The European Aerospace Sector
A lot of technical information is available about the aerospace industry.
However, for the framework of this chapter, this is less interesting than the sociological aspect. Some general statistics about employment are neces- sary in order to get a feel of the importance of the sector for the European and Dutch economy. Direct employment in the European aerospace indus- try surpassed 429,000 in 2000. It is estimated that the European aerospace industry generates twice this number of jobs in related industries within the aerospace supply chain. Between 1995 and 2000, direct European aero- space employment grew steadily at 2 per cent annually, adding 42,000 jobs (Faux, 2002). Of the total number of 420,000 jobs in 2000, some 11,000 are clustered in the Netherlands (Niosi and Zhegu, 2005).
The European aerospace sector is both a generator of wealth and a driver of innovation. In the perspective of managing relationships two aspects are relevant:
1. The industry is organized through an extended supply chain, including many small and medium-sized companies located in all of the 27 coun- tries of the European Union (EU). Prime manufacturers are linked to a network of second- and third-tier specialist companies to meet their needs. These firms, operating at many different levels of the industry, are home to the key technologies essential for the future of Europe.
This complex industrial structure makes aerospace a leading contribu- tor to wealth and employment all across the EU. Here, the manage- ment of complex relations is at stake where cooperation and heavy competition are both present.
2. The aerospace industry is a powerful driver of innovation in the economy as a whole. It makes extreme demands on its products, simul- taneously requiring safety and reliability, low weight, good economics and minimal environmental impact, enhanced power and high efficiency. The technologies developed for aerospace products create spin-offs in many different sectors (ibid.: 12). To meet the requirements, coordination – and therefore cooperation – is vital.
These economic properties are only a starting-point to characterize the external relations of the aerospace market. There is also the political envir- onment. The Lisbon conference in 2000 expressed a commitment to strengthen Europe’s technical capabilities. The Lisbon European Council
concludes, for example: ‘The Union has set itself a new strategic goal for the next decade: to become the most competitive and dynamic knowledge- based economy in the world, capable of sustainable growth with more and better jobs and greater social cohesion’. This message was reinforced at the Barcelona Council, which called for a significant boost in the overall research and development (R&D) and innovation effort in the EU: ‘In order to close the gap between the EU and its major competitors, there must be a significant boost of the overall R&D and innovation effort in the Union, with a particular emphasis on frontier technologies’ (STAR 21:
Strategic Aerospace Review for the 21st century: 10). More recently still, the Thessalonika European Council decided that the time has come to take concrete steps in the defence field. A globally competitive aerospace indus- try is central to the achievement of Europe’s economic and political objec- tives. The government sets not only the strategic agenda, but also the constraints of the market, for instance by dictating that the profit margin cannot exceed 8 per cent. Apart from the economic and political context, there is another aspect: the military and safety domain. The European Advisory Group on Aerospace report, STAR 21, has identified five main areas that deserve specific attention: (i) competing on world markets; (ii) the operating environment for European aerospace; (iii) European gover- nance of civil aviation; (iv) the vital need for European security and defence capabilities; and (v) safeguarding Europe’s role in space (ibid.: 11). To com- plete the complexity of the aerospace market, this means a mutual fertiliz- ing exchange between the defence and civic productions, which includes the complexity of exchanges at a transatlantic level. In conclusion, industrial restructuring combined with the development of relevant common politi- cal programmes within a coherent political framework across European borders is the context for success of an individual company in the aerospace sector. Also, the smallest company has to be aware of the complexity of such relations and be able to manage these in order to sustain continuity.
This rather complex framework of the European aerospace sector sets the scene for research on cooperation within a firm. It reveals that despite tra- ditional rivalry between companies, cooperation is vital for an entrepreneur to ensure survival.
To understand the case of Bradford we can now grasp the rather complex context of European aerospace policy.
Bradford in Transition
In 1984, Ed Voeten founded the family-owned Bradford company at Heerle in the southwest of the Netherlands. It started with 10 employees and a contract in the nuclear energy segment for the welding of piping
systems. After the Chernobyl disaster, the nuclear sector offered little per- spective for Bradford, so at the beginning of the 1990s a transition was made to specialize in the space industry. In this market a main product was the so-called ‘glove box’ for the Space Shuttle. Various versions of the glove box were successfully developed during that decade. When the space shuttle Columbiawas lost, Bradford was again faced with the need for re- orientating its products and communicating its values. And once more the community of practice at Bradford had the courage and capacity to do so. Ed Voeten demonstrated his personal leadership style in accomplish- ing these transitions, with many ‘masculine’ traits in his behaviour that did not always make him popular with employees or customers. In 1994 the shares were transferred to the second generation, Mariol Wildeman- Voeten and Raoul Voeten. In the same year the foundation was laid for the space components division, which after 10 years resulted in a cata- logue containing over 20 innovative products. Raoul Voeten, together with Nico van Putten, who joined the firm in 2001, are the current direc- tors. Raoul Voeten studied engineering while Nico van Putten’s education was grounded in economics. At that time the Noord-Brabant Agency (N.V. BOM) took an interest in Bradford, which enabled the expansion of the production capacity. With the recent founding of Bradford Instruments B.V., concrete steps have been taken to transfer the know- how to earth-based markets and applications, for example, the spin-offof a new generation of sterilization devices and technology for the medical market with the so-called ‘ionizer’. With these major transitions in busi- ness development, Bradford has grown to a yearly turnover of about €8 million and nearly 70 employees, and is the second-largest player in the Dutch aerospace industry. Bradford is a remarkable company not only because of the industrial facts, but also because of the interesting way in which the organization acts as a community. For example, after Columbia exploded in such a dramatic way, Bradford offered condolences on its website. Furthermore, in their external presentation, a specific open- ness and humour becomes visible. In its messages the approach it adopts for business development is characterized by words such as:
‘flexibility’, ‘possibilities’, ‘self-initiative’, ‘involvement’, ‘diversification’,
‘smaller projects’, ‘partnerships’, ‘resourcefulness’ and ‘creativity’. These are not just buzzwords, but terms that seem to reflect modern lifestyle trends. In fact such words have a high ‘feminine’ content. The messages published by the suppliers and partners of this enterprise in its 20th anniversary magazine suggest healthy and cordial mutual relationships.
Finally, it is remarkable how engaged and cooperative the employees of this enterprise are, either during phone or face-to-face conversations. An appealing mix of dignity, hospitality and curiosity is transferred to the
visitor, which makes one feel instantly at home. One wonders how the industrial profile and the characteristics of the community contribute to the success of Bradford. This study aims to illustrate how the entrepre- neur, the community of Bradford and their interaction contribute to the business development. The bases for the description and analysis of this narrative were offered by the information kindly made available by Bradford in various ways.
This basic description of Bradford allows us to get a first insight into the question of why both the psychological and the sociological dimensions are relevant for our analysis.
METHODS OF SURVIVAL ASSESSMENT
The techno-venture is embedded in a social system including the entrepre- neur and other actors. To further develop a successful start-up, the process agents – entrepreneur, manager, employee – have to interact with one another in order to shape an effective social system (Groen, 2005). Within this common ground we distinguish between the psycho-analytical and the socio-cultural approaches.
What makes the Bradford company special is not merely the technical figures in business development, but the way in which Bradford behaves as a community. In order to describe and analyse the Bradford case we use a narrative approach. In other words, the way the community behaves is described as a myth. The analysis is executed by tracing the patterns regarding how they act on (un)common interests, how they com- municate and what are the symbols and symptoms of the Bradford com- munity as a whole. Of course we could have used other disciplines. When it comes to analysing a mix of rational–irrational, conscious and uncon- scious elements, then the approach where personal preferences and the social panorama are investigated will be more suitable than to take into account just the technical or economical aspects. This is illustrated in Figure 2.2.
Before expanding on the methodology, the relations between coopera- tion and concepts such as the brain, entrepreneurship, start-ups, corporate entrepreneurship, entrepreneurial spirit, business development and regional economic development are explored. Cooperation is a vital com- petence in order to survive in the knowledge-intensive playing field of com- petition in this century, as the Lisbon agenda shows. What does this mean for the necessary conditions for successful internal and external coopera- tion in business development? This research question will be analysed using the narrative of Bradford as an example.
Defining Related Concepts
As an entrepreneurship in a techno-venture can be associated with various related concepts, we shall first explore some relevant definitions. For a long time the concept of the entrepreneur has been used in many scientific dis- ciplines. According to Schumpeter (1934 [1942]) the entrepreneur can be defined as a person who is capable of bringing about frame-breaking change. In the decades after Schumpeter the frame breaking was mainly related to technical innovation, that is, primarily based on the control of manufacturing systems in order to exploit products or services. From a psy- chological and sociological angle – the disciplines on which this chapter is based – entrepreneurship could be associated with opportunistic behaviour of the individual who has identified new opportunities. In this strict sense, the only thing that would matter is how the brain of the individual entre- preneur is functioning. Is it functioning differently from the average manager or employee? However, this individual entrepreneur cannot be seen in isolation from his/her environment. The expression ‘frame-break- ing change’ that Schumpeter used becomes more interesting in this context.
Frame breaking for whom – for the customer, for the competitor, or for the existing manufacturing routines and the employees who execute them? In the past the consumer might not have been used to radical changes on the scale that we experience nowadays. Also, the competitors of today have become accustomed to looking for the competitive advantage as intro- duced by Ansoff (1965) and elaborated by many others. Today, frame breaking might be much more related to strategic management issues as seen by Teece (1988). One of the 10 issues he has formulated is concerned with the question of how organizations must be structured and managed Figure 2.2 Overview of relevant disciplines to analyse a techno-start-up
Personal preferences Technical opportunities
Economic opportunities Social panorama
Entrepreneur/
founder
Initial team at start-up
Community of practice
Other explanatory disciplines
to be efficient and innovative: ‘To what degree are efficiency and innova- tiveness in conflict?’. From the viewpoint of this economic paradigm of competitive forces this indeed might be seen as a conflict. In the 1990s, many researchers such as Bolwijn and Kumpe (1990), Porter (1990) or Quinn (1991) showed even more tensions developing among competitive forces. How to control so many variables under rapidly changing and glob- alizing economic conditions? Here, a new paradigm of competitive forces emerged, based on the structure–conduct–performance triangle of Bain (1959) and Mason (1939). With these approaches in mind we can say that the business development in a modern high-tech venture can be expressed through coordinating the external opportunities with the internal qualities of the enterprise. The paradigms mentioned above can be interpreted from the perspective of the individual, say the traditional person of the entre- preneur/owner. In high-tech ventures it can also apply to the engineer/
owner or to the management in general.
In contrast to a start-up, a (high-tech) venture is a company that has already established a product–market combination. Here, the entrepreneur somehow has to cooperate with the people that he/she needs to source goods or services. This is where the concept of corporate entrepreneurship (Saly, 2001) becomes relevant. This concept focuses on questions such as: what are the characteristics of entrepreneurship in the context of a (large) company?
Along with the paradigms already mentioned, a renewed paradigm can grad- ually be developed. This new approach, represented by Nahapiet and Ghoshal (1998), among others, has as its starting-point the fact that an enter- prise can be understood as a social community. Social innovation along with creation and transfer of knowledge can be considered as the compass for management. The concept of competitive advantage is now replaced by the organizational advantage, which comprises various elements such as the recognition that the employee is the critical factor in achieving added value for the customer. The employee embodies scarce, durable talents that are hard to imitate or to trade. Also, such talents can hardly be controlled using the traditional focus on systems in the industry-based leadership styles. The organizational advantage can be seen as an institutional setting that is con- ducive to the development of talent and when exploring relevant internal and external networks. Consider also the way in which many enterprises are cur- rently organized these days: highly individualized and with short report lines.
This implies that the individual employee should be the subject of research as well. Another reason to incorporate the viewpoint of the employee has been put forward by Hofstede and Pedersen (2002): dissatisfaction with society and life in general seems to be a distinguishing factor across nations to explain the preference of employees for entrepreneurship.
All of the above elements add up to the so-called ‘social capital’ of the
company. Here it is the challenge for the engineer/entrepreneur to pursue the effective coordination of his/her personal opportunistic preferences and create the conditions for the development of talent. Already in the late 1990s, AWVN, the Dutch employers’ association, had developed the so-called
‘social innovation strategy’. Social innovation primarily stems from the interactive exploration of interests of stakeholders and (re)creating added value for customers as a learning community (AWVN, 2005; Verhoeffet al., 2005). This definition of social innovation can be a source of misunder- standing. For instance, social innovation is not primarily about being nice to employees, although it is unmistakably also related to the domain of feelings.
In many enterprises the (original) entrepreneur is no longer present. A value- driven leadership style presupposes that leadership is organized in a consis- tent way in the ‘management–employee–human resources’ responsibility triangle. Here, it is evident that all these stakeholders have a certain mindset in entrepreneurial spirit. Entrepreneurial spirit is the propensity of the manager or employee in knowledge-intensive enterprises to identify oppor- tunities for innovation and organize various resources, in order to create added value that meets a solvable demand. This definition of entrepreneur- ial spirit opens up the possibility of researching the reasons why managers or employees in some companies can cope better with innovation than those others. In this resource-based approach the above-mentioned causal logic of structure–conduct–performance of the competitive forces paradigm comes into the discussion. The talent of the entrepreneur, manager or employee gives an extra theoretical degree of freedom and their conduct does not nec- essarily follow from the (cultural or organizational) structure but can be an intermediate variable. In their study on cooperation between European start- ups, Ulijn and Fayolle (2004) explored several aspects of these choices of entrepreneurs. The resource-based approach is taken further by Teece et al.
(1988), de Geus (1997) and Gaspersz and Verhoeff(2001) by exploring the dynamic aspects of capabilities in order to create the knowledge and skills for a learning approach focused on how to cope with ever-changing internal and external conditions. This raises the question of how entrepreneurs them- selves learn, and how they create a learning community of practice like Gielen et al. (2003) have fostered. Florida (2002) extended this approach with research on what the conditions in regional development need to be in order to establish a flourishing ‘creative class’.
The above brief sketch is not meant as a historical perspective but just shows how various paradigms are related to entrepreneurship. It makes clear that there are different angles from which to study the entrepreneur:
the brain of the entrepreneur/owner, the entrepreneurial spirit of the engineer/entrepreneur, manager or employee, or the interaction between them or with other relevant stakeholders. In a high-tech venture all the
stakeholders have to find a common ground to be successful, a way to coop- erate. In order to cooperate effectively, individuals need to have some com- plementary personal characteristics. According to Herrmann’s research (1992) on the model of brain preferences, a person would be predestined for certain types of activities. This can be seen in connection with the work of Sperry (1984) on the specialization of the two halves of the brain. Sperry distinguished between the left and the right hemispheres. The left half con- tains functions like language, time, abstract thinking and logical reasoning, while the right half is more orientated towards imaging, intertemporal events, irrationality, concrete or intuitive matters. Sperry’s insights have been taken further by MacLean (1985), who believes that our head contains not one, but three brains: a ‘triune’ brain. Like the layers of an archaeo- logical site, each brain corresponds to a different stage of evolution. Each brain is connected to the other two, but each operates individually with a distinct ‘personality’. Herrmann has shown that each individual filters information or stimuli depending on his/her own brain preferences. This will have an effect on the way people react, their behaviour, their choices in action, in other words, on the direction that their actions take according to their natural orientations. The development of the brain thus can be seen as a series of critical incidents by which the things that are closer to our nature will probably lead to more specialization of one half compared with the other, for example, control will be organized in the left half, while cre- ativity stems more from the right half. Whether this really leads to an entre- preneur by nature can be further analysed psycho-analytically. If we refer to neuroscience theories, in particular to the works of Sperry, MacLean and Herrmann, the behaviour of individuals – their actions, choices, deci- sions – are related to their dominant characteristics or their cerebral pref- erences. To take Wasserman’s question ‘When does leadership matter?’ even further, we have to look into new methods of survival assessment and the brain itself might be a promising domain. As already indicated, Herrmann (1992) has elaborated on the model of brain preferences, completing the research made by MacLean (1985). The triune brain of MacLean – three separate brains – is shown in Figure 2.3.
In pursuit of the brain functions, Herrmann analysed the way in which different parts of the brain interact and how they handle information.
Herrmann distinguishes four brain functions: facts, future, form and feeling. The various functions are shown in Figure 2.4.
This short introduction makes it clear that neuro-science is not completely disconnected from psycho-analysis. For example, the three identities of Sigmund Freud (Es,Uber-Ichand Ich, or: id, superego and ego) can be found in the three brains of MacLean. The id is the home of our drive, corres- ponding to the reptile brain. The superego can be seen as our collective