Competition, technology innovation, and industrial structure in the Business Aviation Industry

This article aims to investigate the nature of competition and the industrial structure in the Business Aviation Industry (BAI). The aircraft product is a typical Complex Product System (CoPS). Recent study based the nature of the competition in the CoPS industries on the knowledge needed to generate and develop the product. We proposed an extended approach, including collateral assets and scale economies, to understand the drivers of competitive advantage and the industrial structure in the BAI. The methodology research is based on archival data (1930-2004), empirical analysis (1994-2004) and interviews to industrial experts. We find that the BAI tends to oligopoly, because there are high barrier to entry: collateral assets, scale economies, knowledge, and financial resources to compete in the global CoPS industry. Finally, we demonstrated that the product technology innovation is not a relevant force for the incumbent survival. Our research is helpful to managers who need to devise strategy to reduce the uncertainty about the dynamic of Business Aviation (BA) evolution market. Choosing to study the BA market satisfies two needs: to give more insight to the Italian aeronautical industries and, second, the scientific novelty of the analysis. In the next years, the business aviation market will be the most rampant sector of the aeronautical civil arena, and several Italian aeronautical companies showed particular interest. Besides, analyzing a barely investigated market sector represented a strong motivation as well.