
in
innovations,
critical
though, on the other hand, the diffusion scope
restricted
accelerated
which helped drive down the unit
and militarily
exploitation
and
settlement
anti-trust
one of the potential advantages inherent
is
to
not be sufficient, and their
rights
delay of using transistors
utilization,
their resources
the part of the private inventors,
new technology may
exploit the
the
less likely that
is
it
not be so desirable from the standpoint of the whole social
benefits.
This
So
technology, reliance on pure private efforts
or revolutionary
radical
the
R&D.
do the large-scale
would contracted or subsidized "wrong horses."
It
may
to
and
Generic
Technology
If
technological progress
elements,
then
the
is
conceptual
innovation
looked upon
distinction
radical
as
mentioned above may become blurred.
to
between
predict
that
For example,
technology will proceed
of being faster, more powerful, more accurate,
more
accessible,
materials,
available,
etc. -given
same
the
more
input,
and smaller"--given the same output or functions.
the
general
recognizable, and the
possible.
in
it
would not
the direction
reliable,
more
or using
less
energy and being physically "lighter, thinner, shorter
less
perspective,
revolutionary
the
and the evolutionary or incremental innovation
or
be surprising
terms of more basic
in
Even
if
direction
R&D
of technological
endorsement
in
From
this
progress
is
the right direction
fairly
is
the bet on a specific technical approach, device or
machine eventually proves incorrect, the knowledge and
infrastructure
accumulated may
still
33
be
relevant
and can contribute
significantly
Therefore,
identified.
of
direction
the
on
GaAs semiconductors
programs
military
at
schedule over cost,
R&D
their
artificial
belong to
as well
that,
how
made by
on
capitalize
to
the civilian
NC
upon the
because many
usually
civilian
industry
manner
integrated
there
a
is
potential
if
to resist or
To
better
optimum
into a
and commercial
the
one
the civilian
may be
created
mass"
difficult
led into a
sector.
another perspective
technologies,
instrumental.
is
to
system),
momentum
"critical
very
a
in
understand the divergence and convergence of
military
last
may grow
initial
change, and the following efforts
not really
a specific core
nuclear steam supply
the
danger that the
chiefly for military purposes
At the systems
military
level,
similar
But both may consist of many
common
weighted differently.
at
this
functional
mission-oriented
programs could more definitely contribute
civilian
In
sector.
equilibrium,
results
the
the
from military programs.
of
these
The
latter,
functional
clues for the future commercial efforts.
applied
quite
sensing and
well
the
level
that
the
to
consideration of economic viability or systems
commercial applications may not
state-of-the-art
other.
functional dimensions,
is
It
to
and
commercial requirements may look very different from each
despite being
this
basic reactor type) necessitates
a
(e.g.,
(e.g.,
In
itself.
development of other "complementary" technologies
direction
their
shoulders.
industry's
technology, device or machine
then
is
and time
commercial purposes mainly
for
Moreover, as the case of nuclear power shows,
closely
category.
and advanced materials technologies
from military programs
generated
the
this
stage prioritize performance
manufacturing productivity
time and cost must be
falls
may
research
The commercial three-way balance between performance,
weakness.
sense,
speeds and
for processing
should be cautioned
it
early investment in
DOD's long sponsored
correct.
intelligence for "intelligence"
is
computing power, communication
miniaturization,
Nevertheless,
DOD's
could be said that
it
was generally
capacity, etc.
progress once the "right horse"
the continuing
to
to
fully
however, may
technologies
still
define
and provide
This rationale could be
semiconductors, computer architecture,
elements of aircraft such as aerodynamics,
34
the
utilize
remote
propulsion,
which
aircraft
and materials, but
structures
is,
well
less
the
to
whole
one level higher than engine
for instance,
systems hierarchy and, accordingly, should be defined more
commercial
in
terms.
direction of technological
The two perspectives of "general
progress"
the
in
and "functional technology" as suggested above are slightly
from a currently prevailing perspective of "generic
Loosely speaking, "generic technology" means a concept,
technology."
different
component or process, or
phenomena,
has the potential to be applied to a broad range of
that
So
products or processes.
may have
it
militarily
and commercially relevant.
base
manufacturing,
for
of scientific
further investigation
the
the potential of being both
Examples include the science
technology
basic
about
and combustion process, software tools and methods,
technology,"
"generic
Nevertheless,
integrity
structural
conceptually,
is
etc.
"pre-competitive,
covering research activities up to the stage where technical
uncertainties
are
identified
sufficiently
commercial potential and prior
So,
specific prototypes.
or
"innovation
pipeline"
linking different
in
its
it
R&D
development of application-
to
"R&D
spectrum"
(which has feedback and feedforward loops
The importance of
strategic
R&D
thinking.
activities
(e.g.,
research and development) to the usage of
applications and diffusion as a goal.
the
assessment of
permit
basically a stage in the
stages).
inherently novel
from the properties of
is
to
First,
this
perspective
turns
it
the
basic research,
R&D
Second,
it
lies
attention
applied
results--with
wide
grasps the essence of
"convergence" of (or the blurred distinction between) modern
science
and technology, rendering unnecessary the
demarcation"
in
As regards
"artificial
between.
two perspectives proposed here, they are
the
constructed in terms of the contribution to the missions.
not have the
"precompetitive"
development,
production
modification.
It
is
organizing
and construction,
evident,
are cross-fertilizing.
technology
limitation.
So they do
They could cover advanced
systems
use,
and
however, that these three perspectives
"Generic technology" could be a criterion for
programs with more "spin-off" potential.
35
"General direction" and "functional technology" could be a guidance
identifying
for
From
and
Technology
Systems
6.3.
opportunities
"spin-off"
the
capitalize
to
Based
Nationally
on.
Efforts
because the U.S. has an unmatched
a systems perspective,
high-tech military machine and a global military presence,
C3I
its
could be judged to have no comparison in the civilian sector or even
in
the whole world in terms of
Therefore,
other functions.
seems not surprising
it
has
there
that
been a steady flow of contribution from C3I-related programs
civilian
A
sector.
may
similar rationale
the
to
many
Though it
as well be applied
complex mission-oriented systems programs.
large-scale
many
speed and
scale, complexity,
its
to
is
usually difficult to track because of few easily recognizable
"packaged" technologies, the "spin-off" of systems engineering and
management
capabilities
from these programs may have been
widespread and contributed significantly
systemic
character
Finally,
First,
with
industries
commercial counterparts,
their
have
programs
technology
three
rather
because national security cannot be judged
commercial terms, relatively long-term commitment
to
technologies (not necessarily specific products) could
unique
in
some
critical
be more easily
Second, because these programs are mission-focused and
assured.
under big pressure from
usually
the
military
commanding system,
concentrating efforts on some mission-critical fields would
normal strategy.
basis.
strong
particular.
compared with
as
mission-oriented
features.
in
to
Therefore,
investment
not necessarily
technological
more
(not
efficient,
This
consistently paramount role
radical/revolutionary
industry
influence
in
in
may
or
technological
attaining
designated
explain U.S. mission agencies'
C3I and
on
albeit
pioneering some critical
frontiers
scientific)
strong
programs may be more effective,
military
technological objectives.
particularly
be mobilized on a national
the general direction or the specific focus of
if
sound,
is
may
Third, resources
be a
aircraft
many worldly
fields
technology, and
state-of-the-art
where the U.S. civilian
alone could not achieve and no other countries could
compete.
36
and
Implications
6.4.
of
U.S.
Experience
Other Countries
to
applying the strategic implications derived from the U.S.
In
experience to other countries, the U.S. uniqueness should
examined.
First,
investment
and
the U.S. has by far the largest defense-related
Second,
following World
War
broad
all
this
procurement
product
high-performance
Western world.
virtually
R&D
the
in
country during the quarter century
was the world's most productive economy by
II
measures and the technological leader across a very
As
front. ^^
a result of the multiplying effect of these
advantages, the U.S. in effect leads
significant edge
all
by a
the other countries
new technologies from
both the generation of
in
two
programs, and the exploitation of these technologies
military
be
first
commercial sector--or
least
at
fields
the
in
the
the
in
maintains leading
it
position.
As
a corollary,
"spin-off"
out
turn
that
(advanced) countries
other
in
may
it
uncompetitive eventually,
even similarly advanced
may
be
because the alternative
*
abandonment of
France and the U.K.
there
So,
indigenously-developed
the
a
is
little
is
good
"spin-off"
nuclear
likelihood
that
really
radical
which almost certainly would lag behind
counterparts
As
targeted.
is
to
the
in
of resources
innovations
in
other
U.S.
their
and technological levels
invested
unradical innovations of commercial relevance,
it
very probable that the civilian industry has already played a
dominant role
in
terms
in
reactor
illustration.
would originate from military technology programs
countries,
the
in
The ultimate
U.S. tends to have better learning economies.
\
rendered
in
the countries
would be very
the U.S. or in
some other advanced
where the military programs are located.
difficult
to justify
the cost effectiveness
conscious "spin-off"--noting that there
done
meet the commercial
to
countries,
criteria,
still
if
are
the
many
not
if
Then
it
of the
things
to
be
option to transfer the
technology among commercial firms, even across national borders,
exists.
Therefore,
countries
to
it
does not seem
to
be pragmatic for most other
expect significant contribution from "spin-off."
37
Among
advanced countries, the above unfavorable prospect
the
of "spin-off" would naturally be more serious for small countries,
being equal.
others
some
products,
final
these countries
If
pursue self-dependence
all
in
such as combat aircraft, battle tanks,
submarines and missiles, they may have to concentrate their much
technological
limited
on systems design and integration,
resources
and rely heavily on readily available subsystems and functional
home and from
technologies at
investment"
"threshold
required
Then
military items.
slack to deliberately promote
own
their
first
"spin-off."
In
weapon systems,
class
be confined to the
meantime, the military may have no
the
In
modern high-tech
developing
in
may mostly
"spin-off"
systems capabilities.
have
abroad, because of the large
small countries, to
these
much fewer
albeit
in
models for various missions when compared with larger countries,
is
already too big a challenge.
When
the
dynamic
development
industrial
context of a developing country which
is
considered
is
shortening
its
the
in
gap with
advanced countries, the above general argument may need some
modification.
a
military
Usually, a "follower" country's domestic capabilities for
item evolve
licensed
repair,
subsystems, and
production
finally
systems (certainly
subsystems).
of making
If
when
chiefly
a
the
In
still
and
upgrading,
independent design
the
independent production
and production of whole
evolution also proceeds in
the
direction
more sophisticated weapon systems.
model of three stages
civilian
industry
applied here, then at the
is
underdeveloped,
is
military
first
stage
technology
imported from abroad may help transfer relatively simple
technology and management to the local industry, and
industrial
infrastructure
by training
people
uniform
in
upgrade
maintenance
and production--a key element of modern military technology.
the
of
on other countries for many parts and
relying
parallel,
maintenance and
following sequence:
the
in
military
industry
may
play
diffusing Taylorist production
the civilian industry
is
in
leading
role
in
and management.
more developed, and
complex military products
participate
a
increases.
the
demonstrating and
At the second stage,
local
content of more
The private industry may now
more advanced production, and some
38
So,
large
firms
may
even become prime contractors working on systems integration and
design for some military items.
use"
technologies,
Through these
sectors
The technological
the
further shortened.
is
"dual
At the
third stage,
many
have attained rather high levels of technology and
industries
management.
many
example, electronics and systems engineering,
for
could be diffused to the civilian sector.
civilian
firms,
capability
"Spin-off"
gap between the two
becomes more
And
difficult.
argument as precedingly proposed becomes more
general
relevant.
Contrast
6.5.
As
far
as
with
centrally planned
could be a representative case.
This country's huge military
R&D
military and aerospace technology
Its
But there
the U.S.
significant
is
little
USSR
economies are concerned, the
investment in terms of procurement and
U.S.
Economies
Planned
Centrally
evidence that
is
this
only matched by the
is
also second to none but
country has had
with the exception of aircraft and nuclear
"spin-off,"
power.
In
the
USSR,
the airliners
same organizations, such
Design Bureaus,
many
the
well-known Tupolev and Ilyushin
worked also on bombers, military transports
that
Though
and even fighters.
prioritized,
as
were normally developed by the
civilian
military
versions
projects
derived
were traditionally
from
their
models achieved remarkable technological records.
era.
the
military
In
huge turboprop TU-114 entered civilian service
the
in
post-war
1957.
This family only later was displaced by Boeing 747 as the world's
largest,
Airline's
heaviest airliner.
fleet.
This
is
In
the
1956 the TU-104 joined the Aeroflot
world's
first
operational jetliner, without
peers for two years until the entry of the 707 and the DC-8.
engine M-109 was the world's largest operating
at
range was also longer than the 707 and the DC-8.
provided service until
1980 with good
reliability
that
Its
time.
Its
The TU-104
and safety record.
This nearly all-Soviet product, like Sputnik, was seen as another
proof of the rapid scientific and technical progress in the
USSR.
It
is
noteworthy that both the TU-114 and the TU-104 had been
developed inexpensively from the military designs, the Bear and the
39
TU-16 bombers
respectively,
was very
effect
in
The
only eighteen months.
"spin-off"
high.
However, the strong pursuit of speed, range and capacity,
more economically
usually at the expense of
designs, also
justifiable
There was
characterized the Soviet civilian aircraft development.
little
There was also no
profit incentive as a driving force.
"objective"
cost accounting system in
this
designs in the direction of efficiency.
country to push aircraft
Therefore, despite the high cost
consciousness on the designers' part to make economically viable
aircraft
world market, the hurdles rooted
also for the
the counter-
in
productive institutional context proved to be too difficult to
completely
cross.
The TU-144 program which
December
supersonic transport on
style
The 25
development.
led
to
the
historic
1968 also typifies the Soviet-
31,
investment pushed the
persistent
years'
flight of an
first
program steadily forward and achieved high technological levels
aerodynamics, fuselage and engines, though
its
in
and
electronics
comforts could not match the Western counterpart Concorde.
However,
its
commercial
unresolved weakness
1983 the supersonic
Before
civilian
aviation
this
final
even
its
plan
flight
after
In
was
of about a dozen and a half units
fleet
more than 10,000
air-
decision was made, no pragmatic world of
had seriously challenged the course of
as in the U.S., or
in
range, reliability, efficiency and noise.
in
dropped from the Aeroflot's
hours.
was eventually crippled
viability
in
this
program
France and the U.K. --despite the
continuation of their Concorde program and flight. ^^
In
nuclear power technology, the
sector,
country
this
operated
world's
first
fusion)
in
tokamak
1968,
In
term
almost totally
the
new
commitment,
management.
the
world's
in
self-
But,
large-scale
experimental
magnetic confinement for nuclear
in
excellent technical progress
reactor
first
1954, developed the
and made remarkable progress
effect,
output scale and
(i.e.,
the
MWe)
nuclear power plant (with output 5
reactors.
is
Based on the basic technologies originating from the
dependent.
military
USSR
R&D
the
in
fast
terms of
was pushed forward by
investment
and
breeder
its
long-
centralized
on the other hand, the safety factor was largely
40
neglected, resulting in
graphite-moderated
water-cooled,
light
unacceptably bad safety designs
the
disastrous Chernobyl
accident in
outside
controlled
centrally
its
very
the
pitfalls,
system existed and warned against
"unbalanced"
development might have been
environmental issues as have been faced
in
the
many
West would not
the
in
another case
is
advanced military and space systems suggest
its
must have possessed some technical capabilities
country has failed
quality
It
in
imitated
creating
IBM
viable
a
was bad and software support weak.
yield rate
was low and
Even
military uses.
poor
reliability
in
It
least
at
larger computers do, the
USSR
bloc) entirely
lacks
vitality
opportunities.
As
in
the
a
matter of
USSR
the
(as well
fact,
produced ICs, but the
those for non-
in
For example,
modern information
This weakness
to
the
development of many
in
1988 the
USSR
had only 2
to
4 reactors.^
"spin-off"
or nearly completely stymied in
incredibly weak.
1
^
has been
severely
USSR.
the
This country
has a large pool of military and aerospace technology, but
is
fields,
58 reactors, whereas the West has an average of
its
Therefore, on the whole,
industry
than
capabilities
has been described as a crisis.
including nuclear power.
"distorted"
but the
series,
whole East European
as the
the
barrier
simulator per 3
this
grasp the dynamically changing
to
has constituted a serious
simulators for
But
microcomputers which do not really demand
more advanced and sophisticated technological
technology
advanced
base comparable to
RYAD
its
USSR
the
that
in
industrial
computers for
Many
point.
in
computers and telecommunications.
microelectronics,
the West.
and
safety
USSR.
Modern information technology
of
Chernobyl-type
(i.e.,
Had an independent voice
1986.
This certainly does not imply that
avoided.
happen
all
according to the Western standards, and the world's most
reactors),
the
reactors
in
So, even
if
its
its
civilian
government makes
conscious and great efforts to convert military technology for civilian
purposes,
civilian
there
industry
is
no autonomous,
that
vigorous
and market-oriented
could actively take advantage of the "spin-off"
opportunities according to the commercial rules.
the
"virtuous circle"--in
Besides, for lack of
which a strong civilian industry
41
in
turn
supports
military
the
aerospace technology in the
development of military and
further
the
sector,
USSR
has also been seriously
jeopardized.
7.
Remarks
Concluding
In
addition to
some general
mechanisms
three
rules,
the success of several "big" cases in the U.S. "spin-off"
The
identified in this paper.
first
mission agencies'
is
history are
initial
procurement of new and expensive products; the second
substantial
is
R&D
their
is
and collaboration; and the
subsidies
contracts,
to
critical
third
promotion of technology diffusion and industry competition.
the
However, some
"spin-off":
trends,
diverging
programs'
oriented
practices
military
adverse
and
are
pitfalls
also
found
inhibit
to
and civilian requirements, and mission-
on
influence
manufacturing
productivity
and cost containment, misguidance of commercial technological
and
efforts,
diminishing
leverage.
By comparing many phenomena
paper suggests
that
programs tends
to
the
across different cases,
contribution
potential
be more crucial
when
of
mission-oriented
targeted
the
this
technology
the
stage of radical change, and confined to the high-end fields
the
innovation
is
predominantly commercial and incremental.
meantime, the contribution of these programs also tends
steady and predictable in
some
critical
"functional
complex systems programs
unmatched systems
of systems
efforts,
their
in
U.S.
the
"spin-off"
On
the whole, however,
it
other military superpower--the
the
either
"distorted"
civilian
be more
and
in
the
field
technology and engineering tends to be considerable.
in
military technology,
or
should be
seems not pragmatic for most
other countries to expect significant contribution from
to
the
In
demand worldly
generalization of the U.S. experience to other countries
cautioned.
when
technologies"
contribution
Because of the U.S. superpower position
the
at
Because many C3I and
"general directions of technological progress."
large-scale
to
is
USSR,
its
"spin-off."
"spin-off"
has been
stymied for lack of a strong, market-oriented
industry.
42
As
Notes
1
Freeman (1982),
p.
2
Smith (1990),
133.
3
development
development
5
and Nelson (1990),
DOD's technology base programs
exploratory
4
p.
191
(category
OTA
(1989).
The laws promoting technology
Federal
the
Act of
Transfer Act of
1989.
^
from
1988,
Carter (1989), pp.
in
For the
exploratory
1980,
and
the
Act
Innovation
the
programs
sponsored
Federally
of
1980,
Patent
the
Bayh-Dole Patent Amendments of
National
Omnibus Trade and
the
Competitiveness Technology
10 standards used to evaluate the effects of defense
discussed
6.1),
20.
Technology Transfer Act of 1986,
Competitiveness
^
p.
transfer
and Trademark Amendments Act of
1984,
advanced
and
Stevenson-Wydler Technology
the
(category
6.3A).
(category
For DOD's budget, see U.S.
include
research
include
6.2),
125.
p.
R&D
spending are
4-6.
impacts of information
technology
on
information
technology
on
"technological
paradigm,"
see
Dosi (1982).
^
For the
impacts
"techno-economic
9
10
of
paradigm,"
Freeman
see
equipment
and
accounted
RifeD
1981.
the
for
about
Braun and Macdonald (1982),
12
The
rapid
to
license
its
equipment
half
and
about
p.
settlement
and to refrain
in
the
and electrical
a
and
quarter
electronic
to
a
third
is
partly
due
to
AT&T's
mid-1950s.
Misa (1987).
Schnee (1978),
15
Braun and Macdonald (1978), pp. 59-63, and Schnee (1978), pp.
16
Phillips
17
Schnee (1978),
18
Flamm
(1987). pp. 65-70 and
19
Hamm
(1987), pp. 78-80.
pp.
consent
from open market competition as part of an
14
(1982), pp.
of Federal
11-12.
13
pp.
components)
98.
diffusion of transistor technology
patents
(1986).
of aircraft/missiles
See Rosenberg (1986), pp.
funding.
11
antitrust
categories
communications
(including
respectively
military
1971
both
Perez
and
294-295.
Burnett and Scherer (1990), pp.
In
and
system"
"technology
15-16.
162-179.
10-11.
108-110.
43
11-13.
-0
OTA
U.S.
(1990),
188. and
p.
Flamm
(1987). pp. 81-82.
21
Schnee (1978).
-2
Thompson
23
For a brief discussion of the U.S. commercial aircraft industry, see
Dertouzos
et
pp.
(1984).
al.
(1989). pp. 201-216.
24
Donald (1987).
25
Langford (1987),
26
For the
13-14.
14.
p.
37.
p.
government's
influence
see
Mowery and Rosenberg
27
Rosenberg (1986),
28
Rosenberg (1986),
29
For
commercial
U.S.
the
aircraft
industry,
(1982).
24-26.
pp.
24.
p.
development of
brief review of the
a
on
jet
engine, see White
(1984),
pp.
10-18.
30
Dertouzos
31
U.S.
32
U.S.
33
(1989),
et al.
OTA (1989), pp.
OTA (1988), p. 1.
For
206.
170-171.
of this history, see Chiang (1991).
brief review
a
p.
34
Flamm
(1987), pp. 48-49.
35
Flamm
(1987), pp.
36
Flamm
(1987),
37
Flamm
(1987), pp.
38
Flamm
(1987), pp. 59-61.
39
Flamm
(1987), pp. 75-76, and U.S.
"^0
p.
76.
121-123.
OTA
(1989), pp.
For the Polaris program, see Sapolsky (1972).
PERT,
Moder
(1983), pp.
10-14.
There are many reports about Concorde.
See,
history of
see
41
Schnee (1977).
42
Rosenberg (1986),
43
Dertouzos
44
For the
45
For
Altes
U.S.
a
et al.
p.
et
al.
p.
Program,
of the
National
47
Donald (1987),
(1989). pp. 169-170 and 173-174.
pp. 38,
a
for
example, Feldman (1985).
44 and
62.
Burnett and Scherer (1990), pp.
295-300.
44
see
Horwitch
(1982).
Aerospace Program, see Korthals-
(1987).
OTA
brief review of the
For
206.
Transports
brief discussion
U.S.
169-170 and 173-174.
27.
(1989),
Supersonic
46
48
121-122.
'^9
For a brief discussion of the technical issues of the C-5A transport, see
Seamans (1972),
50
pp.
2-4.
For the military contracting behavior and the Lockheed case,
Burnett
see
and Scherer (1990), pp. 300-305.
51
NC
For the development of
and the "distortion" of commercial efforts, see
Noble (1984).
52
53
U.S.
OTA
(1989). pp. 167-168.
For a comparison of advanced materials technology strategies
and Japan, see U.S.
OTA
Misa (1987).
55
Thompson
56
Braun and Macdonald (1982),
p.
70.
57
Braun and Macdonald (1982),
p.
80.
58
Braun and Macdonald (1982),
p.
98.
59
Dallmeyer (1987),
60
DcGrasse (1983). pp. 84-96.
61
For
62
Statistics
VHSIC
p.
48.
Program, see Yoshino and Fong (1985).
from Dataquest.
Schnee (1978),
64
Flamm
(1987), p. 108.
65
Flamm
(1987), pp. 97-99.
66
Thompson
68
69
OTA
p.
9.
(1984), pp. 68-72.
(1990), pp. 33-35 and 161-163.
Nelson (1990).
For the development
transports,
70
U.S.
(1984), pp. 68-73.
63
U.S.
the
(1988).
54
67
in
in
the
USSR,
of aircraft,
history
see
Moon
in
the
USSR,
the
supersonic
(1989).
For a brief discussion of nuclear power,
other technologies
including
see
information
Chiang (1990).
45
technology
and
some
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in
in
Press.
Exhibit
1.
"Spin-Off" from Mission-Oriented Technology Programs
Mission
Requirements
i
Needs of Key Technologies
/
\
R&D ^
Government Labs' In-House
\
y
^ R&D
Contracts to Industry
Mission Test, Integration, Utilization and Modification
/
i
Technology
to
Industry
Government's
Follow-On Procurements
\
Industry's
\
/
i
Transfer
i
Production
Expansion
and
Experience
i
Industry's
Technical
Capability
Upgrading
Accumulation
i
Cost Reduction and Quality
Improvement
[(Spin-Off)
Civilian
Applications
^
i
Improved or
New
Products,
Processes,
Industries
and
Infrastructure
u
-
Date Due
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03
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