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

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

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

4. CONCEPTUAL FRAMEWORK BUSINESS GOAL: FROM “IDEA GENERATION” TO ”INCOME GENERATION” FROMINNOVATIONTOCOMMERCIALISATION

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

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

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

8. EMPIRICAL SURVEY Q1: WHAT ARE IMPORTANT EXTERNAL FACTORS? ENVIRONMENTAL FACTORSEF 1. POLITICAL FACTORSPF 2. ECONOMIC FACTORSEF 3. SOCIAL FACTORSSF 4. NATURAL FACTORSNF 5. LEGAL FACTORSLF 6. MARKET FACTORSMF 7. FINANCIAL FACTORSFF 8. RESOURCE FACTORSRF 9. TECHNOLOGICAL FACTORSTF 10. CULTURAL FACTORSCF

9. EMPIRICAL SURVEY Factors Descriptive statistics MeanTrmeanStdevSemeanMedianQ1Q1 Q3Q3 Rk PF 8,8579,1051,6210,3549,08,010,0 1 EF 7,5247,5791,6920,3698,06,59,0 6 SF 5,3815,3162,2020,4805,03,56,5 9 NF 5,0955,0532,8270,6175,03,06,5 10 LF 7,2867,4742,4110,5268,05,09,0 7 MF 8,0958,3681,9720,4308,07,59,0 3 FF 8,1438,1581,0620,2328,0 9,0 4 RF 7,9528,1081,9360,4228,07,010,0 5 TF 8,7628,8951,2210,2669,08,010,0 2 CF 5,8105,8952,4210,5286,03,57,5 8

10. EMPIRICAL SURVEY

11. Q2: WHAT ARE IMPORTANT COMPANY INNOVATIONS? COMPANY INNOVATIONSCONSENSUSRANK 1. PRODUCT INNOVATIONS (PRI)72,62 2. MARKET INNOVATIONS (MRI)66,14 3. MANUFACTURING INNOVATIONS (MNI)69,63 4. TECHNOLOGICAL INNOVATIONS (TCI)81,61 5. ECONOMIC INNOVATIONS (ECI)40,57 6. FINANCIAL INNOVATIONS (FNI)41,76 7. MARKETING INNOVATIONS (MKI)45,85 8. COMMERCIAL INNOVATIONS (CMI)32,18

12. EMPIRICAL SURVEY

13. Q3: HOW DO EXTERNAL FACTORS AFFECT THE PROCESS OF INNOVATION? Multiple Regression ModelsRR2R2 S PRI = 13,90 + 0,06PF – 0,21EF + 0,04SF + 0,01NF – 0,25LF + 0,20MF – 1,52FF – 0,01RF + 0,64TF – 0,05CF 0,78762,01,88 MRI = 9,05 – 0,30PF – 0,26EF + 0,30SF + 0,12NF + 0,01LF + 0,08MF – 0,85FF – 0,01RF + 0,91TF – 0,53CF 0,75257,21,78 MNI = – 3,33 + 0,18PF – 0,36EF + 0,19SF – 0,64NF + 0,45LF – 0,44MF – 0,23FF + 0,73RF + 1,16TF – 0,25CF 0,63239,92,26 TCI = 3,74 – 0,03PF + 0,21EF + 0,16SF – 0,28NF + 0,22LF – 0,65MF + 0,16FF + 0,20RF + 0,49TF – 0,26CF 0,71651,21,38 ECI = – 8,33 + 0,28PF + 0,62EF – 0,20SF – 0,21NF + 0,08LF – 0,12MF + 0,80FF + 0,03RF – 0,34TF + 0,18CF 0,75456,81,74 FNI = – 1,95 – 0,32PF + 0,35EF – 0,31SF + 0,48NF – 0,36LF – 0,04MF + 0,59FF + 0,40RF – 0,10TF + 0,08CF 0,87476,41,29 MKI = 12,0 + 0,29PF – 0,11EF – 0,44SF + 0,34NF – 0,07LF + 0,60MF + 0,23FF – 0,82RF – 1,38TF + 0,51CF 0,87376,21,33 CMI = 10,90 – 0,16PF – 0,23EF + 0,27SF + 0,17NF – 0,06LF + 0,37MF + 0,53FF – 0,52RF – 1,38TF + 0,32CF 0,78161,01,52

14. EMPIRICAL SURVEY Stepwise procedure Multiple Regression ModelsRR2R2 S PRI = 14,34 – 1,49 FF + 0,64 TF – 0,28 LF0,76558,51,51 MRI = 3,58 – 0,26 PF + 0,65 TF – 0,30 CF0,55330,51,74 MNI = – 0,64 + 0,54 TF + 0,39 RF – 0,30 CF0,45620,81,99 TCI = 4,53 – 0,43 MF + 0,32 EF + 0,38 FF0,62739,41,18 ECI = – 4,79 + 0,80 FF + 0,48 EF – 0,26 MF0,62939,51,58 FNI = – 4,96 + 0,83 FF + 0,45 RF – 0,23 PF0,79963,91,22 MKI = 10,80 – 0,55 RF – 0,69 TF + 0,38 PF0,73554,01,42 CMI = 10,50 – 0,85 TF + 0,35 CF – 0,30 RF0,68046,21,37

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